SM Energy Co (SM) Announces 20% Increase in Fixed Dividend and Strong Q3 2023 Results
SM Energy Co (NYSE:SM) reports a 20% increase in the fixed dividend policy, intending to pay $0.72 per share annually from Q1 2024.
The company's net income for Q3 2023 was $222.3 million, exceeding expectations due to strong oil production and lower production costs.
SM Energy Co (NYSE:SM) increased its total capital return to stockholders in Q3 to $114.1 million, up 31% from the previous quarter.
Adjusted free cash flow for Q3 2023 was $207.7 million, up 119% from Q2 2023.
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On November 2, 2023, SM Energy Co (NYSE:SM) announced its financial and operating results for the third quarter of 2023. The company reported a 20% increase in its fixed dividend policy, demonstrating confidence in its high-quality asset base and balance sheet strength. The increased dividend is expected to provide an approximate 1.8% yield to the current market capitalization.
Financial Performance
SM Energy Co (NYSE:SM) reported a net income of $222.3 million for Q3 2023, or $1.88 per diluted common share. The company's net cash provided by operating activities was $383.0 million, and Adjusted EBITDAX was $475.6 million, all of which exceeded expectations. This strong performance was attributed to robust oil production, increased commodity prices, and lower production costs.
Capital Returns and Stock Repurchase
The company increased its total capital return to stockholders in the third quarter to $114.1 million, up 31% from the previous quarter. This included the repurchase and retirement of 2,351,642 shares of its common stock and the $0.15 per share quarterly dividend paid on August 7, 2023. Since announcing the return of capital program in September 2022, the company has repurchased approximately 7.7 million shares, or approximately 6% of shares outstanding, at an average price of $34.15 per share and returned approximately $335 million to stockholders.
Operational Execution and ESG Focus
SM Energy Co (NYSE:SM) reported that production for Q3 2023 was 14.1 MMBoe, or 153.7 MBoe/d, at 44% oil, exceeding guidance. This was largely driven by accelerated new wells in South Texas due to faster drilling and completion times. The company also highlighted its focus on operational execution, well performance, and ESG initiatives.
CEO Commentary
President and Chief Executive Officer Herb Vogel commented: We are pleased to announce the 20% increase in our annual fixed dividend policy. Our capital return framework is intended to deliver a sustainable dividend, augmented by the potential for share price appreciation realized through stock repurchases. For the first nine months of 2023, we have allocated 74% of Adjusted free cash flow to capital returns to stockholders while maintaining leverage at 0.7 times and adding more than 29,000 net acres in the Midland Basin. Our keen focus on operational execution, building our top tier inventory and maintaining and improving our balance sheet strength, position us to continue to create long-term value.
For more detailed information, please refer to the full earnings report on the SM Energy Co (NYSE:SM) website.
Explore the complete 8-K earnings release (here) from SM Energy Co for further details.
This article first appeared on GuruFocus.
