SM Energy Co (SM) Reports Record Net Proved Reserves and Strong Financial Performance for Full ...
Net Income: Reported $817.9 million for full year 2023, with $247.1 million in Q4.
Adjusted EBITDAX: Reached $1.71 billion for the full year and $445.1 million for Q4.
Net Cash from Operating Activities: Totaled $1.58 billion for the full year 2023.
Net Proved Reserves: Increased by 13% to a record 605 MMBoe at year-end 2023.
Capital Expenditures: Amounted to $1.07 billion for the full year, surpassing expectations.
Return of Capital: $299.6 million returned to stockholders through share repurchases and dividends.
Net Debt: Reduced to $969.0 million, achieving the target of less than $1 billion.
On February 21, 2024, SM Energy Co (NYSE:SM) released its 8-K filing, detailing its financial and operational performance for the fourth quarter and full year of 2023, along with its estimated net proved reserves and the 2024 operating plan. SM Energy, an independent energy company, is engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids, primarily in the United States. The company's revenue is largely derived from premier drilling locations in the U.S., with a focus on geoscience and engineering to maximize property potential.
Financial and Operational Highlights
SM Energy reported a net income of $817.9 million for the full year 2023, equating to $6.86 per diluted common share, and $247.1 million for the fourth quarter, or $2.12 per diluted common share. The adjusted net income was $5.89 per diluted common share for the full year and $1.56 for the fourth quarter. The company's operational performance was marked by a 5% increase in net production from 2022, reaching 55.5 MMBoe, or 152.0 MBoe/d for the full year, and 14.1 MMBoe, or 153.5 MBoe/d for the fourth quarter.
SM Energy's financial achievements for the year included a significant return of capital to stockholders, totaling $299.6 million, which represents an approximate 7% yield to current market capitalization. The company's balance sheet was further strengthened, with long-term debt standing at $1.59 billion and cash and cash equivalents at $616.2 million, resulting in a net debt of $969.0 million. This achievement met the company's target of less than $1 billion net debt, with a net debt-to-Adjusted EBITDAX ratio of 0.57.
Record Net Proved Reserves and Capital Efficiency
SM Energy set a company record with estimated net proved reserves of 605 MMBoe at year-end 2023, a 13% increase over the previous year. The company's Midland Basin leasehold acreage grew by 29,700 net acres, a 37% increase, showcasing the company's expertise in geosciences and land management. The company's capital expenditures for the full year 2023 were $1.07 billion, surpassing expectations and demonstrating capital efficiency.
SM Energy's commitment to safety and environmental stewardship was evident in its superior safety metrics for 2023, including a total recordable incident rate of 0.20 per 200,000 hours worked, a 38% improvement from 2022. The company also received a Leadership level score of A- from the CDP for its participation in the 2023 Climate Change Questionnaire, improving from a Management level score of B received in 2022.
Looking Ahead: 2024 Operating Plan
For 2024, SM Energy aims to create value through operational execution, delivering low breakeven, high return wells, and maintaining a focus on ESG stewardship. The company plans to return capital to stockholders through share repurchases and dividends while reducing debt. The sustainable fixed annual dividend of $0.72 per share, along with the share repurchase program, positions the company to deliver solid returns. The 2024 operating plan also includes the delineation and development of assets acquired in 2023 and the pursuit of continued inventory growth.
CEO Herb Vogel expressed confidence in the company's position entering 2024, citing the excellent financial and operating results of 2023, the growth of the Midland Basin footprint, the record net proved reserves, and the reduction in net debt. Vogel highlighted the company's industry-leading safety metrics and the return of $300 million to stockholders as key achievements.
SM Energy's 2024 operating plan guidance anticipates net production volumes to range between 56-59 MMBoe, with capital expenditures expected to be between $1.16 and $1.20 billion, excluding acquisitions. The company's focus on operational excellence and strategic planning positions it for continued success in the coming year.
For more detailed information on SM Energy's financial performance and 2024 operating plan, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from SM Energy Co for further details.
This article first appeared on GuruFocus.
