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SM Energy Provides Updates on Q1 Production & Capex

Zacks Equity Research
3.2% was well ahead of the consensus 2.3% estimated, which itself had been cranked up from the sub-1% expectations many analysts had been expecting prior to Q1 earnings season.
3.2% was well ahead of the consensus 2.3% estimated, which itself had been cranked up from the sub-1% expectations many analysts had been expecting prior to Q1 earnings season.

SM Energy Company SM provided operating and financial results for the first quarter of 2019.

Total production in the first quarter amounted to10.7 million barrels of oil equivalent (MMBoe) or 118.7 thousand barrels of oil equivalent per day (MBoe/d). Of the total figure, 45% was oil and 63% was liquids. Total production came in at the mid-point of guidance, despite being offset by certain temporary and unanticipated impacts of 0.2 MMBoe to sales volume in March.

The company stated that the 25-well Merlin Maximus development commenced production successfully, on budget and per plans. Located in the RockStar area, the wells are spread across a 1.1-by-2 mile development area. The project includes the co-development of three intervals. While it is too early to conduct analysis based on the collected data, the wells have met or exceeded production expectations.

Oil differentials to Cushing WTI in Permian Basin indicate significant recovery since the beginning of 2019. In February, the company’s pre-hedge net differential improved to about $6 per barrel from around $9 in January. The same is expected to improve in March. Also, SM Energy stated that about 60-65% of the expected oil volumes and about 85% of expected natural gas production from Permian has been hedged through the next two quarters.

During the first quarter, SM Energy’s average realized price per Boe was $31.39, including the effect of realized hedges.

SM Energy incurred costs worth $322 million related to oil and gas activities as well as spent $316 million during the first quarter. SM Energy drilled 28 net wells and completed 27 net wells in the Permian. Also, it drilled seven net wells and completed two net wells in the South Texas region.

Zacks Rank & Key Picks

Currently, SM Energy carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Antero Resources Corporation AR, CrossAmerica Partners L.P. CAPL and SEACOR Holdings, Inc CKH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is an independent explorer, primarily engaged in the acquisition and development of natural gas, natural gas liquids as well as oil resources in the Appalachian Basin. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.

CrossAmerica Partners is involved in the wholesale distribution of motor fuels, comprising gasoline and diesel fuel. The partnership delivered an average positive earnings surprise of 452.2% in the last four quarters.

SEACOR Holdings is a diversified holding company, mainly focused on domestic and international transportation, logistics as well as risk management consultancy. The bottom line for 2019 is expected to inch up 1.7% year over year. The company delivered an average positive earnings surprise of 20.5% in the trailing four quarters.

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