SM Energy Raises Production Guidance, Well Results Impress
SM Energy Company SM raised its production guidance by about 0.4 million barrels of oil equivalent (MMBoe).
The increase is attributable to the second quarter of 2017, which was driven by accelerated completion activity at its core Eagle Ford program. The revised production guidance for the second quarter is 10.7--11.1 MMBoe and 43.2--46.2 MMBoe for full-year 2017.
The pace of completions at the Eagle Ford was accelerated by 11 wells during the quarter. Year to date, the company has completed 31 wells under the same program. Currently, SM Energy intends to complete 39 wells per full-year plan.
These initiatives are expected to boost cash flow and capital cost savings.
In another development, SM Energy announced that production from its highly anticipated Viper 14-9 1WA well in Howard County, Texas, with about 10,400 foot lateral drilled in the Wolfcamp A, has just passed 1,000 Boe per day production at 92% oil during completion flowback with oil rates still rising. The well is likely to take more time before it reaches the 30-day peak rate. The early signs of productivity are encouraging.
Per the company’s three-year plan, Midland Basin is expected to see CAGR of 60%, with rapid growth in oil production as a percentage of commodity mix. Operating margin is also projected to grow 40% during 2017--2019. Currently, SM Energy employs six horizontal rigs and one data gathering rig in the Midland Basin. About 20 wells having laterals of 10,000 have been drilled to date.
The company’s share price chart is unimpressive. Shares of the company have lost 15.2% in the last three months, while the Zacks categorized Oil & Gas – U.S. Exploration & Production industry saw a decrease of 13.6%.
SM Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space include SunCoke Energy, Inc. SXC, Enbridge Energy, L.P. EEP and Canadian Natural Resources Limited Ltd. CNQ. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 120.0% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.
Enbridge Energy posted a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 38.22%.
Canadian Natural Resources posted a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with an average negative earnings surprise of 275.46%.
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