ENERCOM’S THE OIL & GAS CONFERENCE A U G U S T 1 2 , 2 0 1 9
PLEASE READ THIS PRESENTATION MAKES REFERENCE TO: FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of securities laws. The words "anticipate," "budget," "estimate," "expect," "forecast," "guidance," "plan," "project," "objectives," "target," "will," "on course," "potential" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause SM Energy's actual results to differ materially from results expressed or implied by the forward-looking statements. Forward-looking statements in this presentation include: projections for cash flow yield; projections for higher returns; expected number of completions in the second half of 2019; expectations for improved productivity per lateral foot; Austin Chalk production and related margin projections; expected inventory growth; expected total capital spend for 2019 and beyond; the percentage of future production that is hedged; expected value creation; and, expected debt reduction and de-levering of the balance sheet. General risk factors include the availability, proximity and capacity of gathering, processing and transportation facilities; the volatility and level of oil, natural gas, and natural gas liquids prices and related differentials, including any impact on the Company’s asset carrying values or reserves arising from price declines; uncertain ties inherent in projecting future test results and timing and rates of production or other results from drilling and completion activities; the imprecise nature of estimating oil and natural gas reserves; uncertainties inherent in projecting future drilling and completion activities, costs or results; the availability of additional economically attractive exploration, development, and acquisition opportunities for future growth and any necessary financings; unexpected drilling conditions and results; unsuccessful exploration and development drilling results; the availability of drilling, completion, and operating equipment and services; the risks associated with the Company's commodityprice risk management strategy; and other such matters discussed in the Risk Factors section of SM Energy's most recent Annual Report onForm 10-K, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission. The forward-looking statements contained herein speak as of the date of this announcement. Although SM Energy may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws. non-GAAP financial measures and forward-looking metrics: See Appendix for reconciliations and definitions NYSE: SM 2
PREMIER OPERATOR OF TOP-TIER ASSETS FOCUSED ON TWO BASINS IN TEXAS ENTERPRISE VALUE: ~ $4 Billion PRODUCTION: ~136.5 MBoe/d; 44% oil (2Q19) MIDLAND BASIN ▪ ~81,500 net acres ▪ 6 Rigs / 3 Completion Crews PROVED RESERVES: SOUTH TEXAS 503 MMBoe (YE 2018) ▪ ~163,000 net acres ▪ 1 Rig / 1 Completion Crew 2019 TOTAL CAPITAL SPEND GUIDANCE: ~1,025 MM (1) Mid-point of full year guidance; Total Capital Spend is a a non- GAAP financial measures. See “Definitions of non -GAAP (1) NYSE: SM 3 Measures as Calculated by the Company” in the Appendix.
ON TRACK WITH OUR PRIORITIES Grow within cash flow Reduce leverage Prove-up and grow inventory • Expected value creation through testing of new intervals in South Texas and Permian NYSE: SM 4
BALANCE SHEET FOCUS 2019 AND BEYOND: IMPROVING DEBT METRICS • Liquidity of $1.1B (1) ; no near-term maturities • Net debt to trailing twelve-month adjusted EBITDAX projected to be ~3 times at year-end and reduced going forward Debt Maturities as of June 30, 2019 (in millions) $1,750 Borrowing Base: $1.6B $1,500 $1,250 Commitments: $1.2B $1,000 $750 $500 $250 $500 $500 $500 $500 $476.8 $118 $172.5 $0 2019 2020 2021 2022 2023 2024 2025 2026 2027 Coupon 1.500% 6.125% 5.000% 5.625% 6.750% 6.625% Yield to worst (2) - 7.16% 7.40% 8.79% 8.91% 9.37% Initial call date - 11/2018 7/2018 6/2020 9/2021 1/2022 Initial call price - 103.06% 102.50% 102.81% 103.38% 104.97% (1) Liquidity as of June 30, 2019. (2) YTW as of July 31, 2019. NYSE: SM 5
WELL HEDGED PERCENTAGE OF PRODUCTION HEDGED BENCHMARK O i l • ~80% of expected 3Q19 – 4Q19 oil production hedged; Benchmark Hedges (1) swaps at ~$61/Bbl, collar floors at ~$50/Bbl • 3Q19 – 4Q19 ~50% + of expected 2020 oil production hedged; swaps at ~$60/Bbl, collar floors at $55/Bbl G a s • ~70% of expected 3Q19 – 4Q19 gas production hedged; swaps at ~$2.85/MMBtu, collar floors at $2.50/MMBtu • ~10% + of expected 2020 gas production hedged at ~$2.85/MMBtu N G L s • Hedged by product ~75% REGIONAL W A H A • ~ 70% (2) of expected 3Q19 – 4Q19 Permian gas production hedged at WAHA (3Q19 at $1.30/MMBtu, 4Q19 at $1.75/MMBtu) M i d l a n d - C u s h i n g O i l • ~60% (3) of expected 3Q19 – 4Q19 and 2020 Permian oil production covered by Midland to Cushing basis hedges at ~$2.85/Bbl and ~$0.70/Bbl, respectively Note: Hedging data as of July 31, 2019 (1) Total Company percentage includes oil swaps and collars at NYMEX WTI, natural gas swaps and collars at HSC, and NGL swaps (excludes WAHA swaps and basis hedges). (2) Permian gas hedges at WAHA based on Permian residue/tailgate volumes. (3) Midland to Cushing basis hedges based on expected Permian oil volumes. NYSE: SM 6
MIDLAND BASIN TOP-TIER EXECUTION, WELL PERFORMANCE AND CAPITAL EFFICIENCY E x e c u t i n g O n O u r P l a n COMPLETIONS EXECUTION • ~100+ net completions planned for 2019 HOWARD • 32 net completions in 2Q19; 59 net completions YTD RockStar GREAT NEW WELLS • 27 new RockStar wells reached their 30-day peak rates that MARTIN averaged approximately 1,250 Boe/d (87% oil) • Merlin Maximus: All 25 wells across three intervals have now reached 30-day peak IP rates averaging approximately 1,400 Boe/d (86% oil) • New Intervals: Continued encouraging results from Middle Spraberry, Wolfcamp D, and Dean test wells TOP TIER CAPITAL EFFICIENCY • Drilling/completing faster, longer laterals, lower sand costs YE 2018 INVENTORY: 12 – 16 YEARS O p e r a t i n g D e t a i l s ( 1 ) Rigs Running: Sweetie Peck Completion Crews: MIDLAND ~81,500 UPTON N E T A C R E S NYSE: SM (1) As of August 1, 2019 7
MIDLAND BASIN: TOP-TIER CAPITAL EFFICIENCY RECENT DC&E WELL COSTS AT ~$765 PER LATERAL FOOT Drilling Faster Completing Faster Lateral Ft Drilled per Day (1) Lateral Ft Completed per Day (2) 1,323 Increase in 620 Lateral Feet +22% 562 1,025 Drilled / Day 510 (YTD19 / 2017) 765 Increase in Lateral Feet +73% Completed / Day (YTD19 / 2017) 2017 2018 YTD19 2017 2018 YTD19 Increase in Avg. Longer Laterals Lower Sand Costs Lateral Length +13% Avg Lateral Length Completed (3) Indexed to January 2018 (4) 1.1 Completed 10,500 1.0 10,100 (2019 Plan / 2017) 0.9 9,300 0.8 0.7 0.6 Decrease in -74% 0.5 Sand Costs 0.4 (June 19 / Jan. 18) 0.3 0.2 0.1 - 2017 2018 2019 Jan Apr Jul Oct Jan Apr (1) Total lateral feet delivered per day, spud to rig release. (3) 2019 includes drilled and planned wells. NYSE: SM 8 (2) Lateral feet completed per fleet per day. (4) Excludes last mile logistics as there is variability in these charges.
MIDLAND BASIN: GREAT NEW ROCKSTAR RESULTS NEW WELL PERFORMANCE CONSISTENT WITH PRIOR WELLS (1)(2) 250,000 Cumulative Production (Boe) 200,000 150,000 100,000 50,000 0 0 30 60 90 120 150 180 210 240 270 300 330 360 Days on Production (1) (2) Previously Reported Well Avg New Well Avg (1) Previously Reported Well Average includes all (155) previously reported SM operated wells at RockStar on production since 11/3/2016. (2) New Well Average includes 27 new wells at RockStar that have not been previously reported. NYSE: SM 9
MIDLAND BASIN: MERLIN MAXIMUS HIGHLY SUCCESSFUL 25-WELL DEVELOPMENT 250,000 Cumulative Production (Boe) 200,000 150,000 100,000 50,000 0 0 30 60 90 120 150 180 210 240 270 300 330 360 Days on Production Previously Reported Well Avg Merlin Maximus 25 well avg. NYSE: SM 10
Recommend
More recommend
