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SM Energy (SM) Incurs Narrower-than-Expected Loss in Q3
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Independent oil and gas company, SM Energy Company (SM - Free Report) posted third-quarter 2016 adjusted loss of 37 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 63 cents. However, the quarterly loss was wider than a loss of 34 cents per share incurred in the year-ago quarter.
Total revenue was $352.7 million in the quarter, down 5% from $371.1 million in the prior-year quarter.
Operational Performance
The company’s third-quarter production came in at 153.9 thousand barrels of oil equivalent per day (MBoe/d), down 12% from the year-ago level of 174.5 MBoe/d. The decline was mainly attributable to termination of completion activity in the Eagle Ford shale.
SM Energy produced 403 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 14% year over year. Oil production also decreased 4% year over year to 47.2 thousand barrels per day (MBbls/d). Natural gas liquids contributed 39.5 MBbls/d to the total volume, down 16% from the third quarter of 2015.
Including the effect of hedging, the average equivalent price per barrel of oil equivalent (Boe) was $27.31 compared with $29.92 in the year-ago quarter. Including hedging activities, the average realized price of natural gas declined 7% year over year to $2.98 per thousand cubic feet (Mcf) and average realized prices of oil plunged 16% to $50.15 per barrel, whereas average realized prices of natural gas liquid remained unchanged at $16.07 per barrel.
On the cost front, unit lease operating expenses (LOE) decreased 15% year over year to $3.29 per Boe in the quarter. Transportation expenses decreased marginally to $6.24 per Boe from $6.27 per Boe in the year-ago period. General and administrative expenses were down 3% to $1.96 per Boe from the prior-year level of $2.02 Boe, while depletion, depreciation and amortization (DD&A) expenses were down 10% to $13.70 per Boe from the year-ago level of $15.19 per Boe.
Liquidity
Net cash from operating activities decreased to $158.1 million during the quarter from $235.3 million in the year-ago quarter. As of Sep 30, 2016, SM Energy had a cash balance of $980.7 million and long-term debt of $2,894.3 million, with a debt-to-capitalization ratio of 61% as against 71.4 % in the preceding quarter.
SM Energy estimates production for 2016 in the range of 55.3–56 MMBoe/d. Production for the fourth quarter is projected between 13.3 MMBoe/d and 14.0 MMBoe/d.
The estimated LOE per Boe is within $3.60–$3.65. The company has set its capital expenditure budget for 2016 at $700 million.
Enbridge Inc. reported a negative earnings surprise of 10.00% in the prior-year quarter.
TransCanada posted a positive earnings surprise of 22.92% in the last reported quarter.
Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprises in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.
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SM Energy (SM) Incurs Narrower-than-Expected Loss in Q3
Independent oil and gas company, SM Energy Company (SM - Free Report) posted third-quarter 2016 adjusted loss of 37 cents per share, significantly narrower than the Zacks Consensus Estimate of a loss of 63 cents. However, the quarterly loss was wider than a loss of 34 cents per share incurred in the year-ago quarter.
Total revenue was $352.7 million in the quarter, down 5% from $371.1 million in the prior-year quarter.
Operational Performance
The company’s third-quarter production came in at 153.9 thousand barrels of oil equivalent per day (MBoe/d), down 12% from the year-ago level of 174.5 MBoe/d. The decline was mainly attributable to termination of completion activity in the Eagle Ford shale.
SM Energy produced 403 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 14% year over year. Oil production also decreased 4% year over year to 47.2 thousand barrels per day (MBbls/d). Natural gas liquids contributed 39.5 MBbls/d to the total volume, down 16% from the third quarter of 2015.
Including the effect of hedging, the average equivalent price per barrel of oil equivalent (Boe) was $27.31 compared with $29.92 in the year-ago quarter. Including hedging activities, the average realized price of natural gas declined 7% year over year to $2.98 per thousand cubic feet (Mcf) and average realized prices of oil plunged 16% to $50.15 per barrel, whereas average realized prices of natural gas liquid remained unchanged at $16.07 per barrel.
On the cost front, unit lease operating expenses (LOE) decreased 15% year over year to $3.29 per Boe in the quarter. Transportation expenses decreased marginally to $6.24 per Boe from $6.27 per Boe in the year-ago period. General and administrative expenses were down 3% to $1.96 per Boe from the prior-year level of $2.02 Boe, while depletion, depreciation and amortization (DD&A) expenses were down 10% to $13.70 per Boe from the year-ago level of $15.19 per Boe.
Liquidity
Net cash from operating activities decreased to $158.1 million during the quarter from $235.3 million in the year-ago quarter. As of Sep 30, 2016, SM Energy had a cash balance of $980.7 million and long-term debt of $2,894.3 million, with a debt-to-capitalization ratio of 61% as against 71.4 % in the preceding quarter.
SM ENERGY CO Price, Consensus and EPS Surprise
SM ENERGY CO Price, Consensus and EPS Surprise | SM ENERGY CO Quote
Guidance
SM Energy estimates production for 2016 in the range of 55.3–56 MMBoe/d. Production for the fourth quarter is projected between 13.3 MMBoe/d and 14.0 MMBoe/d.
The estimated LOE per Boe is within $3.60–$3.65. The company has set its capital expenditure budget for 2016 at $700 million.
Zacks Rank
SM Energy currently has a Zacks Rank #3 (Hold).
Some better-ranked players from the same sector are Enbridge Inc. (ENB - Free Report) , Braskem SA (BAK - Free Report) and TransCanada Corporation (TRP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see tthe complete list of today’s Zacks #1 Rank stocks here.
Enbridge Inc. reported a negative earnings surprise of 10.00% in the prior-year quarter.
TransCanada posted a positive earnings surprise of 22.92% in the last reported quarter.
Enviva Partners has a mixed earnings surprise history. The partnership posted positive earnings surprises in two of the last four quarters. It reported a positive earnings surprise of 20.51% in the preceding quarter.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>