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SM Energy (SM) Down 11.2% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for SM Energy Company (SM - Free Report) . Shares have lost about 11.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is SM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2017 Results
SM Energy Company’s fourth-quarter 2017 adjusted loss of 8 cents per share came narrower than the Zacks Consensus Estimate of a loss of 15 cents and the year-ago quarter’s loss of 31 cents. The improvement in bottom line can be attributed to an increase in oil-equivalent price and fall in operating expenses.
Although total revenues (Oil, gas and NGL production sales) decreased to $341 million from $380 million in the prior-year quarter, the figure beat the Zacks Consensus Estimate of $330 million. The year-over-year decline in revenue performance was due to a fall in production.
Operational Performance
In the fourth quarter, production was 112.6 thousand barrels of oil equivalent per day (MBoe/d), down 23% from the year-ago level of 145.6 MBoe/d. This stemmed from natural declines in Eagle Ford volumes and absence of new wells in the region.
Production in the fourth quarter reflects strong 21% sequential growth in Permian Basin volumes, which was more than offset by lower sequential Eagle Ford volumes as a result of the previously-announced joint venture as well as natural declines, as no new wells were completed in the Eagle Ford during the quarter.
SM Energy produced 282.5 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 26% year over year. Oil production decreased 5% from the prior-year quarter to 41.5 thousand barrels per day (MBbls/d). Natural gas liquids contributed 24 MBbls/d to total volume, down 37% from fourth-quarter 2016.
Due to hedging, the average equivalent price per barrel of oil equivalent (Boe) was $32.16 compared with $27.59 in the year-ago quarter. Including hedging activities, average realized price of natural gas increased 26% year over year to $4.03 per thousand cubic feet (Mcf). Average realized prices of oil at $48.90 per barrel, came in line with the year-ago quarter, whereas average realized prices of natural gas liquid grew 11% year over year to $18.84 per barrel.
Costs
On the cost front, unit lease operating expenses (LOE) increased 39% year over year to $5.10 per Boe. Transportation expenses decreased to $5.01 per Boe from $6.39 per Boe in the year-ago period. General and administrative expenses flared up 36% to $3.38 per Boe from the prior-year level of $2.49. Depletion, depreciation and amortization (DD&A) expenses were down 1% to $12.69 per Boe from the year-ago level of $12.81.
Operating Expenses
Operating expenses amounted to $441.4 million in the fourth quarter compared with $664.3 million in the year-ago quarter. Exploration expenses decreased to $16.9 million from $23.7 million in the comparable quarter last year.
Liquidity
Net cash from operating activities increased to $144.8 million during the reported quarter from $137.8 million reported in the year-ago quarter. As of Dec 31, 2017, SM Energy had cash balance of $313.9 million and long-term debt of $2,908.770 million. The company had a debt-to-capitalization ratio of 54.9% in the quarter.
Proved Reserves
At the end of the year, the company had proved reserves of 468 million barrels of oil equivalent (MMBoe), which increased from 396 MMBoe reported at the end of 2016.
Guidance
SM Energy has set its 2018 production estimate to be within 42-46 MMBoe, of which 41% is expected to be oil. In comparison, the company’s production for full-year 2017 came in at 44.5 MMBoe. If the company’s 2018 production is at the lower limit of the guided range, it will be lower year over year, even though total capital spending for the full year is estimated to rise 36%.
Production for the first quarter of 2018 is projected between 9.5 and 10 MMBoe, of which 40% is expected to be oil.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted by 38.5% due to these changes.
At this time, SM has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
SM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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SM Energy (SM) Down 11.2% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for SM Energy Company (SM - Free Report) . Shares have lost about 11.2% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is SM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Fourth-Quarter 2017 Results
SM Energy Company’s fourth-quarter 2017 adjusted loss of 8 cents per share came narrower than the Zacks Consensus Estimate of a loss of 15 cents and the year-ago quarter’s loss of 31 cents. The improvement in bottom line can be attributed to an increase in oil-equivalent price and fall in operating expenses.
Although total revenues (Oil, gas and NGL production sales) decreased to $341 million from $380 million in the prior-year quarter, the figure beat the Zacks Consensus Estimate of $330 million. The year-over-year decline in revenue performance was due to a fall in production.
Operational Performance
In the fourth quarter, production was 112.6 thousand barrels of oil equivalent per day (MBoe/d), down 23% from the year-ago level of 145.6 MBoe/d. This stemmed from natural declines in Eagle Ford volumes and absence of new wells in the region.
Production in the fourth quarter reflects strong 21% sequential growth in Permian Basin volumes, which was more than offset by lower sequential Eagle Ford volumes as a result of the previously-announced joint venture as well as natural declines, as no new wells were completed in the Eagle Ford during the quarter.
SM Energy produced 282.5 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 26% year over year. Oil production decreased 5% from the prior-year quarter to 41.5 thousand barrels per day (MBbls/d). Natural gas liquids contributed 24 MBbls/d to total volume, down 37% from fourth-quarter 2016.
Due to hedging, the average equivalent price per barrel of oil equivalent (Boe) was $32.16 compared with $27.59 in the year-ago quarter. Including hedging activities, average realized price of natural gas increased 26% year over year to $4.03 per thousand cubic feet (Mcf). Average realized prices of oil at $48.90 per barrel, came in line with the year-ago quarter, whereas average realized prices of natural gas liquid grew 11% year over year to $18.84 per barrel.
Costs
On the cost front, unit lease operating expenses (LOE) increased 39% year over year to $5.10 per Boe. Transportation expenses decreased to $5.01 per Boe from $6.39 per Boe in the year-ago period. General and administrative expenses flared up 36% to $3.38 per Boe from the prior-year level of $2.49. Depletion, depreciation and amortization (DD&A) expenses were down 1% to $12.69 per Boe from the year-ago level of $12.81.
Operating Expenses
Operating expenses amounted to $441.4 million in the fourth quarter compared with $664.3 million in the year-ago quarter. Exploration expenses decreased to $16.9 million from $23.7 million in the comparable quarter last year.
Liquidity
Net cash from operating activities increased to $144.8 million during the reported quarter from $137.8 million reported in the year-ago quarter. As of Dec 31, 2017, SM Energy had cash balance of $313.9 million and long-term debt of $2,908.770 million. The company had a debt-to-capitalization ratio of 54.9% in the quarter.
Proved Reserves
At the end of the year, the company had proved reserves of 468 million barrels of oil equivalent (MMBoe), which increased from 396 MMBoe reported at the end of 2016.
Guidance
SM Energy has set its 2018 production estimate to be within 42-46 MMBoe, of which 41% is expected to be oil. In comparison, the company’s production for full-year 2017 came in at 44.5 MMBoe. If the company’s 2018 production is at the lower limit of the guided range, it will be lower year over year, even though total capital spending for the full year is estimated to rise 36%.
Production for the first quarter of 2018 is projected between 9.5 and 10 MMBoe, of which 40% is expected to be oil.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted by 38.5% due to these changes.
SM Energy Company Price and Consensus
SM Energy Company Price and Consensus | SM Energy Company Quote
VGM Scores
At this time, SM has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
SM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.