Independent oil and gas company SM Energy Company (SM - Free Report) posted second-quarter 2016 adjusted loss of 44 cents per share. The quarterly loss was significantly narrower than the Zacks Consensus Estimate of a loss of 69 cents per share. The company had posted earnings of 49 cents per share in the year-ago quarter.
Total revenue was $341.8 million in the quarter, down 33.8% from $516 million in the prior-year quarter. Revenues, however, beat the Zacks Consensus Estimate of $323 million.
Operational Performance
The company’s second-quarter production came in at 157.2 thousand barrels of oil equivalent per day (MBoe/d), down 13% from the year-ago level of 181 MBoe/d. The decline was mainly attributable to termination of completion activity in the Eagle Ford shale.
SM Energy produced 428.2 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 12% year over year. Oil production also decreased 19% year over year to 45.1 thousand barrels per day (MBbls/d). Natural gas liquids contributed 40.8 MBbls/d to the total volume, down 8% from the second quarter of 2015.
Including the effect of hedging, the average equivalent price per barrel of oil equivalent (Boe) was $27.45 compared with $33.63 in the year-ago quarter. Including hedging activities, the average realized price of natural gas plunged 24% year over year to $2.60 per thousand cubic feet (Mcf), average realized prices of oil declined 14% to $56.97 per barrel, and average realized prices of natural gas liquid decreased 7% to $15.61 per barrel.
On the cost front, unit lease operating expenses (LOE) increased 2% year over year to $3.31 per Boe in the quarter. Transportation expenses increased marginally to $5.91 per Boe from $5.64 per Boe in the year-ago period. General and administrative expenses were down 29% to $1.60 per Boe from the prior-year level of $2.26 Boe, while depletion, depreciation and amortization (DD&A) expenses were up 11% to $14.75 per Boe from the year-ago level of $13.34 per Boe.
Liquidity
Net cash from operating activities decreased to $138.6 million during the quarter. The company had generated $265.6 million in the year-ago quarter. As of Jun 30, 2016, SM Energy had a cash balance of $0.02 million and long-term debt of $3,374.8 million, with a debt-to-capitalization ratio of 71.4% as against 65.2% in the prior-year quarter.
Guidance
SM Energy estimates production for 2016 in the range of 53–57 MMBoe/d. Production for the third quarter is projected between 13.5 MMBoe/d and 14.0 MMBoe/d.
The estimated LOE per Boe is within $3.90–$4.30. The company has set its capital expenditure budget for 2016 at $670 million.
Zacks Rank
SM Energy currently holds a Zacks Rank #2 (Buy). Other well-ranked stocks in the oil and gas sector include GeoPark Limited (GPRK - Free Report) , Sasol Ltd. (SSL - Free Report) and North Atlantic Drilling Limited . All these sport a Zacks Rank #1 (Strong Buy).
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Independent oil and gas company SM Energy Company (SM - Free Report) posted second-quarter 2016 adjusted loss of 44 cents per share. The quarterly loss was significantly narrower than the Zacks Consensus Estimate of a loss of 69 cents per share. The company had posted earnings of 49 cents per share in the year-ago quarter.
Total revenue was $341.8 million in the quarter, down 33.8% from $516 million in the prior-year quarter. Revenues, however, beat the Zacks Consensus Estimate of $323 million.
Operational Performance
The company’s second-quarter production came in at 157.2 thousand barrels of oil equivalent per day (MBoe/d), down 13% from the year-ago level of 181 MBoe/d. The decline was mainly attributable to termination of completion activity in the Eagle Ford shale.
SM Energy produced 428.2 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 12% year over year. Oil production also decreased 19% year over year to 45.1 thousand barrels per day (MBbls/d). Natural gas liquids contributed 40.8 MBbls/d to the total volume, down 8% from the second quarter of 2015.
Including the effect of hedging, the average equivalent price per barrel of oil equivalent (Boe) was $27.45 compared with $33.63 in the year-ago quarter. Including hedging activities, the average realized price of natural gas plunged 24% year over year to $2.60 per thousand cubic feet (Mcf), average realized prices of oil declined 14% to $56.97 per barrel, and average realized prices of natural gas liquid decreased 7% to $15.61 per barrel.
On the cost front, unit lease operating expenses (LOE) increased 2% year over year to $3.31 per Boe in the quarter. Transportation expenses increased marginally to $5.91 per Boe from $5.64 per Boe in the year-ago period. General and administrative expenses were down 29% to $1.60 per Boe from the prior-year level of $2.26 Boe, while depletion, depreciation and amortization (DD&A) expenses were up 11% to $14.75 per Boe from the year-ago level of $13.34 per Boe.
Liquidity
Net cash from operating activities decreased to $138.6 million during the quarter. The company had generated $265.6 million in the year-ago quarter. As of Jun 30, 2016, SM Energy had a cash balance of $0.02 million and long-term debt of $3,374.8 million, with a debt-to-capitalization ratio of 71.4% as against 65.2% in the prior-year quarter.
Guidance
SM Energy estimates production for 2016 in the range of 53–57 MMBoe/d. Production for the third quarter is projected between 13.5 MMBoe/d and 14.0 MMBoe/d.
The estimated LOE per Boe is within $3.90–$4.30. The company has set its capital expenditure budget for 2016 at $670 million.
Zacks Rank
SM Energy currently holds a Zacks Rank #2 (Buy). Other well-ranked stocks in the oil and gas sector include GeoPark Limited (GPRK - Free Report) , Sasol Ltd. (SSL - Free Report) and North Atlantic Drilling Limited . All these sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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