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Key Takeaways From SM Energy's (SM) Latest Presentation
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SM Energy Company (SM - Free Report) recently provided some key updates in the Bank of America Securities 2020 Leveraged Finance Virtual Conference. The upstream company mainly focused on its strong hedging position in the conference and provided information on debt position.
Hedges
Earlier, it provided its production guidance in the range of 123.5-126.2 barrels of oil equivalent per day (Boe/d) for 2020, of which 49% will likely be crude oil. Fourth-quarter production will likely be in the range of 109-120 Mboe/d. As such, weak crude price can be a cause of pain for the company. To counter the weak price environment, it is depending on its hedging strength. More than 90% of fourth-quarter crude oil volumes are currently hedged at more than $55 per barrel. Additionally, around 18,000 thousand barrels (MBbls) of 2021 oil production is hedged at about $40 per barrel.
Moreover, for the fourth quarter, it hedged around 9,330 Billion British thermal units (BBtu) of natural gas to HSC Index at $2.39 per million British thermal units and 26,080 BBtu of natural gas from the Midland Basin to WAHA at $1.21.
Operations
Importantly, in the Midland Basin, the company has plans for 70 net completions in 2020, of which it has achieved 50 in the year-to-date period. With top-tier well performance and efficiency, SM Energy is operating three rigs and two completion crews at the basin, wherein it has 82,000 net acres. In the South Texas region, it has 159,000 net acres, with one running rig and completion crew each. It intends to drill 12 net wells and complete four net wells at the site in 2020.
Balance Sheet & Cash Flow
As of Sep 30, SM Energy had a cash balance of only $10,000 and liquidity of $880 million. Its net long-term debt was $2,353 million, down from the second-quarter level of $2,456.1 million. It managed to reduce principal debt amount by $106 million in the third quarter. The company had a debt to capitalization of 51.9% at quarter-end. It recently stated that the borrowing base is unchanged at $1.1 billion.
Markedly, the company is targeting growth within cash flow. Some of its free cash flow will be used for further debt reduction and improving leverage metrics. Notably, it generated free cash flow of $172 million in the first nine months of 2020.
Price Performance
SM Energy’s stock has increased 86.4% in the past three months compared with the 13.1% rise for the industry.
Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.
Ameresco’s bottom line for 2020 is expected to rise 15.8% year over year.
Antero Midstream’s bottom line for 2020 has witnessed two upward estimate revisions and no downward movement in the past 60 days.
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.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Key Takeaways From SM Energy's (SM) Latest Presentation
SM Energy Company (SM - Free Report) recently provided some key updates in the Bank of America Securities 2020 Leveraged Finance Virtual Conference. The upstream company mainly focused on its strong hedging position in the conference and provided information on debt position.
Hedges
Earlier, it provided its production guidance in the range of 123.5-126.2 barrels of oil equivalent per day (Boe/d) for 2020, of which 49% will likely be crude oil. Fourth-quarter production will likely be in the range of 109-120 Mboe/d. As such, weak crude price can be a cause of pain for the company. To counter the weak price environment, it is depending on its hedging strength. More than 90% of fourth-quarter crude oil volumes are currently hedged at more than $55 per barrel. Additionally, around 18,000 thousand barrels (MBbls) of 2021 oil production is hedged at about $40 per barrel.
Moreover, for the fourth quarter, it hedged around 9,330 Billion British thermal units (BBtu) of natural gas to HSC Index at $2.39 per million British thermal units and 26,080 BBtu of natural gas from the Midland Basin to WAHA at $1.21.
Operations
Importantly, in the Midland Basin, the company has plans for 70 net completions in 2020, of which it has achieved 50 in the year-to-date period. With top-tier well performance and efficiency, SM Energy is operating three rigs and two completion crews at the basin, wherein it has 82,000 net acres. In the South Texas region, it has 159,000 net acres, with one running rig and completion crew each. It intends to drill 12 net wells and complete four net wells at the site in 2020.
Balance Sheet & Cash Flow
As of Sep 30, SM Energy had a cash balance of only $10,000 and liquidity of $880 million. Its net long-term debt was $2,353 million, down from the second-quarter level of $2,456.1 million. It managed to reduce principal debt amount by $106 million in the third quarter. The company had a debt to capitalization of 51.9% at quarter-end. It recently stated that the borrowing base is unchanged at $1.1 billion.
Markedly, the company is targeting growth within cash flow. Some of its free cash flow will be used for further debt reduction and improving leverage metrics. Notably, it generated free cash flow of $172 million in the first nine months of 2020.
Price Performance
SM Energy’s stock has increased 86.4% in the past three months compared with the 13.1% rise for the industry.
Zacks Rank & Stocks to Consider
The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Covanta Holding Corporation , Ameresco, Inc. (AMRC - Free Report) and Antero Midstream Corporation (AM - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.
Ameresco’s bottom line for 2020 is expected to rise 15.8% year over year.
Antero Midstream’s bottom line for 2020 has witnessed two upward estimate revisions and no downward movement in the past 60 days.
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.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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