We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
SM Energy (SM) Up 15.4% Since Q3 Earnings Beat on Oil Price
Read MoreHide Full Article
SM Energy Company’s (SM - Free Report) shares have risen 15.4% since it reported strong third-quarter results on Oct 28. Investors have welcomed the company’s increased 2021 production guidance, and efforts to reduce costs and expenses.
It reported third-quarter adjusted earnings of 74 cents per share, beating the Zacks Consensus Estimate of 15 cents. The bottom line also improved from a loss of 5 cents per share in the year-ago period.
Quarterly revenues of $760.2 million increased from $281 million in the year-ago quarter and beat the Zacks Consensus Estimate of $493 million.
The strong quarterly results can be attributed to an increase in realized commodity prices, and higher oil and gas production volumes. Other upstream companies like Centennial Resource Development, Inc. and ConocoPhillips (COP - Free Report) also witnessed a massive increase in profits due to higher commodity prices.
SM Energy Company Price, Consensus and EPS Surprise
SM Energy’s third-quarter production totaled 155.8 thousand barrels of oil equivalent per day (MBoe/d) (56.2% oil), up 23% from the year-ago level of 126.3 MBoe/d. Increased production was favored by successful early completion of some South Texas wells and reduced flaring. Better well performance in the Midland Basin also aided output.
Oil production increased 46% year over year to 87.6 thousand barrels per day (MBbls/d). The company produced 316.3 million cubic feet per day of natural gas for the quarter, up 12% year over year. Yet, natural gas liquids contributed 15.5 MBbls/d to total production volume, down 19% from the third-quarter 2020 level.
Realized Prices
Before the effects of derivative settlements, the average realized price per Boe was $53.02 compared with $24.28 in the year-ago quarter. Average realized price of natural gas surged 169% year over year to $5.12 per thousand cubic feet. Also, average realized prices of oil increased 84% to $69.30 per barrel and that of natural gas liquids grew 162% from the prior-year quarter to $36.87.
Cost & Expenses
On the cost front, unit lease operating expenses increased 15% year over year to $4.20 per Boe. Transportation expenses, however, fell to $2.41 per Boe from $3.11 in the year-ago quarter. Also, general and administrative expenses decreased 15% to $1.78 per Boe from the prior-year level of $2.10.
Total hydrocarbon production expenses for the quarter were recorded at $135.7 million compared with the year-ago level of $95.3 million. Total exploration expenses were $8.7 million, marginally higher than the year-ago figure of $8.5 million.
Total operating expenses for the third quarter increased to $634 million from the year-ago period’s $384.1 million.
Capex
Capital expenditure for the September quarter was recorded at $180.1 million, higher than the year-ago figure of $109.6 million. It generated free cash flow of $147.1 million in the quarter compared with the year-ago figure of $63.7 million.
Balance Sheet
As of Sep 30, 2021, the company had cash and cash equivalents of $29.8 million versus no cash in the second quarter. It had net debt of $2,106.8 million, down sequentially from $2,254.6 million. It had total liquidity of $1.13 billion and long-term debt to capital of 55.9%.
Guidance
SM Energy's 2021 capital expenditure guidance has been increased to $670-$675 million from the previous range of $650-$675 million. Total production guidance has been raised to the range of 135.6-137 MBoe/d, signaling a rise from the 2020 level of 126.9 MBoe/d. Of the total output, 54-55% will likely be oil.
For 2021, the company reduced its lease operating expense guidance to $4.50-$4.60 per Boe from the previous expectation of $4.50-$5. However, the reduced guidance still indicates a significant rise from the 2020 level of $3.97. Transportation costs will likely be $2.75 per Boe, suggesting a decline from the 2020 figure of $3.06. Exploration expense for 2021 is expected to be $40 million, down from the previous estimate of $50 million.
For the fourth quarter, production is expected within 138-143.5 Mboe/d. Capital expenditure for the December quarter is projected in the range of $111-$116 million.
Zacks Rank & Another Stock to Consider
The company currently sports a Zacks Rank #1 (Strong Buy). Another top-ranked stock from the energy space is Continental Resources, Inc. , holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Continental Resources’ bottom line for 2021 is expected to rise to earnings of $4.52 per share from a loss of $1.17 a year ago.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
SM Energy (SM) Up 15.4% Since Q3 Earnings Beat on Oil Price
SM Energy Company’s (SM - Free Report) shares have risen 15.4% since it reported strong third-quarter results on Oct 28. Investors have welcomed the company’s increased 2021 production guidance, and efforts to reduce costs and expenses.
It reported third-quarter adjusted earnings of 74 cents per share, beating the Zacks Consensus Estimate of 15 cents. The bottom line also improved from a loss of 5 cents per share in the year-ago period.
Quarterly revenues of $760.2 million increased from $281 million in the year-ago quarter and beat the Zacks Consensus Estimate of $493 million.
The strong quarterly results can be attributed to an increase in realized commodity prices, and higher oil and gas production volumes. Other upstream companies like Centennial Resource Development, Inc. and ConocoPhillips (COP - Free Report) also witnessed a massive increase in profits due to higher commodity prices.
SM Energy Company Price, Consensus and EPS Surprise
SM Energy Company price-consensus-eps-surprise-chart | SM Energy Company Quote
Operational Performance:
Production
SM Energy’s third-quarter production totaled 155.8 thousand barrels of oil equivalent per day (MBoe/d) (56.2% oil), up 23% from the year-ago level of 126.3 MBoe/d. Increased production was favored by successful early completion of some South Texas wells and reduced flaring. Better well performance in the Midland Basin also aided output.
Oil production increased 46% year over year to 87.6 thousand barrels per day (MBbls/d). The company produced 316.3 million cubic feet per day of natural gas for the quarter, up 12% year over year. Yet, natural gas liquids contributed 15.5 MBbls/d to total production volume, down 19% from the third-quarter 2020 level.
Realized Prices
Before the effects of derivative settlements, the average realized price per Boe was $53.02 compared with $24.28 in the year-ago quarter. Average realized price of natural gas surged 169% year over year to $5.12 per thousand cubic feet. Also, average realized prices of oil increased 84% to $69.30 per barrel and that of natural gas liquids grew 162% from the prior-year quarter to $36.87.
Cost & Expenses
On the cost front, unit lease operating expenses increased 15% year over year to $4.20 per Boe. Transportation expenses, however, fell to $2.41 per Boe from $3.11 in the year-ago quarter. Also, general and administrative expenses decreased 15% to $1.78 per Boe from the prior-year level of $2.10.
Total hydrocarbon production expenses for the quarter were recorded at $135.7 million compared with the year-ago level of $95.3 million. Total exploration expenses were $8.7 million, marginally higher than the year-ago figure of $8.5 million.
Total operating expenses for the third quarter increased to $634 million from the year-ago period’s $384.1 million.
Capex
Capital expenditure for the September quarter was recorded at $180.1 million, higher than the year-ago figure of $109.6 million. It generated free cash flow of $147.1 million in the quarter compared with the year-ago figure of $63.7 million.
Balance Sheet
As of Sep 30, 2021, the company had cash and cash equivalents of $29.8 million versus no cash in the second quarter. It had net debt of $2,106.8 million, down sequentially from $2,254.6 million. It had total liquidity of $1.13 billion and long-term debt to capital of 55.9%.
Guidance
SM Energy's 2021 capital expenditure guidance has been increased to $670-$675 million from the previous range of $650-$675 million. Total production guidance has been raised to the range of 135.6-137 MBoe/d, signaling a rise from the 2020 level of 126.9 MBoe/d. Of the total output, 54-55% will likely be oil.
For 2021, the company reduced its lease operating expense guidance to $4.50-$4.60 per Boe from the previous expectation of $4.50-$5. However, the reduced guidance still indicates a significant rise from the 2020 level of $3.97. Transportation costs will likely be $2.75 per Boe, suggesting a decline from the 2020 figure of $3.06. Exploration expense for 2021 is expected to be $40 million, down from the previous estimate of $50 million.
For the fourth quarter, production is expected within 138-143.5 Mboe/d. Capital expenditure for the December quarter is projected in the range of $111-$116 million.
Zacks Rank & Another Stock to Consider
The company currently sports a Zacks Rank #1 (Strong Buy). Another top-ranked stock from the energy space is Continental Resources, Inc. , holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Continental Resources’ bottom line for 2021 is expected to rise to earnings of $4.52 per share from a loss of $1.17 a year ago.