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SM Energy (SM) Stock Gains Marginally After Q2 Earnings Beat

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SM Energy Company (SM - Free Report) has gained marginally since it reported strong second-quarter 2022 earnings on Aug 3, after the closing bell.

SM Energy’s second-quarter adjusted earnings of $2.19 per share beat the Zacks Consensus Estimate of $2.12. The bottom line improved from the year-ago earnings of 1 cent per share.

Total quarterly revenues of $992 million increased from $564 million in the year-ago quarter and beat the Zacks Consensus Estimate of $842 million.

The strong quarterly results were driven by higher oil-equivalent production volumes and commodity price realizations.

SM Energy Company Price, Consensus and EPS Surprise

 

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 second-quarter production totaled 146.6 thousand barrels of oil equivalent per day (MBoe/d) (46% oil), up 7.4% from the year-ago level of 136.5 MBoe/d. Solid performance from several Midland Basin wells contributed to the performance.

Oil production of SM Energy declined 8% year over year to 67.5 thousand barrels per day (MBbls/d). The company produced 346.3 million cubic feet per day of natural gas in the quarter, up 19% year over year. Natural gas liquids contributed 21.4 MBbls/d to the total production volume, up 46.6%.

Realized Prices

Before the effects of derivative settlements, the average realized price per Boe was $74.23 compared with $45.28 in the year-ago quarter. The average realized price of natural gas surged 129.3% year over year to $7.66 per thousand cubic feet. Also, average realized oil prices increased 66.3% to $108.64 per barrel, and that of natural gas liquids grew 48.1% to $42.08 per barrel.

Costs & Expenses

On the cost front, unit lease operating expenses of SM Energy increased 10.6% year over year to $5.11 per Boe. General and administrative expenses increased 7.1% to $2.12 per Boe from the prior year's $1.98. Yet, transportation expenses fell to $2.87 per Boe from $3.01.

Total hydrocarbon production expenses of SM Energy in the quarter were $165.6 million compared with the year-ago level of $125.5 million. Total exploration expenses were $20.9 million, higher than the year-ago figure of $8.7 million.

Total operating expenses in the second quarter declined to $479.3 million from the year-ago period’s $744.5 million.

Capex

The capital expenditure of SM Energy in the June-end quarter was $215.6 million. It generated a free cash flow of $276.6 million in the reported quarter.

Balance Sheet

As of Jun 30, 2022, SM Energy had cash and cash equivalents of $267.1 million. It had net debt of $1,318.1 million at the second-quarter end.

Guidance

For 2022, SM Energy’s total production is expected to be 54-55 MMBoe, with a proportion of oil of 46-47%.

The upstream firm’s capital expenditure guidance is $870-900 million for the year. It expects exploration expenses of $50 million for 2022. Lease operating expenses are estimated to be $4.75-$4.90 per barrel of oil equivalent.

For the third quarter, SM Energy expects to incur a capital expenditure of $250-$270 million. The Zacks Rank #3 (Hold) company expects production of 13.2-13.6 MMBoe for the third quarter, with oil proportion estimated at 46%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of Other Upstream Energy Players

Pioneer Natural Resources Company (PXD - Free Report) reported second-quarter 2022 earnings of $9.36 per share (excluding one-time items), beating the Zacks Consensus Estimate of $8.81. Strong quarterly earnings were driven by higher oil-equivalent production volumes and commodity price realizations.

Pioneer has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth, and B for Value and Momentum. PXD is expected to see earnings growth of 156% for 2022.

Matador Resources Company (MTDR - Free Report) reported adjusted earnings of $3.47 per share, beating the Zacks Consensus Estimate of $3.16 per share. Strong quarterly earnings were driven by higher oil-equivalent production volumes and realizations of commodity prices.

Matador has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth, and B for Value and Momentum. MTDR is expected to see earnings growth of 157.4% for 2022.

EQT Corporation (EQT - Free Report) reported second-quarter 2022 adjusted earnings from continuing operations of 83 cents per share, beating the Zacks Consensus Estimate of 81 cents. The strong results stemmed from higher cubic feet equivalent production and realized commodity prices.

EQT Corp has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of B for Value, Growth and Momentum. EQT is expected to see earnings growth of 314.1% for 2022.