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SM Energy's (SM) Q1 Earnings Beat on Lower Operating Costs
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SM Energy Company’s (SM - Free Report) first-quarter 2023 adjusted earnings of $1.33 per share beat the Zacks Consensus Estimate of $1.19. The bottom line, however, declined from the year-ago earnings of $1.98 per share.
Total quarterly revenues of $574 million declined from $860 million in the year-ago quarter but beat the Zacks Consensus Estimate of $570 million.
The better-than-expected quarterly results were driven by lower operating expenses. This was partially offset by lower oil equivalent production and prices.
SM Energy Company Price, Consensus and EPS Surprise
SM Energy’s first-quarter production totaled 146.4 thousand barrels of oil equivalent per day (MBoe/d) (almost 43% oil), down 4% from the year-ago level of 153.3 MBoe/d.
Oil production of SM Energy declined 12% year over year to 62.9 thousand barrels per day (MBbls/d). The company produced 358.1 million cubic feet per day of natural gas in the quarter, up 3% year over year. Natural gas liquids contributed 23.8 MBbls/d to the total production volume, up 2%.
Realized Prices
Before the effects of derivative settlements, the average realized price per Boe was $43.31 compared with $62.25 in the year-ago quarter. The average realized price of natural gas declined 46% year over year to $2.91 per thousand cubic feet. The average realized price of oil decreased 21% to $74.31 per barrel, while that for natural gas liquids declined 32% to $26.24 per barrel.
Costs & Expenses
On the cost front, unit lease operating expenses of SM Energy increased 21% year over year to $5.16 per Boe. General and administrative expenses increased 16% to $2.10 per Boe from the prior year's $1.81. Also, transportation expenses increased 3% to $2.81 per Boe.
Total hydrocarbon production expenses of SM Energy in the quarter were $142.3 million compared with the year-ago level of $144.7 million. Total exploration expenses were $18.4 million, higher than the year-ago figure of $9.05 million.
Total operating expenses in the first quarter declined to $301.5 million from the year-ago period’s $758 million.
Capex
The capital expenditure of SM Energy in the March quarter was $240.7 million. It generated an adjusted free cash flow of $50.3 million in the reported quarter.
Balance Sheet
As of Mar 31, 2023, SM Energy had cash and cash equivalents of $477.9 million. It had net debt of $1.1 billion at the first-quarter end.
Guidance
For the second quarter, SM Energy projects production in the band of 13.3-13.5 MMBoe. Of the total production, oil will probably contribute 42% to 43%.
Zacks Rank & Stocks to Consider
Currently, SM Energy carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Marathon Petroleum Corporation (MPC - Free Report) , Sunoco LP (SUN - Free Report) and Enterprise Products Partners LP (EPD - Free Report) . While Marathon Petroleum and Enterprise Products carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum operates the largest refining system in the nation. In the past seven days, MPC has witnessed upward earnings estimate revisions for 2023.
Sunoco has a stable business model while distributing motor fuel to approximately 10,000 convenience stores. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.
Enterprise Products has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network that spreads across more than 50,000 miles, transporting natural gas, natural gas liquids, crude oil petrochemicals and refined products.
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SM Energy's (SM) Q1 Earnings Beat on Lower Operating Costs
SM Energy Company’s (SM - Free Report) first-quarter 2023 adjusted earnings of $1.33 per share beat the Zacks Consensus Estimate of $1.19. The bottom line, however, declined from the year-ago earnings of $1.98 per share.
Total quarterly revenues of $574 million declined from $860 million in the year-ago quarter but beat the Zacks Consensus Estimate of $570 million.
The better-than-expected quarterly results were driven by lower operating expenses. This was partially offset by lower oil equivalent production and 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 first-quarter production totaled 146.4 thousand barrels of oil equivalent per day (MBoe/d) (almost 43% oil), down 4% from the year-ago level of 153.3 MBoe/d.
Oil production of SM Energy declined 12% year over year to 62.9 thousand barrels per day (MBbls/d). The company produced 358.1 million cubic feet per day of natural gas in the quarter, up 3% year over year. Natural gas liquids contributed 23.8 MBbls/d to the total production volume, up 2%.
Realized Prices
Before the effects of derivative settlements, the average realized price per Boe was $43.31 compared with $62.25 in the year-ago quarter. The average realized price of natural gas declined 46% year over year to $2.91 per thousand cubic feet. The average realized price of oil decreased 21% to $74.31 per barrel, while that for natural gas liquids declined 32% to $26.24 per barrel.
Costs & Expenses
On the cost front, unit lease operating expenses of SM Energy increased 21% year over year to $5.16 per Boe. General and administrative expenses increased 16% to $2.10 per Boe from the prior year's $1.81. Also, transportation expenses increased 3% to $2.81 per Boe.
Total hydrocarbon production expenses of SM Energy in the quarter were $142.3 million compared with the year-ago level of $144.7 million. Total exploration expenses were $18.4 million, higher than the year-ago figure of $9.05 million.
Total operating expenses in the first quarter declined to $301.5 million from the year-ago period’s $758 million.
Capex
The capital expenditure of SM Energy in the March quarter was $240.7 million. It generated an adjusted free cash flow of $50.3 million in the reported quarter.
Balance Sheet
As of Mar 31, 2023, SM Energy had cash and cash equivalents of $477.9 million. It had net debt of $1.1 billion at the first-quarter end.
Guidance
For the second quarter, SM Energy projects production in the band of 13.3-13.5 MMBoe. Of the total production, oil will probably contribute 42% to 43%.
Zacks Rank & Stocks to Consider
Currently, SM Energy carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Marathon Petroleum Corporation (MPC - Free Report) , Sunoco LP (SUN - Free Report) and Enterprise Products Partners LP (EPD - Free Report) . While Marathon Petroleum and Enterprise Products carry a Zacks Rank #2 (Buy), Sunoco sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum operates the largest refining system in the nation. In the past seven days, MPC has witnessed upward earnings estimate revisions for 2023.
Sunoco has a stable business model while distributing motor fuel to approximately 10,000 convenience stores. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.
Enterprise Products has a stable business model and is not significantly exposed to the volatility in oil and gas prices. It generates stable fee-based revenues from its extensive pipeline network that spreads across more than 50,000 miles, transporting natural gas, natural gas liquids, crude oil petrochemicals and refined products.