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Here's Why You Should Invest in SM Energy (SM) Stock Right Now
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SM Energy Company’s (SM - Free Report) shares have gained 40.6% in the past six months compared with the 13.4% increase of the composite stocks belonging to the industry.
The Zacks Rank #1 (Strong Buy) company has witnessed upward estimate revisions for 2023 and 2024 in the past 60 days.
Image Source: Zacks Investment Research
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The West Texas Intermediate crude oil price, currently surpassing $92 per barrel, presents a highly advantageous situation for oil exploration and production companies. SM Energy is in a strong position to capitalize on the favorable commodity price scenario due to its increasing focus on crude, specifically in the Permian Basin and Eagle Ford areas.
SM Energy possesses approximately 155,000 net acres in South Texas, operating two drilling rigs and one completion crew. In the Midland Basin, the company holds 111,000 net acres, offering a promising outlook for long-term oil production growth, with favorable operating margins.
The upstream company’s profitable investments in hydrocarbons, well-balanced and varied portfolio of confirmed reserves, and prospects for development drilling are anticipated to generate lasting value for its shareholders. Notably, its wells in the Austin Chalk region are yielding 50-90% liquid hydrocarbons, a factor expected to enhance investor returns.
SM Energy expects 2023 production to be 147-152 MBoe/d, with a mid-point increase from last year's 145.1 MBoe/d. Around 43-44% of this production will be oil and higher oil prices are set to benefit the company financially.
SM Energy's strong cash generation places it in a better financial position, allowing for investments in dividends, debt reduction and future growth. Additionally, the ongoing positive crude oil pricing outlook indicates a continued increase in the cash flow.
Also, the company is dedicated to returning capital to its shareholders. SM Energy has introduced a share repurchase program of up to $500 million, valid until Dec 31, 2024. The company has already repurchased $166 million worth of shares, leaving $334 million available for repurchases through 2024.
Overall, SM Energy, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Matador Resources Company (MTDR - Free Report) is among the leading oil and gas explorers in the shale and unconventional resources in the United States. MTDR’s prime priorities include lowering debt, delivering free cashflows and maintaining or increasing dividends.
Matador Resources has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for MTDR’s 2023 and 2024 earnings per share is pegged at $6.36 and $8.56, respectively.
Range Resources Corporation (RRC - Free Report) is among the top 10 natural gas producers in the United States. In the prolific Appalachian Basin, the company has a strong focus on stacked-pay gas projects.
Range Resources has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for RRC’s 2023 and 2024 earnings per share is pegged at $2.10 and $2.94, respectively.
Pioneer Natural Resources Company (PXD - Free Report) is an explorer and producer of oil, natural gas and natural gas liquid. The upstream energy player’s debt to capitalization has been persistently lower than the industry over the past few years, reflecting considerably lower debt exposure.
Pioneer has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for PXD’s 2023 and 2024 earnings per share is pegged at $20.60 and $24.20, respectively.
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Here's Why You Should Invest in SM Energy (SM) Stock Right Now
SM Energy Company’s (SM - Free Report) shares have gained 40.6% in the past six months compared with the 13.4% increase of the composite stocks belonging to the industry.
The Zacks Rank #1 (Strong Buy) company has witnessed upward estimate revisions for 2023 and 2024 in the past 60 days.
Image Source: Zacks Investment Research
Let’s delve into the factors behind the stock’s price appreciation.
What’s Favoring the Stock?
The West Texas Intermediate crude oil price, currently surpassing $92 per barrel, presents a highly advantageous situation for oil exploration and production companies. SM Energy is in a strong position to capitalize on the favorable commodity price scenario due to its increasing focus on crude, specifically in the Permian Basin and Eagle Ford areas.
SM Energy possesses approximately 155,000 net acres in South Texas, operating two drilling rigs and one completion crew. In the Midland Basin, the company holds 111,000 net acres, offering a promising outlook for long-term oil production growth, with favorable operating margins.
The upstream company’s profitable investments in hydrocarbons, well-balanced and varied portfolio of confirmed reserves, and prospects for development drilling are anticipated to generate lasting value for its shareholders. Notably, its wells in the Austin Chalk region are yielding 50-90% liquid hydrocarbons, a factor expected to enhance investor returns.
SM Energy expects 2023 production to be 147-152 MBoe/d, with a mid-point increase from last year's 145.1 MBoe/d. Around 43-44% of this production will be oil and higher oil prices are set to benefit the company financially.
SM Energy's strong cash generation places it in a better financial position, allowing for investments in dividends, debt reduction and future growth. Additionally, the ongoing positive crude oil pricing outlook indicates a continued increase in the cash flow.
Also, the company is dedicated to returning capital to its shareholders. SM Energy has introduced a share repurchase program of up to $500 million, valid until Dec 31, 2024. The company has already repurchased $166 million worth of shares, leaving $334 million available for repurchases through 2024.
Overall, SM Energy, one of the most attractive players in the exploration and production space, is poised for further upside in the coming days.
Key Picks
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources Company (MTDR - Free Report) is among the leading oil and gas explorers in the shale and unconventional resources in the United States. MTDR’s prime priorities include lowering debt, delivering free cashflows and maintaining or increasing dividends.
Matador Resources has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for MTDR’s 2023 and 2024 earnings per share is pegged at $6.36 and $8.56, respectively.
Range Resources Corporation (RRC - Free Report) is among the top 10 natural gas producers in the United States. In the prolific Appalachian Basin, the company has a strong focus on stacked-pay gas projects.
Range Resources has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for RRC’s 2023 and 2024 earnings per share is pegged at $2.10 and $2.94, respectively.
Pioneer Natural Resources Company (PXD - Free Report) is an explorer and producer of oil, natural gas and natural gas liquid. The upstream energy player’s debt to capitalization has been persistently lower than the industry over the past few years, reflecting considerably lower debt exposure.
Pioneer has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for PXD’s 2023 and 2024 earnings per share is pegged at $20.60 and $24.20, respectively.