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Are High Oil Prices a Key Driver of SM's Energy Operations?
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Key Takeaways
WTI is above $100 per barrel as the Iran-war shock supports a strong oil-price backdrop.
SM holds 237,000 net acres in the Permian and 303,000 in the low-cost DJ Basin.
SM shares rose 39.7% in a year; EV/EBITDA is 5.94X vs the industry's 12.11X.
The price of West Texas Intermediate (“WTI”) crude is trading at more than the $100-per-barrel mark. The high price is being driven by the Iran-war shock. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $85.68 per barrel this year, higher than $65.40 last year. A highly favorable pricing environment for the commodity is likely to continue supporting SM Energy’s (SM - Free Report) exploration and production activities, which derive a significant proportion of its earnings.
To have a glimpse of its upstream assets, the company has a strong footprint in shale basins in the United States, comprising the Permian, the most prolific basin in the United States, the DJ Basin and others. The company mentioned that its operations are spread across roughly 237,000 net acres in the Permian and almost 303,000 net acres in the low-cost DJ Basin.
Thus, considering the ongoing high oil prices and footprint in low-cost, high-quality basins, the business outlook of SM Energy seems promising.
Will XOM & COP Also Gain From High Oil Prices?
Like SM, Exxon Mobil Corporation (XOM - Free Report) and ConocoPhillips (COP - Free Report) will benefit from the ongoing strength in oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the high price of the commodity is extremely favorable for the leading oil and gas exploration and production company, much like other energy giants such as XOM and SM.
The upstream energy giant also has low-cost drilling opportunities across Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks highly profitable.
To provide a glimpse of ExxonMobil’s upstream assets, the company has a massive footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. Hence, XOM is also well-positioned to capitalize on the ongoing high commodity prices.
SM’s Price Performance, Valuation & Estimates
Shares of SM have gained 39.7% over the past year, surpassing the industry’s 23.5% growth.
Image Source: Zacks Investment Research
From a valuation standpoint, SM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.94X. This is below the broader industry average of 12.11X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SM’s 2026 earnings has seen upward revisions over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Are High Oil Prices a Key Driver of SM's Energy Operations?
Key Takeaways
The price of West Texas Intermediate (“WTI”) crude is trading at more than the $100-per-barrel mark. The high price is being driven by the Iran-war shock. The U.S. Energy Information Administration (“EIA”) in its latest short-term energy outlook projected WTI at $85.68 per barrel this year, higher than $65.40 last year. A highly favorable pricing environment for the commodity is likely to continue supporting SM Energy’s (SM - Free Report) exploration and production activities, which derive a significant proportion of its earnings.
To have a glimpse of its upstream assets, the company has a strong footprint in shale basins in the United States, comprising the Permian, the most prolific basin in the United States, the DJ Basin and others. The company mentioned that its operations are spread across roughly 237,000 net acres in the Permian and almost 303,000 net acres in the low-cost DJ Basin.
Thus, considering the ongoing high oil prices and footprint in low-cost, high-quality basins, the business outlook of SM Energy seems promising.
Will XOM & COP Also Gain From High Oil Prices?
Like SM, Exxon Mobil Corporation (XOM - Free Report) and ConocoPhillips (COP - Free Report) will benefit from the ongoing strength in oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the high price of the commodity is extremely favorable for the leading oil and gas exploration and production company, much like other energy giants such as XOM and SM.
The upstream energy giant also has low-cost drilling opportunities across Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks highly profitable.
To provide a glimpse of ExxonMobil’s upstream assets, the company has a massive footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. Hence, XOM is also well-positioned to capitalize on the ongoing high commodity prices.
SM’s Price Performance, Valuation & Estimates
Shares of SM have gained 39.7% over the past year, surpassing the industry’s 23.5% growth.
From a valuation standpoint, SM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 5.94X. This is below the broader industry average of 12.11X.
The Zacks Consensus Estimate for SM’s 2026 earnings has seen upward revisions over the past seven days.
SM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.