It has been about a month since the last earnings report for SM Energy (SM Quick QuoteSM - Free Report) . Shares have added about 16.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is SM Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

SM Energy Q1 Earnings Beat Estimates, Revenues Rise Y/Y

SM Energy reported first-quarter 2026 adjusted earnings of $1.55 per share, which topped the Zacks Consensus Estimate of $1.29 by 20.16%. The figure declined 11.9% from the year-ago quarter’s $1.76. Total revenues of $1.48 billion increased 75% year over year and beat the consensus mark of $1.44 billion by 2.99%.

The quarter reflected SM’s first full reporting period after the Civitas merger, with average net daily production of 371.2 thousand barrels of oil equivalent per day (MBoe/d) providing a larger base for cash generation alongside cost and capital efficiency improvements.

Better-than-expected quarterly results can be attributed to the increase in oil-equivalent production volumes.

SM Integrates Civitas and Lifts Synergy Target

Management framed 2026 around “Integrate, Execute and Bolster,” and the early integration cadence is translating into a higher synergy outlook. SM raised its annualized run-rate synergy target to $375 million, with about $300 million already actioned.

The updated synergy plan spans interest savings, overhead and operational efficiencies. Interest savings are now targeted at $75 million, with full actioning achieved. Meanwhile, overhead and G&A synergies were lifted to $100 million, with most of the organizational structure already in place. The remaining upside is concentrated in drilling, completions and operations. The new $200 million target reflects changes such as completion design optimization, simul-frac adoption in the DJ Basin and broader procurement and scheduling leverage.

Production Volumes Benefit From Four-Basin Mix

Beyond scale, the merged portfolio is showing how basin diversity can influence realized pricing and margins. In the quarter, SM’s total production mix was 51% oil and the overall realized price averaged $44.22 per Boe before hedges. The average net daily production was up 88% compared to the prior-year quarter.

Realizations varied by commodity and basin, underscoring the value of market optionality. SM’s realized oil price (before the effect of derivatives) averaged $73.69 per barrel, compared with $70.56 in the year-ago quarter. The realized natural gas was $1.72 per thousand cubic feet (Mcf) and NGLs were $21.58 per barrel, lower than $3.30 per Mcf and $25.86 per barrel, respectively, in the first quarter of 2025.

Costs and Expenses

Unit operating costs were supportive, even as the quarter carried merger-related expenses. Lease operating expense was $6.25 per Boe, up 2% compared with the first quarter of 2025. Transportation costs were $3.65 per Boe, down 7% from the prior-year quarter’s level. Management noted that both metrics came in below internal expectations and said that it is maintaining cost guidance for now as a cushion against potential inflation.

On the income statement, SM reported a net loss of $335 million, largely tied to a $697 million net derivative loss from mark-to-market accounting on the hedge book. Total operating expenses were $1.78 billion, including $174 million in general and administrative expenses and $432 million in depletion, depreciation and amortization expenses. Transaction and integration costs worth $135 million were recorded during the quarter.

Cash Generation & Balance Sheet

Even with one-time integration and transaction-related cash costs, SM posted an operating cash flow of $640 million. Adjusted free cash flow was $20 million and capital expenditures during the period totaled $555 million.

Balance sheet actions remained a major theme. As of March 31, 2026, SM held $449 million of cash and cash equivalents and reported net debt of $7.35 billion.

Outlook

SM raised its full-year 2026 production guidance to 410-430 MBoe/d, including oil volumes of 222-228 MBbl/d. For the second quarter of 2026, total production is expected in the 435-450 MBoe/d range, with oil production guided to 228-235 MBbl/d.

The company reaffirmed its full-year 2026 capital expenditures plan of $2.65-$2.85 billion and highlighted a clear path to low-1x leverage by year-end. SM also strengthened its capital return framework with a 10% increase in the annual fixed dividend to 88 cents per share and an expected allocation of 20% of post-dividend free cash flow to share repurchases. Management indicated that buybacks should begin in the second quarter.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 7.49% due to these changes.

VGM Scores

At this time, SM Energy has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a score of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, SM Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

SM Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, EOG Resources (EOG Quick QuoteEOG - Free Report) , a stock from the same industry, has gained 7.6%. The company reported its results for the quarter ended March 2026 more than a month ago.

EOG Resources reported revenues of $6.92 billion in the last reported quarter, representing a year-over-year change of +22.1%. EPS of $3.41 for the same period compares with $2.87 a year ago.

EOG Resources is expected to post earnings of $4.56 per share for the current quarter, representing a year-over-year change of +96.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +16.4%.

EOG Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.