Back to top

SM Energy (SM) Beats Q2 Earnings and Revenue Estimates

Read MoreHide Full Article

SM Energy Company’s (SM - Free Report) , second-quarter 2018 adjusted earnings of 15 cents per share beat the Zacks Consensus Estimate of 6 cents. Meanwhile, the figure declined from the year-ago quarter’s earnings of 32 cents.
 

SM Energy Company Price, Consensus and EPS Surprise

SM Energy Company Price, Consensus and EPS Surprise | SM Energy Company Quote

Total revenues surged 55.8% to $444 million from $285 million in the prior-year quarter and beat the Zacks Consensus Estimate of $371 million.

Higher oil production and liquids price realizations aided growth, offset by increased operating expenses.

Operational Performance

The company’s second-quarter production was 115.2 thousand barrels of oil equivalent per day (MBoe/d), down 8% from the year-ago quarter’s level of 124.6 MMBoe/d. The decline was mainly caused by the divestment of producing properties.

SM Energy produced 278.3 million cubic feet per day (MMcf/d) of natural gas in the quarter, down 26% year over year. Oil production increased 50% year over year to 47.9 thousand barrels per day (MBbls/d). Natural gas liquids contributed 20.9 MBbls/d to the total volume, down 31% from second-quarter 2017 level.   

Due to hedging, the average equivalent price per barrel of oil equivalent (Boe) was $34.91 compared with $26.57 in the year-ago quarter. Including hedging activities, average realized price of natural gas fell 9% year over year to $3.29 per thousand cubic feet (Mcf). Average realized prices of oil rose 28% to $55.42 per barrel and average realized prices of natural gas liquid grew 15% to $21.51 per barrel.

On the cost front, unit lease operating expenses (LOE) increased 13% year over year to $4.66 per Boe. Transportation expenses fell to $4.47 per Boe from $5.71 per Boe in the year-ago quarter. General and administrative expenses rose 11% to $2.76 per Boe from the prior-year quarter’s level of $2.49. Depletion, depreciation and amortization (DD&A) expenses were up 7% to $14.48 per Boe from the year-ago quarter’s level of $13.52.    

Liquidity

Net cash from operating activities increased to $171.4 million during the quarter from $107.1 million in the year-ago quarter. As of Jun 30, SM Energy had a cash balance of $615.9 million and long-term debt of $2,660.703 million. The company had a debt-to-capitalization ratio of 49.3%.

Operating Expenses

Operating expenses amounted to $387.8 million in the second quarter, up from $268 million in the year-ago quarter by more than 44.7%. Exploration expenses increased to $14.1 million from $13 million in the year-ago quarter.

Q2 Price Performance

The company has outperformed the industry during the second quarter. The company’s shares returned 42.5% compared with the industry's 12.5% rise.

Guidance

SM Energy raised 2018 production estimate to 43.5-45 MMBoe from the previous range of 40.9-44.9 MMBoe. Production for the third quarter is projected between 11.2-11.7 MMBoe. The company also increased 2018 capital expenditure budget by $40 million to $1.31 billion.

Zacks Rank & Key Picks

SM Energy currently carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Canadian Natural Resources Limited (CNQ - Free Report) , China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, and Sunrun Inc (RUN - Free Report) . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Natural Resources, based in Calgary, Alberta, is an exploration and production (E&P) company. It pulled off an average positive earnings surprise of 4.7% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sunrun is engaged in offering solar services through various channels. The company delivered an average positive earnings surprise of 16.3% in the last four quarters.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like