SM Energy Co Q3 FY2024 earnings call

• Core Objectives:
  • Expand high-quality, low breakeven cost portfolio: Uinta acquisition increased core acreage by >93,000 net acres (+40% over past year), extended inventory life by 3+ years.
  • Focus on operational execution: Third quarter production beat; early well completions in South Texas; emphasis on stewardship with sustainability reporting.
  • Return capital to stockholders: Increased dividend to $0.20 per share quarterly, year-to-date $146M returned to shareholders.
• Regional Highlights: Uinta Basin sand mine started up, producing >1M tons/year; rail transfer facility; Uinta crude is high quality (40 API, low sulfur, etc.). Midland Basin Woodford-Barnett tests outperforming peers. South Texas Austin Chalk wells performing well

Uinta Basin

• Added 63,300 net acres, extended inventory life by 3+ years, net oil production up ~40% sequentially. In Q3, three Douglas Creek wells in the upper cube averaged 870 Boe per day per well at 94% oil.

Midland Basin

• Strong performance from Woodford-Barnett tests in Sweetie Peck area: two test wells outperform peer tests by >50% normalized to 10,000 foot laterals; ~20,000 net acres prospective for Woodford-Barnett development. Klondike area: 8 Dean Wells online, two with peak IP 30-day rates averaging 918 BOE per day per well at 93% oil.

South Texas

• Austin Chalk continues to outperform; bounded pilot test at Briscoe C looks good (wells paid out in 6 months); two wells in liquids rich gas area averaged 2,317 Boe per day per well; newly developed high oil content wells producing 76%-80% oil

• Fourth quarter production: ~25% Boe/day sequential increase, ~40% oil; Q4 production guidance 205,000-220,000 Boe/day (highest in company history, ~51% oil).
• Financials: Q4 operating cost $4.90-$5.10 per Boe; transportation cost ~$4.30-$4.60 per Boe; G&A $35M-$38M; CapEx Q4 ~$320M-$340M (drilling ~40 net wells, completing ~36 net wells).
• Debt reduction: Intend to direct more adjusted free cash flow to debt reduction to get leverage closer to 1x

• Forward-looking statements risk; actual results may differ from projections. - Risks associated with oil price fluctuations. - Operational execution challenges in integrating Uinta assets. - Debt reduction challenges