SM Energy Shares Up On Revised Q2 And 2023 Outlook

SM Energy Co SM provided an update on activity and revised guidance for Q2 2023 and 2023, reflecting higher production and lower costs.

The company expects to surpass the higher end of Q2 production guidance aided by increased oil, natural gas and NGL volumes in its South Texas program.

Moreover, SM anticipates underspending the low end of its Q2 capital expenditure and LOE cost guidance, led by favorable cost deflation and a decline in facilities expenses.

Outlook Revised: For Q2, SM increased the oil production outlook by over 4% (at 42% oil) from the previous mid-point of the range of 13.3 MMBoe -13.5 MMBoe.

Also, the company announced a 10% cut in capital expenditures (before acquisitions) guidance from the previous mid-point range of $295 million-$315 million. 

Also, SM is increasing the 2023 oil production outlook by +1 MMBoe from the previous mid-point range of 52.5 MMBoe - 54.5 MMBoe (including 0.2 MMBoe production from the high-oil content acquisition) and expects an increase in the oil percentage to 43%-44%.

The company lowered its 2023 capital expenditure (including acquisition) guidance of around $1.1 billion by $50 million.

The company also lowered LOE per Boe by $0.50 from the previous guidance mid-point, for both Q2 and 2023.

Share Repurchase: The company bought back 2.6 million shares from its $500 million stock repurchase program. 

SM currently has shares worth $334 million remaining under the share buyback authorization through 2024.

Acquisition: In Q2, SM inked a deal to buy 20,000 net acres of land in Dawson and northern Martin counties (Texas) for $93.5 million and bought an additional 2,800 net acres of land near its previously purchased land in the Midland Basin. 

Price Action: SM shares are trading higher by 6.03% at $29.68 on the last check Wednesday.