SM Energy (SM) 3 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the SM Energy's First Quarter 2024 Financial and Operating Results Q&A. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jennifer Samuels, Vice President of Investor Relations and ESG Stewardship. Thank you.

You may begin.

Maria. you, Thank everyone. Good morning, call, presentation we earnings today's reference may prepared remarks. IR or release In the

All are today, joining CFO, us President of you CEO, Wade to Thank which and answer posted Pursell. to your Vogel; questions Herb we our website. have and our for

today the non-GAAP of Before get measures. you Slide of Risk X discussion described to I accompanying need section forward-looking associated slide statements you could the that to direct most we accompanying filed include X with that remind and recently and release Page our the deck, Factors I our started, earnings may statements discussion differ. results of to of XX-K, risks cause which actual forward-looking

deck non-GAAP earnings reconciliations and Also, We Got definitions our out and to appendix measures discussion for measures. that may comparable the morning. this refer the of and of non-GAAP also release GAAP of to most measures, the first filed way. directly please non-GAAP quarter measures XX-Q for forward-looking slide look see

over I a Herb? comment. And with opening brief turn just for to will Herb that, it

morning. and We're Energy. is Thanks, SM obviously up good about how Jennifer, joining XXXX for very shaping for Thanks excited us.

ahead and So let's started. go get

to start turn the call your back to questions. Maria? I'll taking Maria

first [Operator Parham comes question Instructions] with Our Zach from JPMorgan.

the Just wanted first. on to ask buyback

At flow the of quarter. that about talked of free further sense? happens that per that would that with cash. base lot amount remarks paying a excess cash, do the sense allow the $XX to that you make you'll that commodity a of in have prepared what of think will after build using the the seems you How about dividend like buyback buybacks trying remainder a off and finishing year, significant authorization. even get buyback Just could in accelerating buyback to cash imply You ratable prices, cash pace for a for million it around current

repurchased model We Yes. through never on that we This I opportunistically Obviously, quarters, Yes. during could higher accelerated just ratable is what cash scenario buybacks, it's is Good at us just right go Wade. more the think the buying ratably, as assuming to your prices, guidance things -- given see question, with we free commodity could more a the and Zach. it way now. the flow, And best little under set that's generating right? that windows see happen pace open you you the opportunity before us. back than bit

commitment point. to have this new that asked, possible when of buyback. continue So that you do could imagine can going get But at with on guarantees consider would we you what And through Board And many that will being people are it no happen. that. the and I certainly a the

in through the In XQ. a follow-up. production in the flattish a to color of XXs. just remarks, Is year. then and bit that trajectory And you like seems volumes would on exit fair that That Just of what would then in another year back little get the to trying prepared upper with XQ kind the of more oil look number? a you mentioned up step half indicate the

Yes.

I what the said. said being up. What reasonable, quarter third will we given that's think we flattish, be I mid-XXs-ish about it mean

than second I bit with it guidance. quarter before is is the think what's our a changed higher in obviously was little acceleration

But I quarter. quarter well. think that you're third over somewhat -- assume reading you you're the pretty the up So is second can

with Daoud question TD Cowen. comes from Gabe next Our

could we Klondike. if hoping was start I at Maybe

area ready wells, there, mentioned by results some maybe X call. You you during if should quarter some quarter those quite the there to look the third on X work think some where prolific about be did basis. and the signs per But you starting in science complete little maybe I the to foot bit can of productivity oil Deans a talk curious of just the

to we program. or if your get So out just a could trying sense assume expect results similar of

so quite already completing first the quarter. about potentially it high-end that Klondike Yes, did But science drilled pilot excited acreage, prospective the pad X Yes, interval deep X all I logs on that and quite could and side, to of sidewall intervals on those are during we're we've initially did those online X-well Gabe, be take focused this X a the right -- say will lot wells up down Herb. will second and we hole a the a year. And Dean development assess through the there. is vertical we're the the of we now. and cores and now this

it acquisition for the great it plus that our reliance. And quite play know we offsetting like a reliance from with the in So wells southeast us. you we have wells looks came the -- to --

net quick XX,XXX No, Klondike, I follow-up taking that, helpful. Yes. to to right. just a that's guess acres. as That's

were development spend you If program, infrastructure thinking there? there we be any of towards type progress true is about to should a that

which a otherwise, but much quite the we so lines equipment lines a pretty mainly gas the There it's in it's bit -- built place, -- lot just normal infrastructure And don't to out have of there. getting there, in the is but gathering to midstream. the then truck as is of getting the scale, much

one, provide the just can then that? South last on Texas the drill-to-earn any additional you And color

a is a drill acre familiar does it? drill-to-earn get to us around agree that so if will wells to in Yes. block, going and XX,XXX acres. about acreage. with well they're X,XXX wonder net wells how or a the A XX% In drill this for of case, to generally, gain works lot and drill-to-earn we're And people interest where working you not return operate

drill-to-earn The the other company to details kept are us. around and farmed confidential us that that between out really

next Capital Markets. Rezvan KeyBanc from comes Tim question Our with

all The A know talked extremely the to offset want results. strong and Dean. of I We on Klondike. sort Middle on up about area. with you I have follow the looks of Wolfcamp Spraberry analysis And question Gabe's did the

targeting? talk so among was why intervals about on X primary curious about what haven't wells target And as kind that you Wolfcamp initial well. maybe excluding I these you're a And you acreage? the completed, kind talked the being of Can of A science

Sure, back Tim. there you on be that X down I correct when to first, thing want producers, there, one But a plugged X lateral. would hole pilot took the then we we and drilled just

there. are So there X wells

the we of data vertical X just them Just that on. have we got that

reason there's bit But great counting more to we up news. the I've that before, deeper Wolfcamp there. higher into a this so which expected than is intervals. I and great So hear and that migrates we're be, comes it's that's be to are on basin in If surprised talked there would some about say we're prolific oil maturity the we in A. prospectivity that. would not the counting the really being that why And are play, migrated is sandstone for which they a oil for

X Dean then wells Dean? All And initial are or... these

Dean Yes, wells. are. They're they all

And opportunities Okay. comments the the and That's then are the stacked think follow-up, as I pay interesting. a great. on pretty pad Briscoe

claims pad, kind guess was early that. on talking I the of that XXX frame public help I your companies a you one just And from days sort it's resource, are there. big does of debate dramatically? had up locations but to Some of about marketplace know replicate, doing kind what validity understand count if that of I'm XXX something move trying location the disclosed. the test that that stack pay can to significance proves just you're you this to of you be is other

versus Austin the note pads. zone increment XXX we've that it's feet these These before. I we've fully of between we've in about would Tim, lower and in is are the upper The places, differences the other half the Austin is that had big interval other space the fully and been say different the much test. Chalk done bounded developed. bounded. not bounded are in in X several a Chalk or landing and they've is middle only thing upper that difference Yes, the The interval that -- But subtle go upper wells to

and XX,XXX how how they NGL wells that XX,XXX oily just they are long. they are and those really So of And exciting on it's pad one rich because between are, feet how productive are.

are difficulty and economics But also that there And and too, long X the helps have oil their and really didn't laterals, XX,XXX just XX,XXX executing are there. feet. we the other So between rig.

of can like really you about on and just bounding see the of So Austin step other strength the wells. lower the a way Chalk any they're how that not wells and the big it's in area, excited it started. than But really they

[Operator Instructions] Our question Co. & Oliver Pickering, Tudor, Holt Huang comes from with next

kind kind you're a wait-and-see of fully providing that that's something I achieved quarter of new been full have of on case before quarter is year in wanted good that Just continued a plant what in faster to just see capture to Certainly the we outlook? on there starting all taking was ahead efficiencies. of when only it it's there. the of of to in saw? baked QX that kind Is incrementally kind activity of QX? since it wondering start you kind for aspect the Or already

appropriate Yes. Oliver, it. a when that to got we've we change lot include guidance, of confidence that it's means

aspects attractive, see new counting list running unless that through we continually but quite laundry now. efficiencies not That we're team a we're we working. So our looks of and in right is working once have them

gas for that right us ticket mentioned remarks. diesel now DGB on added frac on pumping are prepared big the natural the emissions those COX reduced operations. increased those the and employing. of has from So the that benefit of for the completion fleets substitution items And Wade we're operations And

bit gains the Then in a we're drilling. way efficiency seeing quite of in

really helps So can you bit we steerable They're don't this so drill using to rotary advanced much. feet downhole keep also. we're And number the the so have more to trip day. and it's equipment, translates bid bottom assembly, That longer. as we on reliable per of --

latent production side, it along efficiency going one a is see there -- existing some capacity facilities sitting about need we're significant for now what's the really into all starting facilities. to to on that the pretty way Then happen are using now. that in We with cost just capital knew central a avoids efficiency and new and happen, big

And South some services Texas also then between Permian. bundling we're and

spread between got counts And So are how down, we've the that you the X counts full areas benefits rig frac so helps. the of operation activity down. reduced, are has and the then of know scale

seeing we'll obviously actively contributor. rebidding when that that discounts get tell or is will way. how much you there. I And stop that and we're services can't So But a more

list a things highly I'd confident that's say pursuing. So of list still a we're we're not things that of that and

interest working super of the clarify, and try of confidential are sort That's maybe of drill-to-earn. the for And XXX% within you helpful. you year details any And on that well all terms wanted wells mentioned you the earlier you're this how out that count full some on that and for of year of to that the referenced? just South is to details are kind But D&C for already a Okay. many acreage there XX% planning region? follow-up, if in I responsible Texas do of embedded that that's

Yes.

Okay.

questions X there. got You

reveal But the the XX%. no The first, on No, we question can't first answer saying your there. or details I'd simple say for deal. we're is not to divulge the everything

the integrated the drill question have that plans this that we in baked the we that wells for set we then along Yes, we year. knew there And second enough The far our the deal we'll this was, budget when X into was year. in? February

back like closing now floor There Vogel this would no I questions are to turn to for the further at comments. over time. Herb

we thank forward at Thanks, for and upcoming of to seeing and a you joining number look us, Maria, you events.

concludes teleconference. This today's

your disconnect for you at You time. your this participation. Thank may lines