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SM Energy (SM) Slides 5.3% as Q1 Earnings Miss Estimates

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·4-min read
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SM Energy Company SM has declined 5.3% since it reported lower-than-expected first-quarter 2022 earnings on Apr 28, after the closing bell.

SM Energy’s first-quarter adjusted earnings of $1.98 per share missed the Zacks Consensus Estimate of $2.07. The bottom line, however, improved from the year-ago loss of 5 cents per share.

Quarterly revenues of $860 million increased from $444 million in the year-ago quarter and beat the Zacks Consensus Estimate of $704 million.

SM Energy Company Price, Consensus and EPS Surprise

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

SM Energy Company price-consensus-eps-surprise-chart | SM Energy Company Quote

The lower-than-expected earnings were owing to increased total operating expenses. This was offset partially by higher production and commodity prices.

Operational Performance:

Production

SM Energy’s first-quarter production totaled 153.3 thousand barrels of oil equivalent per day (MBoe/d) (46.8% oil), up 37% from the year-ago level of 111.6 MBoe/d. Solid performance from several RockStar area wells contributed to the performance.

Oil production of SM Energy increased 19% year over year to 71.8 thousand barrels per day (MBbls/d). The company produced 348.4 million cubic feet per day of natural gas in the quarter, up 46% year over year. Natural gas liquids contributed 23.4 MBbls/d to total production volume, up 105%.

Realized Prices

Before the effects of derivative settlements, the average realized price per Boe was $62.25 compared with $42.11 in the year-ago quarter. Average realized price of natural gas surged 30% year over year to $5.42 per thousand cubic feet. Also, average realized oil prices increased 67% to $94.03 per barrel, and that of natural gas liquids grew 43% to $38.56.

Cost & Expenses

On the cost front, unit lease operating expenses of SM Energy decreased 8% year over year to $4.25 per Boe. Transportation expenses fell to $2.74 per Boe from $2.94. General and administrative expenses decreased 26% to $1.81 per Boe from the prior-year level of $2.46.

Total hydrocarbon production expenses of SM Energy in the quarter were $144.7 million compared with the year-ago level of $100.9 million. Total exploration expenses were $9.1 million, lower than the year-ago figure of $9.3 million.

Total operating expenses in the first quarter increased to $758 million from the year-ago period’s $654.8 million.

Capex

Capital expenditure of SM Energy in the March quarter was recorded at $150.1 million. It generated free cash flow of $314.3 million in the quarter.

Balance Sheet

As of Mar 31, 2022, SM Energy had cash and cash equivalents of $419.9 million. It had net debt of $1,611.9 million and debt to capital of 48.4%.

Guidance

For the June quarter of this year, SM Energy projects capital spending in the band of $230-$250 million. SM Energy projects production for the second quarter at 13-13.3 MMBoe.

Zacks Rank & Stocks to Consider

SM Energy currently carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include ConocoPhillips COP, Marathon Oil MRO and Occidental Petroleum OXY. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Considering production and reserves, ConocoPhillips is one of the leading exploration and production players in the global market. COP has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, ConocoPhillips is likely to see earnings growth of 141.6%.

Marathon Oil is a leading oil and natural gas exploration and production company. MRO has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Marathon Oil is likely to see earnings growth of 200%.

In the United States, Occidental Petroleum is among the largest oil producers. OXY has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Occidental Petroleum is likely to see earnings growth of 264.3%.


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Marathon Oil Corporation (MRO) : Free Stock Analysis Report

Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

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