SM Energy Co Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gabe Daoud - TD Cowen - Analyst : I was hoping we can maybe learn a little bit more about the Woodford-Barnett results. I guess, curious about the development plan here whether or not there are more wells in the formation that are expected to turn in line this year? What does development look like from a spacing standpoint? And then, I guess, what are the oil cuts expected on these wells?

Question: Gabe Daoud - TD Cowen - Analyst : And then, I guess, just as a follow-up shifting gears to the buyback and commentary around maybe, more of a focus on debt reduction near-term versus leaning into the buyback? I think last several quarters you've been around, $40 million to $50 million a quarter on buyback. So what does the pace look like to close 2024? And then any additional color on the pace in 2025?

Question: Gabe Daoud - TD Cowen - Analyst : Okay. Thanks. So not all or nothing approach. Okay. It's very helpful. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, SM.N - Q2 2024 SM Energy Co Earnings Call

Question: Zach Parham - JPMorgan - Analyst : First, just wanted to ask a little bit on the trajectory of oil volumes from here and as we move into '25. Your implied 4Q guidance rate is around 115,000 barrels a day pro forma for the Uinta deal. That compares to the preliminary guide you gave of 100,000 barrels a day for 2025. Can you just talk a little bit about the production trajectory you expect through the year? Do you expect -- As you slow down activity, do you expect a pretty steep decline early in '25 and then you kind of level out? Just curious on kind of tying those two numbers together.

Question: Zach Parham - JPMorgan - Analyst : My follow-up, just wanted to ask on OpEx, particularly LOE. This quarter, it was $4.82 per BOE. That's significantly below the low end of the full-year guidance range. Can you just give us any color on why LOE came in so low this quarter and maybe, your expectations on how LOE trends from here?

Question: Neal Dingmann - Truist Securities - Analyst : Good morning. Nice quarter, guys. My first question is around the Eagle Ford activity. Specifically, can you discuss the sort of the future Briscoe C activity? I'm just wondering, will you co-develop the middle and lower Austin Chalk going forward along with Eagle Ford now that you've had that success on the Briscoe C. I'm just wondering how you're going to sort of get after that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, SM.N - Q2 2024 SM Energy Co Earnings Call

Question: Neal Dingmann - Truist Securities - Analyst : Well said. And then just to make sure on the -- my question this one is just on the Uinta side, now that you're able to add additional acres. Is the plan to develop all those acres sort of that same pattern that you had talked about with the original XCL acquisition or is there any change now that you have that additional inventory?

Question: Mike Scialla - Stephens - Analyst : I wanted to follow up on the Barnett-Woodford wells. Just to clarify, those were on that Western Extension acreage, I believe, correct me if I'm wrong there. And how do you get to the 20,000 plus net acres perspective for that? Is that assuming all 9,100 of the extension area plus a portion of the legacy Sweetie Peck. And I guess also are those zones perspective anywhere else in the Midland, where you in particular, in Howard County, where you have acreage?

Question: Mike Scialla - Stephens - Analyst : Okay. And not really looking anywhere outside of Sweetie Peck.

Question: Mike Scialla - Stephens - Analyst : Okay. Look forward to that. And then, just wanted to follow up on the Altamont Energy assets. It looks like that acquisition like you said previously is mostly acreage. How would you characterize that? Has it been delineated? Is it more exploratory in nature than the XCL properties just looking for a little more color there?

Question: Timothy Rezvan - KeyBanc Capital Markets - Analyst : An area that really hasn't been discussed in the release or today is on Klondike. And I know, I think recent dialogue suggested you'd have more to say with Q3 earnings. But I know there's a lot of completion work going on. So Herb, can you maybe, give like a qualitative assessment of what's happening up there right now?

Question: Timothy Rezvan - KeyBanc Capital Markets - Analyst : Okay. That's fair. We'll stay tuned I guess. And then, I just wanted to follow up on Gabe's question on Sweetie Peck. I understand it's early days and you don't have much to -- too much to disclose. We've heard some peers talk about oil cuts more in the 75% to 80% range. I mean, obviously, 50% to 60% is a good number. Can you talk to what you know about, how those should trend and if there is sort of variability across that formation, if there's any insight helpful?

Question: Oliver Huang - Tudor, Pickering, Holt & Co. - Analyst : Just had a couple of follow-ups. Starting in South Texas, I know you all highlight the new Briscoe C wells performing well. Just wondering how did the initial results that you all seen thus far on that 625 foot spaced fully bounded test impact your thinking about optimal spacing on future development in that liquids rich area, a part of the play for you all? And then just kind of additionally on the Briscoe C wells, notice that while you all typically drill wells going northwest to southeast, there's this one pad, where the geometry of the wells are moving northeast to southwest. Any sort of observations or takeaways worth highlighting that came about from that set of wells?

Question: Oliver Huang - Tudor, Pickering, Holt & Co. - Analyst : Perfect. That's helpful color. And just a quick follow-up on Permian LOE, just kind of considering next year's preliminary outlook that you all had alongside BU into deck back in June. Anything that we should be aware of or thinking about that might be driving another leg down further to

Question: Nicholas Pope - Seaport Research Partners - Analyst : Hope we could dig a little bit more into South Texas. because I mean it was a huge jump in oil production and just kind of curious with this basket of wells that you saw come online during the quarter. I mean, I know you have a lot of well control in South Texas. What is your ability to kind of maintain that oil percentage that we saw here in the second quarter? And in terms of how you're, I guess, selecting wells and what you're going to bring it online, I guess how consistent can we expect these kind of oil percentages going forward in South Texas?

Question: Nicholas Pope - Seaport Research Partners - Analyst : Got it. I appreciate it. The other thing and I know there's like digging a little more that I think, you all probably want to. but in 2025, the production kind of broad range that you all gave during the XCL release that 195, gotten a lot of pushback on that number. Just kind of curious as you kind of look at where things are now, what's your current kind of implied guidance is with the added production in Uinta and coming in that you added this with this release. Kind of how you're thinking about that the implied decline that you're seeing there in 2025 from that fourth quarter rate? And if there's anything, I guess maybe when we can get some more clarity on kind of what you're expecting there for 2025? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 2:00PM, SM.N - Q2 2024 SM Energy Co Earnings Call

Question: Nicholas Pope - Seaport Research Partners - Analyst : Got it. All right, that's all I had. I appreciate the time. Thanks.