Independent oil and gas company
SM Energy Company
) first-quarter 2013 adjusted earnings of 82 cents per share
comfortably beat the Zacks Consensus Estimate of 51 cents and
also increased 70.8% from the year-ago earnings of 48 cents on
Total revenue was $484.2 million in the quarter, showing an
improvement of 28.3% from $377.4 million in the prior-year
quarter. The revenue also surpassed the Zacks Consensus Estimate
of $452.0 million.
The company's first-quarter production came in at 115.0
thousand barrels of oil equivalent per day (MBoe/d), which is at
the upper end of its forecasted 110-116 MBoe/d. It also showed an
improvement of 23.9% from the year-ago level of 92.8 MBoe/d. The
outperformance was mainly attributable to the leasehold expansion
in New ventures along with acreage additions in its East Texas
and the Powder River Basin.
SM Energy produced 358.2 million cubic feet per day (MMcf/d)
of natural gas in the quarter, up almost 14% year over year. Oil
production also grew 26.1% year over year to 34.8 thousand
barrels per day (MBbls/d). Natural gas liquids contributed 20.5
MBbls/d to the total volume, up 60.2% from the first quarter of
Including the effect of hedging, the average equivalent price
per barrel of oil equivalent (Boe) was $46.51 compared with
$43.76 in the year-ago period. Average realized prices (inclusive
of hedging activities) were $3.90 per thousand cubic feet (Mcf)
of natural gas (up 8.3% from the comparable quarter last year),
$91.30 per barrel of oil (up 5.7%), and $37.80 per barrel of
natural gas liquid (down 12.1%).
On the cost front, unit lease operating expense (LOE)
increased 13.3% year over year to $5.28 per Boe in the quarter.
Transportation expenses increased to $4.58 per Boe (from $3.38
per Boe in the year-ago period); general and administrative
expenses were $3.12 per Boe (down 6.3%); while depletion,
depreciation and amortization (DD&A) expenses decreased 4.3%
to $19.20 per Boe from the year-earlier level of $20.07 per
Net cash provided by operating activities decreased to $282.3
million during the quarter from $188.1 million in the year-ago
quarter. As of Mar 31, 2013, SM Energy had a cash balance of
$0.087 million and long-term debt of $1,530.0 million, with a
debt-to-capitalization ratio of 51.6%.
For the second quarter of 2013, SM Energy's production
forecast is 10.5 MMBoe/d to 11 MMBoe/d. The estimated LOE per Boe
is $5.00 to $5.25 while DD&A is projected in the
SM Energy's 2013 production forecast is in the band of
42.8-44.5 MMBoe/d. Given the current tepid gas price scenario,
the company intends to increase the liquids composition in its
portfolio, like its peer
Chesapeake Energy Corp.
). As such, liquids are expected to comprise 50% of production by
the end of 2013.
The company also remains upbeat on its New Ventures plan. The
program has already taken additional acreage in the Permian Basin
and in East Texas. These resources have significant potential to
boost its oil-weighted inventory.
SM Energy currently retains a Zacks Rank #2 (Buy). However,
there are other Zacks Ranked #1 (Strong Buy) stocks in the oil
and gas industry like
Harvest Natural Resources Inc.
EPL Oil & Gas, Inc.
) that appear more attractive in the short term.
CHESAPEAKE ENGY (CHK): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
HARVEST NATURAL (HNR): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
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