Independent oil and gas company
SM Energy Company
) second-quarter 2013 adjusted earnings of 76 cents per share
were in line with the Zacks Consensus Estimate but increased
seven-fold from the year-ago earnings of 9 cents on the back of
CHESAPEAKE ENGY (CHK): Free Stock Analysis
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Total revenue was $559.4 million in the quarter, showing an
improvement of 83.7% from $304.4 million in the prior-year
quarter. The revenues also surpassed the Zacks Consensus Estimate
of $508.0 million.
The company's second-quarter production came in at 131.8 thousand
barrels of oil equivalent per day (MBoe/d). It also showed an
improvement of 42.3% from the year-ago level of 92.6 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 430.2 million cubic feet per day (MMcf/d) of
natural gas in the quarter, up 39.1% year over year. Oil
production also grew 37.0% year over year to 35.5 thousand
barrels per day (MBbls/d). Natural gas liquids contributed 24.6
MBbls/d to the total volume, up 61.8% from the second quarter of
Including the effect of hedging, the average equivalent price per
barrel of oil equivalent (Boe) was $44.66 compared with $39.06 in
the year-ago period. Average realized prices (inclusive of
hedging activities) were $4.23 per thousand cubic feet (Mcf) of
natural gas (up 40.1% from the comparable quarter last year),
$89.64 per barrel of oil (up 11.3%), and $36.00 per barrel of
natural gas liquid (down 8.7%).
On the cost front, unit lease operating expense (LOE) decreased
14.4% year over year to $4.69 per Boe in the quarter.
Transportation expenses increased to $5.59 per Boe (from $3.59
per Boe in the year-ago period); general and administrative
expenses were $2.95 per Boe (down 20.1%); while depletion,
depreciation and amortization (DD&A) expenses decreased 1.8%
to $18.82 per Boe from the year-earlier level of $19.17 per Boe.
Net cash provided by operating activities increased to $314.1
million during the quarter from $222.2 million in the year-ago
quarter. As of Jun 30, 2013, SM Energy had a cash balance of
$0.176 million and long-term debt of $1,628.0 million, with a
debt-to-capitalization ratio of 51.6%.
For the third quarter of 2013, SM Energy's production forecast is
12.2 MMBoe/d to 12.8 MMBoe/d. The estimated LOE per Boe is $4.55
to $4.80 while DD&A is projected in the $17.30-$18.50 range.
SM Energy has increased its 2013 production forecast in the band
of 47.3-48.6 MMBoe/d from its earlier guidance of 42.8-44.5
MMBoe/d. 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 carries a Zacks Rank #3 (Hold). However,
there are other Zacks Ranked #1 (Strong Buy) stocks in the oil
and gas industry such as
Gulfmark Offshore, Inc.
) that appear attractive in the short term.