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SM Energy Amends Credit Facility - Analyst Blog

Posted
9/10/2013 1:58:00 PM
By: Zacks.com
Referenced Stocks:CHK;CRZO;SM;WLL

SM Energy Company ( SM ) raised the borrowing base under its senior secured revolving credit facility from $1.8 billion to $2.2 billion. This is reflective of the independent oil and gas company's efforts to increase its financial flexibility.

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%. In the second quarter of 2013, the company generated $314.1 million of cash from operating activities versus $222.2 million in the year-ago quarter.

SM Energy's attractive oil and gas investments, balanced and diverse portfolio of proved reserves and development drilling opportunities are likely to create long-term value for shareholders.

In fact, SM Energy is one of the most attractive players in the exploration and production space. 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 leasehold expansion in New Ventures along with acreage additions in its East Texas play and the Powder River Basin.

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 expects 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. ( CHK ). 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.

Denver, Colorado-based SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in onshore North America.

SM Energy currently carries a Zacks Rank #3 (Hold). However, there are other Zacks Ranked #1 (Strong Buy) stocks in the industry such as Carrizo Oil & Gas Inc. ( CRZO ) and Whiting Petroleum Corp. ( WLL ) that appear attractive for the short term.



CHESAPEAKE ENGY (CHK): Free Stock Analysis Report

CARRIZO OIL&GAS (CRZO): Free Stock Analysis Report

SM ENERGY CO (SM): Free Stock Analysis Report

WHITING PETROLM (WLL): Free Stock Analysis Report

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