SM Energy execs project third-quarter bump in drilling activity
SM Energy Co., Denver, plans to build on its second-quarter performance by boosting its drilling and completion activity this quarter as it also prepares to develop recently acquired acreage in the Midland basin.
SM president and chief executive officer Herb Vogel and his team in June lifted their second-quarter total oil and gas production target to 13.9 MMboe from 13.4 MMboe and ended up topping that goal, clocking in at nearly 14.1 MMboe, 42% of which was oil. The company drilled 17 wells during the quarter (12 in South Texas and five in Midland basin) and completed 25, with Midland basin accounting for 17 of those.
Those production numbers as well as lower expense trends helped SM produce second-quarter 2023 net profit of $150 million on revenues of $551 million. In the same period in 2022, those numbers were $323 million and $992 million, respectively, due mainly to oil prices that were 34% higher and gas prices that were 73% higher than during this year’s quarter.
Looking to this year's third quarter, SM Energy executives plan to drill 22 wells (10 in South Texas, 12 in Midland basin) and complete 28 wells (17 in Midland basin). Capital spending for the quarter is forecast to be $235-240 million, down from an adjusted capital spending of $267 million in the second quarter.
SM Energy still plans to add a fourth rig to its Permian basin operations this fall and also is eyeing a fourth-quarter production start on the 20,000 acres it bought this spring for about $90 million (OGJ Online, June 23, 2023). That, Vogel said, along with efficiency improvements across its network will help set up a solid production lift into 2024.
“We’re just lining out the plans now,” Vogel said on an Aug. 3 conference call with analysts. “Our best wells have been in the Dean so we’re really excited to see what we can do up here. We do have a lot of confidence given offset well data, both vertical and horizontal wells.”
Also set to increase 2024 production are another roughly 9,100 acres the SM team recently bought and plans to expand. Vogel said it’s still early days for the undisclosed property and added that SM Energy will likely share some well details about its plans there in the middle of next year. The company’s overall goal is to increase production in the mid-single digits from 2023 levels.
Shares of SM (Ticker: SM) were changing hands Aug. 8 at about $37.80, down more than 2% on the day. Over the past 6 months, they have risen more than 15%, growing the company’s market capitalization to roughly $4.4 billion.
Geert De Lombaerde | Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.
