SM Energy Company’s SM shares have gained 6.3% since it reported strong third-quarter 2022 earnings on Nov 3, after the closing bell.
SM Energy’s third-quarter adjusted earnings of $1.82 per share beat the Zacks Consensus Estimate of $1.77. The bottom line significantly improved from the year-ago earnings of 74 cents per share.
Total quarterly revenues of $835 million increased from $760 million in the year-ago quarter and beat the Zacks Consensus Estimate of $700 million.
The strong quarterly results were driven by higher realizations of commodity prices.
SM Energy Company Price, Consensus and EPS Surprise
SM Energy Company price-consensus-eps-surprise-chart | SM Energy Company Quote
SM Energy’s third-quarter production totaled 137.8 thousand barrels of oil equivalent per day (MBoe/d) (46% oil), down 11.6% from the year-ago level of 155.8 MBoe/d.
Oil production of SM Energy declined 29.6% year over year to 61.7 thousand barrels per day (MBbls/d). The company produced 336.5 million cubic feet per day of natural gas in the quarter, up 6.4% year over year. Natural gas liquids contributed 20.1 MBbls/d to the total production volume, up 29.7%.
Before the effects of derivative settlements, the average realized price per Boe was $65.27 compared with $53.02 in the year-ago quarter. The average realized price of natural gas increased 48% year over year to $7.58 per thousand cubic feet. Average realized oil prices increased 34% to $92.66 per barrel, and that of natural gas liquids declined 1% to $36.36 per barrel.
Costs & Expenses
On the cost front, unit lease operating expenses of SM Energy increased 34% year over year to $5.64 per Boe. General and administrative expenses increased 26% to $2.24 per Boe from the prior year's $1.78. Also, transportation expenses increased to $2.87 per Boe from $2.41.
Total hydrocarbon production expenses of SM Energy in the quarter were $160 million compared with the year-ago level of $135.7 million. Total exploration expenses were $14.2 million, higher than the year-ago figure of $8.7 million.
Total operating expenses in the third quarter declined to $213.2 million from the year-ago period’s $634 million.
The capital expenditure of SM Energy in the September-end quarter was $226.1 million. It generated an adjusted free cash flow of $177.9 million in the reported quarter.
As of Sept 30, 2022, SM Energy had cash and cash equivalents of $498.4 million. It had net debt of $1,086.7 million at the third-quarter end.
For 2022, SM Energy’s total production is expected to be 52.5-53 MMBoe, with a proportion of oil of 46%.
The upstream firm’s capital expenditure guidance is $870-900 million for the year. It expects exploration expenses of $55 million for 2022. Lease operating expenses are estimated to be $5.10-$5.15 per barrel of oil equivalent.
For the fourth quarter, SM Energy expects to incur a capital expenditure of $228-$258 million. The company expects production of 12.7-13.2 MMBoe for the fourth quarter, with an oil proportion of 44%.
Zacks Rank & Stocks to Consider
SM Energy currently carries a Zacks Rank #4 (Sell).
Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
W&T Offshore, Inc. WTI reported third-quarter 2022 adjusted earnings (excluding one-time items) of 33 cents per share, beating the Zacks Consensus Estimate of 28 cents. Strong quarterly results were driven by higher production and the realization of commodity prices.
W&T Offshore is expected to see earnings growth of 747.8% for 2022. For 2022, WTI reduced its capital spending budget to $65-$75 million from the prior $70-$90 million.
Phillips 66 PSX reported third-quarter 2022 adjusted earnings per share of $6.46, comfortably beating the Zacks Consensus Estimate of $4.98. Strong quarterly earnings were driven by robust refining margins worldwide.
Phillips 66’s board of directors recently authorized a $5-billion increase to its stock repurchase program, bringing the total share repurchases authorized since 2012 to $20 billion. This represents Phillips 66’s strong focus on returning capital to stockholders.
Patterson-UTI Energy PTEN reported a third-quarter 2022 adjusted net profit of 28 cents per share, beating the Zacks Consensus Estimate of a profit of 19 cents. The outperformance was driven by solid segmental performances.
In good news for investors, Patterson-UTI doubled its quarterly cash dividend to 8 cents per share from the previous 4-cent payout. The dividend will be paid out on Dec 15, 2022, to shareholders of record as of Dec 1, 2022. PTEN also increased its share repurchase authorization to $300 million.
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