SM ENERGY REPORTS RECORD 2024 RESULTS AND TRANSFORMATIVE 2025 OPERATING PLAN; AND ANNOUNCES OFFICER RETIREMENT AND NEW APPOINTMENTS

2025-02-19

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DENVER , Feb. 19, 2025 /PRNewswire/ -- SM Energy Company (the "Company") (NYSE: SM) today announces certain fourth quarter and full year 2024 operating and financial results, year-end 2024 estimated net proved reserves and its 2025 operating plan.

In 2024, SM Energy met all of its strategic objectives and delivered certain record results. Financial and operational highlights included :

Record oil production for the full year 2024 of 29.4 MMBbls, or 80.2 MBbls/d, up 23% from 2023. Total net production for the full year 2024 was 62.4 MMBoe, or 170.5 MBoe/d, up 12% from 2023. Record year-end estimated net proved reserves of 678 MMBoe, up 12% from year-end 2023. The ratio of estimated net proved reserves at year-end 2024 to 2024 net production was 10.9 years. Record dividends paid. The Company's sustainable fixed dividend was increased to an annualized rate of $0.80 per share, commencing in the fourth quarter of 2024. The fixed dividend combined with share buybacks returned $169 .0 million to stockholders in 2024, an approximate 4% yield to current market capitalization. The Company has repurchased approximately 10.1 million shares from announcement of its return of capital program on September 7, 2022 , through year-end 2024. Inventory/gross drilling locations increased by approximately 40% at year-end 2024 from year-end 2023, primarily driven by the Uinta Basin acquisitions, organic growth in the Woodford-Barnett and continued expansion of the South Texas Austin Chalk. Reduced the balance on the revolving credit facility by $121.5 million from $190.0 million at October 1, 2024 , to $68 .5 million at year-end 2024, making progress towards the Company's target leverage. Substantial production growth expected in 2025 with the addition of the Uinta Basin program . The 2025 operating plan is designed to optimize capital efficiency across the Company's three core assets and results in a step-change in scale. The addition of the Uinta Basin program is expected to increase year-over-year net production by more than 20% on a Boe basis and increase oil production by more than 30%. Net income for the full year 2024 was $770 .3 million, or $6.67 per diluted common share, and for the fourth quarter 2024 was $188 .3 million, or $1.64 per diluted common share. Adjusted net income (1) was $6.80 per diluted common share for the full year 2024 and $1.91 per diluted common share for the fourth quarter 2024. Adjusted EBITDAX (1) was $2 .0 billion for the full year 2024 and $610 .8 million for the fourth quarter 2024. At SM Energy, employees are recognized as the Company's most valuable asset. In 2024, the Company was honored with two distinguished Leadership Development awards from the Brandon Hall Group. The Gold Award recognized our innovative approach to building competencies and skills, while the Bronze Award celebrated overall excellence in leadership development. These accolades underscore the Company's commitment to cultivating a thriving corporate culture and leadership values that rank among the nation's best.

The Company's 2025 strategy and operational plan is intended to support long-term profitability and value creation by:

Focusing on operational execution to realize a step change in scale through the successful integration of the Company's recently acquired Uinta Basin assets; delivering low breakeven, high return wells across the portfolio by optimizing capital efficiency; demonstrating innovation; and remaining a leader in stewardship. Returning capital to stockholders by generating free cash flow to support our increased $0.80 per share annual fixed dividend, transferring enterprise value to equity holders by pursuing reduced debt to a target of 1 times leverage; and resuming the Company's share buyback program, as appropriate, given $500 .0 million in authorization. Expanding our portfolio of top-tier economic drilling inventory through acquisition and exploration, and the application of advanced analytics, new technologies and development optimization.

Chief Executive Officer Herb Vogel comments: "2024 was an outstanding year. The SM Energy team delivered a significant increase in scale as measured by the 23% increase in daily oil production, 12% increase in estimated net proved reserves, approximate 40% increase in gross drilling locations and 24% expansion in our core portfolio net acreage. We remained focused on operational execution, continuing to deliver superior well performance and organically growing our portfolio while also delivering return of capital equating to an approximate 4% yield to market capitalization.

As we commence 2025, we are first focused on the integration of our Utah operations where results are expected to be accretive to all financial metrics. The balance sheet is in excellent shape, and we intend to prioritize the generation of free cash flow to pay our fixed dividend and reduce debt, followed by share repurchases once we achieve target leverage. We designed our 2025 operational plan to optimize free cash flow, considering a multi-year period, which will employ our differential technical capabilities to deliver superior well performance and drive capital efficiency. We are well poised for an excellent 2025."

OFFICER RETIREMENT AND NEW APPOINTMENTS

The Company announces the retirement of Jennifer Martin Samuels , the Company's Vice President - Investor Relations and ESG Stewardship. Ms. Samuels' retirement from her current position will be effective March 7, 2025 , and she plans to remain with the Company in an advisory capacity until later this year.

The Company also announces several officer appointments, all of which are effective March 2, 2025 .

Dean Lutey was promoted to the position of Senior Vice President - Chief Information Officer. Mr. Lutey has served in the role of Vice President - Chief Information Officer since 2021 and previously Vice President - Information Technology since 2013. Mr. Lutey joined the Company in 2008 as Manager of Production Services. Mr. Lutey has more than 28 years of experience in information technology. Pat Lytle was promoted to the position of Senior Vice President - Finance. Mr. Lytle has served in the role of Vice President - Chief Accounting Officer and Controller since 2021 and joined the Company in 2007 as a Senior Accountant. Mr. Lytle has more than 20 years of accounting and finance experience in the energy industry. He will assume the Investor Relations and ESG Stewardship responsibilities as well as oversee the financial planning and treasury functions. Richard Jenkins was promoted to the position of Senior Vice President - Utah . Mr. Jenkins has served as Vice President - Utah since 2024 and previously Vice President - Operations since 2023. Mr. Jenkins joined the Company in 2010 as a Senior Reservoir Engineer. Mr. Jenkins has more than 17 years of experience in the oil and gas industry. Alan Bennett was promoted to the position of Vice President and Controller. Mr. Bennett most recently served as Senior Director of Financial Planning and Analysis and joined the Company in 2011 as a Senior Accountant. Mr. Bennett previously served as Director of Operations Accounting and has more than 18 years of accounting and finance experience in the energy industry. Mr. Bennett will serve as the Company's principal accounting officer.

ESTIMATED NET PROVED RESERVES AT YEAR-END 2024

| | | MMBoe | | Estimated net proved reserves year-end 2023 | | 605 | | Net acquisitions and divestitures | | 102 | | Net infill/revisions (excluding 5 year rule and price) | | 67 | | Discovery/extensions | | 11 | | Net production | | (62) | | Revisions – 5 year rule | | (31) | | Revisions – price | | (14) | | Estimated net proved reserves year-end 2024 | | 678 |

Estimated net proved reserves at year-end 2024 were 678 MMBoe. Estimated net proved reserves were 51% in South Texas , 34% in the Midland Basin, and 15% in the Uinta Basin, and were comprised of 44% oil, 38% natural gas and 18% NGLs. Net proved reserves were 60% developed and 40% undeveloped.

The ratio of estimated net proved reserves at year-end 2024 to 2024 net production is 10.9 years. 2024 SEC pricing was $75.48 per Bbl oil, $2.13 per MMBtu natural gas and $28.29 per Bbl NGLs, down 4% and 19% and up 2%, respectively, compared to 2023 SEC pricing. Our Uinta Basin acquisitions added estimated net proved reserves of approximately 100 MMBoe, 38% of which were developed.

STANDARDIZED MEASURE

The standardized measure of discounted future net cash flows from estimated net proved reserves was $7 .27 billion at year-end 2024, up from $6 .28 billion at year-end 2023. The 16% increase in the standardized measure compared with year-end 2023 is predominantly due to the increase in estimated net proved reserves, partially offset by lower SEC pricing for oil and gas used in the calculation. Pre-tax PV-10 (1) was $8 .36 billion.

FOURTH QUARTER AND FULL YEAR 2024 RESULTS

Details and discussions of fourth quarter and full year 2024 net production and commodity pricing are given below, along with summary tables:

| NET PRODUCTION BY OPERATING AREA | | | | | | | Fourth Quarter 2024 | | | | | | Midland Basin | South Texas | Uinta Basin | Total | | Oil (MBbl / MBbl/d) | 4,957 / 53.9 | 2,011 / 21.9 | 2,870 / 31.2 | 9,838 / 106.9 | | Natural Gas (MMcf / MMcf/d) | 16,028 / 174.2 | 20,352 / 221.2 | 2,703 / 29.4 | 39,084 / 424.8 | | NGLs (MBbl / MBbl/d) | 9 / — | 2,775 / 30.2 | — / — | 2,784 / 30.3 | | Total (MBoe / MBoe/d) | 7,637 / 83.0 | 8,178 / 88.9 | 3,321 / 36.1 | 19,136 / 208.0 | | Note: Totals may not calculate due to rounding. | | | | |

| | Full Year 2024 | | | | | | Midland Basin | South Texas | Uinta Basin | Total | | Oil (MBbl / MBbl/d) | 19,090 / 52.2 | 7,407 / 20.2 | 2,870 / 7.8 | 29,367 / 80.2 | | Natural Gas (MMcf / MMcf/d) | 62,009 / 169.4 | 72,267 / 197.5 | 2,703 / 7.4 | 136,979 / 374.3 | | NGLs (MBbl / MBbl/d) | 24 / — | 10,178 / 27.8 | — / — | 10,202 / 27.9 | | Total (MBoe / MBoe/d) | 29,449 / 80.5 | 29,629 / 81.0 | 3,321 / 9.1 | 62,399 / 170.5 | | Note: Totals may not calculate due to rounding.

_Uinta Basin full year volumes include one quarter of production; subsequent to the close of the Uinta Basin Acquisitions _ | | | | |

Fourth quarter production volumes were 19.1 MMBoe, or 208.0 MBoe/d, and were 51% oil. Production volumes increased 22% sequentially and oil production volumes increased 38% sequentially with the addition of the Uinta Basin assets acquired on October 1, 2024 . Fourth quarter volumes were affected by approximately 3 MBoe/d as a result of downtime from third-party crude takeaway and the decision to reject ethane at certain gas processing plants due to better economics with strong natural gas prices. Full year production volumes of 62.4 MMBoe (170.5 MBoe/d) were up 12% from 2023. Production volumes were 48% from South Texas , 47% from the Midland Basin, and 5% from the Uinta Basin. Volumes were 47% oil, 37% natural gas and 16% NGLs.

(Pre/Post-hedge) (1) | | Oil ($/Bbl) | $70.56 | $67.31 | $68.66 | $69.34 / $70.54 | | Natural Gas ($/Mcf) | $2.23 | $2.10 | $2.56 | $2.19 / $2.50 | | NGLs ($/Bbl) | nm | $24.48 | nm | $24.49 / $24.01 | | Per Boe | $50.52 | $30.08 | $61.44 | $43.68 / $44.85 | | Note: Totals may not calculate due to rounding. | | | | |

(Pre/Post-hedge) (1) | | Oil ($/Bbl) | $75.83 | $73.27 | $68.66 | $74.49 / $74.92 | | Natural Gas ($/Mcf) | $1.91 | $1.71 | $2.56 | $1.82 / $2.25 | | NGLs ($/Bbl) | nm | $23.00 | nm | $23.01 / $22.76 | | Per Boe | $53.20 | $30.39 | $61.44 | $42.81 / $43.91 | | Note: Totals may not calculate due to rounding. | | | | |

In the fourth quarter, benchmark pricing included NYMEX WTI at $70.27 /Bbl, NYMEX Henry Hub natural gas at $2.79 /MMBtu and OPIS Composite NGLs at $29.29 /Bbl. For the full year, benchmark pricing included NYMEX WTI at $75.72 /Bbl, NYMEX Henry Hub natural gas at $2.27 /MMBtu and OPIS Composite NGLs at $28.30 /Bbl. In the fourth quarter, the average realized price before the effect of hedges was $43.68 per Boe, and the average realized price after the effect of hedges was $44.85 per Boe. (1) For the full year, the average realized price before the effect of hedges was $42.81 per Boe, and the average realized price after the effect of hedges was $43.91 per Boe. (1) The effect of commodity derivative settlements for the fourth quarter and full year was a gain of $1.17 per Boe, or $22 .4 million, and a gain of $1.10 per Boe, or $68 .7 million, respectively.

For additional operating metrics and regional detail, please see the Financial Highlights section below and the accompanying slide deck.

CAPITAL EXPENDITURES AND ACTIVITY

In the fourth quarter 2024, capital expenditures of $353 .5 million before change in accruals of $8 .8 million totaled $362 .3 million. (1) During the fourth quarter of 2024, the Company drilled 45 net wells and added 37 net flowing completions. During the fourth quarter, faster than expected drilling and completion times accelerated certain costs into the fourth quarter 2024. For the full year 2024, capital expenditures of $1 .31 billion before change in accruals of $24 .3 million totaled $1 .29 billion (1) and the Company drilled 142 net wells and added 135 net flowing completions.

NET INCOME AND NET INCOME PER SHARE

Fourth quarter 2024 net income was $188 .3 million, or $1.64 per diluted common share, compared with net income of $247 .1 million, or $2.12 per diluted common share, for the same period in 2023. The current year period benefited on a per share basis from 36% higher production volumes, a 3% increase in the realized price per Boe after the effect of net derivative settlements and fewer shares outstanding, offset by certain higher per unit expenses and increased income tax and net interest expense. For the full year 2024, net income was $770 .3 million, or $6.67 per diluted common share, compared with net income of $817 .9 million, or $6.86 per diluted common share, for the full year 2023. Full year net income compared with the prior year reflects a 12% increase in production volumes, a 2% increase in the realized price per Boe after the effect of net derivative settlements, and fewer shares outstanding, offset predominantly by net interest and tax expenses.

NET CASH PROVIDED BY OPERATING ACTIVITIES

Fourth quarter 2024 net cash provided by operating activities of $577 .9 million before net change in working capital of $(26.6) million totaled $551 .2 million, (1) representing an increase of $127 .5 million, or 30%, from $423 .7 million (1) in the same period in 2023. The increase from the prior year period was primarily due to higher production volumes and a higher realized price per Boe after the effect of net derivative settlements, partially offset by certain higher per unit expenses and higher cash taxes. For the full year 2024, net cash provided by operating activities of $1.78 billion before net changes in working capital of $(11.2) million totaled $1.77 billion , (1) representing an increase of $192 .4 million, or 12%, from $1 .58 billion (1) in 2023. The increase in 2024 is predominantly due to higher production volumes and a higher realized price per Boe after the effect of net derivative settlements, partially offset by higher cash taxes.

ADJUSTED EBITDAX (1) AND ADJUSTED NET INCOME (1)

Fourth quarter 2024 Adjusted EBITDAX (1) was $610 .8 million, up $165 .6 million, or 37%, from $445 .1 million in the same period in 2023. For the full year 2024, Adjusted EBITDAX (1) was $1 .99 billion, compared with $1 .71 billion in 2023.

Fourth quarter 2024 adjusted net income (1) was $220 .2 million, or $1.91 per diluted common share, which compares with adjusted net income (1) of $181 .5 million, or $1.56 per diluted common share, for the same period in 2023. For the full year 2024, adjusted net income (1) was $785 .1 million, or $6.80 per diluted common share, compared with adjusted net income (1) of $702 .5 million, or $5.89 per diluted common share, in 2023.

ADJUSTED FREE CASH FLOW (1)

Fourth quarter 2024 cash flow from operations before net change in working capital totaled $551 .2 million, (1) and capital expenditures before changes in accruals totaled $362 .3 million, (1) delivering Adjusted free cash flow of $188 .9 million. (1) For the full year 2024, cash flow from operations before net change in working capital totaled $1 .77 billion, (1) and capital expenditures before changes in accruals totaled $1 .29 billion, (1) delivering Adjusted free cash flow of $485 .0 million. (1)

FINANCIAL POSITION, LIQUIDITY AND NET DEBT-TO-ADJUSTED EBITDAX (1)

At year-end 2024, the outstanding principal amount of the Company's long-term debt was $2 .80 billion including $68 .5 million drawn on the Company's senior secured revolving credit facility. At year-end 2024, cash and cash equivalents were zero and net debt (1) was $2 .80 billion, up $1 .84 billion from year-end 2023.

As of December 31, 2024, the Company's borrowing base and commitments under its senior secured revolving credit facility were $3 .00 billion and $2 .00 billion, respectively, and combined with the balance drawn on the Company's senior secured revolving credit facility, available liquidity was $1 .93 billion.

At year-end 2024, the Net debt-to-Adjusted EBITDAX (1) ratio was 1.4.

COMMODITY DERIVATIVES

As of February 14, 2025 , commodity derivative positions for 2025 include:

SWAPS & COLLARS:

Oil: Approximately 12,600 MBbls, or slightly more than 30%, of expected 2025 net oil production is hedged at a weighted-average price of $69.02 /Bbl (collar floors and swaps) to $74.89 /Bbl (collar ceilings and swaps), excludes basis swaps. Natural gas: Approximately 43,200 BBtu, or slightly less than 30%, of expected 2025 net natural gas production is hedged at an average price of $3.43 /MMBtu (weighted-average of collar floors and swaps) to $4.44 /MMBtu (weighted-average of collar ceilings and swaps), excludes basis swaps.

BASIS SWAPS:

Oil, Midland Basin differential: Approximately 4,600 MBbls of expected 2025 net oil Midland Basin oil production are hedged to the local price point at a positive weighted-average price of $1.18 /Bbl. Oil, MEH differential: Approximately 2,100 MBbls of expected 2025 net South Texas oil production are hedged to the local price point at a positive weighted-average price of $1.86 /Bbl. Gas, WAHA differential: Approximately 20,500 BBtu of expected 2025 net Midland Basin natural gas production are hedged to WAHA at a weighted-average price of ($0.66) /MMBtu. Gas, HSC differential: Approximately 900 BBtu of expected 2025 net South Texas natural gas production are hedged to HSC at a weighted-average price of $0.0025 /MMBtu.

A detailed schedule of these and other hedge positions are provided in the accompanying slide deck.

2025 OPERATING PLAN AND GUIDANCE

Discussion in this release of the Company's 2025 operating plan guidance includes the term "capital expenditures," which is defined to include adjustments for capital accruals, and is a non-GAAP measure. In reliance on the exception provided by Item 10(e)(1)(i)(B) of Regulation S-K, the Company is unable to provide a reconciliation of forward-looking non-GAAP capital expenditures because components of the calculations are inherently unpredictable, such as changes to, and the timing of, capital accruals, unknown future events, and estimating certain future GAAP measures. The inability to project certain components of the calculation could significantly affect the accuracy of a reconciliation.

KEY ASSUMPTIONS

Benchmark pricing assumptions are $70.00 per Bbl WTI; $3.25 per MMBtu natural gas; $27.00 per Bbl NGLs. Hedges currently in place. Processing ethane in the second and third quarters, rejecting ethane in the first and fourth quarters. Rejecting ethane reduces overall volumes by approximately 3.5-4.0 MBoe/d during those periods.

GUIDANCE FULL YEAR 2025: