PEDEVCO Corp. press release

SM Energy Reports First Quarter 2026 Results

2026-05-06

NYSE - New York Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · United States · Corporate Finance

PR Newswire

Accelerated synergies and higher production drive enhanced full-year outlook Company reaffirms full-year capital expenditure plan

DENVER, May 6, 2026/PRNewswire/ -- SM Energy Company (the "Company" or "SM") (NYSE: SM) today reported financial and operating results for the first quarter 2026. Accompanying slides can be found on the Company's website at https://www.sm-energy.com/investors/news-events/presentations. A conference call is scheduled for 8 a.m. MT/10 a.m. ET on May 7, 2026. Participation details are included in this release.

SM enters 2026 transformed into a scaled, multi-basin operator with a high-quality oil portfolio built to deliver differentiated returns to stockholders. With the Civitas Resources, Inc. ("Civitas") merger (the "Merger") closed on January 30, 2026, SM's focus is squarely on three strategic priorities: Integrate, Execute, and Bolster. First quarter 2026 performance against each of these priorities is summarized in the highlights below.

First Quarter 2026 Highlights

Integrate –

Raised total synergy target to $375 million in annualized run-rate savings _– _up from the initial $200–$300 million target _– _with approximately $300 million actioned to date.

Execute –

Average net daily production totaled 371.2 MBoe/d, including 190.3 MBbl/d of oil, compared to mid-point guidance of 350 MBoe/d (182 MBbl/d of oil). Strong first quarter results led to a raise in full-year 2026 production guidance to 410–430 MBoe/d (222–228 MBbl/d of oil), compared to previous guidance of 400–420 MBoe/d (216–226 MBbl/d of oil). Reflecting strong first quarter execution, SM increased its second-half 2026 average production run rate to approximately 430 MBoe/d, including approximately 238 MBbl/d of oil. Maintained full-year 2026 capital expenditure guidance of $2.65–$2.85 billion. Net loss was $1.68 per diluted share, primarily related to a non-cash mark-to-market loss on the Company's commodity derivatives at period end due to a sharp rise in forward oil prices; adjusted net income1was $1.55 per diluted share. Generated operating cash flow of $640 million, or $692 million before net change in working capital, including certain long-term prepayments.1Capital expenditures totaled $555 million, or $672 million before changes in accruals.1 Delivered adjusted free cash flow1of $20 million after one-time integration and transactions costs and one-time capital costs. Adjusted EBITDAX1was $970 million.

Bolster –

Closed the $950 million sale of certain South Texas assets (the "South Texas Divestiture") on April 30, 2026, substantially achieving SM's $1.0 billion-plus asset sales target and meaningfully strengthening its balance sheet. Net proceeds of approximately $900 million, after preliminary purchase price adjustments and estimated selling costs, are being used to redeem all $819 million aggregate principal amount of the 6.75% and 5.0% Senior Notes due 2026 (collectively, "2026 Senior Notes"). Refinanced nearly $900 million of 8.375% high-coupon debt with $1.0 billion of new 6.625% Senior Notes due 2034, reducing the Company's annualized interest expense. Strengthened return of capital framework with a 10% increase in the annual fixed dividend to $0.88 per share, effective with the first quarter 2026 payment, and an expected allocation of 20% of post-dividend free cash flow to share repurchases.

| 1 Adjusted net income; operating cash flow before net change in working capital, including certain long-term prepayments; capital expenditures, before changes in accruals; adjusted EBITDAX; and net debt are non-GAAP measures. See the Non-GAAP Disclosures section of this news release for the definition of, and other important information regarding, these non-GAAP financial measures. |

"SM is off to an outstanding start in 2026," stated President and CEO Beth McDonald. "In the first quarter, our team delivered production above the top end of our guidance and accelerated merger synergy capture – demonstrating the capability of our combined organization. We also moved decisively to strengthen our balance sheet, refinancing high-coupon assumed debt and closing a significant divestiture at an accretive valuation. That operational momentum gives us the confidence to raise our synergy target, increase our production guidance, and reaffirm our capital plan. We are building a business with the scale, asset quality, and operational discipline to generate growing returns for stockholders."

First Quarter 2026 Review

Production was 371.2 MBoe/d, reflecting the recent Merger with a nearly 80% increase from the prior quarter. Results include two months of Permian and DJ Basin production from legacy Civitas assets. SM's average realized price was $44.22 per Boe, before the effect of hedges. Reported a net loss of $335 million, or $1.68 per diluted share, reflecting a $697 million net derivative loss, the majority of which relates to a non-cash mark-to-market loss on the Company's hedge book at period end due to the sharp rise in forward oil prices. Incurred $135 million of transaction and integration costs against full-year guidance of approximately $180 million, and $60 million of one-time capital costs against full-year guidance of $70 million, with the majority of the remaining costs expected to be incurred in the second quarter 2026.

Balance Sheet

As of March 31, 2026, SM had total liquidity of approximately $2.9 billion, including $449 million of cash and cash equivalents. Total outstanding principal debt was $7.8 billion, with net debt1of approximately $7.4 billion. On March 9, 2026, SM issued $1.0 billion in aggregate principal of 6.625% Senior Notes due 2034 at par, receiving net proceeds of $985 million. The proceeds funded a cash tender offer for the 8.375% Senior Notes due 2028 ("2028 Senior Notes"), originally issued by Civitas, through which SM repurchased $784 million in aggregate principal for total cash consideration of $808 million. Subsequent to March 31, 2026, the tender offer expired and settled, resulting in an additional $110 million in aggregate principal repurchased for a combined total of $894 million aggregate principal of the 2028 Senior Notes repurchased. On April 30, 2026, SM closed the $950 million South Texas Divestiture, generating net proceeds of approximately $900 million, and concurrently issued notices of redemption to holders of the 2026 Senior Notes to retire in full the $819 million aggregate principal amount outstanding thereunder. Subsequent to March 31, 2026, SM completed its semi-annual borrowing base redetermination, with both the borrowing base and aggregate lender commitments reaffirmed at $5.0 billion and $2.5 billion, respectively, underscoring the strength of the Company's portfolio following the South Texas Divestiture. As of March 31, 2026, SM had no outstanding borrowings under the revolving credit facility.

Guidance

The following table summarizes SM's second quarter and full-year 2026 operational and financial guidance, reflecting raised full-year production to 410–430 MBoe/d and reaffirmed capital expenditures of $2.65–$2.85 billion.

| Production | 2Q 2026 | | Full Year 2026 | | Total Production (MMBoe)1 | 39 – 41 | | 150 – 157 | | Total Production (MBoe/d)1 | 435 – 450 | | 410 – 430 | | Oil Production (MBbl/d)1 | 228 – 235 | | 222 – 228 | | | | | | | Capital Program ($ MM) | | | | | Capital Expenditures2 | $815 – $855 | | $2,650 – $2,850 | | DC&E | $710 – $750 | | $2,300 – $2,500 | | Facility, Land, and Other | ~$95 | | ~$280 | | One-Time Capital Costs3 | ~$10 | | ~$70 | | Net Wells Drilled | ~75 | | ~245 | | Net Wells Turned-In-Line | ~75 | | ~295 | | Avg. Well Cost ($/lateral ft)4 | | | ~$710 | | | | | | | Operating Expenses ($/Boe) | | | | | Lease Operating Expense | | | $6.50 – $6.80 | | Transportation | | | $3.60 – $3.90 | | Production Taxes (% of oil, gas and NGL revenue) | | | ~5.5% | | Ad Valorem Taxes | | | ~$0.50 | | DD&A | | | $13.00 – $15.00 | | | | | | | General & Administrative ($ MM) | | | | | Recurring G&A5 | | | $280 – $300 | | One-Time Integration & Transaction — Cash6 | | | ~$150 | | One-Time Integration & Transaction — Non-Cash6 | | | ~$30 | | | | | | | Other ($MM) | | | | | Exploration Expense | | | ~$100 | | Cash Taxes: | | | | | $60–$70/Bbl (WTI) | | | ~$20 | | $70–$75/Bbl (WTI) | | | $20 – $60 | | $75–$80/Bbl (WTI) | | | $60 – $90 |

| | | Notes: | | 1 FY26 production guidance includes 11 months of Civitas contribution following the January 30, 2026, Merger close, the conversion of certain acquired volumes to two-stream reporting, and the South Texas Divestiture that closed on April 30, 2026. | | 2 Indicates a non-GAAP measure or metric. Refer to the "Non-GAAP Definitions, Reconciliations and Disclosures" section in the Appendix. FY26 capital expenditures before changes in accruals includes ~ $50 million of expected synergies. | | 3Includes one-time, non-recurring capital costs related to Merger integration and the South Texas Divestiture. | | 4 Company-wide average 2026 expected well cost and includes well connection/equipment costs. | | 5 FY26 recurring G&A guidance includes ~$50 million of stock-based compensation. | | 6 The majority of one-time integration and transaction costs (both cash and non-cash) were incurred in 1Q26. |

Webcast Details

SM plans to host a conference call and webcast at 8:00 a.m. MT (10:00 a.m. ET) tomorrow, May 7, 2026, to discuss details of the Company's performance for the quarter and certain forward-looking information. The call and accompanying presentation may be accessed at https://www.sm-energy.com/investors. Participants can also dial into the conference call at (877) 407-6050 or +1 (201) 689-8022 for international.

About the SM Energy Company

SM is a premier, scaled operator of top-tier oil and gas assets across four leading U.S. shale basins: the Permian Basin, DJ Basin, South Texas, and Uinta Basin. SM routinely posts important information about the Company on its website. SM is focused on operational excellence, disciplined capital allocation, and delivering growing returns to stockholders. For more information, visit www.sm-energy.com.

Forward Looking Statements

This release contains forward-looking statements within the meaning of securities laws. The words "anticipate," "deliver," "demonstrate," "establish," "estimate," "expects," "goal," "generate," "guidance," "maintain," "objectives," "optimize," "plan," "priority," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include, among other things, the Company's 2026 plans and strategic objectives; the Company's intention to redeem in full its 2026 Senior Notes, plans to enhance the Company's return of capital program and planned allocation of free cash flow to dividends and share repurchases; expectations regarding increased scale; integration objectives and synergy targets, including the expected timing and magnitude; plans to achieve the Company's $1.0 billion-plus divestiture target; statements regarding the South Texas Divestiture; expected future commodity prices; assumptions and projections for the second quarter and full year 2026 regarding guidance for total production; oil production; the Company's capital plan, including total capital expenditures; drilling, completion and equipment costs; facility, land and other costs; one-time capital costs; Company average cost per lateral foot; certain operating expenses, including lease operating expense, transportation, production and ad valorem taxes; DD&A; general and administrative expense, and certain other costs, including exploration expense and cash taxes. These statements involve known and unknown risks, which may cause the Company's actual results to differ materially from results expressed or implied by the forward-looking statements. Future results may be impacted by the risks discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission, specifically the 2025 Form 10-K. The forward-looking statements contained herein speak as of the date of this release. Although the Company may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so, except as required by securities laws.

Investor Relations

Megan Hays, Vice President, Investor Relations, mhays@sm-energy.com Meghan Dack, Director, Investor Relations, mdack@sm-energy.com

| SM ENERGY COMPANY | | | | | | | | | | | FINANCIAL HIGHLIGHTS (UNAUDITED) | | | | | | | | | | | March 31, 2026 | | | | | | | | | | | | | | | | | | | | | | Production Data | | | | | | | | | | | | For the Three Months Ended | | Percent Change

Between | | | | | | | | | March 31, | | December 31, | | March 31, | | 1Q26 & 4Q25 | | 1Q26 & 1Q25 | | | 2026 | | 2025 | | 2025 | | | | | | Realized sales price (before the effect of net derivative settlements): | | | | | | | | | | | Oil (per Bbl) | $ 73.69 | | $ 58.17 | | $ 70.56 | | 27 % | | 4 % | | Gas (per Mcf) | $ 1.72 | | $ 1.81 | | $ 3.30 | | (5) % | | (48) % | | NGLs (per Bbl) | $ 21.58 | | $ 20.67 | | $ 25.86 | | 4 % | | (17) % | | Equivalent (per Boe) | $ 44.22 | | $ 36.92 | | $ 47.29 | | 20 % | | (6) % | | Realized sales price (including the effect of net derivative settlements): (1) | | | | | | | | | | | Oil (per Bbl) | $ 69.56 | | $ 60.83 | | $ 70.87 | | 14 % | | (2) % | | Gas (per Mcf) | $ 2.27 | | $ 2.28 | | $ 3.50 | | — % | | (35) % | | NGLs (per Bbl) | $ 21.75 | | $ 20.76 | | $ 24.87 | | 5 % | | (13) % | | Equivalent (per Boe) | $ 43.32 | | $ 39.32 | | $ 47.73 | | 10 % | | (9) % | | Net production volumes: (2) | | | | | | | | | | | Oil (MMBbl) | 17.1 | | 10.0 | | 9.3 | | 72 % | | 84 % | | Gas (Bcf) | 72.4 | | 39.4 | | 36.4 | | 84 % | | 99 % | | NGLs (MMBbl) | 4.2 | | 2.5 | | 2.4 | | 69 % | | 79 % | | Equivalent (MMBoe) | 33.4 | | 19.0 | | 17.8 | | 76 % | | 88 % | | Average net daily production: (2)(3) | | | | | | | | | | | Oil (MBbl per day) | 190.3 | | 108.4 | | 103.7 | | 76 % | | 84 % | | Gas (MMcf per day) | 804.1 | | 428.3 | | 404.2 | | 88 % | | 99 % | | NGLs (MBbl per day) | 46.9 | | 27.1 | | 26.2 | | 73 % | | 79 % | | Equivalent (MBoe per day) | 371.2 | | 206.9 | | 197.3 | | 79 % | | 88 % | | Per Boe data: | | | | | | | | | | | Lease operating expense | $ 6.25 | | $ 5.55 | | $ 6.13 | | 13 % | | 2 % | | Transportation costs | $ 3.65 | | $ 3.67 | | $ 3.92 | | (1) % | | (7) % | | Production taxes | $ 2.43 | | $ 1.41 | | $ 2.07 | | 72 % | | 17 % | | Ad valorem tax expense | $ 0.47 | | $ 0.23 | | $ 0.55 | | 104 % | | (15) % | | General and administrative (4)(5) | $ 5.20 | | $ 2.10 | | $ 2.22 | | 148 % | | 134 % | | Net derivative settlement gain (loss) | $ (0.90) | | $ 2.39 | | $ 0.44 | | (138) % | | (305) % | | Depletion, depreciation, and amortization | $ 12.91 | | $ 16.73 | | $ 15.20 | | (23) % | | (15) % |

| | | (1)Indicates a non-GAAP measure or metric. Post-hedge is calculated as the average realized price after the effects of commodity net derivative settlements. The Company believes this metric is useful to management and the investment community to understand the effects of commodity net derivative settlements on average realized price. | | (2)Amounts and percentage changes may not calculate due to rounding. | | (3)Average net daily production is calculated as total production for the quarter divided by 90 days. The results for the three months ended March 31, 2026 reflect only two months of production from the Civitas assets acquired. | | (4)Includes recurring non-cash stock-based compensation expense per Boe of $0.26, $0.31, and $0.32 for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively. | | (5) For the three months ended March 31, 2026, includes one-time integration costs of $3.52 per Boe, of which $3.06 per Boe is cash costs and $0.46 per Boe is non-cash stock-based compensation. |

| SM ENERGY COMPANY | | | | | FINANCIAL HIGHLIGHTS (UNAUDITED) | | | | | March 31, 2026 | | | | | | | | | | Condensed Consolidated Balance Sheets | | | | | (in millions, except share data) | March 31, | | December 31, | | ASSETS | 2026 | | 2025 | | Current assets: | | | | | Cash and cash equivalents | $ 449 | | $ 368 | | Accounts receivable | 915 | | 331 | | Derivative assets | 201 | | 83 | | Prepaid expenses and other | 106 | | 29 | | Total current assets | 1,671 | | 811 | | Property and equipment (successful efforts method): | | | | | Proved oil and gas properties | 22,280 | | 16,012 | | Accumulated depletion, depreciation, and amortization | (7,891) | | (8,793) | | Unproved oil and gas properties, net of valuation allowance of $12 and $12, respectively | 1,078 | | 460 | | Wells in progress | 835 | | 458 | | Properties held for sale, net | 666 | | — | | Other property and equipment, net of accumulated depreciation of $65 and $63, respectively | 133 | | 65 | | Total property and equipment, net | 17,101 | | 8,202 | | Noncurrent assets: | | | | | Derivative assets | 27 | | 6 | | Other noncurrent assets | 345 | | 234 | | Total noncurrent assets | 372 | | 240 | | Total assets | $ 19,144 | | $ 9,253 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Current liabilities: | | | | | Accounts payable and accrued expenses | $ 2,221 | | $ 690 | | Senior Notes, net | 1,235 | | 419 | | Derivative liabilities | 703 | | 2 | | Other current liabilities | 121 | | 58 | | Total current liabilities | 4,280 | | 1,169 | | Noncurrent liabilities: | | | | | Revolving credit facility | — | | — | | Senior Notes, net | 6,741 | | 2,296 | | Asset retirement obligations | 477 | | 150 | | Deferred tax liabilities, net | 315 | | 724 | | Derivative liabilities | 2 | | 2 | | Other noncurrent liabilities | 461 | | 102 | | Total noncurrent liabilities | 7,996 | | 3,274 | | Stockholders' equity: | | | | | Common stock, $0.01 par value - authorized: 400,000,000 and 200,000,000 shares, respectively; issued and outstanding: 239,696,577 and 114,630,905 shares, respectively | 2 | | 1 | | Additional paid-in capital | 3,962 | | 1,517 | | Retained earnings | 2,903 | | 3,291 | | Accumulated other comprehensive income | 1 | | 1 | | Total stockholders' equity | 6,868 | | 4,810 | | Total liabilities and stockholders' equity | $ 19,144 | | $ 9,253 |

| SM ENERGY COMPANY | | | | | FINANCIAL HIGHLIGHTS (UNAUDITED) | | | | | March 31, 2026 | | | | | | | | | | Condensed Consolidated Statements of Operations | | | | | (in millions, except per share data) | For the Three Months Ended

March 31, | | | | | 2026 | | 2025 | | Operating revenues and other income: | | | | | Oil, gas, and NGL production revenue | $ 1,477 | | $ 840 | | Other operating income | 2 | | 5 | | Total operating revenues and other income | 1,479 | | 845 | | Operating expenses: | | | | | Oil, gas, and NGL production expense | 428 | | 225 | | Depletion, depreciation, and amortization | 432 | | 270 | | Exploration (1) | 26 | | 12 | | General and administrative (1)(2) | 174 | | 39 | | Net derivative loss (3) | 697 | | 17 | | Other operating expense(2) | 20 | | 5 | | Total operating expenses | 1,777 | | 568 | | Income (loss) from operations | (298) | | 276 | | Interest expense | (113) | | (44) | | Other non-operating income, net | 1 | | — | | Income (loss) before income taxes | (410) | | 232 | | Income tax (expense) benefit | 75 | | (50) | | Net income (loss) | $ (335) | | $ 182 | | | | | | | Basic weighted-average common shares outstanding | 199 | | 115 | | Diluted weighted-average common shares outstanding | 199 | | 115 | | Basic net income (loss) per common share | $ (1.68) | | $ 1.59 | | Diluted net income (loss) per common share | $ (1.68) | | $ 1.59 | | | | | | | (1) Recurring non-cash stock-based compensation included in: | | | | | Exploration expense | $ 2 | | $ 1 | | General and administrative expense | 8 | | 6 | | Total non-cash stock-based compensation | $ 10 | | $ 7 | | | | | | | (2) Transaction and integration costs included in: | | | | | General and administrative (includes $15 million non-cash stock-based compensation associated with the merger) | $ 118 | | $ — | | Other operating expenses | 17 | | — | | Total transaction and integration costs | $ 135 | | $ — | | | | | | | (3) The net derivative loss line item consists of the following: | | | | | Net derivative settlement (gain) loss | $ 30 | | $ (8) | | Net loss on fair value changes | 667 | | 25 | | Total net derivative loss | $ 697 | | $ 17 |