SM Energy Company press release

SM Energy Reports Third Quarter 2026 Results

2026-11-03

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

PR Newswire

Operating cash flow of $1.1 billion funds $417 million of debt redemption and $133 million of capital returned to stockholders

DENVER, Nov. 3, 2026/PRNewswire/ -- SM Energy Company (the "Company" or "SM") (NYSE: SM) today reported financial and operating results for the third quarter 2026. Investor materials, including accompanying slides, can be accessed at www.sm-energy.com/investors. A conference call is scheduled for 8 a.m. MT/10 a.m. ET on November 4, 2026. Participation details are included in this release.

SM continues to execute against its three strategic priorities: Integrate, Execute and Bolster. In the third quarter, the Company substantially completed its Civitas merger (the "Merger") integration and exceeded targeted run-rate synergies, transitioning the business to continuous improvement.

Third quarter 2026 performance is summarized below:

Integrate –

Actioned approximately $400 million of Merger run-rate synergies – twice the original $200 million target and $25 million greater than the revised $375 million target. NPV-10 of merger synergies increased to $2.0 billion from $1.8 billion.

Execute –

Net income was $93 million, or $0.39 per diluted share; adjusted net income1was $465 million, or $1.95 per diluted share.1 Generated operating cash flow of $1.1 billion; capital expenditures totaled $711 million, or $747 million before changes in accruals.1 Delivered adjusted free cash flow1of $397 million. Adjusted EBITDAX1was $1.3 billion. Average net daily production totaled 433 MBoe/d, including 230 MBbl/d of oil. Narrowed full-year 2026 capital guidance to approximately $2.75 billion.

Bolster –

Returned $133 million of capital to stockholders, or approximately 34% of adjusted free cash flow,1 through $81 million in share repurchases (2.3 million shares) and SM's $0.22 per share quarterly dividend. Redeemed all $417 million aggregate principal amount of 6.625% Senior Notes due 2027 at par, resulting in no maturities until mid-2028. Reduced net debt1to $6.0 billion, down from $7.4 billion at March 31, 2026.

| 1Adjusted net income and adjusted net income per diluted share; capital expenditures before changes in accruals; adjusted free cash flow; adjusted EBITDAX; and net debt are non-GAAP measures. Refer to "Definitions of Non-GAAP Measures and Metrics as Calculated by the Company" and the accompanying reconciliations later in this release. |

SM Energy President and CEO Beth McDonald said, "We are meaningfully transforming SM Energy – exceeding our merger synergy target, substantially achieving our divestiture target and materially strengthening the balance sheet. In the third quarter, we generated $1.1 billion of operating cash flow, redeemed $417 million of debt and returned $133 million to stockholders. We are modestly lowering full-year oil guidance to 220-222 MBbl/d due to transitory factors, while reiterating our full-year total production outlook. Importantly, despite service-cost inflation, we now expect 2026 capital of approximately $2.75 billion, the midpoint of our prior range, supported by synergy capture and ongoing efficiency gains. We expect the factors leading to our lower oil production outlook to be resolved in early 2027.

"This is a multi-year journey, and our strong and resilient balance sheet is the foundation. We remain on track for low one-times leverage at mid-cycle prices by year-end 2026, strengthening the capacity for durable stockholder returns. With integration substantially complete, our focus is on disciplined execution, continuous improvement and increasing the capital efficiency of the portfolio to compound long-term value for stockholders."

Third Quarter 2026 Review

Total production was 433 MBoe/d, including 230 MBbl/d of oil. Oil volumes were impacted by higher-than-planned downtime in the Permian Basin, related to compliance and safety work on assets acquired in the Merger and the temporary shut-in of wells during simultaneous operations, which reduced oil volumes by approximately 2 MBbl/d. We also experienced approximately 4 MBbl/d of takeaway constraints in the Uinta Basin. The Permian factors that affected third-quarter volumes have been addressed, and we expect the Uinta takeaway constraints to be resolved in early 2027. Net income was $0.39 per diluted share, which includes a $477 million non-cash loss from changes in the fair value of the Company's commodity derivative contracts. Income tax expense of $30 million included current tax expense of $37 million, reflecting higher realized oil prices. During the third quarter, SM repurchased 2.3 million shares for $81 million and paid a $0.22 per share quarterly dividend, resulting in approximately 34% of adjusted free cash flow1being returned to stockholders. Year-to-date share repurchases total $165 million.

Guidance

SM lowered its full-year 2026 oil production guidance by 1% to 220-222 MBbl/d, primarily related to reasons outlined above. For full-year 2026, total production guidance was narrowed to 420-422 MBoe/d. Full-year capital expenditures are expected to be approximately $2.75 billion, or the midpoint of the prior guidance range. Fourth quarter 2026 production is expected to be 435-445 MBoe/d, including 229-239 MBbl/d of oil, with capital expenditures of approximately $610 million. Included in our oil volume guidance is a continued impact from takeaway constraints in the Uinta Basin. Full-year 2026 cash tax guidance is updated to approximately $100-$120 million. See the table below for detailed fourth quarter and full-year guidance.

The following table summarizes SM's fourth quarter and full-year 2026 operational and financial guidance.

| Production | 4Q 2026 | Full Year 2026 | | Total Production (MMBoe)1 | 40 – 41 | 153 – 154 | | Total Production (MBoe/d)1 | 435 – 445 | 420 – 422 | | Oil Production (MBbl/d)1 | 229 – 239 | 220 – 222 | | | | | | Capital Program ($MM) | | | | Capital Expenditures2 | ~$610 | ~$2,750 | | DC&E | | ~$2,400 | | Facility, Land, and Other | | ~$280 | | One-Time Capital Costs3 | | ~$70 | | Net Wells Drilled | ~55 | ~245 | | Net Wells Turned-In-Line | ~80 | ~295 | | Avg. Well Cost ($/lateral ft)4 | | ~$710 | | | | | | Operating Expenses ($/Boe) | | | | Lease Operating Expense | | $6.60 – $6.80 | | Transportation | | $3.55 – $3.65 | | Production Taxes (% of oil, gas and NGL revenue) | | ~6% | | Ad Valorem Taxes | | ~$0.50 | | DD&A | | ~$14.50 | | | | | | General & Administrative ($MM) | | | | Recurring G&A5 | | $230 – $250 | | One-Time Transaction & Integration — Cash6 | | ~$160 | | One-Time Transaction & Integration — Non-Cash6 | | ~$20 | | | | | | Other ($MM) | | | | Exploration Expense | | ~$100 | | Cash Taxes | | $100 – $120 |

| | | Notes: | | 1Full-year 2026 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 four months of production from certain South Texas assets divested on April 30, 2026 (the "Galvan Divestiture"). Fourth quarter 2026 oil guidance includes the continued impact of Uinta takeaway constraints, which are expected to be resolved in early 2027. | | 2Indicates a non-GAAP measure or metric. Refer to "Definitions of Non-GAAP Measures and Metrics as Calculated by the Company" and the accompanying reconciliations later in this release. Full-year 2026 capital expenditures before changes in accruals include ~$50 million of expected synergies. | | 3Includes one-time, non-recurring capital costs related to Merger integration and the Galvan Divestiture. | | 4Company-wide average 2026 expected well cost, including well connection/equipment costs. | | 5Full-year 2026 recurring G&A guidance includes ~$35 million of stock-based compensation. Recurring G&A in fourth quarter 2026 is expected to be higher quarter over quarter due to year-end items. | | 6The majority of one-time transaction and integration costs (both cash and non-cash) were incurred in the first half of 2026. |

Webcast Details

SM plans to host a conference call and webcast at 8 a.m. MT/10 a.m. ET tomorrow, November 4, 2026. The call and accompanying presentation may be accessed at www.sm-energy.com/investors. Participants can also dial into the conference call at (877) 407-6050 or +1 (201) 689-8022 for international participants.

About 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 is focused on operational excellence, disciplined capital allocation, and delivering growing returns to stockholders. SM routinely posts important information about the Company on its website. 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, including achievement of low one-times leverage by year-end 2026; the Company's future return of capital plans and framework; expectations regarding synergy achievement, continuous improvement and capital efficiency following substantial completion of integration; assumptions and projections for the fourth quarter and full year 2026 regarding guidance for total production and oil production; the Company's capital plan, including total capital expenditures; drilling, completion and equipment costs; facility, land and other costs; one-time transaction, integration and capital costs; Company average cost per lateral foot; number of net wells to be drilled and turned in line; 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. 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) | | | | | | | | | | | | | | | September 30, 2026 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Production Data | | | | | | | | | | | | | | | | For the Three Months Ended | | Percent Change

Between | | For the Nine Months Ended | | Percent Change Between | | | | | | | | | September 30, | | June

30, | | September 30, | | 3Q26

& 2Q26 | | September 30, | | September 30, | | YTD 2026 & 2025 | | | 2026 | | 2026 | | 2025 | | | 2026 | | 2025 | | | | | Realized sales price (before the effect of net derivative settlements): | | | | | | | | | | | | | | | Oil (per Bbl) | $ 85.76 | | $ 96.85 | | $ 63.83 | | (11) % | | $ 86.19 | | $ 65.28 | | 32 % | | Gas (per Mcf) | $ 2.48 | | $ 0.17 | | $ 2.19 | | 1,359 % | | $ 1.43 | | $ 2.54 | | (44) % | | NGLs (per Bbl) | $ 29.40 | | $ 24.69 | | $ 20.79 | | 19 % | | $ 25.33 | | $ 22.73 | | 11 % | | Equivalent (per Boe) | $ 54.23 | | $ 53.86 | | $ 41.23 | | 1 % | | $ 51.15 | | $ 43.15 | | 19 % | | Realized sales price (including the effect of net derivative settlements):1 | | | | | | | | | | | | | | | Oil (per Bbl) | $ 73.92 | | $ 80.62 | | $ 65.40 | | (8) % | | $ 75.03 | | $ 66.61 | | 13 % | | Gas (per Mcf) | $ 2.99 | | $ 1.54 | | $ 2.77 | | 94 % | | $ 2.26 | | $ 2.97 | | (24) % | | NGLs (per Bbl) | $ 29.45 | | $ 24.83 | | $ 20.79 | | 19 % | | $ 25.44 | | $ 22.42 | | 13 % | | Equivalent (per Boe) | $ 49.02 | | $ 48.36 | | $ 43.21 | | 1 % | | $ 47.11 | | $ 44.68 | | 5 % | | Net production volumes:2,3 | | | | | | | | | | | | | | | Oil (MMBbl) | 21.2 | | 20.9 | | 10.5 | | 1 % | | 59.2 | | 30.3 | | 95 % | | Gas (Bcf) | 84.4 | | 86.8 | | 38.5 | | (3) % | | 243.5 | | 111.1 | | 119 % | | NGLs (MMBbl) | 4.6 | | 4.6 | | 2.8 | | (1) % | | 13.5 | | 7.6 | | 77 % | | Equivalent (MMBoe) | 39.8 | | 40.0 | | 19.7 | | — % | | 113.3 | | 56.5 | | 101 % | | Average net daily production:2,3 | | | | | | | | | | | | | | | Oil (MBbl per day) | 230.2 | | 229.8 | | 113.9 | | — % | | 216.9 | | 111.2 | | 95 % | | Gas (MMcf per day) | 917.0 | | 953.7 | | 418.2 | | (4) % | | 892.0 | | 406.9 | | 119 % | | NGLs (MBbl per day) | 50.1 | | 51.0 | | 30.2 | | (2) % | | 49.3 | | 27.8 | | 77 % | | Equivalent (MBoe per day) | 433.1 | | 439.7 | | 213.8 | | (2) % | | 414.9 | | 206.8 | | 101 % | | Per Boe data:2 | | | | | | | | | | | | | | | Lease operating expense | $ 7.02 | | $ 6.71 | | $ 5.67 | | 5 % | | $ 6.69 | | $ 5.76 | | 16 % | | Transportation costs | $ 3.53 | | $ 3.57 | | $ 3.77 | | (1) % | | $ 3.58 | | $ 3.94 | | (9) % | | Production taxes | $ 3.47 | | $ 3.25 | | $ 1.69 | | 7 % | | $ 3.09 | | $ 1.78 | | 74 % | | Ad valorem tax expense | $ 0.38 | | $ 0.37 | | $ 0.51 | | 3 % | | $ 0.40 | | $ 0.53 | | (25) % | | General and administrative4,5 | $ 1.40 | | $ 1.98 | | $ 2.00 | | (29) % | | $ 2.72 | | $ 2.14 | | 27 % | | Net derivative settlement gain (loss) | $ (5.20) | | $ (5.50) | | $ 1.98 | | 5 % | | $ (4.04) | | $ 1.53 | | (364) % | | Depletion, depreciation, and amortization | $ 14.81 | | $ 14.81 | | $ 16.54 | | — % | | $ 14.25 | | $ 15.73 | | (9) % | | | | | | | | | | | | | | | | | 1Indicates a non-GAAP metric calculated as the average realized price after the effects of net commodity derivative settlements. The Company believes this metric is useful to management and the investment community to understand the effects of net commodity derivative settlements on average realized price. | | | | | | | | | | | | | | | 2 Amounts and percentage changes may not calculate due to rounding. | | | | | | | | | | | | | | | 3 The results for the nine months ended September 30, 2026, include eight months of production from the Civitas assets acquired on January 30, 2026, and four months of production from the Galvan Divestiture on April 30, 2026. | | | | | | | | | | | | | | | 4Includes recurring non-cash stock-based compensation expense of $0.26, $0.12, and $0.34 per Boe for the three months ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively, and $0.21 and $0.30 per Boe for the nine months ended September 30, 2026, and 2025, respectively. | | | | | | | | | | | | | | | 5Includes one-time costs (consisting of both cash and non-cash items) of $0.11 per Boe and $0.92 per Boe for the three months ended September 30, 2026 and June 30, 2026, respectively, and $1.40 per Boe for the nine months ended September 30, 2026. | | | | | | | | | | | | | |

| SM ENERGY COMPANY | | | | | FINANCIAL HIGHLIGHTS (UNAUDITED) | | | | | September 30, 2026 | | | | | | | | | | Condensed Consolidated Balance Sheets | | | | | (in millions, except share data) | September 30, | | December 31, | | ASSETS | 2026 | | 2025 | | Current assets: | | | | | Cash and cash equivalents | $ 442 | | $ 368 | | Accounts receivable | 1,175 | | 331 | | Derivative assets | 93 | | 83 | | Prepaid expenses and other | 107 | | 29 | | Total current assets | 1,817 | | 811 | | Property and equipment (successful efforts method): | | | | | Proved oil and gas properties | 23,924 | | 16,012 | | Accumulated depletion, depreciation, and amortization | (9,040) | | (8,793) | | Unproved oil and gas properties, net of valuation allowance of $12 and $12, respectively | 885 | | 460 | | Wells in progress | 848 | | 458 | | Other property and equipment, net of accumulated depreciation of $68 and $63, respectively | 138 | | 65 | | Total property and equipment, net | 16,755 | | 8,202 | | Noncurrent assets: | | | | | Derivative assets | 12 | | 6 | | Other noncurrent assets | 379 | | 234 | | Total noncurrent assets | 391 | | 240 | | Total assets | $ 18,963 | | $ 9,253 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Current liabilities: | | | | | Accounts payable and accrued expenses | $ 2,505 | | $ 690 | | Senior Notes, net | — | | 419 | | Derivative liabilities | 552 | | 2 | | Other current liabilities | 130 | | 58 | | Total current liabilities | 3,187 | | 1,169 | | Noncurrent liabilities: | | | | | Revolving credit facility | — | | — | | Senior Notes, net | 6,614 | | 2,296 | | Asset retirement obligations | 426 | | 150 | | Deferred tax liabilities, net | 609 | | 724 | | Derivative liabilities | 13 | | 2 | | Other noncurrent liabilities | 337 | | 102 | | Total noncurrent liabilities | 7,999 | | 3,274 | | Stockholders' equity: | | | | | Common stock, $0.01 par value - authorized: 400,000,000 and 200,000,000 shares, respectively; issued and outstanding: 235,615,045 and 114,630,905 shares, respectively | 2 | | 1 | | Additional paid-in capital | 3,813 | | 1,517 | | Retained earnings | 3,961 | | 3,291 | | Accumulated other comprehensive income | 1 | | 1 | | Total stockholders' equity | 7,777 | | 4,810 | | Total liabilities and stockholders' equity | $ 18,963 | | $ 9,253 |

| SM ENERGY COMPANY | | | | | | | | | FINANCIAL HIGHLIGHTS (UNAUDITED) | | | | | | | | | September 30, 2026 | | | | | | | | | | | | | | | | | | Condensed Consolidated Statements of Operations | | | | | | | | | (in millions, except per share data) | For the Three Months Ended

September 30, | | For the Nine Months Ended

September 30, | | | | | | | 2026 | | 2025 | | 2026 | | 2025 | | Operating revenues and other income: | | | | | | | | | Oil, gas, and NGL production revenue | $ 2,160 | | $ 811 | | $ 5,793 | | $ 2,436 | | Gain (loss) on divestiture activity | (2) | | — | | 260 | | — | | Other operating income | 12 | | 1 | | 96 | | 13 | | Total operating revenues and other income | 2,170 | | 812 | | 6,149 | | 2,449 | | Operating expenses: | | | | | | | | | Oil, gas, and NGL production expense | 574 | | 229 | | 1,558 | | 678 | | Depletion, depreciation, and amortization | 590 | | 325 | | 1,614 | | 888 | | Exploration1 | 22 | | 12 | | 69 | | 39 | | General and administrative1,2 | 56 | | 39 | | 309 | | 121 | | Net derivative (gain) loss3 | 684 | | (45) | | 1,109 | | (107) | | Other operating expense2 | 8 | | 5 | | 56 | | 12 | | Total operating expenses | 1,934 | | 565 | | 4,715 | | 1,631 | | Income from operations | 236 | | 246 | | 1,434 | | 818 | | Interest expense | (116) | | (43) | | (340) | | (130) | | Other non-operating income, net | 3 | | 1 | | 8 | | 1 | | Income before income taxes | 123 | | 204 | | 1,102 | | 689 | | Income tax expense | (30) | | (49) | | (273) | | (150) | | Net income | $ 93 | | $ 155 | | $ 829 | | $ 539 | | | | | | | | | | | Basic weighted-average common shares outstanding | 237 | | 115 | | 225 | | 115 | | Diluted weighted-average common shares outstanding | 239 | | 115 | | 226 | | 115 | | Basic net income per common share | $ 0.39 | | $ 1.35 | | $ 3.67 | | $ 4.70 | | Diluted net income per common share | $ 0.39 | | $ 1.35 | | $ 3.66 | | $ 4.69 | | | | | | | | | | | 1 Recurring non-cash stock-based compensation included in: | | | | | | | | | Exploration expense | $ 2 | | $ 1 | | $ 7 | | $ 4 | | General and administrative expense | 11 | | 7 | | 23 | | 17 | | Total non-cash stock-based compensation | $ 13 | | $ 8 | | $ 30 | | $ 21 | | | | | | | | | | | 2 Transaction and integration costs included in: | | | | | | | | | General and administrative4 | $ 4 | | $ — | | $ 159 | | $ — | | Other operating expense | 1 | | — | | 18 | | — | | Total transaction and integration costs | $ 5 | | $ — | | $ 177 | | $ — | | | | | | | | | | | 3 The net derivative (gain) loss line item consists of the following: | | | | | | | | | Net derivative settlement (gain) loss | $ 207 | | $ (39) | | $ 457 | | $ (86) | | Net (gain) loss on fair value changes | 477 | | (7) | | 652 | | (20) | | Total net derivative (gain) loss | $ 684 | | $ (45) | | $ 1,109 | | $ (107) |