SM Energy Company SM reported first-quarter 2025 adjusted earnings of $1.76 per share, which surpassed the Zacks Consensus Estimate of $1.60. The bottom line also increased from the year-ago quarter’s figure of $1.41.

Total quarterly revenues of $845 million beat the Zacks Consensus Estimate of $822 million. The top line increased from the year-ago quarter’s level of $560 million. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The strong quarterly results were primarily driven by increased oil equivalent production volumes and higher realized oil-equivalent prices.

SM Energy Company Price, Consensus and EPS Surprise

SM Energy Company price-consensus-eps-surprise-chart | SM Energy Company Quote

Operational Performance

Production

SM Energy’s first-quarter production volumes amounted to 197.3 thousand barrels of oil equivalent per day (MBoe/d) (almost 53% oil), reflecting an increase of 36% from the year-ago level of 145.1 MBoe/d. The Zacks Consensus Estimate for the same was pinned at 196 MBoe/d.

Oil production increased approximately 63% year over year to 103.7 thousand barrels per day (MBbls/d). The Zacks Consensus Estimate for the same was pegged at 103 MBbls/d.

The company produced 404.2 million cubic feet per day of natural gas in the quarter, up 18% year over year. Natural gas liquids production totaled 26.2 MBbls/d in the first quarter. The figure improved 8% on a year-over-year basis.

Realized Prices

Before the effects of derivative settlements, the average realized price per Boe was $47.29 compared with $42.39 in the year-ago quarter. The average realized oil price slipped 7% to $70.56 per barrel.

The average realized price of natural gas improved 51% year over year to $3.30 per thousand cubic feet, while that for natural gas liquids increased 13% to $25.86 per barrel.

Costs & Expenses

On the cost front, unit lease operating expenses increased 11% year over year to $6.13 per Boe. General and administrative expenses decreased 3% to $2.22 per Boe from the prior-year level of $2.60. Transportation expenses jumped 89% to $3.92 per Boe.

Total hydrocarbon production expenses in the quarter were $225 million compared with the year-ago level of $137.4 million. Total exploration expenses were $11.8 million, lower than the year-ago quarter’s figure of $18.6 million.

Capex

Capital expenditures in the March-end quarter totaled $440.8 million, and adjusted free cash flow amounted to $73.8 million.

Balance Sheet

As of March 31, 2025, SM Energy had cash and cash equivalents of $54,000 and a net debt of $2.77 billion.

Guidance

For the second quarter of 2025, SM Energy expects production to be in the range of 197-203 MBoe/d. Of the total production, oil is expected to contribute 54-55%. Capital expenditures (net of the change in capital accruals), excluding acquisitions, are forecasted to be in the $375-$385 million range. Lease operating expenses are anticipated to be $6.10 per Boe in the second quarter.

For full-year 2025, the company anticipates net production volume to be in the range of 200-215 MBoe/d. Oil is anticipated to account for 51-52% of the total production. At the midpoint, this implies a year-over-year increase of approximately 22% in net production on a Boe basis. Full-year capital expenditures are expected to be approximately $1.3 billion. Lease operating expenses are anticipated to be $5.90 per Boe for full-year 2025.

SM’s Zacks Rank and Key Picks

SM currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Nine Energy Service NINE and Kinder Morgan, Inc. KMI. While Archrock currently sports a Zacks Rank #1 (Strong Buy), Nine Energy Service and Kinder Morgan carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues. With natural gas playing an increasingly important role in the energy transition journey, AROC is expected to witness sustained demand for its services.

Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. It operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position it for growth in the long run.

Kinder Morgan is a leading midstream player with a stable and resilient business model in North America, largely driven by take-or-pay contracts. KMI’s stable business model shields it from commodity price volatility, resulting in predictable earnings and facilitating reliable capital returns to shareholders. In the first quarter of 2025, Kinder Morgan declared quarterly cash dividends of 29.25 cents per share, reflecting an approximately 2% increase from the prior-year level. 

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