SM Energy Company (NYSE:SM) Q1 2024 Summary Earnings Conference Call May 2, 2024 5:00 PM ET

Company Participants

Jennifer Martin Samuels - Vice President of Investor Relations and ESG Stewardship
Herb Vogel - President and Chief Executive Officer
Wade Pursell - Executive Vice President and Chief Financial Officer

Conference Call Participants

Jennifer Martin Samuels

Good afternoon and welcome to SM Energy’s First Quarter 2024 Results Webcast. Before we get started on our prepared remarks, I remind you that our discussion today will include forward-looking statements. I direct you to Slide 2 of the accompanying slide deck, Page 5 of the accompanying earnings release, and the risk factors section of our most recently filed 10-K, which describe risks associated with forward-looking statements that could cause actual results to differ.

We will also discuss non-GAAP measures and metrics. Definitions and reconciliations of non-GAAP measures and metrics, to the most directly comparable GAAP measures, and discussion of forward-looking non-GAAP measures, can be found in the back of the slide deck and earnings release.

Today’s prepared remarks will be given by our President and CEO, Herb Vogel, and our CFO, Wade Pursell.

I will now turn the call over to Herb.

Herb Vogel

Thank you, Jennifer. Good afternoon and thank you for your interest in SM Energy. 2024 is off to a very strong start as our focus on operational execution delivered excellent bottom line results. I’m pleased to headline this quarter’s call by increasing our production guidance and lowering our capital expenditure guidance for full-year 2024. As you’ll hear in today’s call, given our most recent outlook for well performance, development pace, and costs, we have the confidence to up our guidance now.

In the relatively short period since we delivered our 2024 operating plan at the end of February, we have made steady progress on each of our core objectives, meeting or exceeding expectations on what has been described as a straightforward 2024 operating plan. As a result, we’ll keep our prepared remarks brief today and look forward to our live Q&A discussion tomorrow.

Turning to Slide 5 and our core objectives for 2024. Our first Core Objective for 2024 is to focus on operational execution to deliver low-breakeven, high-return wells. Here, we delivered better than expected well performance in the first quarter, beating the high end of our guidance. Outperformance is attributable mostly to South Texas from two sources. We were able to complete 14 wells on average about two weeks early, thereby accelerating the start of their production, and performance of new wells reached peak rates earlier than anticipated. In turn, higher production drove better bottom line results for earnings, EBITDAX, and free cash flow.