SM ENERGY REPORTS THIRD QUARTER 2025 FINANCIAL AND OPERATING RESULTS; CONTINUED OPERATIONAL EXCELLENCE DRIVES FINANCIAL BEAT

DENVER, Nov. 3, 2025 /PRNewswire/ -- SM Energy Company (the "Company") (NYSE:SM) today reported financial and operating results for the third quarter 2025 and provided certain full year and fourth quarter 2025 guidance.

Highlights include:

• Strong Production Performance Continues: Production totaled 19.7 MMBoe, or 213.8 MBoe/d, including 113.9 MBbls/d of oil driven by consistent strong performance across all assets. Compared to the third quarter of 2024, total net daily production increased 26% and net daily oil production rose 47%.
  
  
  
  
• Resilient Margins: Despite a decline of more than $10/Bbl in benchmark oil prices year-over-year, the Company's top tier asset portfolio—strengthened by an increase in oil-weighted production from the Uinta Basin—kept Company-wide cash production margin⁽²⁾ nearly flat.
  
  
  
  
• Improved Leverage and Increased Stockholder Returns: The Company ended the quarter with a cash balance of $162.3 million, up $60.4 million from June 30, 2025, continuing steady progress toward its target leverage ratio of 1.0x. The Company returned $35.1 million of capital to its stockholders during the third quarter, consisting of $23.0 million in fixed dividend payments and $12.1 million in share repurchases.
  
  
  
  Additionally, on October 13, 2025, the Company's lender group unanimously reaffirmed the Company's borrowing base at $3.0 billion, reflecting the Company's banking partners' confidence in the Company's disciplined strategy of value creation despite market volatility. The elected commitment amount remained unchanged at $2.0 billion.
  
  
  
  
• Financial Outperformance:
  • Net income was $155.1 million, or $1.35 per diluted common share, and Adjusted net income⁽¹⁾ was $153.7 million, or $1.33 per diluted common share. Net cash provided by operating activities of $505.0 million before net change in working capital of $52.6 million totaled $557.5 million⁽¹⁾ and Adjusted EBITDAX⁽¹⁾ totaled $588.2 million.
    
    
    
    
  • Capital expenditures of $397.7 million adjusted for a change in capital expenditure accruals of $(74.5) million totaled $323.2 million.⁽¹⁾ This amount includes approximately $14.0 million of capital expenditures invested during the quarter as a result of opportunistically acquiring incremental working interests in highly economic wells under development, which are anticipated to be brought online in 2026.
    
    
    
    
  • Adjusted free cash flow⁽¹⁾ was $234.3 million—an increase of 80% compared to the same period in 2024.

Chief Executive Officer Herb Vogel comments: "SM Energy has delivered back-to-back quarters of record production, and I couldn't be prouder of our team. Despite industry challenges, our team continues to drive operational efficiencies, embrace innovation, and maintain strong Company-wide cash production margins year-over-year, even with lower oil prices. We also returned capital to our stockholders through payment of our fixed quarterly dividend and opportunistic share repurchases, reinforcing our commitment to disciplined capital allocation and stockholder returns. As I plan to hand the reins to Beth McDonald next quarter, I do so with full confidence in her leadership and vision for SM Energy's long-term success."

President and Chief Operating Officer Beth McDonald comments: "I'm honored to step into the role of President and lead this exceptional team. Our people are the foundation of SM Energy's success, and I'm committed to building on our momentum and delivering long-term value for our stakeholders. We believe in the quality and depth of our inventory and are encouraged by our team's ability to deliver strong well results in our core acreage and delineate new zones in all three assets. While we will share the well results at a later date, we expect they'll showcase our returns-based technical team's efforts and excellence. Exciting times are ahead."

• Third quarter net production volumes were 19.7 MMBoe (213.8 MBoe/d), and were more than 53% oil (113.9 MBbl/d), exceeding the mid-point of guidance due to strong performance across all assets. Volumes were 39% from the Midland Basin, 40% from South Texas, and 21% from the Uinta Basin.

• Third quarter benchmark pricing included NYMEX WTI at $64.93/Bbl, NYMEX Henry Hub natural gas at $3.07/MMBtu and OPIS Composite NGLs at $25.58/Bbl.
• Third quarter average realized price before the effect of hedges was $41.23 per Boe, and average realized price after the effect of hedges was $43.21 per Boe.⁽¹⁾
• Commodity net derivative settlements for the third quarter resulted in a net gain of $1.98 per Boe, or $38.9 million.

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

NET INCOME AND NET INCOME PER SHARE

Third quarter 2025 net income totaled $155.1 million, or $1.35 per diluted common share, compared to net income of $240.5 million, or $2.09 per diluted common share, in the same period in 2024. Increased year-over-year production was offset by lower realized prices, a lower net derivative gain, and increased DD&A expense, reflecting the higher depletion rate and greater contribution from the Uinta Basin assets. For the first nine months of 2025, net income was $539.0 million, or $4.69 per diluted common share, compared with net income of $582.0 million, or $5.03 per diluted common share, in the same period in 2024. The decline was primarily driven by the same factors impacting third quarter 2025 results, as well as higher interest expense resulting from the issuance of the Company's 2029 and 2032 Senior Notes in the third quarter of 2024.

NET CASH PROVIDED BY OPERATING ACTIVITIES

Third quarter 2025 net cash provided by operating activities of $505.0 million before net change in working capital of $52.6 million totaled $557.5 million,⁽¹⁾ compared with net cash provided by operating activities of $452.3 million before net change in working capital of $(32.0) million that totaled $420.2 million⁽¹⁾ for the same period in 2024. The $137.3 million, or 33%, increase is primarily driven by higher production volumes with a greater oil mix and a favorable net derivative settlement gain, partially offset by lower realized prices, increased operating costs, and higher interest payments.

For the first nine months of 2025, net cash provided by operating activities of $1.56 billion before net change in working capital of $14.9 million totaled $1.57 billion,⁽¹⁾ compared with net cash provided by operating activities of $1.20 billion before net change in working capital of $15.4 million that totaled $1.22 billion⁽¹⁾ for the same period in 2024. The $353.9 million, or 29%, increase is primarily driven by the same factors impacting third quarter 2025 results.

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

Third quarter 2025 Adjusted EBITDAX⁽¹⁾ was $588.2 million, up $106.6 million, or 22%, from $481.5 million in the same period in 2024. For the first nine months of 2025, Adjusted EBITDAX⁽¹⁾ was $1.75 billion, up $370.2 million, or 27%, from $1.38 billion for the same period in 2024.

Third quarter 2025 Adjusted net income⁽¹⁾ was $153.7 million, or $1.33 per diluted common share, compared with Adjusted net income⁽¹⁾ of $186.4 million, or $1.62 per diluted common share, for the same period in 2024. For the first nine months of 2025, Adjusted net income⁽¹⁾ was $527.7 million, or $4.59 per diluted common share, compared with Adjusted net income⁽¹⁾ of $564.9 million, or $4.88 per diluted common share, for the same period in 2024.

CAPITAL EXPENDITURES AND ACTIVITY

Third quarter 2025 capital expenditures of $397.7 million adjusted for a change in capital expenditure accruals of $(74.5) million totaled $323.2 million.⁽¹⁾ This amount includes approximately $14.0 million of capital expenditures invested during the quarter as a result of opportunistically acquiring incremental working interests in highly economic wells under development, which are anticipated to be brought online in 2026. Capital activity during the quarter included drilling 24 net wells, of which 4 were in the Midland Basin, 8 were in South Texas, and 12 were in the Uinta Basin, and adding 27 net flowing completions, of which 15 were in the Midland Basin and 12 were in South Texas.

For the first nine months of 2025, capital expenditures of $1.22 billion adjusted for a change in capital accruals of $(69.7) million totaled $1.15 billion.⁽¹⁾ Capital activity during the first nine months included drilling 93 net wells, of which 37 were in the Midland Basin, 24 were in South Texas, and 32 were in the Uinta Basin, and adding 124 net flowing completions, of which 50 were in the Midland Basin, 33 were in South Texas, and 41 were in the Uinta Basin.

ADJUSTED FREE CASH FLOW⁽¹⁾

Third quarter 2025 cash flow from operations before net change in working capital totaled $557.5 million,⁽¹⁾ and capital expenditures before changes in accruals totaled $323.2 million,⁽¹⁾ delivering Adjusted free cash flow of $234.3 million,⁽¹⁾ representing an 80% increase over the same period in 2024 despite a decline in realized prices. 

For the first nine months of 2025, cash flow from operations before net change in working capital totaled $1.57 billion,⁽¹⁾ and capital expenditures before changes in accruals totaled $1.15 billion,⁽¹⁾ delivering Adjusted free cash flow of $422.0 million,⁽¹⁾ representing a 43% increase over the same period in 2024 despite a decline in realized prices.

RETURN OF CAPITAL TO STOCKHOLDERS

Return of capital to stockholders during the quarter totaled $35.1 million through payment of the Company's $0.20 per share quarterly fixed dividend and repurchase and subsequent retirement of 0.4 million shares of common stock totaling $12.1 million.

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

On September 30, 2025, the outstanding principal amount of the Company's long-term debt was $2.74 billion with a zero balance on the Company's senior secured revolving credit facility. As of September 30, 2025, the Company reclassified $419.2 million of its 2026 Senior Notes as current liabilities, as the Company expects to meet this obligation with cash on hand. Cash and cash equivalents totaled approximately $162.3 million resulting in Net debt⁽¹⁾ of $2.57 billion.

At September 30, 2025, Net debt-to-Adjusted EBITDAX⁽¹⁾ was reduced to 1.1 times.

COMMODITY DERIVATIVES

As of October 22, 2025, commodity derivative positions for the fourth quarter of 2025 include:

SWAPS AND COLLARS:

• Oil: Approximately 5,100 MBbls, or approximately 50% of expected 4Q 2025 net oil production, are hedged to benchmark prices at an average price of $63.14/Bbl (weighted-average of collar floors and swaps) to $69.36/Bbl (weighted-average of collar ceilings and swaps), excluding basis swaps and roll differential swaps.
  
  
  
  
• Natural gas: Approximately 17,100 BBtu, or approximately 40% of expected 4Q 2025 net natural gas production, are hedged to benchmark prices at an average price of $3.69/MMBtu (weighted-average of collar floors and swaps) to $4.65/MMBtu (weighted-average of collar ceilings and swaps), excluding basis swaps and roll differential swaps.

BASIS SWAPS:

• Oil, Midland Basin differential: 1,200 MBbls of expected 4Q 2025 net Midland Basin oil production are hedged to the local price point at a positive weighted-average differential price of $1.18/Bbl.
  
  
  
  
• Oil, MEH differential: Approximately 500 MBbls of expected 4Q 2025 net South Texas oil production are hedged to the local price point at a positive weighted-average differential price of $1.86/Bbl.
  
  
  
  
• Gas, WAHA differential: 5,000 BBtu of expected 4Q 2025 net Midland Basin natural gas production are hedged to WAHA at a weighted-average differential price of ($0.66)/MMBtu.

A detailed schedule of these and additional derivative positions are provided in the accompanying slide deck.

2025 OPERATING PLAN AND GUIDANCE

The Company is unable to provide a reconciliation of forward-looking non-GAAP capital expenditures because components of the calculation are inherently unpredictable, such as changes to, and timing of, capital accruals. The inability to project certain components of the calculation would significantly affect the accuracy of a reconciliation.

UPDATED GUIDANCE FULL YEAR 2025:

• Production: 207-208 MBoe/d at 53-54% oil, narrowed at mid-point of range.
  
  
  
  
• Capital expenditures (net of change in capital accruals),⁽¹⁾ excluding acquisitions, is increased to range from $1.375 billion to $1.395 billion due to the acquisition of incremental working interests in highly economic wells under development during the second half of 2025. Full-year activity is unchanged with approximately 115 net wells drilled and approximately 150 net wells completed.
  
  
  
  
• LOE: reduced to ~ $5.85 per Boe.
  
  
  
  
• Transportation: reduced to $3.80-$4.00 per Boe.
  
  
  
  
• Production and ad valorem taxes: reduced to $2.25-$2.50 per Boe.
  
  
  
  
• Exploration expense: reduced to ~ $65 million.
  
  
  
  
• All other items remain unchanged.

GUIDANCE FOURTH QUARTER 2025:

• Production: approximately 206-212 Mboe/d at 52-53% oil.
  
  
  
  
• Capital expenditures (net of change in capital accruals),⁽¹⁾ excluding acquisitions: approximately $225-$245 million.

UPCOMING EVENTS

SM Energy's third quarter 2025 earnings pre-recorded webcast originally scheduled for November 4, 2025, and the live Q&A session originally scheduled for November 5, 2025, have been cancelled and replaced with a conference call today, November 3, 2025 at 8:00 a.m. Mountain time/10:00 a.m. Eastern time.

Conference call information for the November 3, 2025, event is provided below.

• Telephone – join the live conference call by registering at https://event.choruscall.com/mediaframe/webcast.html?webcastid=M2QTXycV. Dial-in for domestic toll free/International is 877-407-6050 / +1 201-689-8022.
  
  
  
  
• Webcast (available for live and replay) – on the Company's website at sm-energy.com/investors.

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," "maintain," "objectives," "optimize," "plan," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include, among other things: expected timing of achievement of the Company's target leverage ratio of 1.0x, assumptions and projections for the fourth quarter and full year 2025 regarding guidance for production, production growth and oil mix as a percentage of total production, capital expenditures, operating costs (including lease operating expenses, transportation costs and taxes), general and administrative expenses, exploration expenses and DD&A, and the projected impacts thereon, the number of wells expected to be drilled and completed, the percent of future production that is hedged, the allocation of activity and capital expenditures among the Company's operating areas and activities, and the Company's long-term strategy and operational plan, including plans to deliver low breakeven and high-return wells that endure commodity price cycles, return capital to stockholders through dividends, debt reduction to a target of one times leverage, and share repurchases, and increasing scale. These statements involve known and unknown risks, which may cause SM Energy'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 SM Energy's most recent Annual Report on Form 10-K, and 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 SM Energy 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.

FOOTNOTE 1

Indicates a non-GAAP measure or metric. Please refer to the "Definitions of Non-GAAP Measures and Metrics as Calculated by the Company" section in Financials Highlights, and the corresponding reconciliations to the most directly comparable GAAP financial measures, for additional information.

FOOTNOTE 2

Cash production margin is calculated as oil, gas, and NGL revenues (before the effects of commodity derivative settlements), less operating expenses (specifically, LOE, transportation, production taxes, and ad valorem taxes). This calculation excludes derivative settlements, G&A, exploration expense, and DD&A and is reflected on a per BOE basis using net equivalent production for the period presented. Cash production margin provides management and the investment community with an understanding of the Company's recurring production margin before G&A, exploration expense, and DD&A , which is helpful to compare period-to-period and across peers.

ABOUT THE COMPANY

SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, gas, and NGLs in the states of Texas and Utah. SM Energy routinely posts important information about the Company on its website. For more information about SM Energy, please visit its website at www.sm-energy.com.

SM ENERGY INVESTOR CONTACTS

Patrick Lytle, [email protected], 303-864-2502

Meghan Dack, [email protected], 303-837-2426

 

 

 

 

 

DEFINITIONS OF NON-GAAP MEASURES AND METRICS AS CALCULATED BY THE COMPANY

To supplement the presentation of its financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides certain non-GAAP measures and metrics, which are used by management and the investment community to assess the Company's financial condition, results of operations, and cash flows, as well as compare performance from period to period and across the Company's peer group. The Company believes these measures and metrics are widely used by the investment community, including investors, research analysts and others, to evaluate and compare recurring financial results among upstream oil and gas companies in making investment decisions or recommendations. These measures and metrics, as presented, may have differing calculations among companies and investment professionals and may not be directly comparable to the same measures and metrics provided by others. A non-GAAP measure should not be considered in isolation or as a substitute for the most directly comparable GAAP measure or any other measure of a company's financial or operating performance presented in accordance with GAAP. Reconciliations of the Company's non-GAAP measures to the most directly comparable GAAP measure is presented below. These measures may not be comparable to similarly titled measures of other companies.

Adjusted EBITDAX: Adjusted EBITDAX is calculated as net income before interest expense, interest income, income taxes, depletion, depreciation, and amortization expense, exploration expense, property abandonment and impairment expense, non-cash stock-based compensation expense, derivative gains and losses net of settlements, gains and losses on divestitures, gains and losses on extinguishment of debt, and certain other items. Adjusted EBITDAX excludes certain items that the Company believes affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDAX is a non-GAAP measure that the Company believes provides useful additional information to investors and analysts, as a performance measure, for analysis of the Company's ability to internally generate funds for exploration, development, acquisitions, and to service debt. The Company is also subject to financial covenants under the Company's Credit Agreement, a material source of liquidity for the Company, based on Adjusted EBITDAX ratios. Please reference the Company's third quarter 2025 Form 10-Q and the most recent Annual Report on Form 10-K for discussion of the Credit Agreement and its covenants.

Adjusted free cash flow: Adjusted free cash flow is calculated as net cash provided by operating activities before net change in working capital less capital expenditures before changes in accruals. The Company uses this measure to represent the cash generated from operations, in excess of capital expenditures, that is available to fund discretionary uses such as debt reduction, stockholder returns, or expanding the business.

Adjusted net income and Adjusted net income per diluted common share: Adjusted net income and Adjusted net income per diluted common share exclude certain items that the Company believes affect the comparability of operating results, including items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. These items include non-cash and other adjustments, such as derivative gains and losses net of settlements, impairments, gains and losses on divestitures, gains and losses on extinguishment of debt, and accruals for non-recurring matters. The Company uses these measures to evaluate the comparability of the Company's ongoing operational results and trends and believes these measures provide useful information to investors for analysis of the Company's fundamental business on a recurring basis.

Net debt: Net debt is calculated as the total principal amount of outstanding senior notes plus amounts drawn on the revolving credit facility less cash and cash equivalents (also referred to as total funded debt). The Company uses net debt as a measure of financial position and believes this measure provides useful additional information to investors to evaluate the Company's capital structure and financial leverage.

Net debt-to-Adjusted EBITDAX: Net debt-to-Adjusted EBITDAX is calculated as Net Debt (defined above) divided by Adjusted EBITDAX (defined above) for the trailing twelve-month period (also referred to as "leverage ratio" or "Adjusted EBITDAX multiple"). A variation of this calculation is a financial covenant under the Company's Credit Agreement. The Company and the investment community may use this metric in understanding the Company's ability to service its debt and identify trends in its leverage position. The Company reconciles the two non-GAAP measure components of this calculation.

Post-hedge: 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 net commodity derivative settlements on average realized prices. 

 

 

 

 

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