SM Energy (SM) Q4 Results - Feb 21

[dan_s]

Excellent financial results and operational performance:

Net income for the full year 2023 was $817.9 million, or $6.86 per diluted common share, and for the fourth quarter 2023 was $247.1 million, or $2.12 per diluted common share.
Adjusted net income was $5.89 per diluted common share for the full year 2023 and $1.56 per diluted common share for the fourth quarter 2023. < Beat my forecast of $164.5 net income, $1.42 per share.

Net cash provided by operating activities for the full year 2023 of $1.57 billion before net change in working capital of $4.6 million totaled $1.58 billion.
Net cash provided by operating activities for the fourth quarter 2023 of $476.5 million before net change in working capital of $(52.8) million totaled $423.7 million. < Beat my forecast of $403.9 million Adjusted Operating Cash Flow.
Adjusted EBITDAX was $1.71 billion for the full year 2023 and $445.1 million for the fourth quarter 2023.

Return of capital to stockholders through share repurchases and fixed dividends increased in 2023 to $299.6 million, an approximate 7% yield to current market capitalization. The Company has repurchased approximately 8.3 million shares from announcement of its return of capital program on September 7, 2022 through year-end 2023.

The Company ended 2023 with a further strengthened balance sheet. The outstanding principal amount of the Company's long-term debt was $1.59 billion and cash and cash equivalents were $616.2 million, resulting in net debt of $969.0 million, which met the Company's target of less than $1 billion net debt. At year-end 2023, the net debt-to-Adjusted EBITDAX ratio was 0.57. < This is a significant improvement over where SM was two years ago.

Estimated net proved reserves of 605 MMBoe set a Company record and were up 13% at year-end 2023 over year-end 2022. The ratio of estimated net proved reserves at year-end 2023 to 2023 net production is 10.9 years.

Midland Basin leasehold acreage increased 29,700 net acres, or 37%, as the Company's differential geosciences expertise and land team pursue organic replacement of the Company's high quality inventory.

As previously reported, net production for the full year 2023 was up 5% from 2022 to 55.5 MMBoe, or 152.0 MBoe/d, and fourth quarter 2023 net production was 14.1 MMBoe, or 153.5 MBoe/d, while capital expenditures of $989.4 million before changes in accruals of $80.8 million were $1.07 billion for the full year 2023 and capital expenditures of $222.7 million before changes in accruals of $45.1 million were $267.8 million for the fourth quarter 2023, beating expectations.
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I will update my forecast/valuation model for SM tomorrow morning. My valuation of $57/share looks good.