SM Energy

[dan_s]

The key to SM reaching my Fair Value Estimate (see forecast model under the Sweet 16 Tab) is their Eagle Ford program. Note that 25% production growth this year wlll top my forecast. IMO SM Energy is one of the best ways to safely add more exposure to natural gas to your portfolio. They don't need high NG prices to prosper but that will certainly give earnings and cash flows a big boost. Assuming $3.50/mcf for 2013, SM will generate cash flow per share over $16/share. Compare that to today's share price and you will see why I remain bullish on SM Energy. Our updated profile on SM is now available under the Sweet 16 Tab. - Dan
--------------------------------------------------------------------------------------------
SM Energy Company (SM) announces that net production from the Company’s operated Eagle Ford shale program averaged 230 MMCFE/d in July 2012. For the second quarter of 2012, net production in this program averaged 207 MMCFE/d. SM Energy also announces that it is currently starting up additional tank batteries to allow for continued production growth in its operated Eagle Ford shale program.

Additionally, SM Energy announces the borrowing base on its revolving credit facility has been increased by its bank group to $1.55 billion from $1.4 billion. The Company will maintain its current commitment amount at $1.0 billion, which is sufficient for the Company’s expected liquidity needs.

Tony Best, President and Chief Executive Officer, commented, “The operated Eagle Ford program is central to the Company’s plans to grow corporate production by 25% in 2012. I am pleased with the program’s progress and believe that it will help us meet our production goals for the year. I am also happy to see the increase in our borrowing base despite a challenging commodity price environment for natural gas and NGLs, as it is a reflection of the quality of SM Energy’s reserve base.”

[dan_s]

First Call's Price Target is $73/share. I can't get there, but I certainly like the upside this one has in the Eagle Ford. Top Shelf management team as well.