Energy Prospectus

SM Energy Reports Results for the Second Quarter of 2013

•Record quarterly production of 11.99 MMBOE, an average of 131.8 MBOE/d; production above quarterly guidance range of 115 - 121 MBOE/d [I was expecting 118 MMBOE/d ]
•Quarterly GAAP net income of $76.5 million, or $1.13 per diluted share; adjusted quarterly net income of $51.8 million, or $0.76 per diluted share [Adjusted EPS are 6 cents above my forecast of $0.70 ]
•Record quarterly EBITDAX of $342.5 million represents 60% growth over second quarter of 2012
•Company increases full year 2013 production guidance by approximately 10% to a midpoint of 47.9 MMBOE; increases production forecasts for 2014 and 2015

My Fair Value Estimate will be going way up on this one. - Dan

SM upside is coming from outstanding Eagle Ford results:

The Company's operated net production in the Eagle Ford shale averaged 66.1 MBOE per day in the second quarter of 2013, a 28% sequential increase over first quarter production of 51.8 MBOE per day. Average daily production in the second quarter of 2013 from the Company's operated Eagle Ford shale program increased 92% over the second quarter of 2012.
> During the second quarter of 2013, SM Energy made 22 flowing completions in its operated Eagle Ford shale program.
> Due to operational efficiencies from pad drilling, the Company currently expects to make approximately 95 flowing completions in 2013 on its operated Eagle Ford acreage.
> The last 15 wells in the Briscoe area averaged $5.4 million per well, a 13% decrease in the cost per foot versus last year.

SM Energy has increased its full-year 2013 production guidance by 10% with only a 3% increase in associated development capital.

The Company's full-year 2013 updated production guidance range is now 47.3 - 48.6 MMBOE, an increase from the previously provided full-year range of 42.8 - 44.5 MMBOE, and represents production growth of approximately 30% year-over-year. The increase in production guidance is due primarily to efficiencies achieved in the Company's Eagle Ford shale program, where the Company will make an additional 20 flowing completions in 2013. The Company expects its 2013 exit rate production mix to be comprised of 50% liquids and 50% natural gas.

SM Energy is also reiterating its 15% annual production growth rates for 2014 and 2015 on retained assets, resulting in an expected 10% increase in implied volumes for those years, adjusted for divestitures