SM
Posted: Fri Oct 10, 2014 12:33 pm
SM got hammered because of this announcement yesterday. Weather related delays are no reason to dump a stock, but in this market anything the least bit negative is met by a sell-off. Note that production is ramping up in Q4 and they are holding to 20% growth in 2015. I have adjusted my forecast model for this and lower oil prices. My Fair Value Estimate is $149.65, compared to First Call's Price Target of $97.99.
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SM Energy Company (SM) announces that production for the third quarter of 2014 is expected to be 13.1 MMBOE, or 142.5 MBOE/d, which is at the low end of the Company’s previously issued guidance. SM Energy has moved to an enhanced completion program in its Eagle Ford producing area using higher sand loading and longer laterals. These enhanced completions, while improving well economics, resulted in longer than anticipated downtime due to required well shut-ins for offset completions during the quarter. Weather-related delays in the Williston Basin also negatively impacted production for the quarter. Production in both the Eagle Ford and Bakken/Three Forks has been increasing over the past few weeks and production guidance for the fourth quarter of 2014 is 13.9 – 14.7 MMBOE, which at the mid-point represents 9% growth over the third quarter of 2014. The outlook for production growth in 2015 and 2016 remains unchanged at 20% and 15%, respectively.
The Company also announces that the borrowing base under its senior secured revolving credit facility increased to $2.4 billion, from its previous borrowing base of $2.2 billion following its lenders’ regularly scheduled semi-annual redetermination. The increase in the borrowing base is largely due to the increase in the Company’s mid-year proved developed reserves. SM Energy has elected to leave the aggregate commitment amount from the bank group unchanged at $1.3 billion. The redetermination was made under the terms of the existing facility and there were no other changes to the terms of the credit facility resulting from this borrowing base redetermination.
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SM Energy Company (SM) announces that production for the third quarter of 2014 is expected to be 13.1 MMBOE, or 142.5 MBOE/d, which is at the low end of the Company’s previously issued guidance. SM Energy has moved to an enhanced completion program in its Eagle Ford producing area using higher sand loading and longer laterals. These enhanced completions, while improving well economics, resulted in longer than anticipated downtime due to required well shut-ins for offset completions during the quarter. Weather-related delays in the Williston Basin also negatively impacted production for the quarter. Production in both the Eagle Ford and Bakken/Three Forks has been increasing over the past few weeks and production guidance for the fourth quarter of 2014 is 13.9 – 14.7 MMBOE, which at the mid-point represents 9% growth over the third quarter of 2014. The outlook for production growth in 2015 and 2016 remains unchanged at 20% and 15%, respectively.
The Company also announces that the borrowing base under its senior secured revolving credit facility increased to $2.4 billion, from its previous borrowing base of $2.2 billion following its lenders’ regularly scheduled semi-annual redetermination. The increase in the borrowing base is largely due to the increase in the Company’s mid-year proved developed reserves. SM Energy has elected to leave the aggregate commitment amount from the bank group unchanged at $1.3 billion. The redetermination was made under the terms of the existing facility and there were no other changes to the terms of the credit facility resulting from this borrowing base redetermination.