Energy Prospectus

SM Energy (SM) Provides 2015 Guidance, Operational Update, and Reports Results for Fourth Quarter and Full-Year 2014

• 2015 capital budget of $1.2 billion, a 43% reduction from 2014 CAPEX, excluding acquisitions.
• Production guidance of 60.4 - 63.5 MMBOE, or 12% production growth year over year at the midpoint.
• Fourth quarter GAAP net income of $331.7 million or $4.91 per diluted share; adjusted net income of $70.9 million, or $1.05 per diluted share.
• Fourth quarter GAAP net cash provided by operating activities of $381.5 million; quarterly adjusted EBITDAX of $419.0 million.

Adjusted EPS beat my forecast.

SM Energy's estimate of proved reserves as of December 31, 2014, was 547.7 MMBOE, which is an increase of 28% from 428.7 MMBOE at the end of 2013. These reserves are comprised of 169.7 MMBbl of oil/condensate, 1,466.5 Bcf of natural gas, and 133.5 MMBbl of NGLs.

The PV-10 of the Company's estimated proved reserves at December 31, 2014, was $7.6 billion, which was 38% greater than the prior year PV-10 of $5.5 billion. More than 80% of SM Energy's estimated proved reserves by value were audited by an independent reserve engineering firm.

As of December 31, 2014, SM Energy had total long-term debt of $2.4 billion, which included $166.0 million of outstanding borrowings on its revolving credit facility. At year-end, SM Energy's debt to trailing twelve month adjusted EBITDAX was 1.4 times and debt-to-book capitalization ratio was 51%. As of the end of the fourth quarter, SM Energy was in compliance with all covenants associated with its long-term debt.

You guys should all listen to the SM conference call. Good stuff in their conclusion.

gotta be good. sm is up ~14%--loving it!

I have updated my forecast model for SM. It will be posted to the website shortly.

I have increased my Fair Value Estimate by $6.60/share to $97.00 (based on a 5X multiple of cash flow per share).

IMO SM is a SCREAMING TAKEOVER TARGET at the current share price. They have large positions in the Eagle Ford and Bakken. EOG would be wise to make a move on this one.

NFX and SM, so far, have the best outlooks for 2015. Note that SM has close to 50% of this year's oil production hedged at over $90/bbl.