Q2 2024 SM Energy Co Earnings Call Transcript
Key Points
- SM Energy Co (SM) reported an outstanding quarter with significant positive developments.
- The Woodford-Barnett wells in the Permian are performing excellently, with a high oil cut of 56% to 58%.
- The company is prioritizing debt reduction with free cash flow, aiming to reach a 1x leverage ratio by mid-next year.
- Operational efficiencies have led to a lower-than-expected LOE of $4.82 per BOE for the quarter.
- The Eagle Ford development strategy is yielding positive results, with successful co-development of multiple zones.
- No additional turn-in-line wells are planned for the Woodford-Barnett formation this year, indicating a potential slowdown in development.
- The company is facing uncertainties regarding rig contracts and capital efficiency optimization due to ongoing HSR approval processes.
- LOE is expected to increase in the third quarter due to additional electric generator and water handling costs.
- There is some uncertainty about production trajectory and capital efficiency optimization for 2025, pending further analysis post-acquisition.
- The Altamont Energy assets acquired are less technologically advanced compared to XCL properties, requiring optimization efforts.
Thank you for standing by. My name is Jinnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the SM Energy's second-quarter 2024 financial and operating results Q&A conference call. (Operator Instructions)
I would now like to turn the conference over to Jennifer Martin Samuels, Vice President, Investor Relations and ESG Stewardship. You may begin.
Thank you, Jinnie. Good morning, everyone. In today's call, we may reference the earnings release, IR presentation or prepared remarks, all of which are posted to our website. Thank you for joining us. To answer your questions today, we have our President and CEO, Herb Vogel and CFO, Wade Pursell.
Before we get started, I need to remind you that our discussion today may include forward-looking statements and discussion of non-GAAP measures. I direct you to the accompanying slide deck, earnings release, and Risk Factors section of our most recently filed 10-K,
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