Delaware | 001-31539 | 41-0518430 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
1775 Sherman Street, Suite 1200, Denver, Colorado (Address of principal executive offices) | 80203 (Zip Code) |
(d) | Exhibits. | The following exhibit is furnished as part of this report: |
Exhibit 99.1 | Press release of SM Energy Company dated February 18, 2014, entitled, “SM Energy Reports Results for Fourth Quarter and Full Year of 2013 and Provides Operational Update” |
SM ENERGY COMPANY | |||
Date: | February 18, 2014 | By: | /s/ PATRICK A. LYTLE |
Patrick A. Lytle | |||
Financial Reporting Manager and Assistant Secretary |
• | Record proved reserves of 428.7 MMBOE at year-end 2013, up 46% from 2012; liquids account for 54% of total proved reserves at year-end 2013. |
• | Drilling finding and development costs decreased by 26% from 2012 to $7.77 per BOE in 2013; drilling reserve replacement of 405% for 2013. |
• | Annual production increased 32% to a record 48.3 MMBOE; record quarterly production of 13.2 MMBOE within guidance range of 12.8 to 13.5 MMBOE. |
• | Fourth quarter GAAP net income of $7.0 million or $0.10 per diluted share; adjusted net income of $85.9 million, or $1.26 per diluted share. |
• | Fourth quarter GAAP net cash provided by operating activities of $337.6 million; quarterly EBITDAX of $395.5 million. |
Guidance Comparison | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, 2013 | Ended December 31, 2013 | ||||||||||||||
Actual | Guidance | Actual | Guidance | ||||||||||||
Production | |||||||||||||||
Average daily production (MBOE/d) | 143.8 | 139 | - | 146 | 132.4 | 129 | - | 135 | |||||||
Total production (MMBOE) | 13.23 | 12.8 | - | 13.5 | 48.34 | 47.9 | - | 48.6 | |||||||
Costs | |||||||||||||||
Lease operating expense ($/BOE) | $4.62 | $4.65 | - | $4.90 | $4.82 | $4.75 | - | $5.00 | |||||||
Transportation expense ($/BOE) | $5.67 | $5.40 | - | $5.65 | $5.34 | $5.15 | - | $5.45 | |||||||
Production taxes, as a percentage of pre-derivative oil, gas, and NGL revenue | 4.5 | % | 5.0 | % | - | 5.5% | 4.8 | % | 5.0 | % | - | 5.5% | |||
General and administrative - cash ($/BOE) | $3.07 | $2.15 | - | $2.35 | $2.30 | $2.10 | - | $2.30 | |||||||
General and administrative - cash related to Net Profits Plan ($/BOE) | $0.17 | $0.25 | - | $0.40 | $0.28 | $0.25 | - | $0.40 | |||||||
General and administrative - non-cash ($/BOE) | $0.39 | $0.45 | - | $0.60 | $0.51 | $0.50 | - | $0.65 | |||||||
General and administrative - Total ($/BOE) | $3.63 | $2.85 | - | $3.35 | $3.09 | $2.85 | - | $3.35 | |||||||
Depreciation, depletion, and amortization ($/BOE) | $15.31 | $15.00 | - | $16.00 | $17.02 | $16.65 | - | $17.50 | |||||||
Taxes | |||||||||||||||
Effective income tax rate | 38.6 | % | 37.2 | % | - | 37.8% | |||||||||
% of income tax that is current | 2 | % | <2% |
2013 Proved Reserves Roll-Forward | ||
(MMBOE) | ||
Beginning of year | 293.43 | |
Price revisions | 0.63 | |
Performance revisions | 4.36 | |
Discoveries and extensions | 140.97 | |
Infill reserves in an existing proved field | 54.56 | |
Purchases of minerals in place | 1.32 | |
Sales of reserves | (18.21 | ) |
Production | (48.34 | ) |
End of year | 428.72 | |
Percentage liquids | 54 | % |
Percentage proved undeveloped | 51 | % |
Costs incurred in oil and gas producing activities: | |||
(in thousands) | |||
For the Year Ended December 31, 2013 | |||
Development costs (1) | $ | 1,350,116 | |
Exploration costs | 168,612 | ||
Acquisitions: | |||
Proved properties | 29,859 | ||
Unproved properties | 172,546 | ||
Total, including asset retirement obligation (2)(3) | $ | 1,721,133 | |
(1) Includes facility costs of $49.5 million. | |||
(2) Includes capitalized interest of $11.0 million. | |||
(3) Includes amounts relating to estimated asset retirement obligations of $26.8 million. |
2013 Reserve Replacement and Finding and Development Costs | ||||
Reserve Replacement Percentage | Finding and Development Costs ($/BOE) | |||
Drilling, excluding revisions | 405 | % | $7.77 | |
All-in | 418 | % | $8.53 |
1Q14 | FY 2014 | ||
Production (MMBOE) | 12.0 - 12.6 | 51.0 - 53.5 | |
Average daily production (MBOE/d) | 133 - 140 | 140 - 147 | |
LOE ($/BOE) | $5.25 - $5.50 | $5.25 - $5.50 | |
Transportation ($/BOE) | $5.75 - $6.05 | $5.75 - $6.05 | |
Production Taxes (% of pre-derivative O&G revenue) | 5.0% - 5.5% | 5.0% - 5.5% | |
G&A - cash ($/BOE) | $2.00 - $2.20 | $2.20 - $2.45 | |
G&A - cash NPP ($/BOE) | $0.20 - $0.35 | $0.20 - $0.35 | |
G&A - non-cash ($/BOE) | $0.35 - $0.50 | $0.30 - $0.50 | |
G&A Total ($/BOE) | $2.55 - $3.05 | $2.70 - $3.30 | |
DD&A ($/BOE) | $15.10 - $15.90 | $15.10 - $15.90 | |
Effective income tax rate range | 37.0% - 37.5% | ||
% of income tax that is current | <3% |
Reconciliation of standardized measure (GAAP) to PV-10 value (Non-GAAP): | |||
As of December 31, | |||
2013 | |||
(in millions) | |||
Standardized measure of discounted future net cash flows (GAAP) | $ | 4,009.4 | |
Add: 10 percent annual discount, net of income taxes | 2,500.6 | ||
Add: future undiscounted income taxes | 2,722.2 | ||
Undiscounted future net cash flows | $ | 9,232.2 | |
Less: 10 percent annual discount without tax effect | (3,703.7 | ) | |
PV-10 value (Non-GAAP) | $ | 5,528.5 |
SM ENERGY COMPANY | |||||||||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||||||||
Production Data: | 2013 | 2012 | Percent Change | 2013 | 2012 | Percent Change | |||||||||||||||
Average realized sales price, before the effects | |||||||||||||||||||||
of derivative cash settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 86.48 | $ | 84.65 | 2 | % | $ | 91.19 | $ | 85.45 | 7 | % | |||||||||
Gas (per Mcf) | 3.98 | 3.54 | 12 | % | 3.93 | 2.98 | 32 | % | |||||||||||||
NGL (per Bbl) | 38.63 | 35.60 | 9 | % | 35.95 | 37.61 | (4 | )% | |||||||||||||
Equivalent (per BOE) | $ | 44.86 | $ | 42.00 | 7 | % | $ | 45.50 | $ | 40.39 | 13 | % | |||||||||
Average realized sales price, including the | |||||||||||||||||||||
effects of derivative cash settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 86.12 | $ | 84.76 | 2 | % | $ | 89.92 | $ | 83.52 | 8 | % | |||||||||
Gas (per Mcf) | 4.27 | 3.83 | 11 | % | 4.14 | 3.48 | 19 | % | |||||||||||||
NGL (per Bbl) | 38.34 | 37.32 | 3 | % | 36.66 | 38.90 | (6 | )% | |||||||||||||
Equivalent (BOE) | $ | 45.57 | $ | 43.28 | 5 | % | $ | 45.92 | $ | 41.71 | 10 | % | |||||||||
Production: | |||||||||||||||||||||
Oil (MMBbls) | 3.8 | 2.9 | 31 | % | 13.9 | 10.4 | 34 | % | |||||||||||||
Gas (Bcf) | 39.5 | 31.9 | 24 | % | 149.3 | 120.0 | 24 | % | |||||||||||||
NGL (MMBbls) | 2.9 | 1.9 | 51 | % | 9.5 | 6.1 | 55 | % | |||||||||||||
MMBOE (6:1) | 13.2 | 10.1 | 31 | % | 48.3 | 36.5 | 32 | % | |||||||||||||
Average daily production: | |||||||||||||||||||||
Oil (MBbls/d) | 40.8 | 31.3 | 31 | % | 38.2 | 28.3 | 35 | % | |||||||||||||
Gas (MMcf/d) | 429.3 | 347.1 | 24 | % | 409.2 | 328.0 | 25 | % | |||||||||||||
NGL (MBbls/d) | 31.5 | 20.8 | 51 | % | 26.0 | 16.7 | 56 | % | |||||||||||||
MBOE/d (6:1) | 143.8 | 109.9 | 31 | % | 132.4 | 99.7 | 33 | % | |||||||||||||
Per BOE Data: | |||||||||||||||||||||
Realized price before the effects of derivative cash settlements | $ | 44.86 | $ | 42.00 | 7 | % | $ | 45.50 | $ | 40.39 | 13 | % | |||||||||
Lease operating expense | 4.62 | 4.74 | (3 | )% | 4.82 | 4.93 | (2 | )% | |||||||||||||
Transportation costs | 5.67 | 4.25 | 33 | % | 5.34 | 3.81 | 40 | % | |||||||||||||
Production taxes | 2.01 | 2.00 | 1 | % | 2.19 | 2.00 | 10 | % | |||||||||||||
General and administrative | 3.63 | 2.81 | 29 | % | 3.09 | 3.28 | (6 | )% | |||||||||||||
Operating profit, before the effects of derivative cash settlements | $ | 28.93 | $ | 28.20 | 3 | % | $ | 30.06 | $ | 26.37 | 14 | % | |||||||||
Derivative cash settlement gain | (0.71 | ) | (1.28 | ) | (45 | )% | (0.42 | ) | (1.32 | ) | (68 | )% | |||||||||
Operating profit, including the effects of derivative cash settlements | $ | 29.64 | $ | 29.48 | 1 | % | $ | 30.48 | $ | 27.69 | 10 | % | |||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | $ | 15.31 | $ | 20.20 | (24 | )% | $ | 17.02 | $ | 19.95 | (15 | )% |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2013 | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(in thousands, except per share amounts) | For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating revenues and other income: | |||||||||||||||
Oil, gas, and NGL production revenue | $ | 593,668 | $ | 424,737 | $ | 2,199,550 | $ | 1,473,868 | |||||||
Realized hedge gain (loss) | — | 1,528 | (1,777 | ) | 3,866 | ||||||||||
Gain (loss) on divestiture activity | 28,484 | 4,228 | 27,974 | (27,018 | ) | ||||||||||
Marketed gas system revenue | 11,590 | 10,417 | 60,039 | 52,808 | |||||||||||
Other operating revenues | 2,985 | 3,398 | 7,588 | 1,578 | |||||||||||
Total operating revenues and other income | 636,727 | 444,308 | 2,293,374 | 1,505,102 | |||||||||||
Operating expenses: | |||||||||||||||
Oil, gas, and NGL production expense | 162,754 | 111,159 | 597,045 | 391,872 | |||||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 202,640 | 204,267 | 822,872 | 727,877 | |||||||||||
Exploration | 21,769 | 24,217 | 74,104 | 90,248 | |||||||||||
Impairment of proved properties | 110,935 | 170,400 | 172,641 | 208,923 | |||||||||||
Abandonment and impairment of unproved properties | 37,646 | 5,046 | 46,105 | 16,342 | |||||||||||
General and administrative | 47,977 | 28,372 | 149,551 | 119,815 | |||||||||||
Change in Net Profits Plan liability | (15,419 | ) | (11,562 | ) | (21,842 | ) | (28,904 | ) | |||||||
Derivative (gain) loss | 11,605 | (15,590 | ) | (3,080 | ) | (55,630 | ) | ||||||||
Marketed gas system expense | 11,642 | 8,297 | 57,647 | 47,583 | |||||||||||
Other operating expenses | 4,889 | 5,499 | 30,076 | 6,993 | |||||||||||
Total operating expenses | 596,438 | 530,105 | 1,925,119 | 1,525,119 | |||||||||||
Income (loss) from operations | 40,289 | (85,797 | ) | 368,255 | (20,017 | ) | |||||||||
Nonoperating income (expense): | |||||||||||||||
Interest income | 3 | 19 | 67 | 220 | |||||||||||
Interest expense | (24,541 | ) | (18,368 | ) | (89,711 | ) | (63,720 | ) | |||||||
Income (loss) before income taxes | 15,751 | (104,146 | ) | 278,611 | (83,517 | ) | |||||||||
Income tax (expense) benefit | (8,755 | ) | 37,008 | (107,676 | ) | 29,268 | |||||||||
Net income (loss) | $ | 6,996 | $ | (67,138 | ) | $ | 170,935 | $ | (54,249 | ) | |||||
Basic weighted-average common shares outstanding | 66,999 | 66,101 | 66,615 | 65,138 | |||||||||||
Diluted weighted-average common shares outstanding | 68,354 | 66,101 | 67,998 | 65,138 | |||||||||||
Basic net income (loss) per common share | $ | 0.10 | $ | (1.02 | ) | $ | 2.57 | $ | (0.83 | ) | |||||
Diluted net income (loss) per common share | $ | 0.10 | $ | (1.02 | ) | $ | 2.51 | $ | (0.83 | ) | |||||
SM ENERGY COMPANY | |||||||
FINANCIAL HIGHLIGHTS | |||||||
December 31, 2013 | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, except per share amounts) | December 31, | December 31, | |||||
ASSETS | 2013 | 2012 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 282,248 | $ | 5,926 | |||
Accounts receivable | 318,371 | 254,805 | |||||
Refundable income taxes | 4,630 | 3,364 | |||||
Prepaid expenses and other | 9,944 | 30,017 | |||||
Derivative asset | 21,559 | 37,873 | |||||
Deferred income taxes | 10,749 | 8,579 | |||||
Total current assets | 647,501 | 340,564 | |||||
Property and equipment (successful efforts method): | |||||||
Land | 1,857 | 1,845 | |||||
Proved oil and gas properties | 5,637,462 | 5,401,684 | |||||
Less - accumulated depletion, depreciation, and amortization | (2,583,698 | ) | (2,376,170 | ) | |||
Unproved oil and gas properties | 271,100 | 175,287 | |||||
Wells in progress | 279,654 | 273,928 | |||||
Materials inventory, at lower of cost or market | 15,950 | 13,444 | |||||
Oil and gas properties held for sale, net of accumulated depletion, depreciation and amortization of $7,390 in 2013 and $20,676 in 2012 | 19,072 | 33,620 | |||||
Other property and equipment, net of accumulated depreciation of $28,775 in 2013 and $22,442 in 2012 | 218,395 | 153,559 | |||||
Total property and equipment, net | 3,859,792 | 3,677,197 | |||||
Noncurrent assets: | |||||||
Derivative asset | 30,951 | 16,466 | |||||
Restricted cash | 96,713 | 86,773 | |||||
Other noncurrent assets | 70,208 | 78,529 | |||||
Total other noncurrent assets | 197,872 | 181,768 | |||||
Total Assets | $ | 4,705,165 | $ | 4,199,529 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 606,751 | $ | 525,627 | |||
Derivative liability | 26,380 | 8,999 | |||||
Other current liabilities | 6,000 | 6,920 | |||||
Total current liabilities | 639,131 | 541,546 | |||||
Noncurrent liabilities: | |||||||
Revolving credit facility | — | 340,000 | |||||
Senior Notes | 1,600,000 | 1,100,000 | |||||
Asset retirement obligation | 115,659 | 112,912 | |||||
Asset retirement obligation associated with oil and gas properties held for sale | 3,033 | 1,393 | |||||
Net Profits Plan liability | 56,985 | 78,827 | |||||
Deferred income taxes | 650,125 | 537,383 | |||||
Derivative liability | 4,640 | 6,645 | |||||
Other noncurrent liabilities | 28,771 | 66,357 | |||||
Total noncurrent liabilities | 2,459,213 | 2,243,517 | |||||
Stockholders' equity: | |||||||
Common stock, $0.01 par value - authorized: 200,000,000 shares; issued: 67,078,853 shares in 2013 and 66,245,816 shares in 2012; outstanding, net of treasury shares: 67,056,441 shares in 2013 and 66,195,235 shares in 2012 | 671 | 662 | |||||
Additional paid-in capital | 257,720 | 233,642 | |||||
Treasury stock, at cost: 22,412 shares in 2013 and 50,581 shares in 2012 | (823 | ) | (1,221 | ) | |||
Retained earnings | 1,354,669 | 1,190,397 | |||||
Accumulated other comprehensive loss | (5,416 | ) | (9,014 | ) | |||
Total stockholders' equity | 1,606,821 | 1,414,466 | |||||
Total Liabilities and Stockholders' Equity | $ | 4,705,165 | $ | 4,199,529 |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2013 | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(in thousands) | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | 6,996 | $ | (67,138 | ) | $ | 170,935 | $ | (54,249 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
(Gain) loss on divestiture activity | (28,484 | ) | (4,228 | ) | (27,974 | ) | 27,018 | ||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 202,640 | 204,267 | 822,872 | 727,877 | |||||||||||
Exploratory dry hole expense | (32 | ) | 2,310 | 5,846 | 20,861 | ||||||||||
Impairment of proved properties | 110,935 | 170,400 | 172,641 | 208,923 | |||||||||||
Abandonment and impairment of unproved properties | 37,646 | 5,046 | 46,105 | 16,342 | |||||||||||
Stock-based compensation expense | 6,852 | 8,454 | 32,347 | 30,185 | |||||||||||
Change in Net Profits Plan liability | (15,419 | ) | (11,562 | ) | (21,842 | ) | (28,904 | ) | |||||||
Derivative (gain) loss | 11,605 | (15,590 | ) | (3,080 | ) | (55,630 | ) | ||||||||
Derivative cash settlement gain | 9,347 | 11,461 | 22,062 | 44,264 | |||||||||||
Amortization of debt discount and deferred financing costs | 1,476 | 1,077 | 5,390 | 6,769 | |||||||||||
Deferred income taxes | 6,936 | (36,943 | ) | 105,555 | (29,638 | ) | |||||||||
Plugging and abandonment | (2,493 | ) | (1,052 | ) | (9,946 | ) | (2,856 | ) | |||||||
Other | (154 | ) | (379 | ) | 2,775 | 527 | |||||||||
Changes in current assets and liabilities: | |||||||||||||||
Accounts receivable | (33,285 | ) | (2,707 | ) | (78,494 | ) | (21,389 | ) | |||||||
Refundable income taxes | (1,776 | ) | (122 | ) | (1,266 | ) | 2,217 | ||||||||
Prepaid expenses and other | 4,335 | 4,719 | 1,364 | (1,484 | ) | ||||||||||
Accounts payable and accrued expenses | 20,520 | 370 | 93,224 | 31,136 | |||||||||||
Net cash provided by operating activities | 337,645 | 268,383 | 1,338,514 | 921,969 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Net proceeds from sale of oil and gas properties | 404,351 | 6,712 | 424,849 | 55,375 | |||||||||||
Capital expenditures | (432,181 | ) | (381,073 | ) | (1,553,536 | ) | (1,507,828 | ) | |||||||
Acquisition of proved and unproved oil and gas properties | 404 | (169 | ) | (61,603 | ) | (5,773 | ) | ||||||||
Receipts from restricted cash related to 1031 exchange | (1,754 | ) | — | (1,754 | ) | — | |||||||||
Other | 2,650 | 893 | (859 | ) | 893 | ||||||||||
Net cash used in investing activities | (26,530 | ) | (373,637 | ) | (1,192,903 | ) | (1,457,333 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from credit facility | 226,500 | 374,500 | 1,203,000 | 1,609,000 | |||||||||||
Repayment of credit facility | (254,500 | ) | (262,500 | ) | (1,543,000 | ) | (1,269,000 | ) | |||||||
Debt issuance costs related to credit facility | — | — | (3,444 | ) | — | ||||||||||
Net proceeds from Senior Notes | (89 | ) | (85 | ) | 490,185 | 392,138 | |||||||||
Repayment of 3.50% Senior Convertible Notes | — | — | — | (287,500 | ) | ||||||||||
Proceeds from sale of common stock | 2,408 | 2,395 | 6,858 | 5,816 | |||||||||||
Dividends paid | (3,349 | ) | (3,303 | ) | (6,663 | ) | (6,511 | ) | |||||||
Net share settlement from issuance of stock awards | (17 | ) | (17 | ) | (16,220 | ) | (21,622 | ) | |||||||
Other | 4 | 6 | (5 | ) | (225 | ) | |||||||||
Net cash provided by (used in) financing activities | (29,043 | ) | 110,996 | 130,711 | 422,096 | ||||||||||
Net change in cash and cash equivalents | 282,072 | 5,742 | 276,322 | (113,268 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 176 | 184 | 5,926 | 119,194 | |||||||||||
Cash and cash equivalents at end of period | $ | 282,248 | $ | 5,926 | $ | 282,248 | $ | 5,926 | |||||||
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2013 | |||||||||||||||
Adjusted Net Income | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Reconciliation of net income (GAAP) | For the Three Months | For the Twelve Months | |||||||||||||
to adjusted net income (Non-GAAP): | Ended December 31, | Ended December 31, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Actual net income (loss) (GAAP) | 6,996 | $ | (67,138 | ) | $ | 170,935 | $ | (54,249 | ) | ||||||
Adjustments net of tax: (1) | |||||||||||||||
Change in Net Profits Plan liability | (9,683 | ) | (7,249 | ) | (13,411 | ) | (18,123 | ) | |||||||
Derivative (gain) loss | 7,288 | (9,775 | ) | (1,891 | ) | (34,880 | ) | ||||||||
Derivative cash settlement gain | 5,870 | 7,186 | 13,546 | 27,754 | |||||||||||
(Gain) loss on divestiture activity | (17,888 | ) | (2,651 | ) | (17,176 | ) | 16,941 | ||||||||
Impairment of proved properties | 69,667 | 106,841 | 106,002 | 130,995 | |||||||||||
Abandonment and impairment of unproved properties | 23,642 | 3,164 | 28,309 | 10,246 | |||||||||||
Adjusted net income (Non-GAAP) (2) | $ | 85,892 | $ | 30,378 | $ | 286,314 | $ | 78,684 | |||||||
Adjusted net income per diluted common share | $ | 1.26 | $ | 0.45 | $ | 4.21 | $ | 1.17 | |||||||
Adjusted diluted weighted-average shares outstanding (3) | 68,354 | 66,906 | 67,998 | 67,240 | |||||||||||
(1) For the three-month period ended December 31, 2013, adjustments are shown net of tax and are calculated using a tax rate of 37.2%, which approximates the Company's statutory tax rate adjusted for ordinary permanent differences. For the twelve-month period ended December 31, 2013, adjustments are shown net of tax using the Company's effective rate of 38.6%, as calculated by dividing income tax expense by income before income taxes shown on the consolidated statements of operations. For the three and twelve-month periods ended December 31, 2012, adjustments are shown net of tax and are calculated using a tax rate of 37.3%, which approximates the Company's statutory tax rate adjusted for ordinary permanent differences. | |||||||||||||||
(2) Adjusted net income excludes certain items that the Company believes affect the comparability of operating results. Items excluded generally are non-recurring items or are items whose timing and/or amount cannot be reasonably estimated. These items include non-cash adjustments such as the change in the Net Profits Plan liability, derivative (gain) loss, derivative cash settlement gain, impairment of proved properties, abandonment and impairment of unproved properties, and (gain) loss on divestiture activity. The non-GAAP measure of adjusted net income is presented because management believes it provides useful additional information to investors for analysis of SM Energy's fundamental business on a recurring basis. In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted net income should not be considered in isolation or as a substitute for net income, income from operations, cash provided by operating activities, or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income excludes some, but not all, items that affect net income and may vary among companies, the adjusted net income amounts presented may not be comparable to similarly titled measures of other companies. | |||||||||||||||
(3) For the three and twelve-month periods ended December 31, 2012, adjusted net income per adjusted diluted share is calculated by assuming the Company had net income in the period and therefore includes potentially dilutive securities related to unvested Restricted Stock Units, in-the-money outstanding options to purchase the Company’s common stock, contingent Performance Share Units, and 3.50% Senior Convertible Notes. On a GAAP basis, these items are not treated as dilutive securities in periods where the Company reports a GAAP loss. |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2013 | |||||||||||||||
EBITDAX (4) | |||||||||||||||
(in thousands) | |||||||||||||||
Reconciliation of net income (loss) (GAAP) to EBITDAX (non-GAAP) to net cash provided by operating activities (GAAP): | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) (GAAP) | $ | 6,996 | $ | (67,138 | ) | $ | 170,935 | $ | (54,249 | ) | |||||
Interest expense | 24,541 | 18,368 | 89,711 | 63,720 | |||||||||||
Interest income | (3 | ) | (19 | ) | (67 | ) | (220 | ) | |||||||
Income tax (benefit) expense | 8,755 | (37,008 | ) | 107,676 | (29,268 | ) | |||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 202,640 | 204,267 | 822,872 | 727,877 | |||||||||||
Exploration | 20,105 | 15,778 | 65,888 | 81,809 | |||||||||||
Impairment of proved properties | 110,935 | 170,400 | 172,641 | 208,923 | |||||||||||
Abandonment and impairment of unproved properties | 37,646 | 5,046 | 46,105 | 16,342 | |||||||||||
Stock-based compensation expense | 6,852 | 8,454 | 32,347 | 30,185 | |||||||||||
Derivative (gain) loss | 11,605 | (15,590 | ) | (3,080 | ) | (55,630 | ) | ||||||||
Derivative cash settlement gain | 9,347 | 11,461 | 22,062 | 44,264 | |||||||||||
Change in Net Profits Plan liability | (15,419 | ) | (11,562 | ) | (21,842 | ) | (28,904 | ) | |||||||
(Gain) loss on divestiture activity | (28,484 | ) | (4,228 | ) | (27,974 | ) | 27,018 | ||||||||
EBITDAX (Non-GAAP) | $ | 395,516 | $ | 298,229 | $ | 1,477,274 | $ | 1,031,867 | |||||||
Interest expense | (24,541 | ) | (18,368 | ) | (89,711 | ) | (63,720 | ) | |||||||
Interest income | 3 | 19 | 67 | 220 | |||||||||||
Income tax (benefit) expense | (8,755 | ) | 37,008 | (107,676 | ) | 29,268 | |||||||||
Exploration | (20,105 | ) | (15,778 | ) | (65,888 | ) | (81,809 | ) | |||||||
Exploratory dry hole expense | (32 | ) | 2,310 | 5,846 | 20,861 | ||||||||||
Amortization of debt discount and deferred financing costs | 1,476 | 1,077 | 5,390 | 6,769 | |||||||||||
Deferred income taxes | 6,936 | (36,943 | ) | 105,555 | (29,638 | ) | |||||||||
Plugging and abandonment | (2,493 | ) | (1,052 | ) | (9,946 | ) | (2,856 | ) | |||||||
Other | (154 | ) | (379 | ) | 2,775 | 527 | |||||||||
Changes in current assets and liabilities | (10,206 | ) | 2,260 | 14,828 | 10,480 | ||||||||||
Net cash provided by operating activities (GAAP) | $ | 337,645 | $ | 268,383 | $ | 1,338,514 | $ | 921,969 | |||||||
Note: Stock-based compensation expense is a component of exploration expense and general and administrative expense on the accompanying statements of operations. Therefore, the exploration line items shown in the reconciliation above will vary from the amount shown on the accompanying statements of operations for the component of stock-based compensation expense recorded to exploration. | |||||||||||||||
(4) EBITDAX represents income (loss) before interest expense, interest income, income taxes, depreciation, depletion, amortization, and accretion, exploration expense, property impairments, non-cash stock compensation expense, derivative gains and losses net of cash settlements, change in the Net Profits Plan liability, and gains and losses on divestitures. EBITDAX excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally one-time in nature or whose timing and/or amount cannot be reasonably estimated. EBITDAX is a non-GAAP measure that is presented because we believe that it provides useful additional information to investors and analysts, as a performance measure, for analysis of our ability to internally generate funds for exploration, development, acquisitions, and to service debt. We are also subject to a financial covenant under our credit facility based on our debt to EBITDAX ratio. In addition, EBITDAX is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. EBITDAX should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, net cash provided by operating activities, or profitability or liquidity measures prepared under GAAP. Because EBITDAX excludes some, but not all items that affect net income (loss) and may vary among companies, the EBITDAX amounts presented may not be comparable to similar metrics of other companies. |
SM ENERGY COMPANY | ||||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Proved oil and gas reserve quantities: | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Oil or Condensate | Gas | NGL | Equivalents | Proved Developed | Proved Undeveloped | |||||||||||||||
(MMBbl) | (Bcf) | (MMBbl) | (MMBOE) | (MMBOE) | (MMBOE) | |||||||||||||||
Total proved reserves | ||||||||||||||||||||
Beginning of year | 92.2 | 833.4 | 62.3 | 293.4 | 166.5 | 126.9 | ||||||||||||||
Revisions of previous estimates | (5.2 | ) | 68.8 | (1.3 | ) | 5.0 | 6.7 | (1.6 | ) | |||||||||||
Discoveries and extensions | 34.6 | 399.2 | 39.8 | 140.9 | 35.7 | 105.2 | ||||||||||||||
Infill reserves in an existing proved field | 21.6 | 118.7 | 13.2 | 54.6 | 8.2 | 46.4 | ||||||||||||||
Sales of reserves | (3.4 | ) | (85.1 | ) | (0.6 | ) | (18.2 | ) | (17.2 | ) | (1.0 | ) | ||||||||
Purchases of minerals in place | 0.7 | 3.6 | — | 1.3 | 1.3 | — | ||||||||||||||
Production | (13.9 | ) | (149.3 | ) | (9.5 | ) | (48.3 | ) | (48.3 | ) | — | |||||||||
Conversions | — | — | — | — | 56.0 | (56.0 | ) | |||||||||||||
End of year | 126.6 | 1,189.3 | 103.9 | 428.7 | 208.9 | 219.9 | ||||||||||||||
PV-10 value (in millions) | $ | 5,528.5 | $ | 3,898.6 | $ | 1,629.9 | ||||||||||||||
Proved developed reserves | ||||||||||||||||||||
Beginning of year | 58.8 | 483.2 | 27.2 | 166.5 | ||||||||||||||||
End of year | 70.2 | 569.2 | 43.8 | 208.9 | ||||||||||||||||
*Totals may not sum due to rounding. |
Regional proved oil and gas reserve quantities: | |||||||||||||||
South Texas & Gulf Coast | Rockies | Permian | Mid-Continent | Total | |||||||||||
Year-end 2013 proved reserves | |||||||||||||||
Oil (MMBbls) | 50.6 | 64.0 | 11.8 | 0.2 | 126.6 | ||||||||||
Gas (Bcf) | 947.3 | 72.1 | 26.9 | 142.9 | 1,189.3 | ||||||||||
NGL (MMBbls) | 102.7 | — | — | 1.2 | 103.9 | ||||||||||
Total (MMBOE) | 311.2 | 76.0 | 16.3 | 25.2 | 428.7 | ||||||||||
% Proved developed | 42 | % | 59 | % | 91 | % | 78 | % | 49 | % | |||||
Year-end 2012 proved reserves | |||||||||||||||
Oil (MMBbls) | 30.9 | 49.2 | 11.2 | 0.9 | 92.2 | ||||||||||
Gas (Bcf) | 530.7 | 42.7 | 26.6 | 233.4 | 833.4 | ||||||||||
NGL (MMBbls) | 60.5 | — | 0.2 | 1.6 | 62.3 | ||||||||||
Total (MMBOE) | 179.9 | 56.3 | 15.8 | 41.4 | 293.4 | ||||||||||
% Proved developed | 43 | % | 65 | % | 93 | % | 89 | % | 57 | % | |||||
*Totals may not sum due to rounding. |
SM ENERGY COMPANY | |||
FINANCIAL HIGHLIGHTS | |||
December 31, 2013 | |||
Finding and Development Costs and Reserve Replacement Ratios: (8) | |||
Finding and Development Costs in $ per BOE | |||
Drilling, excluding revisions | $7.77 | ||
All-in | $8.53 | ||
Reserve Replacement Ratios | |||
Drilling, excluding revisions | 405 | % | |
All-in | 418 | % | |
(8) Finding and development costs and reserve replacement ratios are common metrics used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry. The metrics are easily calculated from information provided in the sections "Costs incurred in oil and gas producing activities" and "Proved oil and gas reserve quantities" above. Finding and development costs provide some information as to the cost of adding proved reserves from various activities. Reserve replacement provides information related to how successful a company is at growing its proved reserve base. Consistent with industry practice, future capital costs to develop proved undeveloped reserves are not included in "Costs incurred in oil and gas producing activities." The Company uses the reserve replacement ratio as an indicator of the Company’s ability to replenish annual production volumes and grow its reserves. It should be noted that the reserve replacement ratio is a statistical indicator that has limitations. The ratio is limited because it typically varies widely based on the extent and timing of new discoveries and property acquisitions. Its predictive and comparative value is also limited for the same reasons. In addition, since the ratio does not embed the cost or timing of future production of new reserves, it cannot be used as a measure of value creation. | |||
Finding and Development Costs Definitions: | |||
> Drilling, excluding revisions - numerator defined as the sum of development costs and exploration costs divided by a denominator defined as the sum of discoveries, extensions, and infill reserves in an existing proved field. To consider the impact of divestitures on this metric, further include sales of reserves in denominator. | |||
> All-in - numerator defined as total costs incurred, including asset retirement obligation, divided by a denominator defined as the sum of discoveries and extensions, infill reserves in an existing proved field, purchases of minerals in place, and revisions. To consider the impact of divestitures on this metric, further include sales of reserves in denominator. | |||
Reserve Replacement Ratio Definitions: | |||
> Drilling, excluding revisions - numerator defined as the sum of discoveries, extensions and infill reserves in an existing proved field divided by production. To consider the impact of divestitures on this metric, further include sales of reserves in numerator. | |||
> All-in - numerator defined as the sum of discoveries and extensions, infill reserves in an existing proved field, purchases of minerals in place, and revisions divided by production. To consider the impact of divestitures on this metric, further include sales of reserves in numerator. |