SM Energy Company SM announced that production for the first quarter of 2015 is expected to be 186.4 thousand barrels of oil equivalent per day (MBoe/d). This represents 6% sequential growth in average daily production from the fourth quarter of 2014, and exceeds the company’s guidance. Earlier, for the first quarter of 2015, SM Energy expected production to remain flat with the fourth-quarter 2014 level of 175.8 MBoe/d.
The company also announced that the borrowing base under its senior secured revolving credit facility was maintained at $2.4 billion. The company has reduced its capital expenditure budget for 2015 by about 40% to $1 million from $1.9 million in 2014. Moreover, SM Energy expects to exit the year with about 7 rigs from its 17 currently operational.
SM Energy is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America.
We expect the company’s attractive oil and gas investments, balanced and diverse portfolio of proved reserves and development drilling opportunities to create long-term value for shareholders. We view SM Energy as one of the most attractive players in the exploration and production space.
Given the company’s increasing focus on oil, specifically in the Permian and Rocky Mountain regions, we believe that SM Energy will be able to boost its oil-weighted activity. Additionally, SM has meaningful leasehold positions in the leading U.S. shale plays, including the Bakken, Niobrara, Haynesville and Granite Wash, which we believe will provide with many years of profitable drilling inventory. Growth drivers include the South Texas Eagle Ford Shale and Rockies Williston Basin Bakken/Three Forks shales.
On the flip side, though the company holds considerable acreage in the Williston Basin, most of its holdings are in low-yielding regions. Thus, its results will likely lag its peers which have acreage in the core region of the Bakken.
At present, SM Energy carries a Zacks Rank #3 (Hold). Meanwhile, one can look at better-ranked players in the energy sector like Phillips 66 Partners L.P. PSXP, Western Gas Equity Partners, L.P WGP and Hallador Energy Co. HNRG. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment