SM Energy Raises Production Outlook as Daily Output Doubles
The independent energy company reported second-quarter adjusted EBITDAX of $1.4 billion, up from $570 million a year earlier.
SM Energy (SM), the independent energy company, reported a doubling of year-over-year production for the second quarter. The result followed a period of significant asset realignment and a sharp increase in realized oil prices.
Average net daily production rose 100% year-over-year to 439.7 MBoe/d in the second quarter from 203.2 MBoe/d in the same period last year. This followed a sequential increase of 18% from 371.2 MBoe/d in the first quarter.
Financial results were bolstered by a 31% year-over-year increase in the realized sales price for oil, which reached $96.85 per barrel before hedges. However, the company saw a sharp decline in natural gas pricing, with realized sales prices falling 90% sequentially to $0.17 per Mcf.
Operating costs trended upward as lease operating expense per Boe rose 12% year-over-year to $6.71. Despite these costs, the company recognized an estimated $262 million gain on the divestiture of its South Texas assets during the quarter.
SM Energy reduced its net debt by $1.1 billion sequentially. This reduction followed the $950 million sale of the South Texas assets on April 30, 2026, and the redemption of $819 million in senior notes due 2026.
Production guidance for the second half of 2026 was raised to 435–440 MBoe/d from a previous outlook of 430 MBoe/d. The company narrowed its full-year 2026 production guidance to 418–423 MBoe/d.
Full-year capital guidance remained at $2.65 billion to $2.85 billion. The company lowered its full-year recurring G&A guidance by $50 million at the midpoint, citing accelerated integration and the capture of merger-related synergies.
Stockholder returns for the second quarter totaled $137 million, representing approximately 30% of adjusted free cash flow. This included $84 million in share repurchases and quarterly dividends of $0.22 a share.