Financial Performance - For the three months ended September 30, 2025, oil, gas, and NGL production revenue was $811,009,000, an increase of 26.3% compared to $642,380,000 for the same period in 2024[15] - Total operating revenues and other income for the nine months ended September 30, 2025, reached $2,449,078,000, up from $1,838,038,000 in 2024, reflecting a growth of 33.3%[15] - Net income for the three months ended September 30, 2025, was $155,088,000, a decrease of 35.5% from $240,523,000 in the same period of 2024[15] - Net income for the nine months ended September 30, 2025, was $539,022,000, compared to $582,015,000 for the same period in 2024, reflecting a decrease of approximately 7.4%[24] - Total operating revenues for the three months ended September 30, 2025, were $811.6 million, a 26.1% increase from $643.6 million in the same period of 2024[74] - Net income for the E&P Segment for the three months ended September 30, 2025, was $155.1 million, a decrease of 35.5% from $240.5 million in the same period of 2024[74] Assets and Liabilities - The company reported total current assets of $632,958,000 as of September 30, 2025, compared to $434,699,000 at the end of 2024, representing a 45.6% increase[13] - Total assets increased to $9,089,500,000 as of September 30, 2025, from $8,576,647,000 at the end of 2024, marking a growth of 5.9%[13] - The company’s total liabilities decreased from $4,339,390,000 at the end of 2024 to $4,376,413,000 as of September 30, 2025, indicating a slight increase of 0.9%[13] - The total stockholders' equity as of September 30, 2025, was $4,713,087,000, an increase from $4,061,546,000 as of September 30, 2024[21] Cash Flow and Capital Expenditures - Total cash provided by operating activities for the nine months ended September 30, 2025, was $1,559,088,000, an increase of 29.5% from $1,204,645,000 in 2024[24] - Capital expenditures for the nine months ended September 30, 2025, were $1,221,736,000, up from $957,156,000 in 2024, indicating a 27.6% increase[24] - The company declared net cash dividends of $0.20 per share, totaling $68,776,000 for the nine months ended September 30, 2025, compared to $62,136,000 in 2024[24] Stock and Compensation - The Company finalized the Uinta Basin Acquisition with a purchase price of $2.1 billion during the first quarter of 2025[76] - The 2025 Equity Incentive Compensation Plan authorized an increase of approximately 2.0 million shares available for grant, with 2.5 million shares available as of September 30, 2025[77] - A total of 374,692 Performance Share Units (PSUs) were granted in 2025, with a grant date fair value of $10.3 million[79] - Total compensation expense for PSUs was $1.8 million for the three months ended September 30, 2025, compared to $1.1 million in 2024[80] - The Company granted 981,046 Restricted Stock Units (RSUs) with a grant date fair value of $25.8 million during the nine months ended September 30, 2025[84] - Total compensation expense for RSUs was $5.1 million for the three months ended September 30, 2025, compared to $4.5 million in 2024[85] - The Company issued 90,314 shares under the Employee Stock Purchase Plan (ESPP) during the nine months ended September 30, 2025, generating total proceeds of $1.9 million[88] Mergers and Acquisitions - The company anticipates benefits from the pending merger with Civitas, although risks related to the merger's consummation and integration were highlighted[10] - The Company entered into a Merger Agreement with Civitas Resources, Inc., where Civitas shareholders will receive 1.45 shares of the Company's common stock for each share of Civitas[89] Derivative Contracts and Financial Instruments - The Company has commodity derivative contracts in place with terms through the third quarter of 2027, including oil and gas swaps and collars[55] - As of September 30, 2025, the weighted-average contract price for NYMEX WTI oil swaps was $67.91 per barrel for the fourth quarter of 2025[58] - The Company’s total derivative liabilities were $14.740 million as of September 30, 2025, slightly up from $14.200 million as of December 31, 2024[61] - The company does not designate its commodity derivative contracts as hedging instruments, which affects the accounting treatment of these contracts[60] Other Financial Metrics - Basic net income per common share for the three months ended September 30, 2025, was $1.35, down from $2.10 in the same period of 2024[15] - The effective tax rate for the three months ended September 30, 2025, was 24.1%, compared to 19.2% for the same period in 2024[39] - The Company recorded an income tax expense of $49.2 million for the three months ended September 30, 2025, compared to $57.1 million in 2024[39] - The Company was in compliance with all financial and non-financial covenants as of September 30, 2025[49]

Mergers and Acquisitions - SM Energy and Civitas Resources agreed to combine in an all-stock transaction [1]

Production and Operations - Third quarter 2025 production totaled 19.7 MMBoe, or 213.8 MBoe/d, with net daily oil production increasing by 47% year-over-year to 113.9 MBbl/d[6] - Full-year 2025 production guidance is set at 207-208 MBoe/d, with approximately 53-54% expected to be oil[22] - The company plans to drill approximately 115 net wells and complete around 150 net wells for the full year 2025[22] - Production guidance for Q4 2025 is approximately 206-212 Mboe/d with an oil mix of 52-53%[27] - Net production volumes for oil reached 10.5 million barrels, a 47% increase compared to 7.1 million barrels in the same quarter last year[51] - Average net daily production of oil was 113.9 MBbl per day, a 47% increase from 77.4 MBbl per day in the same quarter last year[51] - The company experienced a 6% increase in net production volumes of gas, reaching 38.5 Bcf for the three months ended September 30, 2025, compared to 34.5 Bcf in the same quarter last year[51] Financial Performance - Net income for the third quarter 2025 was $155.1 million, or $1.35 per diluted common share, a decrease from $240.5 million, or $2.09 per diluted common share, in the same period in 2024[10] - Adjusted EBITDAX for the third quarter 2025 was $588.2 million, a 22% increase from $481.5 million in the same period in 2024[13] - Total operating revenues for Q3 2025 reached $811.6 million, a 26% increase from $643.6 million in Q3 2024[33] - Net income for Q3 2025 was $155.1 million, compared to $240.5 million in Q3 2024, reflecting a decrease of 35%[33] - Basic net income per common share for Q3 2025 was $1.35, down from $2.10 in Q3 2024[33] - For the three months ended September 30, 2025, the net income (GAAP) was $155,088,000, a decrease from $240,523,000 for the same period in 2024, representing a decrease of 35.5%[39] - For the nine months ended September 30, 2025, the net income (GAAP) was $539,022 thousand, down from $582,015 thousand in 2024[57] Cash Flow and Capital Expenditures - Adjusted free cash flow for the third quarter 2025 was $234.3 million, representing an 80% increase compared to the same period in 2024[15] - Capital expenditures for the third quarter 2025 totaled $397.7 million, with $323.2 million after adjustments, including $14.0 million for acquiring working interests in economic wells[14] - Capital expenditures for Q4 2025 are projected to be between $225 million and $245 million, excluding acquisitions[27] - Total cash provided by operating activities for the nine months ended September 30, 2025, was $1,559,088,000, an increase from $1,204,645,000 in 2024, reflecting a growth of 29.5%[39] - The net cash provided by operating activities (GAAP) for the three months ended September 30, 2025, was $504,960 thousand, up from $452,263 thousand in 2024, indicating an increase of 11.6%[61] - The net cash used in investing activities for the nine months ended September 30, 2025, was $1,243,774,000, compared to $957,912,000 in 2024, reflecting an increase of 29.8%[39] Shareholder Returns and Equity - The company returned $35.1 million to stockholders in the third quarter 2025 through dividends and share repurchases[16] - The company declared net cash dividends of $0.20 per share for the three months ended September 30, 2025, totaling $22,991,000, compared to $20,595,000 in 2024, which is an increase of 11.5%[39] - Total stockholders' equity increased to $4.71 billion as of September 30, 2025, compared to $4.24 billion at the end of 2024[31] - The total stockholders' equity as of September 30, 2025, was $4,713,087,000, up from $4,061,546,000 as of September 30, 2024, marking an increase of 16.0%[37] Debt and Financial Ratios - The company ended the quarter with a cash balance of $162.3 million, contributing to a net debt of $2.57 billion and a net debt-to-adjusted EBITDAX ratio of 1.1 times[18] - The total principal amount of debt (GAAP) as of September 30, 2025, was $2,736,026 thousand, with net debt (non-GAAP) at $2,573,775 thousand after accounting for cash and cash equivalents of $162,251 thousand[60] - The company aims to achieve a target leverage ratio of 1.0x and plans to return capital to stockholders through dividends and share repurchases[24] Market and Pricing - The company has hedged approximately 5,100 MBbls of expected fourth quarter 2025 net oil production at an average price of $63.14/Bbl to $69.36/Bbl[21] - For the three months ended September 30, 2025, the realized sales price for oil was $63.83 per barrel, a 3% increase from $62.04 in the previous quarter, but a 15% decrease from $74.72 in the same quarter last year[51] - The average realized price for gas was $2.19 per Mcf, reflecting a 50% increase from $1.46 in the same quarter last year[51] Other Financial Metrics - Operating expenses for Q3 2025 totaled $565.1 million, significantly higher than $312.7 million in Q3 2024[33] - The company reported a net derivative gain of $45,479,000 for the three months ended September 30, 2025, compared to a loss of $86,283,000 in 2024[39] - The company reported stock-based compensation expense of $8,124,000 for the three months ended September 30, 2025, compared to $6,587,000 in 2024, an increase of 23.4%[39] - Adjusted EBITDAX is a key non-GAAP measure used to assess the company's ability to generate funds for exploration and development, with specific calculations detailed in the financial highlights[44] - Adjusted free cash flow is calculated as net cash provided by operating activities before net change in working capital, highlighting the cash available for discretionary uses[45] - The adjusted net income (non-GAAP) for the three months ended September 30, 2025, was $153,698 thousand, down from $186,429 thousand in 2024[57]

Core Insights - SM Energy Company reported record production for the third quarter of 2025, achieving net production volumes of 19.7 million barrels of oil equivalent (MMBoe), with over 53% being oil [4][10] - The company maintained strong cash production margins despite lower oil prices, demonstrating operational efficiencies and disciplined capital allocation [3][10] - The company returned $35.1 million to stockholders through dividends and share repurchases, reflecting its commitment to stockholder returns [3][17] Financial Performance - Net income for the third quarter of 2025 was $155.1 million, or $1.35 per diluted share, down from $240.5 million, or $2.09 per diluted share, in the same period of 2024 [7][10] - Net cash provided by operating activities increased by 33% year-over-year to $557.5 million, driven by higher production volumes and a favorable net derivative settlement gain [8][10] - Adjusted EBITDAX for the third quarter was $588.2 million, a 22% increase from $481.5 million in the same period of 2024 [12] Production and Pricing - The company’s oil production averaged 113.9 thousand barrels per day (MBbl/d), with total production comprising 39% from the Midland Basin, 40% from South Texas, and 21% from the Uinta Basin [4][10] - Realized prices for oil were $63.83 per barrel before hedges, while natural gas averaged $2.19 per thousand cubic feet (Mcf) [5][11] - The company experienced a 26% increase in total net daily production and a 47% increase in net daily oil production compared to the third quarter of 2024 [10] Capital Expenditures and Activity - Capital expenditures for the third quarter totaled $397.7 million, with $323.2 million after adjustments, including investments in high-return wells expected to come online in 2026 [14][16] - The company drilled 24 net wells during the quarter, with significant activity in the Midland Basin, South Texas, and Uinta Basin [14][15] Guidance and Future Outlook - For the fourth quarter of 2025, the company expects production between 207-208 MBoe/d, with approximately 50% of expected net oil production hedged at an average price of $63.14 per barrel [23] - Full-year capital expenditures are projected to range from $1.375 billion to $1.395 billion, reflecting ongoing investments in high-quality assets [23]

Core Viewpoint - SM Energy and Civitas Resources have announced a definitive merger agreement involving an all-stock transaction, creating a leading independent oil and gas company with significant free cash flow and enhanced stockholder value [2][3][5] Transaction Details - Each common share of Civitas will be exchanged for 1.45 shares of SM Energy common stock, resulting in a combined enterprise value of approximately $12.8 billion, inclusive of net debt [3][7] - Upon completion, SM Energy stockholders will own approximately 48% and Civitas stockholders will own approximately 52% of the combined company [7] Financial Metrics - Pro forma second quarter of 2025 production is projected to total 526 MBoe/d, with full-year 2025 consensus free cash flow expected to exceed $1.4 billion [1][4] - The merger is anticipated to be immediately accretive to key per share financial metrics, including operating cash flow and free cash flow [10] Synergies and Value Creation - Identified annual synergies of approximately $200 million, with potential upside to $300 million, are expected to enhance stockholder value and support accelerated debt repayment [5][10] - The combined company will operate a premier asset portfolio of approximately 823,000 net acres across high-return U.S. shale basins, positioning it as a top-10 independent oil-focused producer [4][5] Governance and Leadership - The Board of Directors will consist of 11 members, with 6 from SM Energy and 5 from Civitas, and Herb Vogel will serve as CEO of the combined company [8] - The merger has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2026, subject to customary closing conditions [11]

Core Viewpoint - SM Energy is positioned well to potentially beat earnings estimates in its upcoming quarterly report, continuing a strong trend of surpassing expectations in previous quarters [1][6]. Earnings Performance - SM Energy has consistently exceeded earnings estimates, with an average surprise of 15.98% over the last two quarters [2]. - In the last reported quarter, the company achieved earnings of $1.5 per share, surpassing the Zacks Consensus Estimate of $1.23 per share by 21.95% [3]. - In the previous quarter, SM Energy reported earnings of $1.76 per share against an expected $1.6 per share, resulting in a surprise of 10.00% [3]. Earnings Estimates and Predictions - Recent estimates for SM Energy have been revised upward, indicating a positive outlook for the company's earnings [6]. - The Zacks Earnings ESP for SM Energy is currently +4.97%, suggesting analysts are optimistic about the company's earnings prospects [9]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) indicates a high likelihood of another earnings beat [9]. Earnings ESP Insights - Stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [7]. - The Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [8]. - It is crucial to check a company's Earnings ESP before its quarterly release to enhance the probability of success [11].

Core Insights - The energy sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1] - The Relative Strength Index (RSI) is a key indicator for identifying oversold conditions, typically below 30 [1] Company Summaries - **Mach Natural Resources LP (NYSE:MNR)**: Filed for a mixed shelf of up to $250 million; stock fell approximately 12% over the past month with a 52-week low of $11.91; RSI value is 27.3; shares closed at $12.07, down 1.6% [7] - **Global Partners LP (NYSE:GLP)**: Reported weaker-than-expected Q2 results; stock declined around 14% in the last month, reaching a 52-week low of $43.20; RSI value is 25.8; shares closed at $43.89, down 2.4% [7] - **SM Energy Co (NYSE:SM)**: Analyst maintained a Sector Perform rating and raised the price target from $34 to $35; stock fell about 21% over the past month with a 52-week low of $19.67; RSI value is 29.9; shares closed at $21.79, down 1.5% [7]

Core Insights - The energy sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1] - The Relative Strength Index (RSI) is a key indicator for identifying oversold conditions, typically below 30 [1] Company Summaries - **Mach Natural Resources LP (NYSE:MNR)**: Filed for a mixed shelf of up to $250 million; stock fell approximately 12% over the past month with a 52-week low of $11.91; RSI value is 27.3; shares closed at $12.07, down 1.6% [7] - **Global Partners LP (NYSE:GLP)**: Reported weaker-than-expected Q2 results; stock declined around 14% in the last month with a 52-week low of $43.20; RSI value is 25.8; shares closed at $43.89, down 2.4% [7] - **SM Energy Co (NYSE:SM)**: Analyst maintained a Sector Perform rating and raised the price target from $34 to $35; stock fell about 21% over the past month with a 52-week low of $19.67; RSI value is 29.9; shares closed at $21.79, down 1.5% [7]

Core Points - SM Energy Company announced the completion of its semi-annual borrowing base redetermination, reaffirming the borrowing base at $3.0 billion and maintaining the elected commitment amount at $2.0 billion [1][2] - An amendment to the existing Credit Agreement was made, replacing the prior springing maturity provision with a more flexible structure based on short-term debt and borrowing availability [1][2] - The Executive Vice President and Chief Financial Officer expressed satisfaction with the reaffirmed borrowing base and unchanged commitment levels, indicating continued trust from banking partners in SM Energy's strategy and financial strength [2] Company Overview - SM Energy Company is an independent energy company involved in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs, primarily in Texas and Utah [2]

Core Insights - SM Energy's stock closed at $23.08, reflecting a 2.1% increase, outperforming the S&P 500's gain of 1.56% [1] - The company has experienced a significant decline of 15.48% prior to the recent trading day, underperforming compared to the Oils-Energy sector and the S&P 500 [1] Earnings Expectations - Analysts anticipate SM Energy will report an EPS of $1.38, representing a decrease of 14.81% year-over-year [2] - Revenue is expected to reach $841.04 million, indicating a growth of 30.67% compared to the same quarter last year [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $5.78 per share, down 15% from the previous year, while revenue is expected to be $3.32 billion, reflecting a growth of 23.23% [3] - Recent adjustments to analyst estimates are crucial as they indicate short-term business trends and analyst sentiment [3] Stock Performance and Valuation - The Zacks Rank system currently rates SM Energy as 5 (Strong Sell), with a 0.65% decrease in the EPS estimate over the last 30 days [5] - SM Energy's Forward P/E ratio stands at 3.91, significantly lower than the industry average of 9.34, indicating a valuation discount [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is ranked 226 out of over 250 industries, placing it in the bottom 9% [6] - The Zacks Industry Rank suggests that higher-rated industries outperform lower-rated ones by a factor of 2 to 1 [7]