SM Energy Co (SM) 2018 Q3 法說會逐字稿

Good morning.

早上好。

My name is Tiffany, and I will be your conference operator today.

我叫蒂芙尼，今天我將擔任你們的會議接線員。

At this time, I would like to welcome everyone to the SM Energy Q3 2018 Q&A Conference Call.

在這個時候，我想歡迎大家參加 SM Energy Q3 2018 年問答電話會議。

(Operator Instructions)

（操作員說明）

Jennifer Samuels, Vice President of Investor Relations, you may begin your conference.

投資者關係副總裁 Jennifer Samuels，你可以開始你的會議了。

Good morning, everyone.

大家，早安。

Thanks for joining us today for our live question-and-answer discussion.

感謝您今天加入我們的現場問答討論。

I think you've all had the time to go through our press release, prerecorded call and presentation materials, all of which provide the details behind a great quarter and solid growth trajectory.

我想你們都有時間閱讀我們的新聞稿、預先錄製的電話和演示材料，所有這些都提供了出色季度和穩健增長軌跡背後的細節。

In addition, we filed our 10-Q this morning.

此外，我們今天早上提交了 10-Q。

As always, before we get started, I will remind you that we will be making forward-looking statements regarding our plans, expectations and assumptions for future performance.

一如既往，在我們開始之前，我會提醒您，我們將就我們對未來業績的計劃、期望和假設做出前瞻性陳述。

These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements.

這些陳述涉及的風險可能導致我們的實際結果與我們的前瞻性陳述中明示或暗示的結果存在重大差異。

Please refer to today's earnings release, the IR presentation posted to the website or Form 10-K for further discussion of these risks.

請參閱今天的收益發布、網站上發布的 IR 演示文稿或 10-K 表格，以進一步討論這些風險。

In our discussion of results for the quarter, we may reference certain non-GAAP financial measures that we believe are useful in evaluating our performance.

在我們討論本季度的結果時，我們可能會參考某些我們認為對評估我們的業績有用的非 GAAP 財務指標。

Reconciliation of those measures to the directly most comparable GAAP measures are provided in the earnings release and IR presentation.

收益發布和 IR 演示中提供了這些措施與最直接可比的 GAAP 措施的調節。

Jay Ottoson, Wade Pursell, and Herb Vogel are all here to answer questions.

Jay Ottoson、Wade Pursell 和 Herb Vogel 都在這裡回答問題。

And with that, I'll turn it over to Jay.

有了這個，我會把它交給傑伊。

Well, thanks Jennifer.

好吧，謝謝詹妮弗。

Good morning, everyone, and thank you all for attending.

大家早上好，感謝大家的出席。

I think the materials we released were very comprehensive, and I don't see a reason to spend more time than we have to, to today.

我認為我們發布的材料非常全面，我認為沒有理由在今天花更多的時間。

So Tiffany, why don't you just go ahead and open the line for questions?

所以蒂芙尼，你為什麼不直接打開問題熱線呢？

(Operator Instructions) Your first question comes from the line of Brad Heffern with RBC Capital Markets.

（操作員說明）您的第一個問題來自 RBC Capital Markets 的 Brad Heffern。

You talked about getting down your first couple of 15,000-foot laterals in the Permian.

你談到了在二疊紀開始你的第一對 15,000 英尺的分支。

Can you talk about how much of the acreage is suitable for 15,000-foot development versus 10,000 or 1 mile?

你能談談有多少面積適合 15,000 英尺的開發，而不是 10,000 或 1 英里？

Brad, this is Herb.

布拉德，這是赫伯。

Yes, let me go Eagle Ford first.

是的，讓我先去鷹灘。

So there is quite a bit of room for 15,000-foot and even longer laterals in the Eagle Ford, particularly in the Western area.

因此，在伊格爾福特，特別是在西部地區，15,000 英尺甚至更長的支線有相當大的空間。

So I guess, there's -- we don't have a number out there and we're going to be working the inventory this fall and publish some of the results on February.

所以我想，我們沒有數字，我們將在今年秋天進行清點，並在 2 月份公佈一些結果。

On the Permian, it's really driven by the existing well and the lease geometry.

在二疊紀，它實際上是由現有井和租約幾何形狀驅動的。

So there's areas where there is quite a few 15,000-foot wells.

所以有些地區有很多 15,000 英尺的井。

We're going to figure out the optimal between 10,000 and 15,000-plus wells, and that will depend a little bit on area and location.

我們將找出 10,000 到 15,000 多口井之間的最佳選擇，這在一定程度上取決於面積和位置。

So basically, location and the interval.

所以基本上，位置和間隔。

So I don't have a number there.

所以我那裡沒有電話號碼。

Okay.

好的。

And then I guess, on the infrastructure and weather issues in the fourth quarter, of the 0.6 million barrels, how much of that is just sort of temporary onetime impact?

然後我猜，關於第四季度的基礎設施和天氣問題，在 60 萬桶石油中，有多少只是暫時的一次性影響？

And then how much of that affects the ramp going forward in terms of drilling delays or anything along those lines?

然後，在鑽井延遲或沿著這些路線的任何方面，這對未來的斜坡有多大影響？

Jay -- yes, Brad, that's a great question.

傑——是的，布拉德，這是一個很好的問題。

Let me first just give you a visual.

首先讓我給你一個視覺效果。

I'll spend a little bit of time on this because I figured this question would come up.

我會花一點時間在這上面，因為我認為這個問題會出現。

On the rainfall, so you can picture in September, there were about 4-plus inches of rain and the Big Spring area and the ground got quite saturated.

在降雨方面，你可以想像 9 月份的降雨量大約超過 4 英寸，Big Spring 地區和地面變得非常飽和。

And at the same time, we have a lot of trenches that were being put in place or open for connecting wells and for gathering lines and for water infrastructure.

與此同時，我們有許多溝渠正在鋪設或開放，用於連接水井、收集管線和供水基礎設施。

That was followed by Hurricane Willa coming through, and we wound up with quite a bit of standing water everywhere.

緊接著颶風威拉襲來，我們到處都是積水。

So our choices were to attempt to pump a lot of water out of those trenches and continue our operations or to wait for the water to subside.

所以我們的選擇是嘗試從這些戰壕中抽出大量水並繼續我們的行動，或者等待水消退。

Obviously, you can't pump forever and be successful.

顯然，您不可能永遠抽水並獲得成功。

It's very inefficient.

這是非常低效的。

So we basically elected to defer the laying of the lines, and that led to deferral of completions.

所以我們基本上選擇推遲鋪設線路，這導致了完工的推遲。

So you can picture what happened.

所以你可以想像發生了什麼。

Also, it's hard to move trucks through muddy roads.

此外，卡車很難通過泥濘的道路。

So you can picture, really, a deferral is how to look at this that defers our entire schedule.

所以你可以想像，真的，延期是如何看待這個推遲我們整個日程的事情。

So it moves everything out compared to what we had before, and so that's why you're seeing the production in 4Q drop.

因此，與我們之前的相比，它把所有東西都移走了，這就是為什麼你看到第四季度的產量下降了。

So we viewed it as a temporary event, as temporary as rainfall events are.

所以我們將其視為暫時事件，就像降雨事件一樣暫時。

So that's one event.

所以這是一個事件。

The other, the third-party aspect.

另一方面，第三方方面。

So first, the gas plant issue where there was a force majeure event.

首先，發生不可抗力事件的天然氣廠問題。

That, when there's a removal of plant for some period of time, we expect that to come back on at the end of the year.

也就是說，當一段時間內移除工廠時，我們預計它會在年底恢復。

We nearly responded by tying together our gathering systems so we can go to other plants, and that's been very successful.

我們幾乎通過將我們的收集系統捆綁在一起作為回應，這樣我們就可以去其他工廠，這是非常成功的。

But there are still issues that developed in the entire gathering system for all -- a lot of operators around us that defers some of the production.

但在整個收集系統中仍然存在問題——我們周圍的許多運營商推遲了一些生產。

On the oil pipeline event, that's another event that's relatively short, but that was just with one of our takeaway, really, one of our purchasers and they are our long-haul takeaway.

在輸油管道事件中，這是另一個相對較短的事件，但這只是我們的一個外賣，真的，我們的一位買家，他們是我們的長途外賣。

So that problem is temporary.

所以這個問題是暫時的。

But the upshot of it is that this is a temporary event, but it defers some of our completions.

但它的結果是這是一個臨時事件，但它推遲了我們的一些完成。

The well performance itself is great.

油井性能本身就很棒。

So you've seen some from third quarter results that we actually put on fewer completion, but wound up with better-than-expected production.

所以你已經看到了第三季度的一些結果，我們實際上完成的更少，但最終的產量好於預期。

So that's kind of the picture that I wanted to lay out there for the 600,000-barrel estimate, and that was our best estimate as of early this week.

所以這就是我想為 600,000 桶的估計列出的圖片，這是我們截至本周初的最佳估計。

There's some things that could make it go up.

有些事情可以讓它上升。

There's some things that could make it go down.

有些事情可能會使它下降。

But we thought that was a reasonable estimate for the quarter.

但我們認為這是對該季度的合理估計。

Yes.

是的。

Brad, I'll just make a really stark comment.

布拉德，我只會做一個非常嚴厲的評論。

What you shouldn't do is just take that 600,000 barrels and add it to the first quarter, right?

你不應該做的就是把那 600,000 桶加到第一季度，對吧？

We definitely deferred our completion schedule for a good portion of those barrels, which means the ramp is -- it will happen, but it's going to happen a little later than we expected.

我們肯定推遲了這些桶中很大一部分的完成時間表，這意味著斜坡是 - 它會發生，但它會比我們預期的晚一點發生。

So that will have an impact.

所以會有影響。

We think, overall, we'll be able to make up these volumes in our '19 program, but it will tend to push the rate later in the year as a result.

我們認為，總的來說，我們將能夠在我們的 19 年計劃中彌補這些數量，但結果往往會在今年晚些時候推高利率。

And that's just a consequence of essentially having to defer the whole program a few weeks because of the rainfall, so it's regrettable.

這只是由於降雨而不得不將整個計劃推遲幾週的結果，所以很遺憾。

Unfortunately, we haven't developed any way to control the weather yet, but I think our people have done a tremendous job.

不幸的是，我們還沒有開發出任何控制天氣的方法，但我認為我們的人已經做了很多工作。

I'm going to make sure I say that.

我要確保我這麼說。

They've done a great job of working through all this and working in difficult conditions to keep us as close to schedule as we could.

他們在解決所有這些問題並在困難的條件下工作方面做得非常出色，以使我們盡可能接近時間表。

But it's just, again, nothing here that changes the value of this company.

但同樣，這裡沒有任何東西可以改變這家公司的價值。

It's just an issue of timing, really.

真的，這只是時間問題。

It's fourth quarter, just a little bit later.

現在是第四季度，只是晚了一點。

Yes.

是的。

Same number of completions in 4Q, just later than we expected.

第 4 季度完成的數量相同，只是晚於我們的預期。

(Operator Instructions) Your next question comes from the line of Oliver Huang with Tudor, Pickering, Holt.

（操作員說明）你的下一個問題來自 Oliver Huang 與 Tudor、Pickering、Holt 的合作。

You all mentioned having closed on several land trades and bolt-on acreage enabling longer laterals or increasing working interest and operated sectional units in your prepared remarks last night.

你們都提到了在昨晚準備好的發言中關閉了幾處土地交易和螺栓固定面積，從而實現了更長的橫向或增加了工作興趣並運營了分段單元。

Just wondering what the opportunity set here is on a go-forward basis.

只是想知道這裡設置的機會是什麼。

And also, how you all are thinking about M&A and corporate basis just given some of the recent transactions that we've seen from your peers?

而且，鑑於我們最近從同行那裡看到的一些交易，你們如何看待併購和公司基礎？

Yes.

是的。

That's a great question.

這是一個很好的問題。

We have been -- and I'll give our land group all the credit for this, really successful in doing trades that have quart up our position.

我們一直——我會把所有的功勞歸功於我們的土地集團，在進行使我們的頭寸增加四分之一的交易方面非常成功。

I think if you watch our maps over time, you can actually see that on the map, how much more quart up our position is than when we started.

我想如果你隨著時間的推移看我們的地圖，你實際上可以在地圖上看到，我們的位置比我們開始時高了多少夸脫。

And we've done a number of trades, a lot of some large ones that we've had to talk about and others, a number of smaller ones as well.

我們已經完成了很多交易，其中有很多我們不得不談論的大交易，還有一些小交易。

And there's still a list of those out there.

而且那裡還有一份清單。

There's probably not as many big ones and we tackled most of those first, but there's still opportunity, we think, to do some of that and drill longer.

可能沒有那麼多大的，我們首先解決了其中的大部分問題，但我們認為，仍然有機會做一些這樣的事情並鑽得更久。

As Herb indicated earlier, basically, our program now is almost all greater than 10,000 feet, pushing 15,000 in some areas.

正如 Herb 之前指出的那樣，基本上，我們現在的計劃幾乎都超過 10,000 英尺，在某些地區推動了 15,000 英尺。

So we've done a lot of work there and it's being very, very successful.

所以我們在那裡做了很多工作，而且非常非常成功。

With respect to M&A, there have been a flurry of deals and it's certainly been interesting to see the various rationales for every deal, and they're all a little bit different.

關於併購，出現了一連串的交易，看到每筆交易的各種理由當然很有趣，而且它們都有點不同。

So let me address it from 2 perspectives.

因此，讓我從兩個角度來解決這個問題。

From a buy side perspective, for us, we do, really do understand the value of scale in a commodity business like ours, but we generally believe that the source of most competitive advantage is asset quality.

從買方的角度來看，對我們來說，我們確實理解像我們這樣的商品業務的規模價值，但我們普遍認為，最具競爭優勢的來源是資產質量。

So in our particular case, we don't feel under any particular pressure to do a deal that would be, in anyway, dilutive just to get bigger.

因此，在我們的特定情況下，我們不會感到有任何特別的壓力去做一筆交易，無論如何，只是為了擴大規模而稀釋。

But we're certainly open to ideas about transactions that would make our business better, and so we look at a lot of things and look at it from that perspective.

但我們當然對交易的想法持開放態度，這些想法會使我們的業務變得更好，因此我們會從這個角度看待很多事情並看待它。

On the sell side, we really believe we're a premier operator with top-tier assets.

在賣方方面，我們真的相信我們是擁有頂級資產的主要運營商。

And frankly, that we're executing extremely well on our plan that will create a lot of differential value for our shareholders over the next few years.

坦率地說，我們的計劃執行得非常好，這將在未來幾年為我們的股東創造很多不同的價值。

With that said, the company is for sale every day and I know that our board would carefully evaluate proposals that might meaningfully accelerate or increase that value realization.

話雖如此，公司每天都在出售，我知道我們的董事會會仔細評估可能有意義地加速或增加價值實現的提案。

Okay.

好的。

Perfect.

完美的。

And I guess, just switching over to the Eagle Ford.

我想，只是切換到 Eagle Ford。

Seems like the JV has been beneficial towards SM, thus far, on improving optimization on the design of your wells.

到目前為止，合資企業似乎對 SM 有利，改善了油井設計的優化。

But just kind of wondering how you all are thinking about the JV beyond 2018 and if there is any flexibility to kind of extend that program out into 2019?

但只是想知道你們都如何考慮 2018 年以後的合資企業，以及是否有任何靈活性將該計劃擴展到 2019 年？

Yes.

是的。

Oliver, that's another really good question.

奧利弗，這是另一個非常好的問題。

So we're just wrapping up the Phase I activities, which were 16 D&C wells plus 7 DUC completion, and we have 3 more wells to bring on for Phase 1 and they'll all come on in this quarter.

因此，我們剛剛結束了第一階段的活動，即 16 口 D&C 井和 7 口 DUC 完井，我們還有 3 口井要用於第一階段，它們都將在本季度完成。

We're in the midst of negotiating our second phase of that JV.

我們正在談判該合資企業的第二階段。

It has been successful and we have a great relationship with the other parties in the JV, and what we've learned has been beneficial for improving return.

它取得了成功，我們與合資企業的其他各方建立了良好的關係，我們所學到的知識有助於提高回報。

So I can't talk about the details of Phase 2, but we're in the midst of negotiation and I'm sure we'll be able to talk more about it when we give guidance in 2019 because, obviously, it will affect our 2019 CapEx spend and program in the Eagle Ford.

所以我不能談論第 2 階段的細節，但我們正在談判中，我相信當我們在 2019 年提供指導時，我們將能夠更多地討論它，因為很明顯，它會影響我們 2019 年在 Eagle Ford 的資本支出和計劃。

Your next question comes from the line of Michael McAllister with MUFG.

您的下一個問題來自 MUFG 的 Michael McAllister。

Can you guys talk about as you get closer to cash flow neutrality and hopefully, a positive free cash flow, SM's approach to hedging?

你們能談談當你們接近現金流中性和希望的正自由現金流時，SM 的對沖方法嗎？

And any comments about marketing whether it be NGLs and oil would be very helpful as well.

任何關於營銷的評論，無論是 NGL 還是石油，都會非常有幫助。

This is Wade.

這是韋德。

I'll address the hedging question.

我將解決對沖問題。

Our hedging strategy is really tied to leverage and we're locking in.

我們的對沖策略確實與槓桿息息相關，我們正在鎖定。

We're protecting the EBITDAX.

我們正在保護 EBITDAX。

So it's predictable that as our leverage goes down, and we see that going down, and we've told you that as we approach net -- getting to cash flow neutrality and then heading toward the end of next year, you're getting leverage metrics in the lower 2s area.

因此，可以預見的是，隨著我們的槓桿率下降，我們看到它在下降，我們已經告訴過你，當我們接近淨值時——實現現金流中性，然後在明年年底前，你將獲得槓桿率較低 2s 區域的指標。

As you approach 2x, I would just tell you that you would probably be seeing us hedge more like a 50% area of production as you approach the year.

當你接近 2 倍時，我只想告訴你，隨著你接近這一年，你可能會看到我們對沖更像是 50% 的生產區域。

So definitely, lower is the short answer to your question.

所以肯定地，較低的是你問題的簡短答案。

And this is Herb.

這是香草。

On the marketing side, first on the NGLs.

在營銷方面，首先是在 NGL 方面。

We have the ability on part of our volumes from the Eagle Ford to capture ethane or to reject ethane.

我們有能力利用 Eagle Ford 的部分產量捕獲乙烷或拒絕乙烷。

And that's a monthly election, then that's driven by what the methane and ethane prices are.

這是每月一次的選舉，然後由甲烷和乙烷的價格驅動。

So we, right now, we're clearly in ethane capture mode and we'll continue that as long as it's financially beneficial to do so.

因此，我們現在顯然處於乙烷捕獲模式，只要這樣做在經濟上有利，我們就會繼續這樣做。

On the other aspect, oil, gas marketing, we're continuing with what we've done in the past and we have multiple purchasers with multiple takeaway that commit to us that they've got firm takeaway capacity.

在另一方面，石油、天然氣營銷，我們將繼續我們過去所做的事情，我們有多個採購商向我們承諾，他們擁有強大的外賣能力。

And that's been a successful strategy for us, and we'll continue to do that.

這對我們來說是一個成功的戰略，我們將繼續這樣做。

All right.

好的。

Great.

偉大的。

That's helpful.

這很有幫助。

And then to -- going back to the hedging.

然後 - 回到對沖。

So the directive would be that almost any free cash flow would go down to attack that balance sheet and create value through that?

所以指令是幾乎所有自由現金流都會下降以攻擊資產負債表並通過它創造價值？

Well, it's a great -- thanks for asking that.

嗯，這很好——謝謝你提出這個問題。

It's a great opportunity, actually, when you look at free cash flow.

實際上，當您查看自由現金流時，這是一個很好的機會。

So you really have 3 opportunities, you can accelerate activities in either the Permian or the Eagle Ford or pay down debt.

所以你真的有 3 個機會，你可以在二疊紀或伊格爾福特加速活動或償還債務。

And certainly, my bias is to, at this point, given where our leverage is at, is to use it for debt reduction.

當然，我的偏見是，在這一點上，考慮到我們的槓桿作用，是用它來減少債務。

The great thing about that, and if you can say it's ever great to debt, is that our debt is -- all that debt we have is callable at some point.

關於這件事的偉大之處，如果你可以說它對債務來說永遠是偉大的，那就是我們的債務是——我們擁有的所有債務在某個時候都是可以贖回的。

We have some that is callable now.

我們現在有一些可以調用的。

Some that will be -- more that will be callable in November.

一些將是——更多將在 11 月被調用。

We have this opportunity to essentially use that enhance our debt adjusted per share cash flow growth rate, which is the metric we care the most about and the one we think shareholders should care the most about, at a very low risk from the standpoint of using that cash.

我們有機會從本質上利用它來提高我們的債務調整後每股現金流增長率，這是我們最關心的指標，也是我們認為股東最應該關心的指標，從使用的角度來看風險非常低那現金。

So in a way, it's a way to -- it's just moving value from the debt side of the balance sheet to -- down to the shareholders' equity.

所以在某種程度上，這是一種方式 - 它只是將價值從資產負債表的債務方面轉移到 - 股東權益。

And we think that's a great strategy going forward and certainly, that's our intent.

我們認為這是一個偉大的未來戰略，當然，這就是我們的意圖。

I will now turn the conference back over to Mr. Jay Ottoson, CEO, for closing remarks.

我現在將會議轉回給首席執行官 Jay Ottoson 先生作閉幕詞。

Well, we think thank you, again, for your attendance this morning and your interest in the company, and hope you have a pleasant day.

好吧，我們想再次感謝您今天上午的出席以及您對公司的關注，希望您度過愉快的一天。

Thank you.

謝謝。

This concludes today's conference call.

今天的電話會議到此結束。

You may now disconnect.

您現在可以斷開連接。