SM Energy Co (SM) 2022 Q2 法說會逐字稿

Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the SM Energy Second Quarter 2022 Financial and Operating Results Q&A call. I would now like to introduce Jennifer Samuels, VP of Investor Relations. You may now begin your conference.

謝謝你的支持。我的名字是安吉拉，今天我將成為您的會議接線員。在這個時候，我想歡迎大家參加 SM Energy 2022 年第二季度財務和經營業績問答電話。我現在想介紹一下投資者關係副總裁 Jennifer Samuels。你現在可以開始你的會議了。

Thank you, Angela. Good morning, and thank you all for joining us for our second quarter 2022 Q&A call. To answer your questions today, we have our President and CEO, Herb Vogel; and CFO, Wade Pursell.

謝謝你，安吉拉。早上好，感謝大家加入我們的 2022 年第二季度問答電話。為了回答您今天的問題，我們請來了我們的總裁兼首席執行官 Herb Vogel；和首席財務官 Wade Pursell。

Before we get started, our discussion today may include forward-looking statements and discussion of non-GAAP measures. I direct you to Slide 2 of the accompanying slide deck, Page 6 of the accompanying earnings release and the Risk Factors section of our most recently filed 10-K and 10-Q, which describe risks associated with forward-looking statements that could cause actual results to differ.

在我們開始之前，我們今天的討論可能包括前瞻性陳述和非公認會計原則措施的討論。我將您引導至隨附幻燈片的幻燈片 2、隨附的收益發布的第 6 頁以及我們最近提交的 10-K 和 10-Q 的風險因素部分，它們描述了與可能導致實際的前瞻性陳述相關的風險結果不同。

We may also refer to non-GAAP measures. Please see the slide deck appendix and earnings release for definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures and discussion of forward-looking non-GAAP measures. Also, look for our second quarter 10-Q, which was filed this morning.

我們也可以參考非公認會計原則的措施。請參閱幻燈片附錄和收益發布，了解非 GAAP 措施與最直接可比的 GAAP 措施的定義和調節以及前瞻性非 GAAP 措施的討論。另外，請查看我們今天早上提交的第二季度 10-Q。

With that, I will turn it back to Angela to open it up for questions. Angela?

有了這個，我將把它轉回給安吉拉，讓大家提問。安吉拉？

(Operator Instructions) We will now take our first question from Zach Parham with JPMorgan.

（操作員說明）我們現在將回答來自摩根大通的 Zach Parham 的第一個問題。

I guess first, just on the CapEx raise. Could you give us a little more detail on the decision to add a bit of activity to the 2022 program and maybe just also detail how much of the increase in the budget is from that incremental activity versus the increased inflation expectations?

我想首先，只是在資本支出加註上。您能否詳細介紹一下在 2022 年計劃中增加一些活動的決定，也許還可以詳細說明預算的增加有多少來自於增加的活動與增加的通脹預期？

Thanks for calling in. So on the -- how much is from continuing operations, the basic background is we've got some great crews that are out there working for us. And even when we look within those operators, those service providers, we have some of their best crews when they benchmark them against all the crews they have running. So we had about 4 months of activity that was open in the back part of the year, and we said let's close that down, and that was on the frac spread side.

感謝您的來電。所以關於持續運營的費用，基本背景是我們有一些優秀的工作人員為我們工作。即使當我們查看這些運營商、服務提供商的內部時，當他們將他們與他們運行的所有工作人員進行比較時，我們也有一些他們最好的工作人員。所以我們有大約 4 個月的活動在今年下半年開放，我們說讓我們關閉它，這是在壓裂擴散方面。

On the drilling side, we've been having improved penetration rates with our drilling, which is just one of those things we assume we're not going to have improvement and then we keep improving, and that was a benefit also. So there was some additional on the drilling side. So I think we mentioned it in the prepared remarks that we had about 6 additional drills and have 3 turn-in-lines later in the year. So we put in the capital for that. And so the way you can look at it, really, we just added some inflation of around 10% to 15% on the inflation side and then the remainder was for the continuing activity. So that's how you could look at it.

在鑽井方面，我們的鑽井滲透率一直在提高，這只是我們認為我們不會改進的事情之一，然後我們會不斷改進，這也是一個好處。所以在鑽井方面還有一些額外的東西。因此，我認為我們在準備好的評論中提到，我們在今年晚些時候進行了大約 6 次額外的演習，並有 3 次上交線。所以我們為此投入了資本。所以你可以這麼看，真的，我們只是在通脹方面增加了大約 10% 到 15% 的通脹，然後剩下的部分用於持續活動。所以你可以這樣看待它。

Some of that will roll into '23.

其中一些將滾動到'23。

Yes. Yes. And I should mention for 2023 is where we actually get the benefit of a lot of that completion. So there's some additional completion activity that does not result in an incremental turn-in-lines this year. That does result in more in 2023. So that helps you out on that one?

是的。是的。我應該提到 2023 年，我們實際上會從大量的完成中受益。因此，今年還有一些額外的完成活動不會導致增加的上交線。這確實會在 2023 年帶來更多。所以這對你有幫助嗎？

Yes, that's great color. My follow-up, really, just one thing we noticed in the guidance update. It looks like you're now completing 5 additional wells in South Texas, now up to 43 and 2 less wells in the Permian. Anything specific that drove that mix shift? Or is it more timing related? Really just looking for a little more color on that change.

是的，這是很棒的顏色。我的後續行動，真的，只是我們在指南更新中註意到的一件事。看起來您現在在德克薩斯州南部完成了 5 口額外的井，現在在二疊紀增加了 43 口井和 2 口井。有什麼具體的因素推動了這種混合轉變？還是與時間有關？真的只是在這種變化上尋找更多的顏色。

Yes. No, you picked it up, Zach. So really what that was is we had a larger gap in South Texas, so we closed that gap. It's primarily in South Texas on the frac spread side. And on the Permian side, it's just the timing around the end of the year on the turn-in-lines, and we have 2 that turn in line at the -- after the start of the year. You probably noticed from 2Q, we wound up shifting some that just turned in line just after the start of the third quarter. So the same sort of thing. You just can't pin down exactly by a matter of a couple of days, which side of a -- end of month is going to be. That's all that is.

是的。不，你撿到了，扎克。所以實際上，我們在德克薩斯州南部的差距更大，所以我們縮小了差距。它主要位於德克薩斯州南部的壓裂擴散側。而在二疊紀方面，這只是年末左右的轉入時間，我們有 2 個在今年年初之後轉入。您可能從第二季度開始注意到，我們最終轉移了一些在第三季度開始後剛剛排隊的部分。所以同樣的事情。您只是無法在幾天內準確確定，月底將是哪一邊。就是這樣。

Next, we have Gabe Daoud with Cowen.

接下來是Gabe Daoud 和Cowen。

Maybe just piggybacking off of Zach's question a bit more. Could you remind us, I think there are 20 completions in Midland that were supposed to -- or 20 wells that were supposed to be completed very early in '23, I think, January, February. Is that still the case? And then would just be curious with the -- with you securing additional equipment into '23, how does that change your view on volumes?

也許只是更多地捎帶扎克的問題。您能否提醒我們，我認為米德蘭有 20 口井本應完成 - 或者 20 口井本應在 23 年初完成，我認為是 1 月、2 月。還是這樣嗎？然後會很好奇 - 隨著您在 23 年獲得更多設備，這將如何改變您對數量的看法？

So Gabe, that one is difficult to answer. It's just what we said actually previous quarter was that we had quite a few turn-in-lines in the beginning of 2023, and that was the result of 4 pads in the Permian with about 20 wells that we said, okay, they're actually going to start up on the other side of the year-end. So that's the crux of what's going on there. And what we're doing now really isn't changing that -- those 4 pads any at all. And that's really driving the turn-in-lines this year versus next year in the Permian. It's just the size of the pads and the fact that you need to drill them, frac them and drill out the plugs, all before bringing on all 20 wells. And you can see how that's a massive amount of activity.

所以加布，那個很難回答。這正是我們實際上在上一季度所說的，我們在 2023 年初有很多上交線，這是二疊紀 4 個墊層和大約 20 口井的結果，我們說，好吧，他們是實際上要在年底的另一邊啟動。所以這就是那裡發生的事情的癥結所在。而我們現在所做的實際上並沒有改變這一點——那 4 個打擊墊根本就沒有。這確實推動了今年與明年在二疊紀的交接。這只是墊子的大小以及您需要在所有 20 口井上鑽孔之前對其進行鑽孔、壓裂和鑽出塞子的事實。你可以看到這是一個巨大的活動量。

No, understood. That's helpful. And then maybe on the cash return angle, I appreciate the prepared remarks from last night. But curious if you can maybe give us a little more color. And then also, do you anticipate you would do a little bit of a formulaic approach similar to peers where you would kind of allocate x percentage of free cash flow to shareholders? Just curious how the framework could look.

不，明白了。這很有幫助。然後也許在現金回報的角度，我很欣賞昨晚準備好的評論。但是很好奇你是否可以給我們更多的顏色。然後，您是否預計您會採用類似於同行的公式化方法，將 x 百分比的自由現金流分配給股東？只是好奇框架的外觀。

Yes. I'll just start that and then hand it over to Wade. Just -- I think it's just great how fast we've gotten this position to be able to return capital to shareholders. We're way ahead of what our original plans were. And it's just the underlying assets that we have, they keep on performing better than expected. Our base performance is doing great. The wells are doing great. The enhanced completion designs in the Permian have really paid off. And then the Austin Chalk has just continued help us out on the upside. So with that, I'll just hand it over to Wade because that's really what's underpinning that free cash flow generation.

是的。我會先開始，然後把它交給韋德。只是 - 我認為我們能夠以多快的速度獲得這個職位以便能夠將資本返還給股東，這真是太好了。我們遠遠領先於我們最初的計劃。這只是我們擁有的基礎資產，它們的表現一直好於預期。我們的基本表現做得很好。水井做得很好。二疊紀強化完井設計確實得到了回報。然後奧斯汀粉筆剛剛繼續幫助我們向上。因此，我將把它交給韋德，因為這確實是自由現金流產生的基礎。

Yes. No, I appreciate the question. And I'm not sure I can add a lot. It'd be able to premature to be getting into any specifics at this point, but we are really close. And that's very exciting being below 1x already and having a real line of sight. To getting below that net debt target of $1 billion is obviously exciting. And what we shared with you in the prepared remarks, hopefully helps you think about how we're thinking about it right now.

是的。不，我很欣賞這個問題。而且我不確定我可以添加很多。在這一點上談任何細節還為時過早，但我們真的很接近。已經低於 1x 並且擁有真實的視線，這非常令人興奮。低於 10 億美元的淨債務目標顯然令人興奮。我們在準備好的評論中與您分享的內容，希望能幫助您思考我們現在的想法。

Your specific question about percent of free cash flow, it's too early for me to say anything about that. But we're going to do something that we're confident is very sustainable. And I'll just repeat that I mentioned, you could expect something in the fixed dividend area, an increase there and something that's very reliable that you can count on even at lower commodity prices. And we mentioned that our thinking right now would be something in terms of stock buyback. And we always have a view, an internal view on NAV. And by my comments saying that we thought that we feel like that's very appropriate at these prices should obviously tell you that our current view of NAV is a higher number. And going forward, we would continue to analyze that. But that's probably all I should say at this point.

你關於自由現金流百分比的具體問題，我現在說什麼還為時過早。但我們會做一些我們相信是非常可持續的事情。我會重複我提到的，你可以期待固定股息領域的一些東西，那裡的增加和一些非常可靠的東西，即使在商品價格較低的情況下你也可以指望它。我們提到我們現在的想法是股票回購。我們總是對資產淨值有一個看法，一個內部看法。根據我的評論，我們認為我們認為在這些價格下這是非常合適的，這顯然應該告訴你，我們目前對 NAV 的看法是一個更高的數字。展望未來，我們將繼續對此進行分析。但這可能就是我現在應該說的。

(Operator Instructions) Your next question comes from Michael Scialla with Stifel.

（操作員說明）您的下一個問題來自 Stifel 的 Michael Scialla。

I wanted to follow up on the change in plans with the additional rig and crew or filling those gaps. I guess, I wondered how far you've contracted those. And I guess for all of your contracts, how far are you contracted? Are you into '23 and maybe any kind of insight you can provide on what you would expect when you re-up those contracts for next year?

我想通過增加鑽機和工作人員或填補這些空白來跟進計劃的變化。我想，我想知道你已經與那些簽約了多遠。我猜你所有的合同，你的合同有多遠？您是否進入 23 年，或者您可以提供任何關於您在明年重新簽訂這些合同時的期望的見解？

Yes, Mike, thanks for joining the call. There's quite a bit behind that question, actually, and it deals with the entire supply chain that we have. So let me just start with if you're going to have be drilling wells, you need to have the tubulars ready to go with all the casing. And we're into 2023 on getting the firm allocation. And most of it, the price is locked down. There's some at -- in 2023, where you still have to pin that down. But -- so the supply chain we've got to basically run everything through the end of the year.

是的，邁克，感謝您加入電話會議。實際上，這個問題背後有很多東西，它涉及我們擁有的整個供應鏈。所以讓我開始吧，如果你要打井，你需要準備好管件，以便與所有套管一起使用。我們將在 2023 年獲得固定分配。而且大部分價格都是鎖定的。有一些在 2023 年，你仍然必須確定這一點。但是 - 所以我們必須在今年年底之前基本上運行所有的供應鏈。

On the rigs, we're actually not picking up incremental rigs here. We're just closing gaps that we had in the schedule where we would have given them a break for some period of time. So rig-wise, it's the same number. It's just -- because we drilled faster than expected, we're getting more wells done.

在鑽機上，我們實際上並沒有在這裡增加增量鑽機。我們只是縮小了我們在時間表中的差距，我們本來可以讓他們休息一段時間。所以在鑽機方面，它是相同的數字。只是——因為我們的鑽探速度比預期的要快，所以我們完成了更多的井。

On the pumping service side, we're contracted, but those are different than rig contracts on the pumping service side, but we've got reliable commitment from the frac service providers we're using, and that is through the end of the year and into next year. So there's -- we know we can close those gaps without any problem at all. And we can continue on into next year without any issue either.

在泵送服務方面，我們簽訂了合同，但與泵送服務方面的鑽機合同不同，但我們從我們使用的壓裂服務提供商那裡得到了可靠的承諾，而且一直到年底並進入明年。所以有 - 我們知道我們可以毫無問題地縮小這些差距。我們也可以毫無問題地繼續到明年。

Okay. I guess, do you have any sense of what you might expect for inflation for next year based on what you've seen so far this year?

好的。我想，根據你今年到目前為止所看到的情況，你對明年的通脹有什麼看法嗎？

No. We figured you guys to be wondering, it's just one of those things that after Russia invaded Ukraine, it was just really hard to figure out the supply chain. And we fortunately were -- had commitments through much of this year on most of what we needed. And then we locked that down real fast for this year and started going to next year much earlier than we normally would. And that went for steel. On sand, we've also now locked in our sand for 2023 for South Texas, which we had opened before. So we're progressively going through every single part of our supply chain, making sure we've got everything when we need it at the best price possible. But it's -- so in some cases, we know what our inflation would be for activities than -- for some others, we don't yet know what it will be like. So it's going to be just part of our normal processes in the fourth quarter and as we get into the budget for 2023 when we'll pin all that down.

不，我們想你們會想，這只是俄羅斯入侵烏克蘭後，很難弄清楚供應鏈的事情之一。幸運的是，我們在今年的大部分時間裡都對我們需要的大部分內容做出了承諾。然後我們在今年快速鎖定了這一點，並比我們通常更早地開始明年。那是鋼鐵。在沙灘上，我們現在也鎖定了 2023 年南德克薩斯州的沙灘，我們之前已經打開了。因此，我們正在逐步檢查我們供應鏈的每一個環節，確保我們在需要時以最優惠的價格獲得一切。但它 - 所以在某些情況下，我們知道我們的通貨膨脹會是什麼活動，而不是 - 對於其他一些人來說，我們還不知道它會是什麼樣子。因此，這將只是我們第四季度正常流程的一部分，當我們進入 2023 年的預算時，我們將確定所有這些。

Okay. Understood. And I wanted to ask, in your prepared remarks, Herb, you had mentioned 13 years of drilling inventory in the Midland Basin. And then you've got some exciting results from some new zones. Looking at Slide 16, you've got a lot of zones listed there. I'm just wondering what is built into that 13 years of inventory in terms of some of these new zones, and if they're not all built in, what the potential upside could be there in terms of the overall inventory of these new zones work out.

好的。明白了。我想問一下，赫伯，在你準備好的講話中，你提到了米德蘭盆地 13 年的鑽探庫存。然後你從一些新的區域得到了一些令人興奮的結果。看看幻燈片 16，你已經列出了很多區域。我只是想知道在這些新區域中的一些方面，這 13 年的庫存中內置了什麼，如果它們不是全部內置，就這些新區域的整體庫存而言，潛在的上升空間是什麼鍛煉。

Right. Mike, I'll just start by saying we have a little bit in every one of those 8 zones, but what we're really doing is expanding what the potential is in each of them. We run a normal annual process on that, which will really be in November. We'll start pinning that down on how much we've added in every interval. So we're not really going to update anything on inventory until usual year-end and then talk about them in February. It's just much more thorough, and it's just a comprehensive look at what we can do and with the same criteria that we've used in previous years. That's worked well for us, and we'll do that again. Last year, we fortunately were -- did a great job of replacing all the inventory we drilled up or completed in 2021, and we hope to have done the same thing in 2022. And we'll see at the end of the year, how that came out.

正確的。邁克，我首先要說的是，我們在這 8 個區域中的每一個都有一點點，但我們真正在做的是擴大每個區域的潛力。我們對此進行了正常的年度流程，實際上將在 11 月進行。我們將開始確定我們在每個間隔中添加了多少。因此，在通常的年底之前，我們不會真正更新庫存的任何內容，然後在二月份討論它們。它只是更徹底，它只是對我們可以做的事情的全面了解，並使用我們在前幾年使用的相同標準。這對我們來說效果很好，我們將再次這樣做。去年，幸運的是，我們在替換 2021 年鑽探或完成的所有庫存方面做得很好，我們希望在 2022 年也能做到這一點。我們將在年底看到，如何出來了。

(Operator Instructions) We have a question from Zach Parham with JPMorgan.

（操作員說明）我們有一個來自摩根大通的 Zach Parham 的問題。

Just one follow-up on the A&D market. Chesapeake announced they were going to be exiting their Eagle Ford position. And while that's still early on and we don't know exactly what that sale process is going to look like, they do have some acreage that directly offsets your northern area in South Texas. Could that be something you're potentially interested in? And maybe just general thoughts on the A&D market in general?

只是 A&D 市場的一項後續行動。切薩皮克宣布他們將退出鷹福特的職位。雖然這還處於早期階段，我們並不確切知道銷售過程會是什麼樣子，但他們確實有一些面積直接抵消了您在德克薩斯州南部的北部地區。這可能是你可能感興趣的東西嗎？也許只是對 A&D 市場的一般看法？

Yes. Zach, thanks for asking that. Yes, on the Austin Chalk, we think there's just some great acreage out there. You always got to look at what are the specific land terms and what are the specific midstream commitments on those sorts of things to really get an assessment of value. And I don't know how that looks. We always evaluate those. And if it's something that makes sense for our shareholders, we'd obviously look at it. That's a very recent announcement. So I don't know how that will look.

是的。扎克，謝謝你的提問。是的，在奧斯汀粉筆上，我們認為那裡只有一些大面積。你總是要看看具體的土地條款是什麼，以及在這些事情上具體的中游承諾是什麼，才能真正獲得價值評估。我不知道那看起來如何。我們總是評估那些。如果這對我們的股東有意義，我們顯然會考慮它。這是最近的一個公告。所以我不知道那會是什麼樣子。

In general, it's hard to do A&D when commodity prices are where they are. And there's a pretty wide bid-ask spread from our understanding of how things look with -- between the sellers and potential buyers. The sellers are looking for the buyers to buy a strip, and a buyer would be looking at more something mid-cycle or below to make sure they could get returns for their shareholders. So it's not a great time from a pure A&D perspective from our perspective. And we'll see where things shake out on commodity prices. But there's clearly some great acreage offsetting us in South Texas.

一般來說，當商品價格處於當前水平時，很難進行 A&D。從我們對事物外觀的理解來看，賣家和潛在買家之間存在相當廣泛的買賣差價。賣家正在尋找買家來購買一條帶，而買家將在周期中期或以下尋找更多的東西，以確保他們能夠為股東獲得回報。所以從我們的角度來看，從純粹的 A&D 角度來看，這不是一個好時機。我們將看到大宗商品價格的變化。但很明顯，在德克薩斯州南部，有一些大面積的土地抵消了我們。

There are no further questions at this time. I would now like to turn the call over to Mr. Herb Vogel, President and CEO, for closing remarks.

目前沒有其他問題。我現在想把電話轉給總裁兼首席執行官 Herb Vogel 先生做閉幕詞。

Yes. I'll just be really brief here. Thanks for joining the call. If you're wondering why invest in SM Energy now, I just want to repeat, we're producing really top-tier low breakeven assets in 2 excellent basins, and it's really a great time to be in SM stock. Thanks again. Have a great day.

是的。我將在這裡非常簡短。感謝您加入通話。如果你想知道為什麼現在投資 SM Energy，我只想重複一遍，我們正在兩個優秀的盆地生產真正頂級的低盈虧平衡資產，現在是 SM 股票的好時機。再次感謝。祝你有美好的一天。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。