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SM Energy Reports Results For The Second Quarter Of 2012; Provides Operations Update

Stocks in this article: SM

SM Energy Company (NYSE: SM) announces financial results for the second quarter of 2012 and provides an operations update. In addition, a new presentation for the Company's second quarter earnings and operations update will be posted on the Company's website at www.sm-energy.com. This presentation will be referenced during the conference call scheduled for 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on August 2, 2012. Information for the earnings call can be found below.

SECOND QUARTER 2012 RESULTS

SM Energy reported net income for the second quarter of 2012 of $24.9 million or $0.37 per diluted share. This compares to net income of $124.5 million, or $1.86 per diluted share, for the same period of 2011. Adjusted net income for the second quarter of 2012 was $5.9 million, or $0.09 per diluted share, compared to adjusted net income of $61.1 million, or $0.91 per diluted share, for the same period of 2011. Adjusted net income excludes certain items that the Company believes affect the comparability of operating results. The Company generally excludes non-recurring items or items whose timing and/or amount cannot be reasonably estimated, and large non-cash items, such as gains or losses on divestiture activity and unrealized gains or losses from derivative activity. A summary of the adjustments made to arrive at adjusted net income is presented in the table below:

Adjusted Net Income Reconciliation
(in thousands, except per share data)
 
Reconciliation of net income (GAAP)

to adjusted net income (Non-GAAP):

    For the Three Months Ended June 30,
2012       2011
 
Reported net income (GAAP) $ 24,889 $ 124,533
Adjustments, net of tax: (1)
Change in Net Profits Plan liability (13,844 ) (8,823 )
Unrealized derivative gain (51,205 ) (36,500 )
Loss (gain) on divestiture activity 15,158 (18,940 )
Impairment of proved properties 24,154
Abandonment & impairment of unproved properties 6,713 780
   
Adjusted net income (Non-GAAP) $ 5,865   $ 61,050  
 
Adjusted net income per common share
Basic $ 0.09   $ 0.96  
Diluted $ 0.09   $ 0.91  
 
Weighted-average common shares outstanding
Basic 64,585   63,638  

Diluted

67,556   66,909  

(1) For the three-month periods ended June 30, 2012, adjustments are shown net of tax and are calculated using an effective tax rate of 37.3%, which approximates the Company's statutory tax rate, as adjusted for ordinary permanent differences. For the three-month period ended June 30, 2011, adjustments are shown net of tax using the effective income tax rate as calculated by dividing the income tax expense by income before income taxes as shown on the consolidated statement of operations for that period.Earnings before interest, taxes, depreciation, depletion, amortization, accretion, and exploration expense ("EBITDAX") was $213.7 million for the second quarter of 2012, down from $242.4 million for the same period of 2011.

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