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SM Energy Announces 2013 Capital Expenditure Budget And Performance Guidance

SM Energy Company (NYSE: SM) today announces that its Board of Directors has approved a capital expenditure budget for 2013 and provides 2013 production and cost guidance.

Tony Best, CEO, remarked, “Our 2013 capital program positions the Company for another year of record production while generating strong returns from our key projects. The capital budget is anchored by our high return Eagle Ford and Bakken/Three Forks development programs, with additional investments being made in emerging oil programs in the Permian Basin. Our production mix will continue to shift from lower value natural gas to higher value liquids throughout the year. We’ll exit next year with a solid balance sheet and with quarterly capital expenditures equaling quarterly EBITDAX assuming current strip prices. We expect to grow production by 20% in 2013, followed by annual production growth of approximately 15% in 2014 and 2015 with improving leverage metrics and no equity dilution. With our solid multi-year drilling inventory, visibility of production growth, and strong financial position, it is an excellent time to be a shareholder of SM Energy.”

2013 Capital Investment Budget

The breakdown of the capital budget is provided in the following table:

2013 Capital Expenditure Budget

($ in MM)
Eagle Ford (1)           $650
Bakken/Three Forks $290
Operated Permian $170
Operated Granite Wash $45
Operated other $20
Non-operated other $25
Drilling and completion subtotal $1,200
Non-drilling capital (2) $175
New Ventures activity $125
Non-program subtotal $300
TOTAL $1,500
    (1)   This amount is net of carried costs for the non-operated Eagle Ford program.
(2) Includes capitalized overhead, facilities, G&G, and land.

Eagle Ford

SM Energy plans to operate five drilling rigs, supported by two dedicated frac spreads, on its operated Eagle Ford shale acreage in 2013. Most of the Company’s activity next year will be focused on swath drilling in the northern portion of its Galvan Ranch acreage and the eastern portions of its Briscoe Ranch acreage. Swath drilling allows wells to be drilled at optimum spacing and mitigates complications associated with attempting to drill and complete infill locations later in field life. The Company expects to complete approximately 75 flowing completions during the year, with an additional 40 wells waiting on completion at year-end.

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