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SM Energy Announces Improved Production Outlook And Revised Guidance

SM Energy Company (NYSE: SM) announces that its board of directors approved a revised capital expenditure budget for 2014. The Company is also providing updated 2014 production and cost guidance, as well as production growth expectations for 2015 and 2016.

MANAGEMENT COMMENTARY

Tony Best, CEO, remarked, "I am pleased to share an improved production outlook that reflects the combination of our strong operational performance and our deep inventory of high return projects. Recent enhancements in our completion techniques are improving the value and quantity of drilling inventory across our portfolio, which has been further bolstered by our recent acquisition activity in oil-weighted areas of our Rocky Mountain region. It's an exciting time at SM Energy and one that I think will generate significant value for our stockholders."

REVISED CAPITAL PROGRAM

Capital Expenditures

SM Energy has updated its 2014 capital expenditure budget. The majority of the capital increase is attributable to approximately $430 million of un-budgeted acquisitions in the Powder River and Williston Basins and additional activity related to those acquisitions in the second half of 2014. Changes from the original 2014 budget are summarized in the table below:
                 
Original Budget       Incremental Capital       Updated Budget
Program         (in millions)  
Eagle Ford $ 900 $ 30 $ 930
Bakken/TFS 350 30 380
Powder River 140 30 170
Permian 155 155
Other   115     115
Drilling and completion subtotal $ 1,660 $ 90 $ 1,750
 
New Ventures and non-drilling 265 40 305
Acquisitions 430 430
     
Total $ 1,925 $ 560 $ 2,485
 

The increase in Eagle Ford investment reflects higher levels of activity in the Company's non-operated Eagle Ford program than were assumed in its original budget. In the Bakken/Three Forks program, the increase in capital relates to drilling and completion activity in the fourth quarter associated with the Company's previously announced pending acquisition in its Gooseneck area in North Dakota, which is expected to close during the third quarter of 2014. In the Powder River Basin, the Company is increasing capital to reflect accelerated activity in the second half of 2014 due to strong results from its Frontier program. The increase in New Ventures and non-drilling is primarily due to construction of a gathering system in its East Texas program.

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