SM Energy Company
Key statistics
from XBRL data in SEC filingsAI briefing
from the latest 10-K, 10-Q and 8-K eventsSM Energy is an independent oil and gas producer that closed its merger with Civitas on January 30, 2026, creating a scaled operator across the Permian, DJ, South Texas (Maverick), and Uinta basins.
What they do
SM Energy develops and produces crude oil, natural gas, and NGLs from shale assets, with its portfolio now consisting of the Midland and Delaware basins in the Permian, the DJ Basin in Colorado, the Maverick Basin in South Texas, and the Uinta Basin in Utah. Second-quarter 2026 average net production was approximately 440 MBoe/d, including approximately 230 MBbl/d of oil. The company operates with a stated focus on capital efficiency, digital technology, and post-merger integration.
Revenue drivers
- Oil production (Permian, DJ, Uinta, South Texas) — Second-quarter 2026 production of approximately 440 MBoe/d was roughly half oil at approximately 230 MBbl/d; barrels are sold at realized prices such as the reported $53.86 per Boe before hedges.
- Natural gas and NGLs — The remaining production volume is natural gas and associated liquids-rich gas, including volumes from the newly acquired Civitas DJ Basin and Permian assets.
- South Texas (Maverick Basin) assets — Contributed approximately 12 MBoe/d in the second quarter of 2026 before the April 30, 2026 divestiture closed for a $950 million purchase price.
- Merger synergies and cost savings — The company reports actioning 95% of its $355 million target run-rate synergies to date, with full-year 2026 recurring G&A guidance lowered by $50 million at the midpoint.
Recent performance
Second-quarter 2026 net income was $4.46 per diluted share, with adjusted net income of $2.19 per diluted share. The company generated operating cash flow of $1.1 billion, or $1.2 billion before net working capital changes, and adjusted EBITDAX of $1.4 billion. Capital expenditures were $754 million, or $717 million before accrual changes, and adjusted free cash flow was $467 million after $42 million of one-time integration and transaction costs. The company returned $137 million to stockholders through $84 million of share repurchases (2.6 million shares) and its $0.22 per share quarterly dividend, and reported an estimated $262 million gain on the South Texas Divestiture.
Strategy
SM Energy's near-term focus is integrating Civitas, maintaining safe operations, delivering consistent operational execution, maximizing free cash flow, and bolstering the balance sheet. The company closed the $950 million South Texas Divestiture on April 30, 2026, using approximately $900 million of net proceeds to redeem all $819 million principal of its 6.75% and 5.0% Senior Notes due 2026, reducing net debt by $1.1 billion sequentially. Subsequent to quarter-end, it issued notice to redeem the remaining $417 million of 6.625% Senior Notes due 2027 at par, retiring all Senior Notes due through mid-2028. Capital return continues through fixed dividends and share repurchases, targeting the stated goal of more than $1.0 billion in divestitures within one year of the merger close.
Risks
- Civitas integration risk — The company may fail to successfully integrate Civitas' business or realize the anticipated benefits and stated $355 million synergy target, which could materially affect results.
- Commodity price volatility — Oil, gas, and NGL price declines can reduce profitability, cash flow, and access to capital, and second-quarter realized prices were $53.86 per Boe before hedges.
- Asset carrying value write-downs — Future price declines or unsuccessful exploration could result in write-downs of the company's oil and gas asset carrying values.
- Merger-related litigation and costs — Securities class action and derivative lawsuits may be brought in connection with the merger and could result in substantial costs, and additional merger costs will continue during a portion of 2026.
Outlook
Management raised second-half 2026 production guidance to 435-440 MBoe/d, including approximately 238 MBbl/d of oil, while maintaining full-year 2026 capital guidance of $2.65-$2.85 billion. Full-year 2026 recurring G&A guidance was lowered by $50 million at the midpoint, and the company expects its targeted run-rate synergies to be fully actioned by year-end 2026. Year-to-date transaction and integration costs are $172 million versus full-year guidance of $180 million, with the substantial majority of one-time costs already incurred.