SM Energy Corp., Denver, plans to grow its total production by up to 4% to roughly 157,000 boe/d in 2024, with growth plans tilted toward the company’s Midland basin assets and to oil over gas and NGLs.
Fourth-quarter production from SM Energy's operations in the Midland basin and South Texas regions totaled 153,500 boe/d, with oil contributing 43% of that figure. Total production was split nearly evenly between Midland basin and South Texas assets but chief executive officer Herb Vogel told analysts Feb. 22 his team is ready to build on some of its 2023 acreage acquisitions.
“The operational focus in 2024 is more oil growth, less gas growth [and] significant capital efficiency improvement with a 10% increase in capital against a nearly 30% increase in turned-in-lines weighted to oil,” Vogel said.
SM executives have outlined a capital spending plan of $1.16-1.2 billion for this year, which is up from $989 million last year and $880 million in 2022. The plan is expected to fund, among other things, the drilling of 115-120 wells versus 89 in 2023. Of the 2024 number, about 70 are slated for the Midland basin, where SM Energy is extending its use of a fourth rig through most of the year.
The operator last year spent about $110 million to buy nearly 30,000 net acres as well as working interests in wells (OGJ Online, Nov. 6, 2023). Those moves grew the company's footprint in the Midland basin to about 111,000 net acres. Of the roughly 70 wells SM Energy plans to drill there this year, 25-30 are expected to have lateral length of 15,000 ft.
In fourth-quarter 2023, SM Energy produced a net profit of $247 million, down slightly from its late-2022 number as market prices fell, on total revenues of $609 million. Shares of the company (Ticker: SM) closed last week at $41.44, about 6% higher than the previous Friday. Over the past 6 months, shares are up slightly, leaving the company’s market capitalization at about $4.8 billion.