SM Energy Co

Acquisition Activity. On October 1, 2024, we acquired approximately 63,300 net acres of primarily proved oil and gas assets, and related supporting facilities located in Duchesne and Uintah counties, Utah, including approximately 103.2 MMBOE of existing net proved reserves, for an unadjusted purchase price of $2.1 billion, establishing a new position in the Uinta Basin in northeastern Utah (“Uinta Basin”). Our Uinta Basin position provides future development and exploration opportunities within multiple oil-rich intervals in the Lower Green River and Wasatch formations, and includes acreage with waxy crude and gas composition amenable to processing for NGL extraction. Refer to Note 17 – Acquisitions in Part II, Item 8 of this report for additional discussion. The information presented in this report regarding our Uinta Basin assets pertains to the fourth quarter of 2024 and does not represent the full-year 2024.

Senior Notes Activity. During 2024, we issued $750.0 million in aggregate principal amount of our 6.75% Senior Notes at par with a maturity date of August 1, 2029 (“2029 Senior Notes”) and $750.0 million in aggregate principal amount of our 7.0% Senior Notes at par with a maturity date of August 1, 2032 (“2032 Senior Notes”). As a result of these issuances, we received combined net proceeds of $1.5 billion after deducting fees of $23.0 million, which we used in part to fund the acquisition activity discussed above, and to redeem the $349.1 million of aggregate principal amount outstanding of our 5.625% Senior Notes due June 1, 2025 (“2025 Senior Notes”). The redeemed 2025 Senior Notes were canceled upon settlement. Refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion.

Reserves and Capital Investment. Our total estimated net proved reserves were 678.3 MMBOE as of December 31, 2024, an increase of 12 percent from 604.9 MMBOE as of December 31, 2023. This increase primarily consisted of the acquisition of 103.2 MMBOE of estimated net proved reserves in the Uinta Basin and revisions of previous estimates of 74.7 MMBOE related to infill reserves in both our South Texas and Midland Basin programs. This increase was partially offset by 62.4 MMBOE of production and 30.5 MMBOE of revisions of previous estimates related to the removal of certain net proved undeveloped reserve cases that are no longer expected to be developed within the five-year period from initial booking as a result of the reallocation of capital to include our Uinta Basin assets. Our proved reserve life index remained flat at 10.9 years as of December 31, 2024, and 2023. Refer to Areas of Operationand Reserves below for additional discussion of changes in estimated net proved reserves. Costs incurred increased 184 percent from 2023 to $3.5 billion in 2024. Refer to Areas of Operation below, and to Supplemental Oil and Gas Information (unaudited)in Part II, Item 8 of this report for additional discussion.

Return of Capital Program. In 2024, we continued to execute on our goal of sustainably returning capital to our stockholders through our fixed dividend payments and Stock Repurchase Program, as defined below. Our Board of Directors approved an increase to our fixed dividend to $0.80 per share annually, to be paid in quarterly increments of $0.20 per share, which commenced in the fourth quarter of 2024. During the year ended December 31, 2024, we paid dividends of $0.74 per share, an increase from $0.60 per share paid during the year ended December 31, 2023.

During the first half of 2024, we repurchased and subsequently retired 1.8 million shares of our common stock at a cost of $84.0 million, excluding excise taxes, commissions, and fees. In June 2024, our Board of Directors re-authorized the existing stock repurchase program to re-establish our authorization to repurchase up to $500.0 million in aggregate value of our common stock through December 31, 2027 (“Stock Repurchase Program”). As of December 31, 2024, $500.0 million remained available for repurchases of our outstanding common stock under the Stock Repurchase Program. Refer to Note 3 – Equity in Part II, Item 8 of this report for additional discussion.

Production, Pricing and Revenue, and Commodity Derivatives. Our average net daily equivalent production in 2024 increased 12 percent compared with 2023 to 170.5 MBOE, consisting of 80.2 MBbl of oil, 374.3 MMcf of gas, and 27.9 MBbl of NGLs, as a result of an increased number of completions, strong well performance, and production from our Uinta Basin assets during the fourth quarter of 2024. Oil production as a percentage of total production increased to 47 percent in 2024 from 43 percent in 2023, as a result of increased oil production from both our Midland Basin and South Texas assets, in addition to oil production from our Uinta Basin assets.

Realized prices before the effect of net derivative settlements (“realized price” or “realized prices”) for oil and gas decreased two percent and 27 percent, respectively, for the year ended December 31, 2024, compared with 2023. Realized price for NGLs remained flat for the year ended December 31, 2024, compared with 2023. Oil, gas, and NGL production revenue increased 13 percent to $2.7 billion for the year ended December 31, 2024, compared with $2.4 billion for 2023, primarily as a result of the timing of well completions, strong well performance, and production from our Uinta Basin assets. Oil production revenue was 82 percent and 77 percent of total production revenue for the years ended December 31, 2024, and 2023, respectively.

We recorded net derivative gains of $50.0 million and $68.2 million for the years ended December 31, 2024, and 2023, respectively. These amounts include net derivative settlement gains of $68.7 million and $26.9 million for the years ended December 31, 2024, and 2023, respectively.

Refer to Areas of Operation below and Overview of the Company in Part II, Item 7 of this report for additional discussion.