SM Energy Co
For the period ended Mar 31, 2025. Filed May 2, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
SM$29.92+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0000893538-24-000136
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0000893538-25-000040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 134 previous paragraphs and 131 current paragraphs.
40 unchanged; 76 reworded; 14 added; 15 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 20 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Market Trends and Uncertainties
Current report
Historically, tariffs have led to increased costs for products exchanged in international trade, and have heightened global political tensions. Recent U.S. government policies, including new and higher tariffs on imported goods, have increased economic uncertainty. These tariffs, along with retaliatory tariffs from other countries, could lead to reduced trade resulting from increased costs for imported goods and decreased demand for U.S. exports, as well as reduced investment and technological exchange between major economies. These outcomes could negatively impact global economic conditions, financial market stability, and commodity prices. Volatility in political, trade, regulatory, and economic conditions could have a material adverse effect on our financial condition or results of operations. We are unable to reasonably estimate the period of time that these market conditions will exist or the extent to which they will impact our business, results of operations, and financial condition.
Current report
Continuing volatility in political, trade, regulatory and economic conditions could impact supply and demand fundamentals, and any related declines in oil, gas, and NGL prices could lead to proved and unproved property impairments in the future. Future impairments of proved and unproved properties are difficult to predict, especially in a volatile price environment.
Current report
(1)The Uinta Basin assets were acquired on October 1, 2024.
Current report
Average net daily equivalent production for the three months ended March 31, 2025, decreased five percent sequentially. The overall decrease consisted of decreases of 13 percent and two percent from our South Texas and Midland Basin assets, respectively, partially offset by a six percent increase from our Uinta Basin assets. The decreases in average net daily equivalent production from our South Texas and Midland Basin assets were anticipated during the first quarter of 2025 as a result of no completion crews operating in South Texas during the fourth quarter of 2024, and the planned timing of well completions in the Midland Basin. These anticipated changes also reflect a shift in capital allocation to our Uinta Basin assets. Average net daily equivalent production increased 36 percent YTD 2025-over-YTD 2024 primarily driven by the addition of 38.4 MBOE per day of production from our Uinta Basin assets, and as a result of strong well performance and the timing of well completions; average net daily equivalent production from our South Texas and Midland Basin assets increased 10 percent and nine percent, respectively.
Current report
Average net daily equivalent production, production revenue, and production expense
Current report
(1)Amounts reflect Uinta Basin activity for the three months ended March 31, 2025. There was no comparable activity for the three months ended March 31, 2024, as the Uinta Basin assets were acquired on October 1, 2024.
Current report
Average net daily equivalent production volumes increased 36 percent, primarily driven by the addition of 38.4 MBOE per day of production from our Uinta Basin assets. Average net daily equivalent production from our South Texas and Midland Basin assets increased 10 percent and nine percent, respectively. Oil, gas, and NGL production revenue increased 50 percent and oil, gas, and NGL production expense increased 64 percent, primarily driven by the addition of our Uinta Basin assets.
Current report
Depletion, depreciation, and amortization
Current report
DD&A expense increased four percent sequentially, primarily driven by increases in our DD&A rates, partially offset by a decrease in average net daily equivalent production. DD&A expense increased 62 percent YTD 2025-over-YTD 2024 as a result of increased average net daily equivalent production, including the addition of production from our recently acquired Uinta Basin assets, and increases in our DD&A rates. Our Midland Basin and Uinta Basin assets have higher DD&A rates than our South Texas assets.
Current report
G&A expense decreased six percent sequentially, primarily due to a decrease in one-time expenses associated with the Uinta Basin Acquisition. G&A expense increased 30 percent YTD 2025-over-YTD 2024 primarily as a result of increased compensation and G&A expenses associated with the Uinta Basin Acquisition.
Current report
Net derivative loss
Current report
The sequential quarterly decrease in the effective tax rate is due to estimated state revenue changes affecting our apportionment of taxable income to states with lower statutory tax rates. The YTD 2025-over-YTD 2024 increase in the effective tax rate is due to estimated state revenue changes affecting our apportionment of taxable income to states with higher statutory tax rates and proportional effects of forecast net income on estimated permanent items between periods.
Current report
Refer to Note 4 - Income Taxes in Part I, Item 1 of this report, and to the Risk Factors section in Part 1, Item 1A of our 2024 Form 10-K for additional discussion.
Removed paragraphs (15)
Previous report
•We exercised the option to purchase the Altamont Option Assets, and on October 1, 2024, we closed the Uinta Basin Acquisition, as discussed in Note 11 - Acquisitions in Part I, Item 1 of this report.
Previous report
•We issued our 2029 Senior Notes and 2032 Senior Notes and redeemed the remaining $349.1 million of aggregate principal amount outstanding of our 2025 Senior Notes. Please refer to Note 5 - Long-Term Debt in Part I, Item 1 of this report for additional discussion.
Previous report
Financial and Operational Results. Average net daily equivalent production for the three months ended September 30, 2024, increased seven percent sequentially to 170.0 MBOE, consisting of increases of eight percent and six percent from our South Texas and Midland Basin assets, respectively. These increases were a result of strong well performance and the timing of well completions.
Previous report
(2) Amount excludes five gross (two net) non-operated wells drilled in the Midland Basin during the third quarter of 2024, resulting in five gross (two net) non-operated wells drilled but not completed at September 30, 2024.
Previous report
Average net daily equivalent production for the three months ended September 30, 2024, increased seven percent sequentially, consisting of increases of eight percent and six percent from our South Texas and Midland Basin assets, respectively. Average net daily equivalent production increased four percent YTD 2024-over-YTD 2023, consisting of increases of six percent and two percent from our Midland Basin and South Texas assets, respectively. These increases were a result of strong well performance and the timing of well completions. We expect a slight increase in total net equivalent production for the full-year 2024, compared with 2023, driven by well performance and an accelerated pace of development of our existing assets, as well as production from our newly acquired assets in the Uinta Basin.
Previous report
Comparison of Financial Results and Trends Between the Three Months Ended September 30, 2024, and June 30, 2024, and Between the Nine Months Ended September 30, 2024, and 2023
Previous report
Average net daily equivalent production volumes increased four percent, consisting of increases of six percent and two percent from our Midland Basin and South Texas assets, respectively. Total realized price per BOE remained flat. As a result of the increase in average net daily equivalent production volumes, oil, gas, and NGL production revenue increased four percent. Oil, gas, and NGL production expense decreased one percent, primarily driven by a decrease in transportation expense, partially offset by increases in LOE, production tax expense, and ad valorem tax expense.
Previous report
DD&A expense increased 13 percent sequentially and nine percent YTD 2024-over-YTD 2023. The sequential quarterly increase was primarily driven by an increase in average net daily equivalent production and an increase in our DD&A rate due to inflation. The YTD 2024-over-YTD 2023 increase resulted from a combination of increased average net daily equivalent production, an increase in our DD&A rate due to inflation, and a slight shift in production mix resulting from higher activity in our Midland Basin assets, which have a higher DD&A rate than our South Texas assets. Please refer to Overview of Selected Production and Financial Information, Including Trends above for discussion of DD&A expense on a per BOE basis.
Previous report
G&A expense increased 13 percent sequentially and 14 percent YTD 2024-over-YTD 2023 as a result of increases in compensation expense due to inflation and increases in certain G&A expenses resulting from the Uinta Basin Acquisition. Please refer to the section Overview of Selected Production and Financial Information, Including Trends above for discussion of G&A expense on a per BOE basis.
Previous report
Net derivative (gain) loss
Previous report
The sequential quarterly decrease in the effective tax rate is due to the effect of excess tax benefits from share-based payment awards during the third quarter of 2024 and an increased benefit from qualified R&D credits claimed. The YTD 2024-over-YTD 2023 increase in the effective tax rate is primarily due to the benefit recognized from the multi-year R&D credit study which was completed during the third quarter of 2023. The effective tax rate for the three and nine months ended September 30, 2024, reflects the benefit of current R&D credits claimed and we expect to continue to recognize benefits from R&D activities for the remainder of 2024.
Previous report
During the third quarter of 2024, we issued our 2029 Senior Notes and 2032 Senior Notes. Please see below for discussion on how the net proceeds received were used, and refer to Note 5 - Long-Term Debtin Part I, Item 1 of this report for additional discussion.
Previous report
Our credit ratings affect the availability of, and cost for us to borrow, additional funds. Subsequent to September 30, 2024, one major credit rating agency upgraded our credit ratings following the close of the Uinta Basin Acquisition on October 1, 2024, citing our increased size and scale, increased inventory, increased oil percentage of expected production, strong operational performance, our priority of improving our leverage metrics, our ability to consistently generate cash flows, and our use of financial derivative instruments as part of our financial risk management program.
Previous report
On August 26, 2024, we redeemed all of the $349.1 million of aggregate principal amount outstanding of our 2025 Senior Notes. Please refer to Note 5 - Long-Term Debtin Part I, Item 1 of this report for additional discussion.
Previous report
On October 1, 2024, we used a portion of the net proceeds from the 2029 Senior Notes and 2032 Senior Notes, cash on hand, a portion of the Cash Deposit, and borrowings under our revolving credit facility to fund our proportionate share of the Uinta Basin Acquisition. Please refer to Note 5 - Long-Term Debtand Note 11 - Acquisitions in Part I, Item 1 of this report for additional discussion.
Reworded paragraphs (76)
Previous wording
The following discussion includes forward-looking statements. Please refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements. Additionally, the following discussion includes sequential quarterly comparison to the financial information presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed with the SEC on August 8, 2024. Throughout the following discussion, we explain changes between the three months ended September 30, 2024, and the three months ended June 30, 2024 (“sequential quarterly” or “sequentially”), as well as the year-to-date (“YTD”) change between the nine months ended September 30, 2024, and the nine months ended September 30, 2023 (“YTD 2024-over-YTD 2023”).
Current wording
The following discussion includes forward-looking statements. Refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements. Throughout the following discussion, we explain changes between the three months ended March 31, 2025, and the three months ended December 31, 2024 (“sequential quarterly” or “sequentially”), and the year-to-date (“YTD”) change between the three months ended March 31, 2025, and the three months ended March 31, 2024 (“YTD 2025-over-YTD 2024”).
Previous wording
Our purpose is to make people’s lives better by responsibly producing energy supplies, contributing to domestic energy security and prosperity, and having a positive impact in the communities where we live and work. Our long-term vision and strategy is to sustainably grow value for all of our stakeholders as a premier operator of top-tier assets by maintaining and optimizing our high-quality asset portfolio, generating cash flows, and maintaining a strong balance sheet. Our team executes this strategy by prioritizing safety, technological innovation, and stewardship of natural resources, all of which are integral to our corporate culture. Our near-term goals include focusing on continued operational excellence, successfully integrating the Uinta Basin assets, and continuing to return value to stockholders through fixed dividend payments and our Stock Repurchase Program, while also transferring value to stockholders through reduced debt.
Current wording
Our purpose is to make people’s lives better by responsibly producing energy supplies, contributing to domestic energy security and prosperity, and having a positive impact in the communities where we live and work. Our long-term vision and strategy is to sustainably grow value for all of our stakeholders as a premier operator of top-tier assets by maintaining and optimizing our high-quality asset portfolio, generating cash flows, and maintaining a strong balance sheet. Our team executes this strategy by prioritizing safety, technological innovation, and stewardship of natural resources, all of which are integral to our corporate culture. Our near-term goals include focusing on operational execution and successfully integrating the Uinta Basin assets; generating cash flows that enable us to continue returning value to stockholders through fixed dividend payments, debt repayments, and our Stock Repurchase Program; and expanding our portfolio of top-tier economic drilling inventory through acquisition and exploration.
Previous wording
Our asset portfolio is comprised of high-quality assets in the Midland Basin in West Texas, the Maverick Basin in South Texas, and as of October 1, 2024, the Uinta Basin in northeast Utah, which we believe are capable of generating strong returns in the current macroeconomic environment and provide resilience to commodity price risk and volatility. We seek to maximize returns and increase the value of our top-tier assets through disciplined capital spending, strategic acquisitions, such as the Uinta Basin Acquisition, and continued development and optimization of our existing assets. We believe that our high-quality assets facilitate a sustainable approach to prioritizing operational execution, maintaining a strong balance sheet, generating cash flows, returning capital to stockholders, and maintaining financial flexibility.
Current wording
Our asset portfolio is comprised of high-quality assets in the Midland Basin of West Texas, the Maverick Basin of South Texas, and the Uinta Basin of Northeast Utah, which we believe are capable of generating strong returns in the current macroeconomic environment and provide resilience to commodity price risk and volatility. We seek to maximize returns and increase the value of our top-tier assets through disciplined capital spending, strategic acquisitions, and continued development and optimization of our existing assets. We believe that our high-quality assets facilitate a sustainable approach to prioritizing operational execution, maintaining a strong balance sheet, generating cash flows, returning capital to stockholders, and maintaining financial flexibility.
Previous wording
We are committed to exceptional safety, health, and environmental stewardship; supporting the professional development of a diverse and thriving team of employees; building and maintaining partnerships with our stakeholders by investing in and connecting with the communities where we live and work; and transparency in reporting on our progress in these areas. The Environmental, Social and Governance Committee of our Board of Directors oversees, among other things, the effectiveness of our ESG policies, programs and initiatives, monitors and responds to emerging trends, issues, and associated risks, and, together with management, reports to our Board of Directors regarding such matters. Further demonstrating our commitment to sustainable operations and environmental stewardship, compensation for our executives and eligible employees under our long-term incentive plan, and compensation for all employees under our short-term incentive plan is calculated based on, in part, certain Company-wide, performance-based metrics that include key financial, operational, environmental, health, and safety measures.
Current wording
We are committed to exceptional safety, health, and environmental stewardship; supporting the professional development of a diverse and thriving team of employees; building and maintaining partnerships with our stakeholders by investing in and connecting with the communities where we live and work; and transparency in reporting on our progress in these areas. The Governance and Sustainability Committee of our Board of Directors oversees, among other things, the effectiveness of our sustainability policies, programs and initiatives, monitors and responds to emerging trends, issues, and associated risks, and, together with management, reports to our Board of Directors regarding such matters. Further demonstrating our commitment to sustainable operations and environmental stewardship, compensation for our executives and eligible employees under our long-term incentive plan, and compensation for all employees under our short-term incentive plan is calculated based on, in part, certain Company-wide, performance-based metrics that include key financial, operational, environmental, health, and safety measures.
Previous wording
We are impacted by global commodity and financial markets that remain subject to heightened levels of uncertainty and volatility. Key factors contributing to market fluctuations include ongoing oil production curtailment agreements among the Organization of the Petroleum Exporting Countries (“OPEC”) plus other non-OPEC oil producing countries (collectively referred to as “OPEC+”); lower than expected oil and gas demand from China; War and Geopolitical Instability; United States Federal Reserve monetary policy; shipping channel constraints and disruptions; and changes in global oil inventory in storage. These factors have driven commodity price volatility, contributed to instances of supply chain disruptions and fluctuations in interest rates, and could have further industry-specific impacts that may require us to adjust our business plan. For additional detail, please refer to the Risk Factors section in Part I, Item 1A of our 2023 Form 10-K, and Exhibit 99.2 to our Current Report on Form 8-K filed with the SEC on July 18, 2024. Despite continuing uncertainty, we expect to maximize the value of our high-quality asset base and sustain strong operational performance and financial stability. We remain focused on returning capital to stockholders through cash flow generation.
Current wording
Global commodity and financial markets, which remain subject to heightened levels of uncertainty and volatility, affect our financial performance. Key factors contributing to market fluctuations include tariffs and trade restrictions; the decision of the Organization of the Petroleum Exporting Countries (“OPEC”) plus other non-OPEC oil producing countries (collectively referred to as “OPEC+”) to increase oil output in the second quarter of 2025; fluctuations in oil and gas demand from China and other markets; War and Geopolitical Instability; United States Federal Reserve monetary policy; shipping channel constraints and disruptions; the potential for economic recession in the U.S.; and changes in global oil inventory in storage. These factors have driven commodity price volatility, contributed to instances of supply chain disruptions, inflation, and fluctuations in interest rates, and could have further industry-specific impacts that may require us to adjust our business plan. Future impacts of these and other events on commodity and financial markets are inherently unpredictable.
Previous wording
Our Midland Basin assets are comprised of approximately 110,000 net acres located in the Permian Basin in West Texas (“Midland Basin”). In the third quarter of 2024, our drilling and completion activities focused on development optimization of our RockStar and Sweetie Peck assets, and delineation and development of our Klondike assets. Our Midland Basin position provides substantial future development opportunities within multiple oil-rich intervals, including the Spraberry and Wolfcamp formations.
Current wording
Our Midland Basin assets are comprised of approximately 110,000 net acres located in the Permian Basin in West Texas (“Midland Basin”). Our Midland Basin position provides substantial future development opportunities within multiple oil-rich intervals, including the Spraberry, Wolfcamp, and Woodford Barnett formations.
Previous wording
Our South Texas assets are comprised of approximately 155,000 net acres located in Dimmit and Webb counties, Texas (“South Texas”). In the third quarter of 2024, we focused our operations on development and further delineation of the Austin Chalk formation, and on production from both the Austin Chalk formation and Eagle Ford shale formation. Our overlapping acreage position in the Maverick Basin in South Texas covers a significant portion of the western Eagle Ford shale and Austin Chalk formations, and includes acreage across the oil, gas-condensate, and dry gas windows with gas composition amenable to processing for NGL extraction.
Current wording
Our South Texas assets are comprised of approximately 155,000 net acres located in Dimmit and Webb counties, Texas (“South Texas”). Our overlapping acreage position in South Texas covers a significant portion of the western Eagle Ford shale and Austin Chalk formations, and includes acreage across the oil, gas-condensate, and dry gas windows with gas composition amenable to processing for NGL extraction.
Previous wording
On October 1, 2024, we acquired approximately 63,300 net acres located in Duchesne and Uintah counties, Utah (“Uinta Basin”). Our Uinta Basin position provides future development 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. Please refer to Note 11 - Acquisitions in Part I, Item 1 of this report for additional discussion.
Current wording
Our Uinta Basin assets, which we acquired during the fourth quarter of 2024, are comprised of approximately 63,600 net acres located in Duchesne and Uintah counties, 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.
Previous wording
Third Quarter 2024 Overview and Outlook for the Remainder of 2024
Current wording
First Quarter 2025 Overview and Outlook for the Remainder of 2025
Previous wording
•We continued to execute on our goal of sustainably returning capital to our stockholders by paying a net cash dividend of $0.18 per share totaling $20.6 million. Additionally, we declared an increased net cash dividend of $0.20 per share totaling $22.9 million, which will be paid in the fourth quarter of 2024.
Current wording
During the first quarter of 2025, we remained focused on integrating the Uinta Basin assets into our portfolio and continued to execute on our goal of sustainably returning capital to our stockholders by paying a quarterly net cash dividend of $0.20 per share, totaling $22.9 million.
Previous wording
Average net daily equivalent production, oil, gas, and NGL production revenue, and oil, gas, and NGL production expense
Current wording
Financial and Operational Results. Average net daily equivalent production for the three months ended March 31, 2025, decreased five percent sequentially to 197.3 MBOE. The overall decrease consisted of decreases of 13 percent and two percent from our South Texas and Midland Basin assets, respectively, partially offset by an increase of six percent from our Uinta Basin assets. The decreases in average net daily equivalent production from our South Texas and Midland Basin assets were anticipated during the first quarter of 2025 as a result of no completion crews operating in South Texas during the fourth quarter of 2024, and the planned timing of well completions in the Midland Basin. These anticipated changes also reflect a shift in capital allocation to our Uinta Basin assets.
Previous wording
Oil, gas, and NGL production revenue increased one percent to $642.4 million for the three months ended September 30, 2024, compared with $633.5 million for the three months ended June 30, 2024. Oil, gas, and NGL production expense increased nine percent to $148.4 million for the three months ended September 30, 2024, compared with $136.6 million for the three months ended June 30, 2024, as a result of increases in transportation expense and lease operating expense (“LOE”).
Current wording
Oil, gas, and NGL production revenue remained flat at $839.6 million for the three months ended March 31, 2025, compared with $835.9 million for the three months ended December 31, 2024. Oil, gas, and NGL production expense increased five percent to $225.1 million for the three months ended March 31, 2025, compared with $214.6 million for the three months ended December 31, 2024, as a result of increases in ad valorem tax expense and lease operating expense (“LOE”), partially offset by a decrease in transportation costs.
Previous wording
Realized price per BOE, before the effect of net derivative settlements (“realized price” or “realized prices”), decreased six percent sequentially. During the third quarter of 2024, oil and NGL benchmark prices decreased, and the gas benchmark price increased. These changes resulted in sequential quarterly decreases in oil and NGL realized prices of seven percent and five percent, respectively, partially offset by an increase in the gas realized price of four percent.
Current wording
Realized price per BOE, before the effect of net derivative settlements (“realized price” or “realized prices”), increased eight percent sequentially, as a result of increases in oil, gas and NGL benchmark prices during the first quarter of 2025. The increase in realized price per BOE was offset by a five percent decrease in average net daily equivalent production, resulting in oil, gas, and NGL production revenue remaining flat sequentially.
Previous wording
We recorded net derivative gains of $86.3 million and $12.1 million for the three months ended September 30, 2024, and June 30, 2024, respectively. Included within these amounts are net derivative settlement gains of $16.5 million for each of the three months ended September 30, 2024, and June 30, 2024.
Current wording
We recorded net derivative losses of $17.2 million and $20.3 million for the three months ended March 31, 2025, and December 31, 2024, respectively. Included within these amounts are net derivative settlement gains of $7.8 million and $22.4 million for the three months ended March 31, 2025, and December 31, 2024, respectively.
Previous wording
•Net cash provided by operating activities of $452.3 million, compared with $476.4 million for the three months ended June 30, 2024.
Current wording
•Net cash provided by operating activities of $483.0 million, compared with $577.9 million for the three months ended December 31, 2024.
Previous wording
•Net income of $240.5 million, or $2.09 per diluted share, compared with net income of $210.3 million, or $1.82 per diluted share, for the three months ended June 30, 2024.
Current wording
•Net income of $182.3 million, or $1.59 per diluted share, compared with net income of $188.3 million, or $1.64 per diluted share, for the three months ended December 31, 2024.
Previous wording
•Adjusted EBITDAX, a non-GAAP financial measure, of $481.5 million, compared with $485.9 million for the three months ended June 30, 2024. Please refer to the caption Non-GAAP Financial Measures below for additional discussion and our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities.
Current wording
•Adjusted EBITDAX, a non-GAAP financial measure, of $588.9 million, compared with $610.8 million for the three months ended December 31, 2024. Refer to the caption Non-GAAP Financial Measures below for additional discussion and our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities.
Previous wording
Please refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended September 30, 2024, and June 30, 2024, and Between the Nine Months Ended September 30, 2024, and 2023 below for additional discussion.
Current wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2025, and December 31, 2024, and Between the Three Months Ended March 31, 2025, and 2024 below for additional discussion.
Previous wording
Operational Activities. We expect our total 2024 capital program to be between $1.24 billion and $1.26 billion, including capital expenditures related to the development of our recently acquired Uinta Basin assets, but excluding acquisitions. Our capital program remains focused on highly economic oil development projects in our Midland Basin, South Texas, and Uinta Basin assets. During 2024, we expect to continue our focus on strategic inventory replacement and growth by applying our strength in geosciences and development optimization. Please refer to Overview of Liquidity and Capital Resources below for discussion of how we expect to fund the remainder of our 2024 capital program.
Current wording
Operational Activities. Our capital program for 2025, excluding acquisitions, is expected to be approximately $1.3 billion. Our capital program remains focused on applying our strength in geosciences and development optimization to highly economic oil development projects in our areas of operations that support our priority of strategic inventory replacement and growth. Refer to Overview of Liquidity and Capital Resources below for discussion of how we expect to fund the remainder of our 2025 capital program.
Previous wording
In our Midland Basin program, we operated four drilling rigs and averaged one completion crew, drilled 27 gross (19 net) wells, and completed 17 gross (15 net) wells during the third quarter of 2024. Average net daily equivalent production volumes increased sequentially by six percent to 84.6 MBOE. Costs incurred during the three months ended September 30, 2024, totaled $168.3 million, or 55 percent of our total costs incurred for the period. We anticipate operating four drilling rigs and one completion crew for the remainder of 2024, focused on developing formations within our RockStar, Sweetie Peck, and Klondike assets.
Current wording
In our Midland Basin program, we averaged four drilling rigs and one completion crew during the first quarter of 2025, and our operations focused on development optimization of our RockStar assets, and delineation and development of our Sweetie Peck and Klondike assets. Average net daily equivalent production volumes decreased sequentially by two percent to 81.5 MBOE. Costs incurred during the three months ended March 31, 2025, totaled $182.8 million, or 41 percent of our total costs incurred for the period. We anticipate operating an average of two drilling rigs and one completion crew for the remainder of 2025, focused on developing formations within our RockStar, Sweetie Peck, and Klondike assets.
Previous wording
In our South Texas program, we operated two drilling rigs and one completion crew, drilled 16 gross (16 net) wells, and completed 20 gross (20 net) wells during the third quarter of 2024. Average net daily equivalent production volumes increased sequentially by eight percent to 85.4 MBOE. Costs incurred during the three months ended September 30, 2024, totaled $125.9 million, or 41 percent of our total costs incurred for the period. We anticipate operating two drilling rigs and no completion crews for the remainder of 2024, focused primarily on developing the Austin Chalk formation.
Current wording
In our South Texas program, we averaged two drilling rigs and one completion crew during the first quarter of 2025, and our operations focused primarily on the development and further delineation of the Austin Chalk formation. Average net daily equivalent production volumes decreased sequentially by 13 percent to 77.4 MBOE. Costs incurred during the three months ended March 31, 2025, totaled $111.0 million, or 25 percent of our total costs incurred for the period. We anticipate operating between one and two drilling rigs and one completion crew for the remainder of 2025, focused primarily on developing the Austin Chalk formation.
Previous wording
In our Uinta Basin program, we anticipate operating three drilling rigs and one completion crew during the remainder of 2024, focused primarily on delineating and developing our recently acquired assets.
Current wording
In our Uinta Basin program, we operated three drilling rigs and one completion crew during the first quarter of 2025, and our operations focused on delineation and development. Average net daily equivalent production volumes increased sequentially by six percent to 38.4 MBOE. Costs incurred during the three months ended March 31, 2025, totaled $144.9 million, or 32 percent of our total costs incurred for the period. We anticipate operating three drilling rigs and one completion crew during the remainder of 2025, focused primarily on delineating and developing the Lower Green River and Wasatch formations.
Previous wording
The table below provides a quarterly summary of changes in our drilled but not completed well count and current year drilling and completion activity in our operated programs for the three and nine months ended September 30, 2024:
Current wording
The table below provides a quarterly summary of changes in our drilled but not completed well count and current year drilling and completion activity in our operated programs for the three months ended March 31, 2025:
Previous wording
Costs Incurred. Costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, totaled $304.7 million and $956.8 million for the three and nine months ended September 30, 2024, respectively, and were primarily incurred in our Midland Basin and South Texas programs as discussed in Operational Activities above.
Current wording
Costs Incurred. Costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, totaled $449.7 million for the three months ended March 31, 2025, and were primarily incurred in our Midland Basin, South Texas, and Uinta Basin programs as discussed in Operational Activities above.
Previous wording
Production Results. The table below presents our net production by product type for each of our assets for the periods presented:
Current wording
Production Results. The table below presents the disaggregation of our net production volumes by product type for each of our assets for the periods presented:
Previous wording
Please refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended September 30, 2024, and June 30, 2024, and Between the Nine Months Ended September 30, 2024, and 2023 below for discussion on production.
Current wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2025, and December 31, 2024, and Between the Three Months Ended March 31, 2025, and 2024 below for discussion of production.
Previous wording
The following table summarizes commodity price data, as well as the effect of net derivative settlements, for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023:
Current wording
The following table summarizes commodity price data, as well as the effect of net derivative settlements, for the periods presented:
Previous wording
As global commodities, the prices for oil, gas, and NGLs are affected by real or perceived geopolitical risks in various regions of the world, as well as the relative strength of the United States dollar compared to other currencies. Given the uncertainty surrounding global financial markets, production output from OPEC+, global shipping channel constraints and disruptions, lower than expected oil and gas demand from China, War and Geopolitical Instability, changes in global oil inventory in storage, and the potential impacts of these issues on global commodity markets, we expect benchmark prices for oil, gas, and NGLs to remain volatile for the foreseeable future, and we cannot reasonably predict the timing or likelihood of any future impacts that may result, which could include inflation, supply chain disruptions, fluctuations in interest rates, and industry-specific impacts. Our realized prices at local sales points may also be affected by infrastructure capacity or outages in the areas of our operations and beyond. The realized price for our Midland Basin gas production was impacted by residue pipeline capacity constraints during the third quarter of 2024; however, a portion of any negative impact to the realized price was mitigated by our commodity derivative contracts in effect during the third quarter of 2024. We expect that increased infrastructure capacity will alleviate constraints during the fourth quarter of 2024.
Current wording
As global commodities, the prices for oil, gas, and NGLs are affected by real or perceived geopolitical risks in various regions of the world, as well as the relative strength of the United States dollar compared to other currencies. Given the uncertainty surrounding global financial markets, including the imposition of tariffs and trade restrictions, production output from OPEC+, global shipping channel constraints and disruptions, fluctuations in oil and gas demand from China and other markets, War and Geopolitical Instability, the potential for economic recession in the U.S., changes in global oil inventory in storage, and the potential impacts of these issues on global commodity supply and demand, we expect benchmark prices for oil, gas, and NGLs to remain volatile for the foreseeable future, and we cannot reasonably predict the timing or likelihood of any future impacts that may result, which could include inflation, supply chain disruptions, fluctuations in interest rates, and industry-specific impacts. Our realized prices at local sales points may also be affected by infrastructure capacity or outages in the areas of our operations and beyond.
Previous wording
We use financial derivative instruments as part of our financial risk management program. We have a financial risk management policy governing our use of derivatives, and decisions regarding entering into commodity derivative contracts are overseen by a financial risk management committee consisting of certain senior executive officers and finance personnel. We make decisions about the amount of our expected production that we cover by derivatives based on the amount of debt on our balance sheet, the level of capital commitments and long-term obligations we have in place, and the terms and futures prices that are made available by our approved counterparties. With our current commodity derivative contracts, we believe we have partially reduced our exposure to volatility in commodity prices and basis differentials in the near term. Our use of costless collars for a portion of our derivatives allows us to participate in some of the upward movements in oil and gas prices while also setting a price floor below which we are insulated from further price decreases. Please refer to Note 7 - Derivative Financial Instruments in Part I, Item 1 of this report and to Commodity Price Riskin Overview of Liquidity and Capital Resources below for additional information regarding our oil, gas, and NGL derivatives.
Current wording
We use financial derivative instruments as part of our financial risk management program. We have a financial risk management policy governing our use of derivatives, and decisions regarding entering into commodity derivative contracts are overseen by a financial risk management committee consisting of certain senior executive officers and finance personnel. We make decisions about the amount of our expected production that we cover by derivatives based on the amount of debt on our balance sheet, the level of capital commitments and long-term obligations we have in place, and the terms and futures prices that are made available by our approved counterparties. With our current commodity derivative contracts, we believe we have partially reduced our exposure to volatility in commodity prices and basis differentials in the near term. Our use of costless collars for a portion of our derivatives allows us to participate in some of the upward movements in oil and gas prices while also setting a price floor below which we are insulated from further price decreases. Refer to Note 7 - Derivative Financial Instruments in Part I, Item 1 of this report and to Commodity Price Riskin Overview of Liquidity and Capital Resources below for additional information regarding our oil, gas, and NGL derivatives.
Previous wording
(2) Net derivative settlements for the three months ended September 30, 2024, and for the nine months ended September 30, 2024, and 2023, are included within the net derivative (gain) loss line item in the accompanying statements of operations.
Current wording
(2) Net derivative settlements for the three months ended March 31, 2025, and 2024, are included within the net derivative loss line item in the accompanying statements of operations.
Previous wording
(3) Please refer to Note 9 - Earnings Per Share in Part I, Item 1 of this report for additional discussion.
Current wording
(3) Refer to Note 9 - Earnings Per Share in Part I, Item 1 of this report for additional discussion.
Previous wording
We present certain information on a per BOE basis in order to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis and discussion. The full-year 2024 trends discussed below include our expectations related to the Uinta Basin Acquisition.
Current wording
We present certain information on a per BOE basis in order to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis and discussion.
Previous wording
Our realized price on a per BOE basis decreased $2.84 sequentially and remained flat YTD 2024-over-YTD 2023. The sequential decrease primarily resulted from a decrease in oil benchmark prices. For the three months ended September 30, 2024, and June 30, 2024, we recognized net gains on the settlement of our commodity derivative contracts of $1.05 per BOE and $1.15 per BOE, respectively. For the nine months ended September 30, 2024, and 2023, we recognized net gains on the settlement of our commodity derivative contracts of $1.07 per BOE and $0.49 per BOE, respectively.
Current wording
Our total realized price per BOE increased $3.61 sequentially as a result of increases in oil, gas and NGL benchmark prices. Our total realized price per BOE increased $4.90 YTD 2025-over-YTD 2024 as a result of a shift in our production mix towards more oil production, and increases in gas and NGL benchmark prices, slightly offset by a decrease in oil benchmark prices. For the three months ended March 31, 2025, December 31, 2024, and March 31, 2024, we recognized net gains on the settlement of our commodity derivative contracts of $0.44 per BOE, $1.17 per BOE, and $1.01 per BOE, respectively.
Previous wording
LOE on a per BOE basis remained relatively flat both sequentially and YTD 2024-over-YTD 2023 as increases in labor costs and certain other operating costs were mostly offset by a decrease in workover expense due to timing of activity. For the full-year 2024, we expect LOE on a per BOE basis to remain relatively flat, compared with 2023, primarily as a result of expected increases in labor costs and certain other operating costs offset by decreases in workover expense and changes in our overall production mix. We anticipate volatility in LOE on a per BOE basis as a result of changes in total production, changes in our overall production mix, timing of workover projects, and industry activity, all of which affect total LOE.
Current wording
LOE per BOE increased 15 percent sequentially as a result of increases in certain operating costs including workover expense, and decreased average net daily equivalent production. LOE per BOE increased 11 percent YTD 2025-over-YTD 2024 as a result of a shift in our production mix towards more oil production and increases in certain operating costs, which outpaced an increase in average net daily equivalent production. For the full-year 2025, we expect LOE per BOE to increase, compared with 2024, as our product mix continues to shift towards more oil production with our Uinta Basin assets, and as a result of expected increases in certain operating costs associated with our Midland Basin assets. We anticipate volatility in LOE per BOE as a result of changes in total production, timing of workover projects, changes in service provider costs, and industry activity, all of which affect total LOE.
Previous wording
Transportation costs on a per BOE basis increased ten percent sequentially as a result of an eight percent increase in net equivalent production from our South Texas assets, which incur higher transportation costs than our Midland Basin assets. Transportation costs on a per BOE basis in South Texas also increased slightly as a result of expenditures necessary to upgrade certain gathering and transportation infrastructure to handle increasingly liquids-rich production from the Austin Chalk formation. Transportation costs on a per BOE basis decreased 21 percent YTD 2024-over-YTD 2023 primarily as a result of the expiration of a long-term contract in South Texas on June 30, 2023. In general, we expect total transportation costs to fluctuate relative to changes in gas and NGL production from our South Texas assets and oil production from our Uinta Basin assets, where we incur and anticipate incurring a majority of our transportation costs. For the full-year 2024, we expect transportation costs on a per BOE basis to increase compared with 2023, as a result of the addition of our Uinta Basin assets.
Current wording
Transportation costs per BOE decreased four percent sequentially primarily as a result of a decrease in average net daily equivalent production from our South Texas assets, slightly offset by an increase in average net daily equivalent production from our Uinta Basin assets. Transportation costs per BOE increased 89 percent YTD 2025-over-YTD 2024 primarily as a result of the addition of oil production from our Uinta Basin assets and increased production from our South Texas assets. In general, we expect total transportation costs to fluctuate relative to changes in gas and NGL production from our South Texas assets and oil production from our Uinta Basin assets, where we incur a majority of our transportation costs. For the full-year 2025, we expect transportation costs per BOE to increase compared with 2024, as a result of the addition of our Uinta Basin assets.
Previous wording
Production tax expense on a per BOE basis remained relatively flat both sequentially and YTD 2024-over-YTD 2023. Our overall production tax rate for the three and nine months ended September 30, 2024, was 4.6 percent and 4.4 percent, respectively, compared with 4.3 percent for the three months ended June 30, 2024, and 4.4 percent for the nine months ended September 30, 2023. We expect that our Uinta Basin assets will incur a lower production tax rate compared to our Midland Basin and South Texas assets. We generally expect production tax expense to correlate with oil, gas, and NGL production revenue on an absolute and per BOE basis. Product mix, the location of production, and incentives to encourage oil and gas development can also impact the amount of production tax expense that we recognize.
Current wording
Production tax expense per BOE increased 16 percent sequentially primarily as a result of an increase in total realized price per BOE and a decrease in average net daily equivalent production. Production tax expense per BOE increased nine percent YTD 2025-over-YTD 2024, as a result of an increase in total realized price per BOE. Our overall production tax rate for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024, was 4.4 percent, 4.1 percent, and 4.5 percent, respectively. We expect that our Uinta Basin assets will incur a lower production tax rate compared with our Midland Basin and South Texas assets. We generally expect production tax expense to correlate with oil, gas, and NGL production revenue on a per BOE and absolute basis. Product mix, the location of production, and incentives to encourage oil and gas development can also impact the amount of production tax expense that we recognize.
Previous wording
Ad valorem tax expense on a per BOE basis decreased seven percent sequentially and increased five percent YTD 2024-over-YTD 2023, as a result of changes to the assessed values of our producing properties. We anticipate volatility in ad valorem tax expense on a per BOE and absolute basis as the valuation of our producing properties changes, which is generally driven by fluctuations in commodity prices.
Current wording
Ad valorem tax expense per BOE increased sequentially as a result of final valuation assessments received during the three months ended December 31, 2024, that reduced expense in that period. Ad valorem tax expense per BOE decreased 38 percent YTD 2025-over-YTD 2024 primarily as a result of decreased oil prices impacting the expected valuation of our producing properties. We anticipate volatility in ad valorem tax expense on a per BOE and absolute basis as the valuation of our producing properties changes, which is generally driven by fluctuations in commodity prices, and as a result of varying tax policies across the different counties in which we operate.
Previous wording
Depletion, depreciation, amortization, and asset retirement obligation liability accretion (“DD&A”) expense on a per BOE basis increased four percent sequentially primarily as a result of an increase in our DD&A rate due to inflation. DD&A expense on a per BOE basis increased five percent YTD 2024-over-YTD 2023 due to inflation and a slight shift in production mix resulting from higher activity in our Midland Basin assets, which have a higher DD&A rate than our South Texas assets. Our DD&A rate fluctuates as a result of changes in our production mix, changes in our total estimated net proved reserve volumes, changes in capital allocation, impairments, acquisition and divestiture activity, and carrying cost funding and sharing arrangements with third parties. For the full-year 2024, we expect DD&A expense per BOE and on an absolute basis to increase, compared with 2023, primarily as a result of expected increased production, the acquisition of the Uinta Basin assets, and a shift in our production mix.
Current wording
Depletion, depreciation, and amortization (“DD&A”) expense per BOE increased 12 percent sequentially, primarily driven by an increase in our DD&A rates as a result of the acquisition of our Uinta Basin assets. DD&A expense per BOE increased 21 percent YTD 2025-over-YTD 2024 as a result of the addition of our Uinta Basin assets, and a shift in our production mix. Our Midland Basin and Uinta Basin assets have higher DD&A rates than our South Texas assets. Our DD&A rate fluctuates as a result of changes in our production mix, changes in our total estimated net proved reserve volumes, changes in capital allocation, impairments, acquisition and divestiture activity, and carrying cost funding and sharing arrangements with third parties. For the full-year 2025, we expect DD&A expense per BOE and on an absolute basis to increase, compared with 2024, primarily as a result of expected increased production resulting from the addition of our Uinta Basin assets, and a shift in our production mix.
Previous wording
General and administrative (“G&A”) expense on a per BOE basis increased four percent sequentially and nine percent YTD 2024-over-YTD 2023 primarily as a result of increased compensation expense due to inflation and increases in certain G&A expenses resulting from the Uinta Basin Acquisition. We expect that these factors will lead to an increase in G&A expense per BOE and G&A expense on an absolute basis for the full-year 2024, compared with 2023.
Current wording
General and administrative (“G&A”) expense on a per BOE basis remained relatively flat sequentially, and decreased slightly YTD 2025-over-YTD 2024 primarily as a result of an increase in average net daily equivalent production. For the full-year 2025, we expect G&A expense on an absolute basis to increase compared with 2024, primarily as a result of an increase in employee headcount attributable to the Uinta Basin Acquisition. We expect G&A expense per BOE to remain relatively flat for the full-year 2025 compared with 2024, as expected increases in G&A expense on an absolute basis are expected to be mostly offset by increases in production.
Previous wording
Please refer to Comparison of Financial Results and Trends Between the Three Months Ended September 30, 2024, and June 30, 2024, and Between the Nine Months Ended September 30, 2024, and 2023 below for additional discussion of operating expenses.
Current wording
Refer to Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2025, and December 31, 2024, and Between the Three Months Ended March 31, 2025, and 2024 below for additional discussion of operating expenses.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2025, and December 31, 2024, and Between the Three Months Ended March 31, 2025, and 2024
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
During the third quarter of 2024:
Previous report — wording carried elsewhere
Depletion, depreciation, amortization, and asset retirement obligation liability accretion
Previous report — wording carried elsewhere
Because adjusted EBITDAX excludes some, but not all items that affect net income (loss) and may vary among companies, the adjusted EBITDAX amounts presented may not be comparable to similar metrics of other companies. Our revolving credit facility provides a material source of liquidity for us. Under the terms of our Credit Agreement, if we failed to comply with the covenants that establish a maximum permitted ratio of total funded debt, as defined in the Credit Agreement, to adjusted EBITDAX, we would be in default, an event that would prevent us from borrowing under our revolving credit facility and would therefore materially limit a significant source of our liquidity. In addition, if we are in default under our revolving credit facility and are unable to obtain a waiver of that default from our lenders, lenders under that facility and under the indentures governing each series of our outstanding Senior Notes would be entitled to exercise all of their remedies for default.