SM Energy Co

The tables below provide information regarding selected production and financial information for the three months ended December 31, 2025, and the preceding three quarters:

Selected Performance Metrics

Overview of Selected Production and Financial Information, Including Trends

(1) Amounts and percentage changes may not calculate due to rounding.

(2)Net derivative settlements for the years ended December 31, 2025, and 2024, are included within the net derivative gain line item in the accompanying consolidated statements of operations (“accompanying statements of operations”).

(3) Refer to Note 9 – Earnings Per Sharein Part II, Item 8 of this report for additional discussion.

The Civitas Merger, which closed on January 30, 2026, is expected to materially affect our future operating and financial results. The addition of Civitas’ assets and operations is expected to increase production volumes and revenues and to impact oil, gas, and NGL production expense, general and administrative expense, and other expense categories. The magnitude and timing of these impacts will depend, in part, on integration activities, operating performance, commodity prices, and other factors and may not be directly comparable to the Company’s historical results. Unless otherwise noted, the discussion below reflects the results of our legacy operations and historical trends prior to the Merger.

Average net daily equivalent production for the year ended December 31, 2025, increased 21 percent compared with 2024, resulting from a full year of production from our Uinta Basin assets, and continued strong well performance. Oil production as a percentage of total production increased to 53 percent in 2025 from 47 percent in 2024, resulting from a full year of oil production from our Uinta Basin assets, which averaged 87 percent oil production in 2025. In 2026, we expect an increase in total production volumes due to the integration of assets from the Civitas Merger. Refer to Comparison of Financial Results and Trends Between 2025 and 2024 below for additional discussion.

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.

Our realized price on a per BOE basis decreased three percent for the year ended December 31, 2025, compared with 2024, primarily because of decreases in oil benchmark commodity prices partially offset by the increase in gas benchmark commodity prices. For the years ended December 31, 2025, and 2024, we recognized net gains on the settlement of our commodity derivative contracts of $1.75 per BOE and $1.10 per BOE, respectively.

LOE on a per BOE basis increased 12 percent for the year ended December 31, 2025, compared with 2024, driven by the increased percentage of oil in our total production mix, which has higher lifting costs per BOE, and increases in certain operating costs. We anticipate volatility in LOE on a per BOE basis resulting from changes in production, timing of workover projects, changes in service provider costs, and industry activity, all of which affect total LOE.

Transportation costs on a per BOE basis increased 44 percent for the year ended December 31, 2025, compared with 2024. This increase was primarily due to 15.9 MMBOE of full year production from our Uinta Basin assets, which incur higher transportation costs on a per BOE basis compared to our Midland Basin and South Texas assets. In general, we expect total transportation costs to fluctuate relative to changes in oil production from our Uinta Basin assets and gas and NGL production from our South Texas assets, where we incur a majority of our transportation costs. For 2026, we expect transportation costs on a per BOE basis to remain relatively flat compared with 2025.

Production tax expense on a per BOE basis for the year ended December 31, 2025, decreased nine percent compared with 2024, primarily resulting from a decrease in the realized price of oil, and full year operations for our Uinta Basin assets which incur a lower production tax rate compared to our Midland Basin and South Texas assets. Our overall production tax rate was 4.1 percent and 4.3 percent for the years ended December 31, 2025, and 2024, respectively. 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.

Ad valorem tax expense on a per BOE basis decreased 18 percent for the year ended December 31, 2025, compared with 2024, primarily due to increased net equivalent production and 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.

Depletion, depreciation, and amortization (“DD&A”) expense on a per BOE basis increased 23 percent for the year ended December 31, 2025, compared with 2024, due to increased production from our Uinta Basin assets, which caused a shift in the production mix towards our higher rate Midland Basin and Uinta Basin assets. For 2026, we expect DD&A expense on an absolute basis to increase compared with 2025, primarily reflecting anticipated higher production volumes and our expanded asset base. Our DD&A expense on a per BOE and absolute basis may fluctuate as a result of changes in our production mix, changes in our total estimated proved reserve volumes, changes in capital allocation, impairments, acquisition and divestiture activity, and carrying cost funding and sharing arrangements with third parties.

General and administrative (“G&A”) expense on a per BOE basis decreased four percent for the year ended December 31, 2025, compared with 2024, primarily driven by a higher rate of production growth relative to increases in G&A expense on an absolute basis. For 2026, we expect G&A expense on an absolute basis and on a per BOE basis to increase compared with 2025, primarily due to an increase in employee headcount as a result of the Civitas Merger, and expected increases in compensation expense and integration costs. Certain components of G&A expense, and G&A expense on a per BOE basis, are impacted by the Company’s full year performance against performance targets established at the beginning of the year and, therefore, are subject to variability.

Refer to Comparison of Financial Results and Trends Between 2025 and 2024 for additional discussion of operating expenses.