SM Energy Company (SM) Q1 2026 earnings summary

Executive summary

• Closed the Civitas merger on January 30, 2026, creating a four-basin operator with premier positions in the Permian, DJ, South Texas, and Uinta Basins, issuing 124–125 million shares to Civitas holders, who now own 52% of outstanding shares.

• Achieved Q1 2026 production above guidance at 371,200 BOE/d (190,300 bbl/d oil), with capital spending below guidance at $672 million.

• Raised annualized synergy target to $375 million (NPV-10 $1.8 billion), with $300 million actioned to date and all synergies expected by year-end 2026.

• Completed South Texas divestiture on April 30, 2026, for $900–$950 million in net proceeds, advancing the $1B+ asset sale target and accelerating deleveraging.

• Accelerated balance sheet improvement, setting the stage for increased share repurchases and a 10% dividend increase.

Financial highlights

• Adjusted EBITDAX was $970 million; adjusted net income was $309 million ($1.55 per diluted share); adjusted free cash flow was $20 million after ~$180 million in one-time integration and transaction costs.

• Net loss of $335 million ($1.68 per diluted share) for Q1 2026, primarily due to a $697 million non-cash mark-to-market derivative loss.

• Oil, gas, and NGL production revenue rose 110% sequentially to $1.5 billion, driven by a 79% increase in average daily production and higher realized prices.

• Lease operating and transportation expenses came in below guidance at $6.25/Boe and $3.65/Boe, respectively.

• Net cash from operating activities was $640 million, up from $483 million year-over-year.

Outlook and guidance

• Full-year 2026 production guidance raised to 410–430 MBoe/d (222–228 MBbl/d oil), with second-half run rate expected at ~430 MBoe/d and ~238 MBbl/d oil.

• Full-year capital expenditures maintained at $2.65–$2.85 billion, focused on high-return oil and liquids-rich projects.

• Lease operating expense guidance: $6.50–$6.80/Boe; transportation: $3.60–$3.90/Boe.

• Recurring G&A for 2026 guided at ~$280–$300 million, with one-time integration and transaction costs expected to total ~$150 million.

• Plan to allocate 20% of post-dividend free cash flow to share repurchases, increasing as leverage declines.