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SM Energy Reports Results for the First Quarter of 2013; Provides Operations Update

  SM Energy Reports Results for the First Quarter of 2013; Provides Operations
  Update

  *Record quarterly production of 10.35 MMBOE, an average of 115.0 MBOE/d;
    production at the top of the quarterly guidance range of 110 - 116 MBOE/d
  *Quarterly GAAP net income of $16.7 million, or $0.25 per diluted share;
    adjusted net income of $55.3 million, or $0.82 per diluted share
  *Record quarterly EBITDAX of $328.8 million represents 10% sequential
    growth over fourth quarter of 2012 and 27% growth over first quarter of
    2012
  *New ventures leasehold expanding significantly with expected additions in
    East Texas and the Powder River Basin

Business Wire

DENVER -- April 30, 2013

SM Energy Company (NYSE: SM) announces its financial results for the first
quarter of 2013 and provides an operations update. In addition, a new
presentation concerning the Company's first quarter earnings and operations
update will be posted on the Company's website at www.sm-energy.com. This
presentation will be referenced during the conference call scheduled for 8:00
a.m. Mountain Time (10:00 a.m. Eastern Time) on May 1, 2013. Information for
the call can be found below.

FIRST QUARTER 2013 RESULTS

SM Energy reported net income for the first quarter of 2013 of $16.7 million,
or $0.25per diluted share. This compares to net income of $26.3 million, or
$0.39 per diluted share, for the same period of 2012. Adjusted net income for
the first quarter of 2013 was $55.3 million, or $0.82per diluted share,
compared to adjusted net income of $32.8 million, or $0.48 per diluted share,
for the same period of 2012. Adjusted net income excludes certain items that
the Company believes affect the comparability of operating results and are
generally items whose timing and/or amount cannot be reasonably estimated. The
table below presents a summary of the adjustments made to arrive at adjusted
net income:


Adjusted Net Income Reconciliation
(in thousands, except per share data)

Reconciliation of net income (GAAP)

to adjusted net income (Non-GAAP):
                                               For the Three Months Ended
                                                 March 31,
                                                 2013           2012
                                                                    
Reported net income (GAAP)                       $ 16,727           $ 26,336
Adjustments, net of tax: ^(1)
Change in Net Profits Plan liability             (1,188   )         2,470
Unrealized derivative loss                       26,139             4,798
(Gain) loss on divestiture activity ^(2)         354                (917     )
Impairment of properties                         13,279             89
                                                                   
Adjusted net income (Non-GAAP)                   $ 55,311          $ 32,776 
                                                                    
Diluted weighted-average common shares           67,521            67,845   
outstanding:
                                                                    
Adjusted net income per diluted common           $ 0.82            $ 0.48   
share:


(1) For the three-month period ended March 31, 2013, adjustments are shown net
of tax using the Company's effective rate; calculated by dividing income tax
expense by income before income taxes on the consolidated statement of
operations. For the three-month period ended March 31, 2012, adjustments are
shown net of tax and are calculated using a tax rate of 37.3%, which
approximates the Company's statutory tax rate for that period, as adjusted for
ordinary permanent differences.

(2) ^ (Gain) loss on divestiture activity is included within the other
operating revenues line item of the accompanying statements of operations.


Earnings before interest, taxes, depreciation, depletion, amortization,
accretion, and exploration expense ("EBITDAX") was $328.8 million for the
first quarter of 2013, a record level and an increase of 27% from $259.0
million for the same period of 2012.

Adjusted net income and EBITDAX are non-GAAP financial measures. Please refer
to the respective reconciliations in the accompanying Financial Highlights
section at the end of this release for additional information about these
measures.

Total operating revenues for the first quarter were $484.2 million compared to
$377.4 million for the same period of 2012, a 28% increase from period to
period. The table below provides the average realized prices received by
product for the Company, as well as the adjusted prices received after taking
into account cash settlements for derivative transactions:


Average Realized Commodity Prices for the Three Months Ended March 31, 2013

                              Before the effect of         After the effect of
                             derivative cash          derivative cash
                              settlements                  settlements
                                                           
Oil ($/Bbl)                 $ 91.67                      $ 91.30
Gas ($/Mcf)                 $ 3.57                       $ 3.90
Natural gas liquids ($/Bbl) $ 36.65                      $ 37.80
Equivalent ($/BOE)          $ 45.38                      $ 46.51
                                                           

The table below presents key performance measures and metrics, as well as
previously provided guidance for the first quarter of 2013:

Production                                  Reported     1Q13 Guidance
                                                               
Average daily production (MBOE/d)             115.0            110 - 116
Total production (MMBOE)                      10.35            9.9 - 10.4
                                                               
Costs
LOE ($/BOE)                                   $5.28            $4.68 - $4.92
Transportation ($/BOE)                        $4.58            $4.32 - $4.50
Production taxes (% of pre-derivative
oil,                                          5.0%             5.0% - 5.5%
gas, and NGL revenue)
                                                               
G&A - Cash ($/BOE)                            $2.15            $2.40 - $2.58
G&A - Cash NPP ($/BOE)                        $0.37            $0.30 - $0.42
G&A - Non-cash ($/BOE)                        $0.60            $0.60 - $0.72
Total G&A ($/BOE)                             $3.12            $3.30 - $3.72
                                                               
DD&A ($/BOE)                                  $19.20           $19.20 - $20.40
                                                               

For the first quarter of 2013, SM Energy reported record production volumes
near the top of its guidance range and approximately 2% above the midpoint of
the Company's guidance range. The Company reported quarterly LOE per unit
costs above its guidance range due to higher than expected LOE costs in its
Tredway and non-operated Eagle Ford programs. Transportation expense was also
above its guidance range for the quarter on a per unit basis largely due to
non-operated Eagle Ford truck or pay shortfalls for NGLs. Cash G&A was lower
than the Company's guidance range due to lower than expected compensation and
general corporate expenses. DD&A and production taxes were within their
respective guidance range.

FINANCIAL POSITION AND LIQUIDITY

At the end of the first quarter of 2013, SMEnergy had total long-term debt
outstanding of approximately $1.5 billion. Asummary of the Company's
long-term debt is shown in the table below:

Schedule of long-term debt
($ in millions)              
                                  
Debt Issue                        Amount outstanding at
                                  March 31, 2013
Revolving credit facility         $        430
Senior Notes due 2019             350
Senior Notes due 2021             350
Senior Notes due 2023             400
Total                             $        1,530
                                           

On April 12, 2013, the Company's bank group redetermined its borrowing base,
increasing it to $1.9 billion from $1.55 billion at December 31, 2012. SM
Energy also increased its commitments under its credit facility to $1.3
billion, up from $1.0 billion at year-end 2012. At the end of the first
quarter, the Company had $430 million drawn against its credit facility. As of
March 31,2013, the Company's debt to twelve month trailing EBITDAX was 1.4
times, and SMEnergy's debt-to-book capitalization ratio was 52%. As of the
end of the first quarter, SM Energy was in compliance with all of the
covenants associated with its long-term debt.

OPERATIONS UPDATE

Production

SM Energy reported quarterly production of 10.35 MMBOE, resulting in average
daily production of 115.0 MBOE per day for the first quarter of 2013, near the
top of the guidance range of 110 to 116 MBOE per day. Reported average daily
production increased by 5% from quarterly production of 109.9 MBOE per day in
the fourth quarter of 2012. Reported production in the first quarter was
comprised of 30% oil/condensate, 18% NGLs, and 52% natural gas. The Company
expects its product mix to be 50% liquids by year-end 2013.

Eagle Ford Shale

The Company's operated net production in the Eagle Ford shale averaged 51.8
MBOE per day in the first quarter of 2013, a 15% sequential increase over
fourth quarter of 2012 production of 45.2 MBOE per day. Average daily
production in the first quarter from the Company's operated Eagle Ford shale
program increased 74% over the first quarter of 2012. During the first quarter
of 2013, SM Energy operated five drilling rigs on its operated Eagle Ford
shale acreage and made 28 flowing completions.

In the non-operated portion of the Company's Eagle Ford shale program, net
production for the first quarter of 2013 averaged 16.0 MBOE per day, an
increase of approximately 3% over the fourth quarter of 2012. The operator ran
nine drilling rigs during the first quarter of 2013.

Bakken / Three Forks

SM Energy operated four drilling rigs during the first quarter of 2013 in its
Bakken/Three Forks program, and expects to release two of these rigs and
contract for one more efficient walking rig during the second quarter of 2013.
The Company continues to focus its drilling on the Bakken and Three Forks
formations in its Raven/Bear Den and Gooseneck prospects in McKenzie, Williams
and Divide Counties, North Dakota. First quarter average daily production for
the Company's Bakken/Three Forks program was 12.2 MBOE per day, a 3%
sequential increase from the fourth quarter of 2012 and an 18% increase from
the first quarter of 2012. During the quarter, the Company made 11 gross
flowing completions on its operated Bakken/Three Forks program.

Permian Basin

In the Permian Basin, SM Energy operated three drilling rigs during the first
quarter of 2013, with two of the rigs focused on the Company's approximately
66,000 net acre position, targeting the Mississippian Limestone in the
northern Midland Basin and a third rig focused on the Bone Spring formation in
the Delaware Basin. The Company recently completed the Roy 1803H (SM 100% WI),
a long-lateral Mississippian test, which had a peak 12-day average production
rate of approximately 990 BOE/d. Results from this and additional recent
long-lateral Mississippian tests will be discussed in more detail on the
Company's first quarter of 2013 earnings call.

East Texas

SM Energy expects to have approximately 150,000 total net acres in its new
East Texas play upon the consummation of various transactions, which are
expected to close during the second quarter of 2013. The Company's acreage
position is located primarily in Walker, San Jacinto, Polk, and Washington
Counties, Texas. SM Energy continues to add acreage in this exploratory play
where it previously announced a Woodbine test well earlier this year. SM
Energy expects to drill additional test wells in the play targeting primarily
Woodbine and Eagle Ford shale intervals in the second half of 2013.

Powder River Basin

SM Energy has recently entered into a purchase agreement which, after closing,
will increase its position in the Powder River Basin to approximately 105,000
net acres. This transaction is expected to close during the second quarter of
2013. This will be an approximately 40,000 net acre increase to its previously
disclosed position in the basin. The Company is currently focusing on the
Frontier, Sussex, and Shannon formations on its acreage position. Results from
the Company's recent testing in the basin will be discussed in more detail on
the Company's first quarter of 2013 earnings call.

UPDATED PRODUCTION AND PERFORMANCE GUIDANCE

The Company is providing updated production and performance guidance for
second quarter and full year 2013 in the table below:

Guidance for 2013                                         
                                     2Q13                    FY2013
Production (MMBOE)                     10.5 - 11.0             42.8 - 44.5
Average daily production (MBOE/d)      115 - 121               117 - 122
                                                               
LOE ($/BOE)                            $5.00 - $5.25           $5.00 - $5.30
Transportation ($/BOE)                 $4.65 - $4.90           $4.95 - $5.25
Production taxes (% of
pre-derivative oil, gas, and NGL       5.0% - 5.5%             5.0% - 5.5%
revenue)
                                                               
G&A - Cash ($/BOE)                     $2.25 - $2.45           $2.25 - $2.45
G&A - Cash NPP ($/BOE)                 $0.35 - $0.50           $0.35 - $0.50
G&A - Non-cash ($/BOE)                 $0.75 - $0.90           $0.60 - $0.75
Total G&A ($/BOE)                      $3.35 - $3.85           $3.20 - $3.70
                                                               
DD&A ($/BOE)                           $19.20 - $20.40         $19.20 - $20.40
                                                               
Effective income tax rate range                                38.0% - 38.6%
% of income tax that is current                                <5%
                                                               

EARNINGS CALL INFORMATION

The Company has scheduled a teleconference to discuss these results and other
operational matters for May 1, 2013, at 8:00 a.m. Mountain Time (10:00 a.m.
Eastern Time). The call participation number is 877-445-0811 and the
conference ID number is 55776538. An audio replay of the call will be
available approximately two hours after the call at 855-859-2056, with the
conference ID number 55776538. International participants can dial
617-401-8115 to take part in the conference call, using the conference ID
number 55776538, and can access a replay of the call at 404-537-3406, using
conference ID number 55776538. Replays can be accessed through May 15, 2013.

This call is being webcast live and can be accessed at SM Energy Company's
website at www.sm-energy.com. An audio recording of the conference call will
be available at that site through May 15, 2013.

INFORMATION ABOUT FORWARD LOOKING STATEMENTS

This release contains forward looking statements within the meaning of
securities laws, including forecasts and projections. The words “anticipate,”
“assume,” “believe,” “budget,” “estimate,” “expect,” “forecast,” “intend,”
“plan,” “project,” “will” and similar expressions are intended to identify
forward looking statements. These statements involve known and unknown risks,
which may cause SM Energy's actual results to differ materially from results
expressed or implied by the forward looking statements. These risks include
factors such as the availability, proximity and capacity of gathering,
processing and transportation facilities; the uncertainty of negotiations to
result in an agreement or a completed transaction, including, but not limited
to, our announced transactions in East Texas and the Powder River Basin; the
uncertain nature of announced acquisition, divestiture, joint venture, farm
down or similar efforts and the ability to complete any such transactions,
including, but not limited to, our announced transactions in East Texas and
the Powder River Basin; the uncertain nature of expected benefits from the
actual or expected acquisition, divestiture, joint venture, farm down or
similar efforts; the volatility and level of oil, natural gas, and natural gas
liquids prices; uncertainties inherent in projecting future rates of
production from drilling activities and acquisitions; the imprecise nature of
estimating oil and gas reserves; the availability of additional economically
attractive exploration, development, and acquisition opportunities for future
growth and any necessary financings; unexpected drilling conditions and
results; unsuccessful exploration and development drilling results; the
availability of drilling, completion, and operating equipment and services;
the risks associated with the Company's commodity price risk management
strategy; uncertainty regarding the ultimate impact of potentially dilutive
securities; and other such matters discussed in the “Risk Factors” section of
SM Energy's 2012 Annual Report on Form 10-K. The forward looking statements
contained herein speak as of the date of this announcement. Although SM Energy
may from time to time voluntarily update its prior forward looking statements,
it disclaims any commitment to do so except as required by securities laws.

ABOUT THE COMPANY

SM Energy Company is an independent energy company engaged in the acquisition,
exploration, development, and production of crude oil, natural gas, and
natural gas liquids in onshore North America. SMEnergy routinely posts
important information about the Company on its website. For more information
about SM Energy, please visit its website at www.sm-energy.com.


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                        
Guidance Comparison
                                               For the Three Months Ended

                                               March 31, 2013
                                               Actual          Guidance Range
                                                               
Average daily production (MBOE per day)        115.0           110 - 116
Total production (MMBOE)                       10.35           9.9 - 10.4
                                                               
Lease operating expense (per BOE)              $5.28           $4.68 - $4.92
Transportation expense (per BOE)               $4.58           $4.32 - $4.50
Production taxes, as a percentage of           5.0   %         5.0% - 5.5%
pre-derivative oil, gas, and NGL revenue
                                                               
General and administrative - Cash (per         $2.15           $2.40 - $2.58
BOE)
General and administrative - Cash related      $0.37           $0.30 - $0.42
to Net Profits Plan (per BOE)
General and administrative - Non-cash (per     $0.60           $0.60 - $0.72
BOE)
Total General and administrative (per BOE)     $3.12           $3.30 - $3.72
                                                               
Depreciation, depletion, and amortization      $19.20          $19.20 - $20.40
(per BOE)
                                                               


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                            
Production Data                    For the Three Months Ended
                                   March 31,
                                   2013              2012              Percent
                                                                       Change
                                                                       
Average realized sales price,
before the effects of
derivative cash settlements:
Oil (per Bbl)                      $ 91.67           $ 90.67           1    %
Gas (per Mcf)                      3.57              2.90              23   %
NGL (per Bbl)                      36.65            44.67            (18  )%
Equivalent (per BOE)               $ 45.38           $ 42.92           6    %
                                                                       
Average realized sales price,
including the effects of
derivative cash settlements:
Oil (per Bbl)                      $ 91.30           $ 86.35           6    %
Gas (per Mcf)                      3.90              3.60              8    %
NGL (per Bbl)                      37.80            42.98            (12  )%
Equivalent (per BOE)               $ 46.51           $ 43.76           6    %
                                                                       
Production:
Oil (MMBbls)                       3.13              2.51              25   %
Gas (Bcf)                          32.24             28.66             13   %
NGL (MMBbls)                       1.84             1.16             58   %
MMBOE                              10.35             8.45              22   %
                                                                       
Average daily production:
Oil (MBbls per day)                34.8              27.6              26   %
Gas (MMcf per day)                 358.2             314.9             14   %
NGL (MBbls per day)                20.5             12.8             60   %
MBOE                               115.0             92.8              24   %
                                                                       
Per BOE Data:
Realized price before the
effects of derivative cash         $ 45.38           $ 42.92           6    %
settlements
Lease operating expense            5.28              4.66              13   %
Transportation costs               4.58              3.38              36   %
Production taxes                   2.28              2.26              1    %
General and administrative         3.12             3.33             (6   )%
Operating profit, before the
effects of derivative cash         $ 30.12           $ 29.29           3    %
settlements
Derivative cash settlements        1.13             0.84             35   %
Operating profit, including
the effects of derivative cash     $ 31.25          $ 30.13          4    %
settlements
Depletion, depreciation,
amortization, and
asset retirement obligation        $ 19.20           $ 20.07           (4   )%
liability accretion
                                                                       


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                           
Condensed Consolidated Statements of
Operations
(in thousands, except per share amounts)       For the Three Months
                                               Ended March 31,
                                               2013                2012
Operating revenues:
Oil, gas, and NGL production revenue           $ 469,575           $ 362,595
Other operating revenues                       14,605             14,828    
Total operating revenues                       484,180            377,423   
                                                                   
Operating expenses:
Oil, gas, and NGL production expense           125,633             87,132
Depletion, depreciation, amortization,
and asset retirement obligation                198,709             169,570
liability accretion
Exploration                                    15,398              18,607
Impairment of properties                       21,521              142
General and administrative                     32,280              28,142
Change in Net Profits Plan liability           (1,925    )         3,939
Unrealized and realized derivative loss        30,572              2,216
Other operating expenses                       15,794             11,450    
Total operating expenses                       437,982            321,198   
                                                                   
Income from operations                         46,198              56,225
                                                                   
Nonoperating income (expense):
Interest income                                12                  70
Interest expense                               (19,101   )         (14,278   )
                                                                   
Income before income taxes                     27,109              42,017
Income tax expense                             (10,382   )         (15,681   )
                                                                   
Net income                                     $ 16,727           $ 26,336  
                                                                   
Basic weighted-average common shares           66,211             64,104    
outstanding
                                                                   
Diluted weighted-average common shares         67,521             67,845    
outstanding
                                                                   
Basic net income per common share              $ 0.25             $ 0.41    
                                                                   
Diluted net income per common share            $ 0.25             $ 0.39    
                                                                             


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                          
Condensed Consolidated Balance Sheets
(in thousands, except per share            March 31,             December 31,
amounts)
ASSETS                                     2013                  2012
Current assets:
Cash and cash equivalents                  $ 87                  $ 5,926
Accounts receivable                        255,888               254,805
Refundable income taxes                    3,113                 3,364
Prepaid expenses and other                 28,523                30,017
Derivative asset                           23,364                37,873
Deferred income taxes                      9,215                8,579       
Total current assets                       320,190              340,564     
                                                                 
Property and equipment (successful
efforts method), at cost:
Land                                       1,857                 1,845
Proved oil and gas properties              5,670,183             5,401,684
Less - accumulated depletion,              (2,564,865  )         (2,376,170  )
depreciation, and amortization
Unproved oil and gas properties            173,215               175,287
Wells in progress                          296,854               273,928
Materials inventory, at lower of cost      14,110                13,444
or market
Oil and gas properties held for sale
net of accumulated depletion,              33,340                33,620
depreciation and amortization of
$21,305 in 2013 and $20,676 in 2012
Other property and equipment, net of
accumulated depreciation of $23,968 in     156,416              153,559     
2013 and $22,442 in 2012
Total property and equipment, net          3,781,110            3,677,197   
                                                                 
Noncurrent assets:
Derivative asset                           8,571                 16,466
Restricted cash                            106,800               86,773
Other noncurrent assets                    75,653               78,529      
Total other noncurrent assets              191,024              181,768     
Total Assets                               $ 4,292,324          $ 4,199,529 
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses      $ 480,318             $ 525,627
Derivative liability                       22,836                8,999
Other current liabilities                  7,000                6,920       
Total current liabilities                  510,154              541,546     
                                                                 
Noncurrent liabilities:
Revolving credit facility                  430,000               340,000
6.625% Senior Notes Due 2019               350,000               350,000
6.50% Senior Notes Due 2021                350,000               350,000
6.50% Senior Notes Due 2023                400,000               400,000
Asset retirement obligation                115,163               112,912
Asset retirement obligation associated
with oil and gas properties held for       4,396                 1,393
sale
Net Profits Plan liability                 76,902                78,827
Deferred income taxes                      548,339               537,383
Derivative liability                       12,669                6,645
Other noncurrent liabilities               57,876               66,357      
Total noncurrent liabilities               2,345,345            2,243,517   
                                                                 
Stockholders’ equity:
Common stock, $0.01 par value -
authorized: 200,000,000 shares;
issued: 66,300,003 shares in 2013 and
66,245,816 shares in 2012;                 663                   662
outstanding, net of treasury shares:
66,249,422 shares in 2013 and
66,195,235 shares in 2012
Additional paid-in capital                 242,526               233,642
Treasury stock, at cost: 50,581 shares     (1,221      )         (1,221      )
in 2013 and 2012
Retained earnings                          1,203,813             1,190,397
Accumulated other comprehensive loss       (8,956      )         (9,014      )
Total stockholders’ equity                 1,436,825            1,414,466   
                                                                 
Total Liabilities and Stockholders’        $ 4,292,324          $ 4,199,529 
Equity
                                                                             


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                             
Condensed Consolidated Statements of Cash
Flows
(in thousands)
                                                 For the Three Months Ended

                                                 March 31,
                                                 2013               2012
Cash flows from operating activities:
Net income                                       $ 16,727           $ 26,336
Adjustments to reconcile net income to net
cash provided by operating activities:
Depletion, depreciation, amortization, and
asset retirement obligation liability            198,709            169,570
accretion
Exploratory dry hole expense                     159                606
Impairment of properties                         21,521             142
Stock-based compensation expense                 8,113              4,350
Change in Net Profits Plan liability             (1,925   )         3,939
Unrealized derivative loss                       42,364             7,652
Amortization of debt discount and deferred       1,077              3,665
financing costs
Deferred income taxes                            10,280             15,288
Other                                            1,032              (2,580   )
Changes in current assets and liabilities:
Accounts receivable                              (22,164  )         (13,967  )
Refundable income taxes                          251                3,006
Prepaid expenses and other                       354                (3,003   )
Accounts payable and accrued expenses            5,794             (26,951  )
Net cash provided by operating activities        282,292           188,053  
                                                                    
Cash flows from investing activities:
Net proceeds from sale of oil and gas            4,307              1,679
properties
Capital expenditures                             (381,185 )         (335,015 )
Other                                            (2,025   )         1,550    
Net cash used in investing activities            (378,903 )         (331,786 )
                                                                    
Cash flows from financing activities:
Proceeds from credit facility                    223,500            26,000
Repayment of credit facility                     (133,500 )         (2,000   )
Proceeds from sale of common stock               772                1,038
Other                                            —                 (213     )
Net cash provided by financing activities        90,772            24,825   
                                                                    
Net change in cash and cash equivalents          (5,839   )         (118,908 )
Cash and cash equivalents at beginning of        5,926             119,194  
period
Cash and cash equivalents at end of period       $ 87              $ 286    
                                                                             


SM ENERGY COMPANY
FINANCIAL HIGHLIGHTS
March 31, 2013
                                                             
Adjusted Net Income
(in thousands, except per share data)
                                                                    
Reconciliation of net income (GAAP)
to adjusted net income (Non-GAAP):
                                                 For the Three Months Ended
                                                 March 31,
                                                 2013               2012
                                                                    
Reported net income (GAAP)                       $ 16,727           $ 26,336
                                                                    
Adjustments net of tax: ^(1)
Change in Net Profits Plan liability             (1,188   )         2,470
Unrealized derivative loss                       26,139             4,798
(Gain) loss on divestiture activity^(2)          354                (917     )
Impairment of properties                         13,279             89
                                                                   
Adjusted net income (Non-GAAP) ^ (3)             $ 55,311          $ 32,776 
                                                                    
Diluted weighted-average common shares           67,521            67,845   
outstanding:
                                                                    
Adjusted net income per diluted common           $ 0.82            $ 0.48   
share:
                                                                             

(1) For the three-month period ended March 31, 2013, adjustments are shown net
of tax using the Company's effective rate as calculated by dividing income tax
expense by income before income taxes on the consolidated statement of
operations. For the three-month period ended March 31, 2012, adjustments are
shown net of tax and are calculated using a tax rate of 37.3%, which
approximates the Company's statutory tax rate for that period, as adjusted for
ordinary permanent differences.

(2) ^ (Gain) loss on divestiture activity is included within the other
operating revenues line item of the accompanying statements of operations.

(3) Adjusted net income excludes certain items that the Company believes
affect the comparability of operating results and generally are items whose
timing and/or amount cannot be reasonably estimated. These items include
non-cash adjustments and impairments such as the change in the Net Profits
Plan liability, unrealized derivative loss, property impairments, and (gain)
loss on divestiture activity. The non-GAAP measure of adjusted net income is
presented because management believes it provides useful additional
information to investors for analysis of SM Energy's fundamental business on a
recurring basis. In addition, management believes that adjusted net income is
widely used by professional research analysts and others in the valuation,
comparison, and investment recommendations of companies in the oil and gas
exploration and production industry, and many investors use the published
research of industry research analysts in making investment decisions.
Adjusted net income should not be considered in isolation or as a substitute
for net income, income from operations, cash provided by operating activities
or other income, profitability, cash flow, or liquidity measures prepared
under GAAP. Since adjusted net income excludes some, but not all, items that
affect net income and may vary among companies, the adjusted net income
amounts presented may not be comparable to similarly titled measures of other
companies.


                                                             
EBITDAX
(in thousands)
                                                                   
Reconciliation of net income (GAAP) to
EBITDAX (Non-GAAP) to net cash provided
by operating activities (GAAP)
                                            For the Three Months Ended
                                            March 31,
                                            2013                   2012
                                                                   
Net income (GAAP)                           $ 16,727               $ 26,336
Interest expense                            19,101                 14,278
Interest income                             (12       )            (70       )
Income tax expense                          10,382                 15,681
Depreciation, depletion, amortization,
and asset retirement obligation             198,709                169,570
liability accretion
Exploration                                 13,224      ^(1)       18,607
Impairment of properties                    21,521                 142
Stock-based compensation expense            8,113                  4,350
Unrealized derivative loss                  42,364                 7,652
Change in Net Profits Plan liability        (1,925    )            3,939
(Gain) loss on divestiture activity         574        ^(2)       (1,462    )
EBITDAX (Non-GAAP)                          $ 328,778             $ 259,023 
Interest expense                            $ (19,101 )            $ (14,278 )
Interest income                             12                     70
Income tax expense                          (10,382   )            (15,681   )
Exploration                                 (13,224   )            (18,607   )
Exploratory dry hole expense                159                    606
Amortization of debt discount and           1,077                  3,665
deferred financing costs
Deferred income taxes                       10,280                 15,288
Other                                       458         ^(3)       (1,118    )
Changes in current assets and               (15,765   )            (40,915   )
liabilities
Net cash provided by operating              $ 282,292             $ 188,053 
activities (GAAP)
                                                                             

^(1) Stock-based compensation expense is a component of exploration expense
and general and administrative expense on the accompanying statements of
operations. Therefore, the exploration line items shown in the reconciliation
above will vary from the amount shown on the accompanying statements of
operations because of the component of stock-based compensation expense
recorded to exploration.

^(2) (Gain) loss on divestiture activity is included within the other
operating revenues line item of the accompanying statements of operations.
                                        
^(3) Does not include the impact of any (gain) loss on divestiture activity,
which is included in other on the accompanying statements of cash flows.

Contact:

SM Energy
James R. Edwards, 303-837-2444
 
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