SM Energy Q2 Earnings Surpass Estimates on Higher Production Volumes

SM Energy Company SM reported second-quarter 2025 adjusted earnings of $1.50 per share, which surpassed the Zacks Consensus Estimate of $1.23. The bottom line, however, declined from the year-ago quarter’s figure of $1.85.

Total quarterly revenues of $793 million beat the Zacks Consensus Estimate of $780 million. The top line increased from the year-ago quarter’s level of $635 million.

The strong quarterly results were primarily driven by increased oil equivalent production volumes.

SM Energy Company Price, Consensus and EPS Surprise

SM Energy Company price-consensus-eps-surprise-chart | SM Energy Company Quote

Operational Performance

Production

SM Energy’s second-quarter production volume amounted to 209.1 thousand barrels of oil equivalent per day (MBoe/d) (almost 55% oil), reflecting an increase of 32% from the year-ago level of 158.5 MBoe/d. The Zacks Consensus Estimate for the same was pinned at 204 MBoe/d.

Oil production increased approximately 59% year over year to 115.7 thousand barrels per day (MBbls/d). The Zacks Consensus Estimate for the same was pegged at 109 MBbls/d.

The company produced 398.3 million cubic feet per day of natural gas in the quarter, up 13% year over year. Natural gas liquids production totaled 26.9 MBbls/d in the second quarter. The figure improved 1% on a year-over-year basis.

Realized Prices

Before the effects of derivative settlements, the average realized price per Boe was $41.27 compared with $43.92 in the year-ago quarter. The average realized oil price slipped 23% to $62.04 per barrel.

The average realized price of natural gas improved 54% year over year to $2.15 per thousand cubic feet, while that for natural gas liquids increased 4% to $21.91 per barrel.

Costs & Expenses

On the cost front, unit lease operating expenses increased 15% year over year to $5.52 per Boe. General and administrative expenses increased 2% to $2.21 per Boe from the prior-year level of $2.16. Transportation expenses jumped 113% to $4.13 per Boe.

Total hydrocarbon production expenses in the quarter were $224 million compared with the year-ago level of $136.6 million. Total exploration expenses were $15.4 million, lower than the year-ago quarter’s figure of $17.1 million.

Capex

Capital expenditures in the June-end quarter totaled $410.2 million, and adjusted free cash flow amounted to $113.9 million.

Balance Sheet

As of June 30, 2025, SM Energy had cash and cash equivalents of $101.9 million and a net debt of $2.63 billion.

Guidance

For the third quarter of 2025, SM Energy expects production to be in the range of 209-215 MBoe/d. Of the total production, oil is expected to contribute 53-54%. Capital expenditures (net of the change in capital accruals), excluding acquisitions, are forecasted to be in the $300-$320 million range.

For full-year 2025, the company anticipates net production volume to remain unchanged in the range of 200-215 MBoe/d. Oil is anticipated to account for 51-52% of the total production. At the midpoint, this implies a year-over-year increase of approximately 22% in net production on a Boe basis. Full-year capital expenditures are expected to be approximately $1.3-$1.375 billion.

SM’s Zacks Rank and Key Picks

SM currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Antero Midstream Corporation AM, Viper Energy, Inc. VNOM and Enbridge Inc. ENB, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Antero Midstream generates stable cash flow by providing midstream services under long-term contracts with Antero Resources. The company prioritizes debt reduction by effectively utilizing free cash flow after dividends. Antero Midstream’s higher dividend yield compared to its sub-industry peers reflects its commitment to generating shareholder returns.

AM’s earnings beat estimates in one of the trailing four quarters, met once and missed in the other two, delivering an average negative surprise of 5.50%.

Viper Energy generates strong, steady royalty income from its royalty acres in the prolific Permian Basin, with active rigs providing ample growth potential. The company boasts a lower debt-to-capitalization ratio than the composite stocks in the energy sector, indicating a healthier financial position.

VNOM’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 20.41%.

Enbridge is a major energy company that owns the longest and most complex oil and gas pipeline system in North America, transporting about 20% of the natural gas used in the United States. The business earns steady fees through long-term contracts, protecting it against big oil price swings or changes in shipment. 

ENB’s earnings beat estimates in two of the trailing four quarters, met once and missed in the other, delivering an average surprise of 0.28%.

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This article originally published on Zacks Investment Research (zacks.com).

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