SM Energy Company today announced certain operating and financial results for the first quarter of 2019, including production, realized pricing and total capital spend. Highlights include:

• 10.7 MMBoe (118.7 MBoe/d) total production came in at the mid-point of guidance. Permian production was up 34% year-over-year. 
• 45% oil in the commodity mix; 63% liquids. 
• Costs incurred in oil and gas activities of $322 million and total capital spend of $316 million.

President and Chief Executive Officer Jay Ottoson comments: 
"Successful execution at the Merlin Maximus development underpins our full year objective of approximately 20% growth in Permian production. In addition, with over 60% liquids production and more than one-half of total production for the quarter from our Permian assets, we continue marching towards higher overall operating margins and cash flow." 

At 10.7 MMBoe/118.7 MBoe/d, first quarter production was at the mid-point of guidance. As previously reported, first quarter production volumes met expectations despite impacts totaling (0.2) MMBoe in March from severe weather and from third-party processing plant delays in reaching full capacity following a force majeure event.

Realized pricing during the first quarter of 2019 benefited from improved regional oil differentials in the Permian Basin, which were offset by lower regional natural gas prices and a lower realized NGL uplift from Permian production impacted by force majeure events. For the next two quarters, the Company expects pricing for both oil and natural gas in the Permian Basin to be volatile as a result of tight pipeline capacity. The Company sells its Permian oil and natural gas production to purchasers (that are obligated to take forecast volumes) who own or have access to firm transportation. In addition, the Company has put in place Midland-Cushing basis hedges for approximately 60-65% of Permian oil production and has hedged Waha gas prices for approximately 85% of Permian natural gas production through the next two quarters.

FINANCIAL POSITION, LIQUIDITY AND TOTAL CAPITAL SPEND 

On March 31, 2019, the outstanding principal amount of the Company's long-term debt was $2.5 billion in senior notes plus $172.5 million in senior convertible notes, with $46.5 million drawn on the Company's senior secured credit facility. 

Costs incurred in oil and gas activities for the first quarter of 2019 were $322 million. Total capital spend (a non-GAAP measure defined as costs incurred less asset retirement obligations, capitalized interest and proved property acquisitions, is reconciled below) for the quarter was $316 million. During the first quarter, the Company drilled 28 net wells and completed 27 net wells in the Permian, and drilled seven net wells and completed two net wells in its South Texas region. 

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