SM Energy Reports Third Quarter 2026 Results
SM Energy Co (SM) filed an SEC Form 8-K — Results of Operations and Financial Condition. News Release EXHIBIT 99.1 SM Energy Reports Third Quarter 2026 Results Operating cash flow of $1.1 billion funds $417 million of debt redemption and $133 million of capital returned to stockholders DENVER, Nov. 3, 2026 - SM Energy Company (the “Company” or “SM”) (NYSE: SM) today
How this was made
The 30-second read
Why it matters
The company delivered strong cash flow, repurchased shares, paid a dividend, and reduced net debt, while modestly lowering oil production guidance.
Market read
The release provides fresh earnings data and guidance updates that can influence SM's stock and the broader energy sector.
What to watch
Debt reduction and strong free cash flow may support a longer‑term bullish case.
SM Energy Reports Third Quarter 2026 Results Operating cash flow of $1.1 billion funds $417 million of debt redemption and $133 million of capital returned to stockholders
Operating cash flow, adjusted free cash flow, synergy capture, debt redemption and stockholder returns were strong, but GAAP net income declined from the prior-year quarter, oil guidance was lowered, and production was affected by Permian downtime and Uinta takeaway constraints.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Oil, gas, and NGL production revenue, three months ended September 30GAAP | $2.16B | – | – |
| Total operating revenues and other income, three months ended September 30GAAP | $2.17B | – | – |
| Oil, gas, and NGL production expense, three months ended September 30GAAP | $574M | – | – |
| Depletion, depreciation, and amortization, three months ended September 30GAAP | $590M | – | – |
| Exploration expense, three months ended September 30GAAP | $22M | – | – |
| General and administrative expense, three months ended September 30GAAP | $56M | – | – |
| Net derivative (gain) loss, three months ended September 30GAAP | $684M | – | – |
| Income from operations, three months ended September 30GAAP | $236M | – | – |
| Interest expense, three months ended September 30GAAP | −$116M | – | – |
| Income before income taxes, three months ended September 30GAAP | $123M | – | – |
| Income tax expense, three months ended September 30GAAP | −$30M | – | – |
| Net income, three months ended September 30GAAP | $93M | – | – |
| Diluted net income per common share, three months ended September 30GAAP | $ 0.39 | – | – |
| Adjusted net income, three months ended September 30non-GAAP | $465M | – | – |
| Adjusted net income per diluted common share, three months ended September 30non-GAAP | $ 1.95 | – | – |
| Adjusted EBITDAX, three months ended September 30non-GAAP | $1.34B | – | – |
| Net cash provided by operating activities, three months ended September 30GAAP | $1.12B | – | – |
| Capital expenditures, three months ended September 30GAAP | $711M | – | – |
| Capital expenditures before changes in accruals, three months ended September 30non-GAAP | $747M | – | – |
| Adjusted free cash flow, three months ended September 30non-GAAP | $397M | – | – |
| Average net daily production, equivalent, three months ended September 30other | 433.1 MBoe per day | (2) % | – |
| Average net daily production, oil, three months ended September 30other | 230.2 MBbl per day | — % | – |
| Average net daily production, gas, three months ended September 30other | 917.0 MMcf per day | (4) % | – |
| Average net daily production, NGLs, three months ended September 30other | 50.1 MBbl per day | (2) % | – |
| Realized sales price before the effect of net derivative settlements, oil, three months ended September 30other | $ 85.76 per Bbl | (11) % | – |
| Realized sales price before the effect of net derivative settlements, gas, three months ended September 30other | $ 2.48 per Mcf | 1,359 % | – |
| Realized sales price before the effect of net derivative settlements, NGLs, three months ended September 30other | $ 29.40 per Bbl | 19 % | – |
| Realized sales price including the effect of net derivative settlements, equivalent, three months ended September 30non-GAAP | $ 49.02 per Boe | 1 % | – |
| Lease operating expense per Boe, three months ended September 30other | $ 7.02 | 5 % | – |
| Transportation costs per Boe, three months ended September 30other | $ 3.53 | (1) % | – |
| Production taxes per Boe, three months ended September 30other | $ 3.47 | 7 % | – |
| General and administrative per Boe, three months ended September 30other | $ 1.40 | (29) % | – |
| Oil, gas, and NGL production revenue, nine months ended September 30GAAP | $5.79B | – | – |
| Total operating revenues and other income, nine months ended September 30GAAP | $6.15B | – | – |
| Net income, nine months ended September 30GAAP | $829M | – | – |
| Diluted net income per common share, nine months ended September 30GAAP | $ 3.66 | – | – |
| Adjusted net income, nine months ended September 30non-GAAP | $1.3B | – | – |
| Adjusted net income per diluted common share, nine months ended September 30non-GAAP | $ 5.74 | – | – |
| Adjusted EBITDAX, nine months ended September 30non-GAAP | $3.72B | – | – |
| Net cash provided by operating activities, nine months ended September 30GAAP | $2.87B | – | – |
| Capital expenditures, nine months ended September 30GAAP | $2.02B | – | – |
| Capital expenditures before changes in accruals, nine months ended September 30non-GAAP | $2.14B | – | – |
| Adjusted free cash flow, nine months ended September 30non-GAAP | $884M | – | – |
| Average net daily production, equivalent, nine months ended September 30other | 414.9 MBoe per day | – | 101 % |
| Average net daily production, oil, nine months ended September 30other | 216.9 MBbl per day | – | 95 % |
| Net debt, September 30, 2026non-GAAP | $6.01B | – | – |
Fourth quarter 2026 and full year 2026 outlook
- NoteFourth quarter 2026 total production: 40 – 41 MMBoe
- NoteFull year 2026 total production: 153 – 154 MMBoe
- NoteFourth quarter 2026 total production: 435 – 445 MBoe/d
- NoteFull year 2026 total production: 420 – 422 MBoe/d
- NoteFourth quarter 2026 oil production: 229 – 239 MBbl/d
- NoteFull year 2026 oil production: 220 – 222 MBbl/d
- NoteFourth quarter 2026 capital expenditures: ~$610
- NoteFull year 2026 capital expenditures: ~$2,750
- NoteFull year 2026 DC&E: ~$2,400
- NoteFull year 2026 facility, land, and other: ~$280
- NoteFull year 2026 one-time capital costs: ~$70
- NoteFull year 2026 net wells drilled: ~55
- NoteFull year 2026 net wells turned-in-line: ~80
- NoteFull year 2026 average well cost: ~$710 per lateral ft
- NoteFourth quarter 2026 lease operating expense: $6.60 – $6.80 per Boe
- NoteFourth quarter 2026 transportation: $3.55 – $3.65 per Boe
- NoteFull year 2026 production taxes: ~6% of oil, gas and NGL revenue
- NoteFull year 2026 ad valorem taxes: ~$0.50 per Boe
- NoteFull year 2026 DD&A: ~$14.50 per Boe
- NoteFull year 2026 recurring G&A: $230 – $250 million
- NoteFull year 2026 one-time transaction & integration cash costs: ~$160 million
- NoteFull year 2026 one-time transaction & integration non-cash costs: ~$20 million
- NoteFull year 2026 exploration expense: ~$100 million
- NoteFull year 2026 cash taxes: $100 – $120 million
Capital returns
- Returned $133 million of capital to stockholders, or approximately 34% of adjusted free cash flow, through $81 million in share repurchases and SM’s $0.22 per share quarterly dividend.
- Repurchased 2.3 million shares for $81 million during the third quarter.
- Year-to-date share repurchases total $165 million.
- Repurchase of common stock was $79 million for the three months ended September 30, 2026 and $166 million for the nine months ended September 30, 2026.
- Dividends paid were $52 million for the three months ended September 30, 2026 and $187 million for the nine months ended September 30, 2026.
What drove it
- The Company actioned approximately $400 million of Merger run-rate synergies, twice the original $200 million target and $25 million greater than the revised $375 million target.
- NPV-10 of merger synergies increased to $2.0 billion from $1.8 billion.
- The nine-month results include eight months of production from Civitas assets acquired on January 30, 2026, and four months of production from the Galvan Divestiture on April 30, 2026.
- Third-quarter net income included a $477 million non-cash loss from changes in the fair value of commodity derivative contracts.
- Income tax expense of $30 million included current tax expense of $37 million, reflecting higher realized oil prices.
Concerns
- Oil volumes were affected by higher-than-planned Permian Basin downtime related to compliance and safety work on assets acquired in the Merger and temporary shut-ins during simultaneous operations, reducing oil volumes by approximately 2 MBbl/d.
- The Company experienced approximately 4 MBbl/d of takeaway constraints in the Uinta Basin.
- Full-year 2026 oil production guidance was lowered by 1% to 220 – 222 MBbl/d.
- Service-cost inflation is cited in the Company's capital outlook discussion.
- Interest expense was $ (116) million in the third quarter, compared with $ (43) million in the prior-year quarter.
What to watch
- Resolution of Uinta Basin takeaway constraints, which the Company expects in early 2027.
- Fourth-quarter production guidance of 435 – 445 MBoe/d, including 229 – 239 MBbl/d of oil.
- Delivery of full-year total production guidance of 420 – 422 MBoe/d and oil production guidance of 220 – 222 MBbl/d.
- Full-year capital expenditures of approximately $2.75 billion amid service-cost inflation.
- The Company's stated objective of low one-times leverage at mid-cycle prices by year-end 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $ 442 million at September 30, 2026, compared with $ 368 million at December 31, 2025.
- Principal amount of Senior Notes was $ 6,456 million at September 30, 2026.
- Total principal amount of debt was $ 6,456 million at September 30, 2026.
- Net Debt was $ 6,014 million at September 30, 2026.
- Cash paid to repurchase Senior Notes was $ (417) million for the three months ended September 30, 2026 and $ (2,160) million for the nine months ended September 30, 2026.
- The Company redeemed all $417 million aggregate principal amount of 6.625% Senior Notes due 2027 at par.
- Net cash used in financing activities was $ (554) million for the three months ended September 30, 2026.
- Net change in cash, cash equivalents, and restricted cash was $ (178) million for the three months ended September 30, 2026.
Analysis
Third-quarter operating performance reflected the expanded asset base and merger integration. Oil, gas, and NGL production revenue was $ 2,160 million, while total operating revenues and other income was $ 2,170 million. Average net daily production was 433.1 MBoe per day, including 230.2 MBbl per day of oil. Total equivalent production was down sequentially from 439.7 MBoe per day, while oil production was effectively flat sequentially at 230.2 MBbl per day versus 229.8 MBbl per day.
GAAP earnings were pressured by derivatives and higher costs. Net income was $ 93 million, or $ 0.39 per diluted common share, compared with $ 155 million, or $ 1.35 per diluted common share, in the prior-year quarter. The quarter included a $477 million non-cash loss from changes in the fair value of commodity derivative contracts. Adjusted net income was $ 465 million, or $ 1.95 per diluted common share, and adjusted EBITDAX was $ 1,341 million.
Cash generation supported both capital spending and balance-sheet actions. Net cash provided by operating activities was $ 1,122 million, capital expenditures before changes in accruals were $ 747 million, and adjusted free cash flow was $ 397 million. SM used $417 million to redeem all of its 6.625% Senior Notes due 2027 at par and returned $133 million to stockholders. Net Debt was $ 6,014 million at September 30, 2026, while cash and cash equivalents were $ 442 million.
Management reported approximately $400 million of Merger run-rate synergies, above both its original $200 million target and revised $375 million target. This supports full-year capital expenditures of approximately $2.75 billion despite service-cost inflation. The operating issue is production: the Company lowered full-year oil guidance by 1% to 220 – 222 MBbl/d after Permian downtime reduced volumes by approximately 2 MBbl/d and Uinta constraints affected approximately 4 MBbl/d. Total production guidance was narrowed to 420 – 422 MBoe/d, and management expects the Uinta constraints to be resolved in early 2027.
Management, verbatim
We are meaningfully transforming SM Energy – exceeding our merger synergy target, substantially achieving our divestiture target and materially strengthening the balance sheet.
Beth McDonald, President and CEO
We are modestly lowering full-year oil guidance to 220-222 MBbl/d due to transitory factors, while reiterating our full-year total production outlook.
Beth McDonald, President and CEO
With integration substantially complete, our focus is on disciplined execution, continuous improvement and increasing the capital efficiency of the portfolio to compound long-term value for stockholders.
Beth McDonald, President and CEO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Gross margin was not reported.
- No reportable revenue segments were provided.
- No forward revenue, gross-margin, operating-expense, or tax-rate guidance was provided.
- Prior-quarter values were not reported for the income statement, cash flow statement, adjusted earnings measures, or net debt.
- Year-over-year percentage changes were not reported for GAAP revenue, income, EPS, cash flow, adjusted earnings measures, capital expenditures, or adjusted free cash flow.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
SM Energy filed a Form 8‑K reporting its third‑quarter 2026 financial and operating results.
Ticker impact
SM Energy reported Q3 2026 results with $1.1B operating cash flow, $133M returned to shareholders, and lowered full-year oil guidance to 220-222 MBbl/d.
likely modest upside as strong cash flow and debt reduction offset lower oil guidance.
Operating cash flow and debt paydown improve balance sheet, while reduced oil guidance may temper enthusiasm.
Market effects
Energy sector may see slight pressure from lowered oil production outlook.
U.S. energy stocks could experience mixed reactions.
Limited; primarily impacts U.S. oil and gas investors.
Counterpoint
Lowered oil guidance could signal deeper operational issues, suggesting a short bias.
Key entities
- companySM Energy
U.S. oil and gas producer (NYSE: SM).
