SM Energy Cuts 2026 Oil Production Guidance by 1% to 220–222,000 Barrels a Day
Key Facts
SM Energy cut its 2026 oil production guidance by 1% to a range of 220–222,000 barrels a day in its third-quarter results released on November 3. The company said it narrowed its full-year total production guidance to 420–422,000 barrels of oil equivalent a day. The stock fell 4.5% in after-hours trading following the announcement, according to Investing.com. Third-quarter adjusted net income was $465 million, or $1.95 per diluted share. On a reported basis, the company recorded net income of $93 million, or $0.39 per diluted share.
Average daily production in the third quarter was 433,000 barrels of oil equivalent, including 230,000 barrels of oil a day. The company attributed a reduction of about 2,000 barrels of oil a day to compliance and safety work and temporary shutdowns in the Permian Basin. It added that oil transportation constraints in the Uinta Basin limited production by about 4,000 barrels a day. It said the factors behind the cut to oil production guidance are expected to be resolved in early 2027. At the same time, it noted that transportation constraints in the Uinta Basin continue to affect its oil production guidance.
Revenue and adjusted earnings per share came in above analyst estimates cited by Investing.com. Revenue was $2.16 billion, compared with expectations of $1.99 billion, and rose 166% year over year. Adjusted earnings per share of $1.95 also exceeded the consensus estimate of $1.88. On a quarterly comparison, adjusted net income per diluted share was $2.19 in the second quarter, according to the company's previous results. In August, SM Energy had raised its second-half production outlook to 435–440,000 barrels of oil equivalent a day, including about 238,000 barrels of oil a day.
The company forecast capital spending of about $2.75 billion in 2026, saying the figure is at the midpoint of its previous range. For the fourth quarter, it expects total production of 435,000 to 445,000 barrels of oil equivalent a day, including 229–239,000 barrels of oil a day. It estimated capital spending for the quarter at about $610 million. This guidance puts the fourth-quarter oil production range above the new full-year guidance range, while full-year total production remains set at 420–422,000 barrels of oil equivalent a day. The company said the factors behind the cut to its annual oil outlook are expected to be addressed in early 2027.
On liquidity, SM Energy generated $1.1 billion in operating cash flow in the third quarter. It returned $133 million to shareholders, including $81 million in share repurchases and a quarterly cash dividend of $0.22 per share. It also redeemed notes with an aggregate face value of $417 million that mature in 2027, saying this leaves it with no maturities until mid-2028. Net debt fell to $6.0 billion at the end of the third quarter, compared with $7.4 billion on March 31, 2026. The company said it had activated about $400 million in annualized run-rate merger synergies, double its original target of $200 million and $25 million above its revised target of $375 million.
The company was scheduled to hold a webcast conference call to discuss its third-quarter results on November 4, 2026, at 10 a.m. Eastern Time. SM Energy said the factors behind the oil guidance cut are expected to be resolved in early 2027, while transportation constraints in the Uinta Basin continue to affect its oil production guidance. Fourth-quarter guidance covers total production of 435,000 to 445,000 barrels of oil equivalent a day and oil production of 229,000 to 239,000 barrels a day. The company also expects capital spending of about $610 million in the quarter. Its full-year capital spending forecast is about $2.75 billion.