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SM Energy's Stellar Financial Performance in 2025

SM Energy Company (NYSE: SM) has reported its financial and operational results for the fourth quarter and full year of 2025, showcasing impressive milestones in production and cash flow.

Overview of 2025 Performance

In what has been a record-breaking year, SM Energy achieved a net income of $648 million, which translates to $5.64 per diluted share. The company generated a remarkable operating cash flow of $2.01 billion, enhancing its financial resilience and providing meaningful returns to its shareholders. The company's adjusted EBITDAX reached an all-time high of $2.26 billion, marking a 13% increase from 2024. This has been attributed to record production numbers and resilient margins against the backdrop of a 14% decline in benchmark oil prices.

Beth McDonald, President and CEO of SM Energy, commented on the company's performance: "In 2025, we delivered record cash flow from operations and net production, reflecting our robust operational strategy and execution. We are well positioned for future growth and success."

The year saw significant investment activities as well, with total capital expenditures amounting to $1.44 billion. Adjusted free cash flow saw a growth of 28% year-over-year, climbing to $620 million, demonstrating the company's ability to internally fund its expansion plans and return capital to shareholders.

Key Highlights

• - Record Production: The company achieved a record net production of 75.5 million barrels of oil equivalent (MMBoe), averaging 206.8 thousand barrels of oil equivalent per day, rising 21% from the previous year. Notably, 53% of this production was derived from oil.
• - Strategic Divestitures: SM Energy announced plans to divest certain assets in South Texas for approximately $950 million, which is part of their strategy to achieve total divestitures of $1 billion in 2026. This move is aimed at bolstering the balance sheet further.
• - Reduced Debt Levels: The company successfully decreased its net debt by $437 million, achieving a net debt-to-adjusted EBITDAX leverage ratio of 1.05x at the year's conclusion, emphasizing financial health amid fluctuating oil prices.
• - Shareholder Returns: In alignment with its commitment to shareholder value, SM Energy returned $104 million to shareholders via dividends and share buybacks, cumulatively returning $648 million since 2022.

Fourth Quarter Highlights

In the fourth quarter alone, SM Energy reported a net income of $109 million and an operating cash flow of $452 million. This quarter maintained consistent production metrics, with net production at 19 million MMBoe, 52% of which was oil, aligned with the company’s guidance.

Future Outlook

With a clear strategic plan in place, SM Energy is poised for further progress in 2026. The merger with Civitas Resources, finalized shortly after the year-end, is anticipated to generate considerable synergies, enhancing operational efficiency and market presence. The merger aims to unlock significant value over the next several years, with expected benefits evident across various operational fronts.

Beth McDonald emphasized the company's momentum, stating, "As we look to 2026, our focus remains on optimizing our operations and maximizing value for our shareholders, evidenced by our recent strategic moves and prudent financial management."

Investors eager to learn more will have the opportunity to engage in a live conference call on February 26, 2026, at 8 a.m. MT/10 a.m. ET, where additional insights will be shared regarding the company’s projections and strategic prioritization for the upcoming year.

For more detailed financial data and operational metrics, stakeholders are encouraged to visit the SM Energy investor relations page at sm-energy.com/investors/news-events/presentations.

In summary, SM Energy's robust performance in 2025 solidifies its standing in the energy sector and sets the stage for future growth and shareholder returns. As market dynamics evolve, the company remains committed to delivering operational excellence and sustained profitability.