SM Energy Co. has increased its full-year production guidance for the second time in a month on better-than-expected output in the Permian Basin and South Texas.
The Denver-based independent boosted its full-year guidance to 47-47.8 million boe/d, the midpoint of which is 1% higher than the June forecast.
“During the quarter, we announced successful tests of several new intervals on our existing acreage. We now forecast higher second half production and lower full year total capital spend than we originally planned,” said CEO Jay Ottoson.
Second quarter production was 12.4 million boe (136,500 million boe/d), up by 16% sequentially and 18% year/year. Oil comprised 44% of output during the quarter and liquids made up 62% of production volumes.
SM lowered its guidance for 2019 capital spending to $1.03 billion, roughly $70-80 million per month for the rest of the year, citing improved efficiencies. That marks a decrease from the previously forecast capital spending outlook for the year of roughly $1.35 billion.
The company last revised higher its full-year production guidance in mid-June, citing “strong” 30-day peak initial production (IP) rates recorded from wells in the Dean and Wolfcamp D intervals in the RockStar area of the Permian’s Midland sub-basin.
In March, SM said a package of completed wells in the Permian were impacted when a third-party natural gas processing facility declared a force majeure and went offline. High winds in West Texas in mid-March also caused electrical outages, which interrupted artificial lift installations on several wells, resulting in some temporary production shut-ins.