SM ENERGY PROVIDES 2026 OUTLOOK

Rhea-AI Summary

SM Energy (NYSE: SM) outlined a 2026 plan to maximize free cash flow, strengthen the balance sheet and accelerate returns to stockholders.

Key items: annual dividend +10% to $0.88 (quarterly $0.22), ~$950M South Texas asset sale expected 2Q26, borrowing base $5.0B, commitments $2.5B, total liquidity $2.9B, 2026 guidance: 146–153 MMBoe (~54% oil) and capex $2.65–$2.85B.

The company plans ~20% of post-dividend free cash flow for repurchases and ~80% for debt reduction; $200–$300M synergy target with ~$185M actioned.

Positive

• Dividend increase of 10% to $0.88 annual ($0.22 quarterly)
• $950 million South Texas asset sale expected to close in 2Q26
• Borrowing base increased to $5.0 billion; commitments $2.5 billion; liquidity $2.9 billion
• $185 million of approximately $200–$300 million synergies already actioned

Negative

• High 2026 capex guidance of $2.65–$2.85 billion
• Non-recurring integration costs of approximately $70 million
• Initial buyback allocation limited to ~20% of post-dividend free cash flow

News Market Reaction – SM

-1.83%

27 alerts

-1.83% News Effect

-10.7% Trough in 23 hr 40 min

-$98M Valuation Impact

$5.25B Market Cap

0.1x Rel. Volume

On the day this news was published, SM declined 1.83%, reflecting a mild negative market reaction. Argus tracked a trough of -10.7% from its starting point during tracking. Our momentum scanner triggered 27 alerts that day, indicating elevated trading interest and price volatility. This price movement removed approximately $98M from the company's valuation, bringing the market cap to $5.25B at that time.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Dividend increase: 10% increase Annual dividend: $0.88 per share 2026 capex guidance: $2.65–$2.85 billion +5 more

8 metrics

Dividend increase 10% increase Upgrade to quarterly dividend policy in 2026 return framework

Annual dividend $0.88 per share New annual fixed dividend policy, paid quarterly in 2026

2026 capex guidance $2.65–$2.85 billion Full-year 2026 capital expenditures adjusted for accruals

2026 production 146–153 MMBoe Full-year 2026 total net production, ~54% oil

Asset sale proceeds $950 million Sale of certain South Texas assets expected to close in 2Q26

Borrowing base $5.0 billion Revolving credit facility borrowing base as of Jan 30, 2026 amendment

Total liquidity $2.9 billion Liquidity as of February 20, 2026

Short interest 9.38% Short interest as percent of float from risk context

Market Reality Check

Price: $23.13 Vol: Volume 6,343,561 is below...

low vol

$23.13 Last Close

Volume Volume 6,343,561 is below the 20-day average of 9,232,307, indicating relatively muted trading ahead of the outlook release. low

Technical Shares at $22.46 are trading 35.33% below the 52-week high of $34.73 and below the 200-day MA of $23.18, though still 28.71% above the 52-week low of $17.45.

Peers on Argus

SM fell 1.27% while close peers were mixed: GPOR -0.71%, NOG -1.09%, CIVI -4.86%...

SM fell 1.27% while close peers were mixed: GPOR -0.71%, NOG -1.09%, CIVI -4.86%, MUR -4.02%, but BSM rose 1.67%. The mixed peer performance suggests the move was more company-specific than a broad sector rotation.

Historical Context

5 past events · Latest: Feb 18 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Feb 18	Asset divestiture	Positive	+7.9%	Agreed to sell $950M of South Texas assets to fund deleveraging and returns.
Jan 30	Credit facility update	Positive	+3.2%	Raised borrowing base to $5.0B and commitments to $2.5B, extending maturity.
Jan 30	Civitas merger close	Positive	+3.2%	Closed all-stock merger with Civitas, creating a larger oil-focused producer.
Jan 27	Merger approval	Positive	+0.5%	Stockholders of SM and Civitas approved the all-stock merger with strong support.
Dec 16	Dividend declaration	Positive	-4.5%	Board declared a $0.20 quarterly cash dividend with specified record and pay dates.

Pattern Detected

Recent strategic and balance sheet actions (merger, asset sale, credit facility amendment) have generally been met with positive price reactions, while a prior dividend declaration saw a negative move, indicating occasional divergences on capital return headlines.

Recent Company History

Over the last few months, SM Energy has focused on scale, portfolio high-grading, and balance sheet strength. It closed an all-stock merger with Civitas on Jan 30, 2026, targeting $200–$300 million in synergies and at least $1.0 billion in divestitures. It then amended its credit facility, lifting the borrowing base to $5.0 billion and commitments to $2.5 billion. On Feb 18, 2026 it agreed to sell $950 million of South Texas assets to focus and delever. A prior $0.20 quarterly dividend on Dec 16, 2025 drew a negative reaction, framing today’s expanded return framework within a mixed history for dividend news.

Market Pulse Summary

This announcement outlines SM Energy’s 2026 roadmap, combining a 10% dividend increase to an annual ...

Analysis

This announcement outlines SM Energy’s 2026 roadmap, combining a 10% dividend increase to an annual $0.88 per share with disciplined $2.65–$2.85 billion capex and targeted production of 146–153 MMBoe. It builds on the Civitas merger and a planned $950 million South Texas divestiture to emphasize deleveraging and capital returns. Investors may watch progress on the $200–$300 million synergy range, execution against asset sale targets, and adherence to the free cash flow allocation between debt reduction and buybacks.

Key Terms

free cash flow, borrowing base, revolving credit facility, MMBoe, +2 more

6 terms

free cash flow financial

"Plan maximizes free cash flow and strengthens balance sheet"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

borrowing base financial

"lenders increased the borrowing base to $5.0 billion"

A borrowing base is the amount a lender will allow a company to borrow based on the value of assets the company offers as security, typically things like accounts receivable and inventory. It matters to investors because it sets a practical ceiling on short-term financing and influences a company’s liquidity and risk: if the borrowing base falls, the company may lose access to cash or be forced to sell assets, which can affect operations and share value.

revolving credit facility financial

"maturity date of the Company's revolving credit facility to January 30, 2031"

A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.

MMBoe technical

"Total net production volumes are expected to be 146–153 MMBoe"

mmboe stands for million barrels of oil equivalent, a unit that converts different forms of energy (natural gas, condensates and other hydrocarbons) into the energy value of one million barrels of crude oil. Investors use mmboe to compare production, reserves and project size across companies and assets—like using a single currency to add apples and oranges—so it helps gauge potential supply, future revenue and company scale.

MMBtu technical

"Key assumptions: $60 /Bbl WTI; $3.50 /MMBtu; $24 /Bbl NGL"

A MMBtu is a unit of energy equal to one million British thermal units, commonly used to measure natural gas and other fuel quantities for trading and contracts. For investors, it translates raw energy into a standardized price metric—think of it like gallons for gasoline—so changes in the MMBtu price affect producer revenues, utility costs, commodity derivatives, and the profitability of energy-related investments.

WTI technical

"Key assumptions: $60 /Bbl WTI; $3.50 /MMBtu; $24 /Bbl NGL"

West Texas Intermediate (WTI) is a widely used grade of crude oil and one of the main global benchmarks for oil prices, serving as a common yardstick that buyers and sellers use to set contracts. Investors watch WTI because its price influences energy company profits, fuel and transport costs, inflation expectations and broad market sentiment—similar to how a central market price for apples would shape decisions for growers, grocery stores and consumers.

AI-generated analysis. Not financial advice.

Plan maximizes free cash flow and strengthens balance sheet

Accelerates return of capital, including a 10% dividend increase, under an enhanced framework

DENVER, Feb. 25, 2026 /PRNewswire/ -- SM Energy Company (the "Company" or "SM Energy") (NYSE: SM) today issued its 2026 outlook, designed to maximize free cash flow through disciplined investments in its high-return development projects. It also provided a new stockholder return framework, which includes a 10% increase to its quarterly dividend policy. Accompanying slides can be found on the Company's website at sm-energy.com/investors/news-events/presentations. A conference call is scheduled for 8 a.m. MT/10 a.m. ET on February 26, 2026. Participation details can be found within this release.

"Our 2026 plan maximizes free cash flow to further strengthen our balance sheet and accelerate returns to stockholders under our upgraded return of capital framework," said Beth McDonald, President and CEO. "Our expanded, top-tier asset portfolio provides flexibility to allocate capital to our highest-return opportunities. As previously messaged, we're adjusting activity levels to improve capital efficiency and generate higher free cash flow. The strength of our asset portfolio, combined with reduced rig activity, 14% lower capital spend, and our recently announced $950 million asset sale, gives us the confidence to increase our fixed dividend by 10%, while prioritizing debt reduction and accelerating share buybacks."

2026 OUTLOOK

The Company's 2026 plan focuses on three strategic priorities:

• Integrate and Capture Synergies – Successfully integrate Civitas Resources, Inc. ("Civitas") and action $200–$300 million of identified and expected synergies, of which approximately $185 million has already been actioned to date.
• Maximize Free Cash Flow – Execute high-grade investments across an expanded asset portfolio to enhance capital efficiency and maximize inventory value, with a safety-first, efficiency-driven operational mindset.
• Strengthen Capital Structure – Bolster the balance sheet and accelerate returns to stockholders through an increased return of capital framework. Highlights include:
  • $1.0+ Billion Divestiture Target – The Company's recently announced agreement to sell $950 million of certain South Texas assets (expected to close in the second quarter) largely accomplishes this objective and accelerates SM Energy's path to lower leverage.
  • Enhanced Liquidity – As announced on January 30, 2026, the Company's lenders increased the borrowing base to $5.0 billion, increased commitments to $2.5 billion, and extended the maturity date of the Company's revolving credit facility to January 30, 2031. Total liquidity as of February 20, 2026, was $2.9 billion.
  • New Stockholder Return Framework – Balances free cash flow allocation between debt reduction and returning capital to stockholders.
  • Annual fixed dividend policy increased 10% to $0.88 per share paid quarterly, representing an expected yield of nearly 4% at current market prices. See below for information regarding declaration of the first quarter dividend.
  • Calculated on a quarterly basis, after dividend payments, the Company plans to allocate free cash flow as follows:
    • Approximately 20% to share repurchases. Approximately $488 million of availability remains under the Company's previously authorized $500 million repurchase program, which extends through December 31, 2027.
    • Approximately 80% to debt reduction.
    • The Company expects to increase the allocation to share repurchases as leverage and absolute debt levels decline.

2026 GUIDANCE

The Company's merger with Civitas closed on January 30, 2026; therefore, full-year 2026 guidance reflects 11 months of Civitas contribution. In addition, 2026 guidance reflects the conversion of certain acquired volumes to two-stream reporting and the planned divestiture of certain South Texas assets, expected to close in the second quarter of 2026, with an effective date of February 1, 2026.

Full-Year 2026 Highlights:

• Capital expenditures, adjusted for accruals,⁽¹⁾ are expected to be $2.65–$2.85 billion, with $2.3–$2.5 billion allocated to drilling, completion and well connection.
• Total net production volumes are expected to be 146–153 MMBoe (approximately 54% oil).
• Activity levels include an average of 11 operated rigs and 4.5 completion crews (down from 15 and seven, respectively, entering 2026, on a pro forma basis). The Company expects to drill approximately 245 net wells and turn-in-line approximately 295 net wells.
  • Permian – The Company plans to allocate approximately 45% of capital running an average of six rigs and two completion crews to turn-in-line approximately 150 net wells.
  • DJ – The Company plans to allocate approximately 20% of capital running an average of one rig and one completion crew to turn-in-line approximately 80 net wells.
  • South Texas – The Company plans to allocate approximately 15% of capital running an average of 1.5 rigs and one completion crew to turn-in-line approximately 35 net wells.
  • Uinta – The Company plans to allocate approximately 20% of capital running an average of 2.5 rigs and one completion crew to turn-in-line approximately 30 net wells.

Guidance		1Q26		FY26
Total production (MMBoe)		30.5–32.5		146–153
Oil mix		~ 52%		~ 54%
Capital expenditures adjusted for accruals,(1) net of expected synergies		$740 – $780 million		$2.65 – $2.85 billion (net of $50 million of expected synergies)
Drilling, completion and well connection				$2.3 – $2.5 billion
Facility, land and other				~ $280 million
Non-recurring integration costs				~ $70 million
Net wells drilled		~ 65		~ 245
Net wells completed		~ 65		~ 295

Notes: Key assumptions: $60/Bbl WTI; $3.50/MMBtu; $24/Bbl NGL and hedges currently in place. Guidance reflects 11 months of Civitas' impact due to timing of the merger closing, the conversion of certain acquired volumes to two-stream reporting, and the planned divestiture of certain South Texas assets in 2Q26. Refer to slide 9 in the accompany presentation for a detailed reconciliation of these impacts.

For additional 1Q26 and FY26 guidance and detail refer to the accompanying slides on the Company's website at sm-energy.com/investors/news-events/presentations.

BOARD DECLARES QUARTERLY CASH DIVIDEND

SM Energy's Board of Directors approved the quarterly cash dividend of $0.22 per share of common stock outstanding. The dividend will be paid on March 23, 2026, to stockholders of record as of the close of business on March 9, 2026.

CONFERENCE CALL AND WEBCAST

The Company plans to host a conference call and webcast at 8 a.m. MT/10 a.m. ET. on February 26, 2026. The call is accessible via:

• Webcast (available live and for replay) – on the Company's website at sm-energy.com/investors (replay accessible approximately 1 hour after the live call); or
  
  
• Telephone - join the live conference call by registering at our conference call registration webpage. Dial-in for domestic toll free/International is 877-407-6050 / +1 201-689-8022.

CONFERENCE PARTICIPATION

• March 3, 2026 – J.P. Morgan 2026 Global High Yield & Leveraged Finance Conference. President and Chief Executive Officer Beth McDonald and Executive Vice President and Chief Financial Officer Wade Pursell will present at 9 a.m. MT/11 a.m. ET and will participate in investor meetings at the event.
  
  
• March 4, 2026 – Citadel SMID Cap Generalist Investor Conference. President and Chief Executive Officer Beth McDonald and Executive Vice President and Chief Financial Officer Wade Pursell will participate in investor meetings at the event.
  
  
• March 23, 2026 – 38th Annual ROTH Conference. Executive Vice President and Chief Financial Officer Wade Pursell will participate in investor meetings at the event.

DISCLOSURES

FORWARD LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of securities laws. The words "action," "anticipate," "deliver," "demonstrate," "establish," "estimate," "expects," "goal," "generate," "guidance," "integrate," "maintain," "objectives," "optimize," "project," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include, among other things, the Company's 2026 strategic objectives, operational plan and priorities, including: plans to successfully integrate Civitas; expectations regarding increased scale; expectations to action and realize synergies, including the expected timing and magnitude; plans to maximize free cash flow and inventory value, increase liquidity, reduce debt, improve capital efficiency and strengthen the balance sheet and capital structure; plans to accelerate the Company's return of capital program through increased fixed quarterly dividends and share repurchases; the Company's expected annual dividend yield; the Company's expected allocation of free cash flow to its capital return program and future changes thereto; achievement of the Company's $1 billion divestiture target in 2026; statements regarding the announced divestiture of certain South Texas assets (the "Transaction"), including the estimated timing and final purchase price, the Company's expectation that the remaining conditions to the closing of the Transaction will be satisfied or waived, the Company's expectations regarding the application of the proceeds from the Transaction; expected future commodity prices; assumptions and projections for the first quarter and full year 2026 regarding guidance for production and oil mix as a percentage of total production, capital expenditures, the number of net wells to be drilled and turned in line, and the allocation of activity and capital expenditures among our operating areas and activities. These statements involve known and unknown risks, which may cause SM Energy's actual results to differ materially from results expressed or implied by the forward-looking statements. Future results may be impacted by the risks discussed in the Risk Factors section of SM Energy's most recent Annual Report on Form 10-K, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission, specifically the 2025 Form 10-K. The forward-looking statements contained herein speak as of the date of this release. Although SM Energy may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so, except as required by securities laws.

FOOTNOTE 1: Indicates a non-GAAP measure or metric. Please refer to the "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" section in accompanying presentation on the Company's website at sm-energy.com/investors/news-events/presentations, and the corresponding reconciliations to the most directly-comparable GAAP financial measures for additional information.

ABOUT THE COMPANY

SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs in the states of Colorado, New Mexico, Texas and Utah. SM Energy routinely posts important information about the Company on its website. For more information about SM Energy, please visit its website at www.sm-energy.com.

INVESTOR CONTACTS

Patrick Lytle, plytle@sm-energy.com, 303-864-2502

Meghan Dack, mdack@sm-energy.com, 303-837-2426

MEDIA CONTACT

media@sm-energy.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/sm-energy-provides-2026-outlook-302697526.html

SOURCE SM Energy Company

FAQ

What dividend change did SM (NYSE: SM) announce for 2026 and when is it payable?

SM increased its annual dividend by 10% to $0.88 per share, paid quarterly at $0.22. According to the company, the declared quarterly dividend will be paid March 23, 2026 to holders of record on March 9, 2026.

How much liquidity and credit capacity does SM (NYSE: SM) report after the January 30, 2026 update?

SM reports a borrowing base of $5.0 billion, commitments of $2.5 billion, and total liquidity of $2.9 billion. According to the company, lenders increased commitments and extended the revolver maturity to January 30, 2031.

What 2026 production and capital guidance did SM (NYSE: SM) provide for the full year?

SM guided full-year 2026 production of 146–153 MMBoe with ~54% oil and capex of $2.65–$2.85 billion. According to the company, guidance reflects 11 months of Civitas contribution and planned divestitures.

What is SM's planned allocation of free cash flow in 2026 under the new framework?

SM plans to allocate roughly 20% of post-dividend free cash flow to repurchases and 80% to debt reduction. According to the company, buyback allocation will increase as leverage and absolute debt decline.

How large is SM's announced South Texas asset sale and when is it expected to close?

SM announced an agreement to sell roughly $950 million of South Texas assets, expected to close in the second quarter of 2026. According to the company, the sale largely accomplishes its >$1.0 billion divestiture target.