SM Energy Hikes Dividend to $0.88, Sells $950M South Texas Assets
SM Energy’s 2026 plan allocates $2.65–$2.85 billion to capital expenditures, targets 146–153 MMBoe production, and boosts its quarterly dividend by 10% to $0.88 per share. The company will sell $950 million of South Texas assets, pursue $200–$300 million of synergies, and allocate 80% of free cash flow to debt reduction.
1. 2026 Strategic Plan
SM Energy’s 2026 plan allocates $2.65–$2.85 billion to capital expenditures, with $2.3–$2.5 billion for drilling, completion and well connections. The company expects total production of 146–153 MMBoe (about 54% oil) using an average of 11 operated rigs and 4.5 completion crews.
2. Enhanced Stockholder Returns
The fixed dividend rises 10% to $0.88 per share, implying a near 4% yield, under an enhanced return framework. After dividends, approximately 20% of free cash flow will fund up to $500 million in share repurchases ($488 million remaining) and 80% will go toward debt reduction.
3. Asset Sale and Balance Sheet Strength
SM Energy entered an agreement to sell $950 million of South Texas assets, expected to close in Q2 with an effective date of February 1. Its borrowing base was increased to $5 billion, commitments to $2.5 billion, and revolver maturity extended to January 2031, leaving $2.9 billion in total liquidity as of February 20.
4. 2025 Performance Highlights
In 2025 SM Energy reported record net production of 75.5 MMBoe (206.8 MBoed), $2.01 billion in operating cash flow and $2.26 billion in adjusted EBITDAX. Adjusted free cash flow rose 28% to $620 million, and net debt was reduced by $437 million despite lower oil prices.