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 SM Energy Reports 2015 Results and 2016 Operating Plan: Maintaining Balance Sheet Strength While Increasing Activity in the Permian
   Tuesday, February 23, 2016 5:30:01 PM ET

SM Energy Company ("SM Energy" or the "Company") (SM ) announces today fourth quarter and full year 2015 financial and operating results, year-end 2015 reserves and the Company’s 2016 operating plan. Highlights include:

-- Proved reserves: 471 MMBoe at year-end 2015, including +208 MMBoe additions and revisions driven by well performance and successful resource expansion in the Eagle Ford and Bakken/Three Forks

-- 2016 operating strategy: preserve the Company’s strong balance sheet and liquidity by optimizing capital efficiency; plan delivers projected total debt:adjusted EBITDAX of less than 4 times through 2017



-- 2015 financial results: adjusted net loss of $35.9 million, or $0.53 per diluted common share, and adjusted EBITDAX of $1,125 million (see GAAP reconciliation below)

-- Previously reported 2015 results: record production of 64.2 MMBoe and year-end liquidity of $1.3 billion with debt:adjusted EBITDAX of 2.3 times

President and Chief Executive Officer Jay Ottoson comments: "In 2015, we delivered record production with a capital program cut in half from 2014. We aggressively applied new drilling and completion techniques and tested expansions of our core programs that added more than 200 MMBoe of proved reserves, delivered significant growth in inventory, and furthered the upside potential of core assets.

"Our 2016 plan includes capital expenditures of approximately $705 million, a more than 45% cut from 2015. While a portion of our capital will be spent in the Eagle Ford in order to hold acreage, we will be completing a number of drilled and uncompleted wells in both the Eagle Ford and Bakken/Three Forks, and to the maximum extent possible we will be shifting our drilling and completion activity to our highly productive Midland Basin shale development. We will focus on continuing to improve the performance and economics of our portfolio and position the Company for significant value growth as product prices recover."

2016 OPERATING PLAN AND GUIDANCE

SM Energy’s operating plan demonstrates the quality and optionality of the Company’s asset base. Key assumptions in the Company’s 2016 operating plan include:

-- Total capital before acquisitions of approximately $705 million, weighted to 1H16

-- Williston - drill approximately 20 wells and complete approximately 50 wells (gross)

-- Permian - drill approximately 20 wells and complete approximately 24 wells (gross)

-- Eagle Ford - drill approximately 15 wells and complete approximately 40 (gross, operated)

-- Divest several non-core PDP assets by year-end for expected proceeds of at least $100 million

-- Average commodity price projections: 2016 - WTI oil $37.50, Henry Hub natural gas $2.30, NGLs $15.50; 2017 - WTI oil $45.00, Henry Hub natural gas $2.75, NGLs $18.00

The 2016 capital program is designed to optimize cash flow while keeping total expenditures below projected EBITDAX. The program is expected to result in total production for 2016 of 51-55 MMBoe. Production guidance reflects planned divestitures and reduced activity in dry natural gas programs, as well as a projected increase in the percentage of oil in the production mix in the second half of the year due to production growth from the Permian and Williston basins. Given the Company’s commodity price assumptions, and additional cost guidance below, the Company projects debt:adjusted EBITDAX at year-end 2016 of approximately 3.5 times and year-end 2017 of less than 4.0 times. The Company has 2016 hedges in place for: more than 30% of projected oil production at an average price of $88.01/Bbl WTI; more than 55% of projected natural gas production at an average price of $3.61/MMBtu; and approximately 60% of projected NGL production, specifically ethane and propane. Assuming similar production in 2017, the Company has hedges in place for more than 50% of natural gas production at $4.26 per MMBtu.

     2016 Guidance:             
          Capital                                                                           $705 million, before acquisitions
          Production                                                                      51-55 MMBoe
          LOE                                                                             $4.10-$4.50 per Boe, including ad valorem taxes
          Transportation                                                                  $6.10-$6.30 per Boe
          Production taxes                                                                 $1.00 per Boe or 5%
          G&A                                                                             $130-136 million, including approximately $21-23 million non-cash
                                                                                          compensation
          Exploration                                                                     $62-66 million, before dry hole expense, all of which is included in
                                                                                          capital expenditure guidance
          DD&A                                                                            $15.50-17.50 per Boe

The Company expects first quarter of 2016 production of approximately 13.1-13.5 MMBoe. Lower sequential production from the fourth quarter of 2015 is primarily the result of the Company’s plan to reduce activity in the Eagle Ford, where activity was slowed early in the fourth quarter of 2015, and increase activity in the Permian, where drilling was restarted in January. The transition from natural gas to oil results in lower volumes yet higher cash margins.

2015 FINANCIAL AND OPERATING RESULTS

PROVED RESERVES

Year-end 2015 proved reserves of 471 MMBoe are calculated in accordance with SEC pricing at $50.28 per barrel of oil NYMEX, $2.59 per MMBtu of natural gas at Henry Hub and $20.20 per barrel of NGLs at Mt. Belvieu. Year-end proved reserves were 55% liquids ( 31% oil and 24% NGLs) and 45% natural gas. 52% were proved developed.

During 2015, the Company added 161 MMBoe of reserves, predominantly in its operated Eagle Ford and Bakken/Three Forks program in Divide County, North Dakota. These reserve additions are a result of high-grading inventory through improved completion designs, better targeting of landing intervals, further delineation of the Bakken formation and further delineation of acreage acquired in late 2014 in both the Bakken and Three Forks intervals. The Company also added 47 MMBoe of proved reserves based on performance revisions, reflecting improved well performance in the Eagle Ford and Bakken/Three Forks programs primarily as a result of completion design enhancements, such as increased sand loading and plug-n-perf design, as well as reductions in operating costs. As a result of improved well performance and higher quality drilling locations, the Company revised its five-year plan to high-grade certain drilling in both the Eagle Ford and Bakken/Three Forks programs, which postponed the drilling of certain previously proved locations beyond five years. This resulted in moving 79 MMBoe of proved reserves predominantly to the probable category, to conform with SEC five-year rule; in effect, recent pilots and testing programs enabled reserve additions in our new development plans and deferred proved reserves from previous development plans beyond the 5-year development horizon. In addition, proved reserves were reduced by 117 MMBoe as a direct result of lower SEC pricing at year-end 2015. The table below provides a reconciliation of changes in the Company’s proved reserves from year-end 2014 to year-end 2015 (numbers are rounded):

    Proved reserves year-end 2014 (adjusted for asset sales)            522   MMBoe
                            Production (adjusted for assets sold)                                                                                   (63 )
                            Reserve additions through drilling                                                                                      161
                            Reserve additions through performance revisions                                                                          47
                            Reserve revisions to high-grade 5-year plan/5-year rule                                                                 (79 )
                            Reserve revisions due to commodity price changes                                                                       (117 )
                                                                                                                                                   ---- -
                                                                                                                                                    471   MMBoe
                       Year-end 2015 proved reserves

Production replacement (reserve additions and performance revisions/2015 total production) was 324%, making six years sequentially when this metric exceeded 250%. The cost to add reserves was $6.35 per Boe calculated as total capital expenditures/reserve additions and performance revisions, before price and proved undeveloped reserve vintage revisions (see below for reconciliation of total capital spend to costs incurred).

The pre-tax present value of proved reserves discounted at 10%, or PV-10, (see GAAP reconciliation below) was $1.8 billion. PV-10 is calculated using the SEC pricing described above. Including the present value of the Company’s oil, natural gas and NGL hedge positions, PV-10 is estimated at $2.3 billion.

CAPITAL EXPENDITURES

Full year 2015 total capital spend (see below for GAAP reconciliation) was $1.3 billion and was allocated 52% to the Eagle Ford, 28% to the Bakken/Three Forks and 20% to the Permian Basin, Powder River Basin and other. Total capital spend included development capital of $1,148 million, $17 million for leasehold, $70 million for infrastructure and $79 million for corporate costs. During 2015, the Company drilled 236 net wells and completed 161 net wells.

FINANCIAL RESULTS

Adjusted EBITDAX and adjusted net income are non-GAAP measures. Please reference the reconciliations to GAAP financial statements at the end of this release.

Adjusted EBITDAX was $216 million for the fourth quarter of 2015 and $1,125 million for the full year 2015. Adjusted EBITDAX declined 32% in 2015 compared with 2014, primarily as a result of a 48% decline in commodity prices, partially offset by a 16% increase in total production, a 14% decline in cash operating costs per Boe, a 19% decline in general and administrative costs per Boe and higher commodity hedge settlements.

Net loss was $340.3 million, or $5.01 per diluted common share, for the fourth quarter of 2015 and $447.7 million, or $6.61 per diluted common share, for the full year. The Company recorded impairments and abandonment charges on proved and unproved properties and equipment of $448.2 million ($284.6 million after-tax) and $596.7 million ($378.9 million after-tax) for the fourth quarter and full year, respectively. The net loss for 2015 compares with net income of $666.1 million, or $9.79 per diluted common share, in 2014. Lower net income is primarily a result of lower cash margins before derivative settlements described above due to the decline in commodity prices, a 3% increase in per unit depletion, depreciation and amortization and increased impairment charges recorded in 2015.

Adjusted net loss was $61.1 million, or $0.90 per diluted common share, for the fourth quarter of 2015 and $35.9 million, $0.53 per diluted common share, for the full year.

OPERATIONS UPDATE

Optimizing expenditures and driving efficiencies were key goals of the 2015 operating plan. Company-wide drilling costs declined 30%-40% from mid-2014, including drilling rig rate reductions and drilling times that improved 5%-15%, while completion costs dropped as much as 50%, including larger fracture stimulations, reflecting both service provider cost reductions and efficiency gains. The 2015 operating plan slowed activity in the second half of 2015, particularly in the fourth quarter. The Company reduced drilling activity to six operated rigs by year-end, postponed gas well completions in the Eagle Ford starting in October, postponed all completions in the Eagle Ford after November and slowed the pace of well completions in Bakken/Three Forks, while third party-operated Eagle Ford activity was also significantly reduced.

This change in activity supported the planned transition from natural gas and condensate development in the operated Eagle Ford to oil-focused activity in the Permian and Williston basins. The Company currently has 4 operated rigs and 3 completions crews.

Eagle Ford

During the fourth quarter of 2015, the Company drilled 29 net wells and completed 20 net wells (operated and third party-operated), ending the year with a DUC inventory of 76 net operated wells and 40 net third party-operated wells. The Company currently is operating 1 rig in the Eagle Ford East area.

The Company continues to evaluate stack and stagger down-spacing pilot test results in the Eagle Ford. Pilot Tests #1 through #5 are currently flowing back and some pilot wells are awaiting artificial lift installation. The Company plans to defer tests #6 and #9 as part of the 2016 re-allocation of capital to the Permian Basin.

Bakken/Three Forks

During the fourth quarter of 2015, the Company drilled 13 net wells and completed 11 net wells, ending the year with a DUC inventory of 40 net wells. The Company currently is operating 2 rigs in Divide County, North Dakota.

Permian Basin

The Company re-initiated drilling activity on its Sweetie Peck asset in early January 2016. The Company currently is operating 1 rig and expects to redeploy a second rig from the Eagle Ford to the Permian later in the year. The 2016 drilling program targets the Wolfcamp B and Lower Spraberry intervals. The Sweetie Peck play is located in a prime position in Upton and Midland counties and includes approximately 15,200 net contiguous acres.

UPCOMING EVENTS

EARNINGS WEBCAST AND CALL

As previously announced, SM Energy will host a webcast and conference call to discuss the 2015 results and the 2016 operating plan at 8:00 a.m. Mountain time tomorrow, February 24, 2016. Please join us via webcast at www.SM-Energy.com or by telephone 877-303-1292 (toll free) or 315-625-3086 (international) with passcode 46889560. The webcast and call will also be available for replay. The dial-in replay number is 855-859-2056 (toll free) or 404-537-3406 (international) with passcode 46889560 and is available through March 9, 2016.

A presentation will be posted to the Company’s website to accompany this call at www.SM-Energy.com.

UPCOMING CONFERENCE PARTICIPATION

-- February 25, 2016 - 21st Annual Credit Suisse Energy Summit. Executive Vice President and Chief Financial Officer Wade Pursell will present at 7:25 a.m. Mountain time. This event will be webcast.

-- March 3, 2016 - Simmons Sixteenth Annual Energy Conference. President and Chief Executive Officer Jay Ottoson will meet with investors in a 1x1 setting.

-- March 9, 2016 - Raymond James 37th Annual Institutional Investors Conference. Executive Vice President and Chief Financial Officer Wade Pursell will present at 11:35 a.m. Eastern time. This event will be webcast.

The investor presentation for these events will be posted to the Company’s website at www.SM-Energy.com on February 24, 2016 after market close.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of securities laws, including forecasts, projections and 2016 guidance. The words "guidance," "anticipate," "assume," "believe," "budget," "estimate," "expect," "forecast," "going forward," "intend," "plan," "project," "will" and similar expressions are intended to identify forward-looking statements. 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. These risks include factors such as the availability, proximity and capacity of gathering, processing and transportation facilities; the volatility and level of oil, natural gas, and natural gas liquids prices, including any impact on the Company’s asset carrying values or reserves arising from price declines; uncertainties inherent in projecting future rates of production or other results from drilling and completion activities; the imprecise nature of estimating oil and gas reserves; uncertainties inherent in projecting future drilling and completion activities, costs or results, including from pilot tests; the uncertainty of negotiations to result in an agreement or a completed transaction; the uncertain nature of divestiture, joint venture, farm down or similar efforts and the ability to complete any such transactions; the uncertain nature of expected benefits from the actual or expected divestiture, joint venture, farm down or similar efforts; the availability of additional economically attractive exploration, development, and acquisition opportunities for future growth and any necessary financings; unexpected drilling conditions and results; unsuccessful exploration and development drilling results; the availability of drilling, completion, and operating equipment and services; the risks associated with the Company’s commodity price risk management strategy; uncertainty regarding the ultimate impact of potentially dilutive securities; and other such matters discussed in the "Risk Factors" section of SM Energy’s 2015 Annual Report on Form 10-K upon filing, 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. The forward-looking statements contained herein speak as of the date of this announcement. 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.

INFORMATION ABOUT PROVED RESERVES

This press release contains references to certain items pertaining to the process used to estimate the Company’s proved reserves and their PV-10, which is equal to the standardized measure of discounted future net cash flows from proved reserves on the applicable date, before deducting future income taxes, discounted at 10 percent. SM Energy believes that the presentation of pre-tax PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to the Company’s proved reserves prior to taking into account future corporate income taxes and the Company’s current tax structure. The Company further believes investors and creditors use pre-tax PV-10 as a basis for comparison of the relative size and value of the Company’s proved reserves to other peer companies. SM Energy’s pre-tax PV-10 for estimated proved reserves as of December 31, 2015, may be reconciled to its standardized measure of discounted future net cash flows as of December 31, 2015, by reducing the Company’s pre-tax PV-10 by the discounted future income taxes associated with such reserves. A reconciliation of these adjustments is provided below.

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 natural gas liquids in onshore North America. 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.

 
                                                                                                                                                                        SM ENERGY COMPANY
                                                                                                                                                                      FINANCIAL HIGHLIGHTS
                                                                                                                                                                        December 31, 2015
                                                                                                                                                                                                     
                                                                                                                                      For the Three Months Ended                                                                                                                     For the Twelve Months Ended
                                                                                                                                             December 31,                                                                                                                                   December 31,
                                                                                       ---------------------------------------------------------------------------------------------------------------                               -----------------------------------------------------------------------------------------------------------------
Production Data:                                                                                    2015                                               2014                                        Percent                                        2015                                               2014                                         Percent
                                                                                                                                                                                                   Change                                                                                                                                         Change
--------------------------------------------                                           ---------------------------                        ---------------------------                        -----------------                       ---------------------------                        ---------------------------                        -------------------
                                                                                                                                                                                                                                                                                                                                            
Average realized sales price, before the
effects of derivative settlements:
  Oil (per Bbl)                                                                         $ 34.93                                            $ 62.60                                                      (44 )%                        $ 41.49                                            $ 80.97                                                  (49 )%
  Gas (per Mcf)                                                                            2.19                                               3.87                                                      (43 )%                           2.57                                               4.58                                                  (44 )%
  NGL (per Bbl)                                                                           14.99                           25.97                                   (42 )%                          15.92                           33.34                               (52 )%
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
  Equivalent (per BOE)                                                                  $ 20.03                                            $ 36.27                                                      (45 )%                        $ 23.36                                            $ 45.01                                                  (48 )%
                                                                                                                                                                                                                                                                                                                                            
Average realized sales price, including
the effects of derivative settlements:
  Oil (per Bbl)                                                                         $ 55.81                                            $ 73.55                                                      (24 )%                        $ 60.34                                            $ 82.68                                                  (27 )%
  Gas (per Mcf)                                                                            2.96                                               3.91                                                      (24 )%                           3.28                                               4.40                                                  (25 )%
  NGL (per Bbl)                                                                           15.60                           30.71                                   (49 )%                          17.61                           34.18                               (48 )%
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
  Equivalent (BOE)                                                                      $ 28.40                                            $ 40.94                                                      (31 )%                        $ 31.34                                            $ 45.23                                                  (31 )%
                                                                                                                                                                                                                                                                                                                                            
Production:
  Oil (MMBbls)                                                                              4.4                                                5.1                                                      (14 )%                           19.2                                               16.7                                                   15 %
  Gas (Bcf)                                                                                40.2                                               43.9                                                       (8 )%                          173.6                                              152.9                                                   14 %
  NGL (MMBbls)                                                                              3.8                             3.8                                     2 %                            16.1                            13.0                                24 %
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
  MMBOE (6:1)                                                                              14.9                                               16.2                                                       (8 )%                           64.2                                               55.1                                                   16 %
                                                                                                                                                                                                                                                                                                                                            
Average daily production:
  Oil (MBbls/d)                                                                            47.7                                               55.4                                                      (14 )%                           52.7                                               45.6                                                   15 %
  Gas (MMcf/d)                                                                            436.6                                              476.9                                                       (8 )%                          475.7                                              419.0                                                   14 %
  NGL (MBbls/d)                                                                            41.6                            40.9                                     2 %                            44.0                            35.6                                24 %
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
  MBOE/d (6:1)                                                                            162.1                                              175.8                                                       (8 )%                          175.9                                              151.1                                                   16 %
                                                                                                                                                                                                                                                                                                                                            
Per BOE Data:
                                                                                        $ 20.03                                            $ 36.27                                                      (45 )%                        $ 23.36                                            $ 45.01                                                  (48 )%
  Realized price before the effects of
  derivative settlements
  Lease operating expense                                                                  3.85                                               4.28                                                      (10 )%                           3.73                                               4.28                                                  (13 )%
  Transportation costs                                                                     6.10                                               5.77                                                        6 %                            6.02                                               6.11                                                   (1 )%
  Production taxes                                                                         1.03                                               1.70                                                      (39 )%                           1.13                                               2.13                                                  (47 )%
  Ad valorem tax expense                                                                   0.38                                               0.38                                           -- %                            0.39                                               0.46                                                  (15 )%
  General and administrative                                                               2.26                            3.23                                   (30 )%                           2.46                            3.03                               (19 )%
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
                                                                                        $  6.41                                            $ 20.91                                                      (69 )%                        $  9.63                                            $ 29.00                                                  (67 )%
  Operating profit, before the effects of
  derivative settlements
  Derivative settlement gain                                                               8.37                            4.67                                    79 %                            7.98                            0.22                             3,527 %
                                                                                       -----------------------------                      -----------------------------                      -------------- ---                      -----------------------------                      -----------------------------                      ---------- ---------
                                                                                        $ 14.78                         $ 25.58                                   (42 )%                        $ 17.61                         $ 29.22                               (40 )%
  Operating profit, including the effects of
  derivative
  settlements
                                                                                       == ===== ====================                      == ===== ====================                      ============== ===                      == ===== ====================                      == ===== ====================                      ========== =========
                                                                                                                                                                                                                                                                                                                                            
                                                                                        $ 16.10                                            $ 13.56                                                       19 %                         $ 14.34                                            $ 13.92                                                    3 %
  Depletion, depreciation, amortization, and
  asset retirement
  obligation liability accretion
                                                                                                                                                        
                                                                                                                                                 SM ENERGY COMPANY
                                                                                                                                         FINANCIAL HIGHLIGHTS (UNAUDITED)
                                                                                                                                                 December 31, 2015
                                                                                                                                                                                                                                    
Consolidated Statements of Operations                                                                                                                                                           
--------------------------------------------------                                           -----------------------------------------------------------------------------------------                            -----------------------------------------------------------------------------------------
(in thousands, except share amounts)                                                                                            For the Three Months Ended                                                                                           For the Twelve Months Ended
                                                                                                                                       December 31,                                                                                                         December 31,
                                                                                             -----------------------------------------------------------------------------------------                            -----------------------------------------------------------------------------------------
                                                                                                              2015                                                      2014                                                      2015                                                      2014
                                                                                             --------------------------------------                     -------------------------------------                     ------------------------------------                     ---------------------------------------
Operating revenues:
  Oil, gas, and NGL production revenue                                                             $  298,719                                                 $ 586,567                                              $ 1,499,905                                                 $ 2,481,544
  Net gain on divestiture activity                                                                      4,534                                                       594                                                   43,031                                                         646
  Marketed gas system revenue                                                                               4                                                     7,200                                                    9,485                                                      24,897
  Other operating revenues                                                                                477                                  1,460                                 4,544                                   15,220  
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
    Total operating revenues and other income                                                         303,734                                595,821                             1,556,965                                2,522,307  
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
                                                                                                                                                                                                                                                                            
Operating expenses:
  Oil, gas, and NGL production expense                                                                169,229                                                   196,181                                                  723,633                                                     715,878
                                                                                                      240,025                                                   219,277                                                  921,009                                                     767,532
  Depletion, depreciation, amortization, and asset
  retirement
  obligation liability accretion
  Exploration                                                                                          37,942                                                    49,696                                                  120,569                                                     129,857
  Impairment of proved properties                                                                     344,249                                                    84,480                                                  468,679                                                      84,480
                                                                                                       54,597                                                    57,151                                                   78,643                                                      75,638
  Abandonment and impairment of unproved
  properties
  Impairment of other property and equipment                                                           49,369                                            --                                                   49,369                                              --
  General and administrative                                                                           33,642                                                    52,241                                                  157,668                                                     167,103
  Change in Net Profits Plan liability                                                                 (6,351 )                                                 (14,569 )                                                (19,525 )                                                   (29,849 )
  Derivative gain                                                                                    (123,340 )                                                (616,734 )                                               (408,831 )                                                  (583,264 )
  Marketed gas system expense                                                                              (7 )                                                   6,759                                                   13,922                                                      24,460
  Other operating expenses                                                                              9,952                                  2,854                                30,612                                    4,658  
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
    Total operating expenses                                                                          809,307                                 37,336                             2,135,748                                1,356,493  
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
                                                                                                                                                                                                                                                                            
Income (loss) from operations                                                                        (505,573 )                                                 558,485                                                 (578,783 )                                                 1,165,814
                                                                                                                                                                                                                                                                            
Non-operating income (expense):
  Other, net                                                                                               26                                                       (68 )                                                    649                                                      (2,561 )
  Interest expense                                                                                    (31,566 )                                                 (27,703 )                                               (128,149 )                                                   (98,554 )
  Loss on extinguishment of debt                                                               --                         --                               (16,578 )                                            --  
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
                                                                                                                                                                                                                                                                            
Income (loss) before income taxes                                                                    (537,113 )                                                 530,714                                                 (722,861 )                                                 1,064,699
Income tax (expense) benefit                                                                          196,855                               (198,988 )                                                275,151                                 (398,648 )
                                                                                             -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
                                                                                                                                                                                                                                                                            
Net income (loss)                                                                                  $ (340,258 )                                               $ 331,726                           $  (447,710 )                                               $   666,051  
                                                                                             ======= ======== ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
                                                                                                                                                                                                                                                                            
Basic weighted-average common shares outstanding                                                       67,976                                 67,410                                67,723                                   67,230  
                                                                                             =====================================                      ====================================                      ===================================                      ======================================
                                                                                                                                                                                                                                                                            
Diluted weighted-average common shares outstanding                                                     67,976                                 67,535                                67,723                                   68,044  
                                                                                             =====================================                      ====================================                      ===================================                      ======================================
                                                                                                                                                                                                                                                                            
Basic net income (loss) per common share                                                           $    (5.01 )                                               $    4.92                           $     (6.61 )                                               $      9.91  
                                                                                             ======= ======== ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
                                                                                                                                                                                                                                                                            
Diluted net income (loss) per common share                                                         $    (5.01 )                                               $    4.91                           $     (6.61 )                                               $      9.79  
                                                                                             ======= ======== ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
                                                                       
                                                                                                 SM ENERGY COMPANY
                                                                                         FINANCIAL HIGHLIGHTS (UNAUDITED)
                                                                                                 December 31, 2015
Consolidated Balance Sheets                                                                                                                             
---------------------------------------------------------------------
(in thousands, except share amounts)                                                   December 31,                                                December 31,
                                ASSETS                                                                                           2015                                                        2014
                                                                                                                ---------------------------------------                     ---------------------------------------
                                                                                                                                                                             
Current assets:
  Cash and cash equivalents                                                                                           $        18                                                 $       120
  Accounts receivable                                                                                                     134,124                                                     322,630
  Derivative asset                                                                                                        367,710                                                     402,668
  Prepaid expenses and other                                                                                               17,137                                   19,625  
                                                                                                                --------------------------------------                      --------------------------------------
    Total current assets                                                                                                  518,989                                  745,043  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Property and equipment (successful efforts method):
  Proved oil and gas properties                                                                                         7,606,405                                                   7,348,436
  Less - accumulated depletion, depreciation, and amortization                                                         (3,481,836 )                                                (3,233,012 )
  Unproved oil and gas properties                                                                                         284,538                                                     532,498
  Wells in progress                                                                                                       387,432                                                     503,734
                                                                                                                              641                                                      17,891
  Oil and gas properties held for sale, net of accumulated
  depletion, depreciation and
  amortization of $0 and $22,482,
  respectively
                                                                                                                          153,100                                  334,356  
  Other property and equipment, net of accumulated depreciation of
  $32,956 and
  $37,079, respectively
                                                                                                                ----------------  --------------------                      ----------------  --------------------
    Total property and equipment, net                                                                                   4,950,280                                5,503,903  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Noncurrent assets:
  Derivative asset                                                                                                        120,701                                                     189,540
  Other noncurrent assets                                                                                                  31,673                                   44,659  
                                                                                                                --------------------------------------                      --------------------------------------
    Total other noncurrent assets                                                                                         152,374                                  234,199  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Total Assets                                                                                                          $ 5,621,643                              $ 6,483,145  
                                                                                                                ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                             
                 LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
  Accounts payable and accrued expenses                                                                               $   302,517                                                 $   640,684
  Derivative liability                                                                                                          8                                              --
  Deferred tax liability                                                                                           --                                                     142,976
  Other current liabilities                                                                                        --                                    1,000  
                                                                                                                --------------------------------------                      --------------------------------------
    Total current liabilities                                                                                             302,525                                  784,660  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Noncurrent liabilities:
  Revolving credit facility                                                                                               202,000                                                     166,000
  Senior Notes, net of unamortized deferred financing costs                                                             2,315,970                                                   2,166,445
  Asset retirement obligation                                                                                             137,525                                                     120,867
  Net Profits Plan liability                                                                                                7,611                                                      27,136
  Deferred income taxes                                                                                                   758,279                                                     891,681
  Derivative liability                                                                                             --                                                          70
  Other noncurrent liabilities                                                                                             45,332                                   39,631  
                                                                                                                --------------------------------------                      --------------------------------------
    Total noncurrent liabilities                                                                                        3,466,717                                3,411,830  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Stockholders’ equity:
                                                                                                                              681                                                         675
  Common stock, $0.01 par value - authorized: 200,000,000 shares;
  issued and
  outstanding: 68,075,700 and 67,463,060 shares,
  respectively
  Additional paid-in capital                                                                                              305,607                                                     283,295
  Retained earnings                                                                                                     1,559,515                                                   2,013,997
  Accumulated other comprehensive loss                                                                                    (13,402 )                                                   (11,312 )
                                                                                                                --------------------------------------                      --------------------------------------
    Total stockholders’ equity                                                               1,852,401                                2,286,655  
                                                                                                                --------------------------------------                      --------------------------------------
                                                                                                                                                                             
Total Liabilities and Stockholders’ Equity                                                 $ 5,621,643                              $ 6,483,145  
                                                                                                                ======= ========= ====================                      ======= ========= ====================
 
                                                                                                                                                     SM ENERGY COMPANY
                                                                                                                                             FINANCIAL HIGHLIGHTS (UNAUDITED)
                                                                                                                                                     December 31, 2015
                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                       
Consolidated Statements of Cash Flows
-----------------------------------------------------------
(in thousands)                                                                                        For the Three Months                                                                                                 For the Twelve Months
                                                                                                                                             Ended December 31,                                                                                                   Ended December 31,
                                                                                                      ------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------
                                                                                                                       2015                                                      2014                                                       2015                                                      2014
                                                                                                      --------------------------------------                     -------------------------------------                     --------------------------------------                     -------------------------------------
Cash flows from operating activities:
Net income (loss)                                                                                           $ (340,258 )                                               $ 331,726                                                 $ (447,710 )                                               $ 666,051
Adjustments to reconcile net income (loss) to net
cash
provided by operating activities:
  Net gain on divestiture activity                                                                              (4,534 )                                                    (594 )                                                  (43,031 )                                                    (646 )
                                                                                                               240,025                                                   219,277                                                    921,009                                                   767,532
  Depletion, depreciation, amortization, and asset
  retirement
  obligation liability accretion
  Exploratory dry hole expense                                                                                  13,752                                                    21,583                                                     36,612                                                    44,427
  Impairment of proved properties                                                                              344,249                                                    84,480                                                    468,679                                                    84,480
  Abandonment and impairment of unproved properties                                                             54,597                                                    57,151                                                     78,643                                                    75,638
  Impairment of other property and equipment                                                                    49,369                                            --                                                     49,369                                            --
  Stock-based compensation expense                                                                               6,975                                                     8,126                                                     27,467                                                    32,694
  Change in Net Profits Plan liability                                                                          (6,351 )                                                 (14,569 )                                                  (19,525 )                                                 (29,849 )
  Derivative gain                                                                                             (123,340 )                                                (616,734 )                                                 (408,831 )                                                (583,264 )
  Derivative settlement gain                                                                                   124,847                                                    75,509                                                    512,566                                                    12,615
  Amortization of deferred financing costs                                                                       1,907                                                     1,713                                                      7,710                                                     6,146
  Non-cash loss on extinguishment of debt                                                               --                                            --                                                      4,123                                            --
  Deferred income taxes                                                                                       (196,334 )                                                 199,600                                                   (276,722 )                                                 397,780
  Plugging and abandonment                                                                                      (1,956 )                                                  (2,603 )                                                   (7,496 )                                                  (8,796 )
  Other, net                                                                                                    10,091                                                     4,003                                                     13,761                                                     1,069
Changes in current assets and liabilities:
  Accounts receivable                                                                                           34,864                                                    14,705                                                    140,200                                                    24,088
  Prepaid expenses and other                                                                                     1,976                                                    (2,056 )                                                    2,563                                                    (1,822 )
  Accounts payable and accrued expenses                                                                        (12,020 )                                                  36,270                                                    (86,267 )                                                   9,466
  Accrued derivative settlements                                                                                (4,356 )                                                 (36,134 )                                                    5,232                                (41,034 )
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
Net cash provided by operating activities                                                                      193,503                                381,453                                 978,352                              1,456,575  
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                       
Cash flows from investing activities:
  Net proceeds from the sale of oil and gas properties                                                          22,835                                                     1,990                                                    357,938                                                    43,858
  Capital expenditures                                                                                        (231,737 )                                                (656,936 )                                               (1,493,608 )                                              (1,974,798 )
  Acquisition of proved and unproved oil and gas properties                                                       (896 )                                                 (85,276 )                                                   (7,984 )                                                (544,553 )
  Other, net                                                                                                         5                                 (2,542 )                                                     (985 )                                                  (3,256 )
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
Net cash used in investing activities                                                                         (209,793 )                                                (742,764 )                                               (1,144,639 )                                              (2,478,749 )
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                       
Cash flows from financing activities:
  Proceeds from credit facility                                                                                268,000                                                   749,000                                                  1,872,500                                                 1,285,500
  Repayment of credit facility                                                                                (250,000 )                                                (973,000 )                                               (1,836,500 )                                              (1,119,500 )
  Debt issuance costs related to credit facility                                                        --                                                    (3,388 )                                           --                                                    (3,388 )
  Net proceeds from Senior Notes                                                                        --                                                   589,991                                                    490,951                                                   589,991
  Repayment of Senior Notes                                                                             --                                            --                                                   (350,000 )                                          --
  Proceeds from sale of common stock                                                                             1,687                                                     1,979                                                      4,844                                                     4,877
  Dividends paid                                                                                                (3,399 )                                                  (3,370 )                                                   (6,772 )                                                  (6,723 )
  Net share settlement from issuance of stock awards                                                              (176 )                                                     (48 )                                                   (8,678 )                                                 (10,624 )
  Other, net                                                                                                        (1 )                                                      (2 )                                                     (160 )                                                     (87 )
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
Net cash provided by financing activities                                                                       16,111                                361,162                                 166,185                                740,046  
                                                                                                      ---------------  --------------------                      --------------  --------------------                      ---------------  --------------------                      --------------  --------------------
                                                                                                                                                                                                                                                                                       
  Net change in cash and cash equivalents                                                                         (179 )                                                    (149 )                                                     (102 )                                                (282,128 )
  Cash and cash equivalents at beginning of period                                                                 197                                    269                                     120                                282,248  
                                                                                                      -------------------------------------                      ------------------------------------                      -------------------------------------                      ------------------------------------
Cash and cash equivalents at end of period                                                                  $       18                              $     120                              $       18                              $     120  
                                                                                                      ======= ======== ====================                      ======= ======= ====================                      ======= ======== ====================                      ======= ======= ====================
                                                                                                                                                                                                                                      
                                                                                                                                         SM ENERGY COMPANY
                                                                                                                                       FINANCIAL HIGHLIGHTS
                                                                                                                                         December 31, 2015
                                                                                                                                                                           
Adjusted Net Income (Loss)
----------------------------------------------------
(in thousands, except per share data)
                                                                                                                                                                                                                                                                               
Reconciliation of net income (loss) (GAAP)                                                                     For the Three Months                                                                                                   For the Twelve Months
to adjusted net income (loss) (Non-GAAP):                                                                       Ended December 31,                                                                                                     Ended December 31,
                                                                          -----------------------------------------------------------------------------------------------                     -----------------------------------------------------------------------------------------------------
                                                                                          2015                                                      2014                                                      2015                                               2014          
                                                                          -------------------------------------                     -------------------------------------                     -------------------------------------                     ------------------------------------------
                                                                                                                                                                                                                                                                               
Actual net income (loss) (GAAP)                                                  (340,258 )                                               $ 331,726                                                $ (447,710 )                                                  $    666,051
                                                                                                                                                                                                                                                                               
Adjustments net of tax: (1)
  Change in Net Profits Plan liability                                             (4,033 )                                                  (9,164 )                                                 (12,398 )                                                       (18,775 )
  Derivative gain                                                                 (78,321 )                                                (387,926 )                                                (259,608 )                                                      (366,873 )
  Derivative settlement gain                                                       79,278                                                    47,495                                                   325,479                                                           7,935
  Net gain on divestiture activity                                                 (2,879 )                                                    (374 )                                                 (27,325 )                                                          (406 )
  Impairment of proved properties                                                 218,598                                                    53,138                                                   297,611                                                          53,138
  Abandonment and impairment of unproved properties                                34,669                                                    35,948                                                    49,938                                                          47,576
  Impairment of other property and equipment                                       31,349                                            --                                                    31,349                                                  --
  Loss on extinguishment of debt                                           --                                            --                                                    10,527                                                  --
                                                                           --                                            --                                                    (9,734 )                                                        (3,536 )
  Unwinding of derivatives contracts related to Mid-
  continent
  Other (3)                                                                           540                                                        68                                                     5,963                                                          (5,032 )
                                                                                                                                                                                                   
                                                                          -------------------------------------                     -------------------------------------                     -------------------------------------                     ------------------------------------------
Adjusted net income (loss) (Non-GAAP) (2)                                       $ (61,057 )                                               $  70,911                             $  (35,908 )                                                  $    380,078  
                                                                          ======= ======= ====================                      ======= ======= ====================                      ====== ======== ====================                      ========== ========== ====================
                                                                                                                                                                                                                                                                               
Adjusted net income (loss) per diluted common share                             $   (0.90 )                                               $    1.05                             $    (0.53 )                                                  $       5.59  
                                                                          ======= ======= ====================                      ======= ======= ====================                      ====== ======== ====================                      ========== ========== ====================
                                                                                                                                                                                                   
                                                                          =====================================                     =====================================                     =====================================                     ==========================================
  Diluted weighted-average shares outstanding                                      67,976                                 67,535                                 67,723                                       68,044  
                                                                          ====================================                      ====================================                      ====================================                      ==========================================

(1) For the three and twelve-month periods ended December 31, 2015, adjustments are shown net of tax and are calculated using a tax rate of 36.5%, which approximates the Company’s statutory tax rate adjusted for ordinary permanent differences. For the three and twelve-month periods ended December 31, 2014, adjustments are shown net of tax and are calculated using a tax rate of 37.1%, which approximates the Company’s statutory tax rate adjusted for ordinary permanent differences.

(2) Adjusted net income (loss) excludes certain items that the Company believes affect the comparability of operating results. Items excluded generally are non-recurring items or are items whose timing and/or amount cannot be reasonably estimated. These items include non-cash and other adjustments, such as the change in the Net Profits Plan liability, derivative gain, net of derivative settlement gains, impairments, and net gain on divestiture activity. The non-GAAP measure of adjusted net income (loss) is presented because management believes it provides useful additional information to investors for analysis of SM Energy’s fundamental business on a recurring basis. In addition, management believes that adjusted net income (loss) is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted net income (loss) should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, cash provided by operating activities, or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income (loss) excludes some, but not all, items that affect net income (loss) and may vary among companies, the adjusted net income (loss) amounts presented may not be comparable to similarly titled measures of other companies.

(3) For the three and twelve-month periods ended December 31, 2015, the adjustment is related to the impairment of materials inventory and an estimated adjustment relating to claims on royalties on certain Federal and Indian leases, which are included in other operating expenses on the Company’s condensed consolidated statements of operations. For the three and twelve-month periods ended December 31, 2014, adjustments include items related to settlements from the previously disclosed litigation against Endeavour Operating Corporation. These items are included as a portion of other operating revenues and non-operating income (expense), other, net, on the Company’s consolidated statement of operations.

 
                                                                                                                                        SM ENERGY COMPANY
                                                                                                                                      FINANCIAL HIGHLIGHTS
                                                                                                                                        December 31, 2015
                                                                                                                                                                             
Adjusted EBITDAX (4)
------------------------------------------------------
(in thousands)
                                                                                                                                                                                                                                                           
Reconciliation of net income (loss) (GAAP) to adjusted                                                            For the Three Months                                                                                                 For the Twelve Months
EBITDAX
(non-GAAP) to net cash provided by
operating activities
(GAAP):
                                                                                                                   Ended December 31,                                                                                                   Ended December 31,
                                                                            ------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------
                                                                                             2015                                                      2014                                                      2015                                                      2014
                                                                            --------------------------------------                     -------------------------------------                     ------------------------------------                     ---------------------------------------
Net income (loss) (GAAP)                                                          $ (340,258 )                                               $ 331,726                                              $  (447,710 )                                               $   666,051
  Interest expense                                                                    31,566                                                    27,703                                                  128,149                                                      98,554
  Other non-operating (income) expense, net                                              (26 )                                                      68                                                     (649 )                                                     2,561
  Income tax expense (benefit)                                                      (196,855 )                                                 198,988                                                 (275,151 )                                                   398,648
                                                                                     240,025                                                   219,277                                                  921,009                                                     767,532
  Depletion, depreciation, amortization, and asset
  retirement
  obligation liability accretion
  Exploration (5)                                                                     35,860                                                    47,881                                                  113,158                                                     122,577
  Impairment of proved properties                                                    344,249                                                    84,480                                                  468,679                                                      84,480
  Abandonment and impairment of unproved properties                                   54,597                                                    57,151                                                   78,643                                                      75,638
  Impairment of other property and equipment                                          49,369                                            --                                                   49,369                                              --
  Stock-based compensation expense                                                     6,975                                                     8,126                                                   27,467                                                      32,694
  Derivative gain                                                                   (123,340 )                                                (616,734 )                                               (408,831 )                                                  (583,264 )
  Derivative settlement gain (6)                                                     124,847                                                    75,509                                                  512,566                                                      12,615
  Change in Net Profits Plan liability                                                (6,351 )                                                 (14,569 )                                                (19,525 )                                                   (29,849 )
  Net gain on divestiture activity                                                    (4,534 )                                                    (594 )                                                (43,031 )                                                      (646 )
  Loss on extinguishment of debt                                              --                                            --                                                   16,578                                              --
  Other, net                                                                             153                         --                                 4,054                           --  
                                                                            -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
Adjusted EBITDAX (Non-GAAP)                                                       $  216,277                              $ 419,012                           $ 1,124,775                              $ 1,647,591  
                                                                            ------- -------- --------------------                      ------- ------- --------------------                      ---- --------- --------------------                      ------- --------- --------------------
  Interest expense                                                                   (31,566 )                                                 (27,703 )                                               (128,149 )                                                   (98,554 )
  Other non-operating income (expense), net                                               26                                                       (68 )                                                    649                                                      (2,561 )
  Income tax (expense) benefit                                                       196,855                                                  (198,988 )                                                275,151                                                    (398,648 )
  Exploration (5)                                                                    (35,860 )                                                 (47,881 )                                               (113,158 )                                                  (122,577 )
  Exploratory dry hole expense                                                        13,752                                                    21,583                                                   36,612                                                      44,427
  Amortization of deferred financing costs                                             1,907                                                     1,713                                                    7,710                                                       6,146
  Deferred income taxes                                                             (196,334 )                                                 199,600                                                 (276,722 )                                                   397,780
  Plugging and abandonment                                                            (1,956 )                                                  (2,603 )                                                 (7,496 )                                                    (8,796 )
  Loss on extinguishment of debt                                              --                                            --                                                  (12,455 )                                            --
  Other, net                                                                           9,938                                                     4,003                                                    9,707                                                       1,069
  Changes in current assets and liabilities                                           20,464                                 12,785                                61,728                                   (9,302 )
                                                                            -------------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
Net cash provided by operating activities (GAAP)                                  $  193,503                              $ 381,453                           $   978,352                              $ 1,456,575  
                                                                            ======= ======== ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================

(4) Adjusted EBITDAX represents net income (loss) before interest expense, other non-operating income or expense, income taxes, depreciation, depletion, amortization, and accretion expense, exploration expense, impairments, non-cash stock-based compensation expense, derivative gains and losses net of settlements, change in the Net Profits Plan liability, and gains and losses on divestitures. Adjusted EBITDAX excludes certain items that the Company believes affect the comparability of operating results and can exclude items that are generally one-time in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDAX is a non-GAAP measure that is presented because the Company believes it provides useful additional information to investors and analysts, as a performance measure, for analysis of the Company’s ability to internally generate funds for exploration, development, acquisitions, and to service debt. The Company is also subject to a financial covenant under its credit facility based on its debt to adjusted EBITDAX ratio. In addition, adjusted EBITDAX is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted EBITDAX should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, net cash provided by operating activities, or profitability or liquidity measures prepared under GAAP. Because adjusted EBITDAX excludes some, but not all items that affect net income (loss) and may vary among companies, the adjusted EBITDAX amounts presented may not be comparable to similar metrics of other companies.

(5) Stock-based compensation expense is a component of exploration expense and general and administrative expense on the accompanying statements of operations. Therefore, the exploration line items shown in the reconciliation above will vary from the amount shown on the accompanying statements of operations for the component of stock-based compensation expense recorded to exploration expense.

(6) Natural gas derivative settlements for the years ended December 31, 2015, and 2014, include a $15.3 million gain and $5.6 million gain on the early settlement of futures contracts during the second quarter of 2015 and first quarter of 2014, respectively, as a result of divesting our Mid-Continent assets.

                                                                                  
Regional proved oil and gas reserve
quantities:
---------------------------------------------------------------------
                                                                                                                                                                
                                                           South Texas &                       Rocky                           Permian                                 Total
                                                            Gulf Coast                       Mountain
                                                          -------------                      --------                      --------------                      --------------------
Year-end 2015 proved reserves
  Oil (MMBbl)                                                      43.6                          88.2                                13.4                                     145.3
  Gas (Bcf)                                                     1,116.9                         102.9                                44.2                                   1,264.0
  NGL (MMBbl)                                                     112.6                           2.8                      --                                     115.4
                                                          -------------                      --------                      --------------                      --------------------
Total (MMBOE)                                                     342.4                         108.1                                20.8                                     471.3
% Proved developed                                                  50%                           57%                                 49%                                       52%
                                                                                                                                                                
*Totals may not sum due to rounding.
                                                          
                                                            SM ENERGY COMPANY
                                                          FINANCIAL HIGHLIGHTS
                                                            December 31, 2015
                                                            
Costs incurred in oil and gas producing
activities(1):
--------------------------------------------------------
(in thousands)
Reconciliation of Cost Incurred in Oil and Gas Producing                                                     For the Year Ended
Activities (GAAP) to                                                                                          December 31, 2015
Total Capital Spend (Non-GAAP)
                                                                                                   -----------------------------------
                                                                                                    
Development costs (2)                                                                                   $ 1,234,114
Exploration costs                                                                                           132,465
Acquisition costs:
  Proved properties                                                                                          10,040
  Unproved properties                                                                                        18,382  
                                                                                                   -------------------------------------
Total, including asset retirement obligation                                                            $ 1,395,001  
                                                                                                   ====== ========= ====================
                                                                                                    
  Less: Asset retirement obligation                                                                         (38,506 )
  Less: Capitalized interest                                                                                (25,051 )
  Less: Proved property acquisitions                                                                        (10,040 )
  Less: Other                                                                                                (7,388 )
                                                                                                   -------------------------------------
Total Capital Spend                                                                                     $ 1,314,016  
                                                                                                   ====== ========= ====================

(1) The non-GAAP measure of total capital spend is presented because management believes it provides useful information to investors for analysis of SM Energy’s fundamental business on a recurring basis. In addition, management believes that total capital spend is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Total capital spend should not be considered in isolation or as a substitute for Cost Incurred or other capital spending measures prepared under GAAP. The total capital spend amounts presented may not be comparable to similarly titled measures of other companies.

(2) Includes facility costs of $75.6 million.

                                                                   
Reconciliation of standardized measure (GAAP) to PV-10
(Non-GAAP):
---------------------------------------------------------------
                                                                                                           
                                                                                                                   As of December 31,
                                                                                                                          2015
                                                                                                          -------------------------------------
                                                                                                                      (in millions)
Standardized measure of discounted future net cash flows (GAAP)                                                 $ 1,868.9
Add: 10 percent annual discount, net of income taxes                                                              1,228.7
Add: future undiscounted income taxes                                                                      --  
                                                                                                          ------------------------------------
Undiscounted future net cash flows                                                                                3,097.6
Less: 10 percent annual discount without tax effect                                                              (1,307.1 )
                                                                                                          ------------------------------------
PV-10 (Non-GAAP)                                                                                                $ 1,790.5  
                                                                                                          ======= ======= ====================

PV-10 is a commonly used measure that removes the tax effect from the standardized measure of discounted future net cash flows. Management finds this measure to be widely used by investment professionals and believes the presentation of PV-10 is helpful in evaluating and comparing Company data. This measure should not be used in isolation.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20160223007019r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20160223007019/en/

SOURCE: SM Energy Company

SM Energy Contacts 
Investors: 
Jennifer Samuels, 303-863-2507 
ir@sm-energy.com 
or 
Media: 
Patty Errico, 303-830-5052 
perrico@sm-energy.com


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