SM Energy Company (SM)

[Timothy Smith]

SM delivered 3Q13 results that were on balance better than expected with solid operational execution offsetting mixed financial results. In addition to the typical Eagle Ford and Bakken highlights, the company provided a detailed update on its Permian Basin Wolfcamp Shale program, which could provide an incremental slug of growth potential over and above what’s been factored into current expectations.

Included in the update was a 1,226boe/d (82% oil) 30-day average production rate from its first horizontal Wolfcamp B well (the Dorcus 3035H; 100% working interest, ~75% net revenue interest), which is amongst the best wells that we’re aware of in the play and it only had a 5,000’ horizontal lateral while others are already testing longer laterals over 7,000’.