SEC Comment Letter for SM Energy Co (SM) (CIK 0000893538) (SM) — Oct 14, 2016
SM Energy Co (SM) (CIK 0000893538)
Date: Oct. 14, 2016 · CIK: 0000893538 · Accession: 0000000000-16-097177
AI Filing Summary & Sentiment
Reasoning
Letter
Mail Stop 4628 October 14 , 201 6 A. Wade Pursell Chief Financial Officer SM Energy Company 1775 Sherman Street, Suite 1200 Denver, Colorado 80203
Re: SM Energy Company Form 10 -K for Fiscal Year Ended December 31, 201 5 Filed February 2 4, 201 6 Form 8 -K filed February 24, 2016 Form 8 -K filed August 2, 2016 File No. 1 -31539
Dear Mr. Pursell :
We have reviewed your August 2, 2016 response to our comment letter and have the following comments. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments. Unless we no te otherwise, our references to prior comments are to comments in our July 19, 2016 letter .
Form 10 -K for Fiscal Year Ended December 31, 2015
Reserves, page 8
Proved Undeveloped Reserves, page 10
1. We note your response to prior comment 1 regarding drilled but uncompleted wells. Revise to provide additional disclosure specifying the planned timing and the capital expenditures included in estimated future development costs necessary to complete drilled but uncompleted wells.
A. Wade Pursell SM Energy Company October 14 , 201 6 Page 2
2. In your Form 1 0-K, you state that 2.8 MMBOE of proved undeveloped reserves had been on your books in excess of five years, but were scheduled to be completed in 2016. Tell us whether these uncompleted wells have been completed and quantify any reserves added during 201 6 which are associated with drilled but uncompleted wells that are not scheduled to be developed within five years from the date of initial booking.
Supplemental Oil & Gas Information, page 137
Standardized Measure of Discounted Future Net Cash Flows, p age 139
3. Your response to prior comment 5 indicates that $314.5 million was expended during 2015 to convert proved undeveloped reserves to proved developed reserves. However, on page 11 of your Form 10 -K, you disclose the amount of $415 million for expend itures associated with proved undeveloped reserves booked at the end of 2014. Revise to separately disclose capital expenditures made during the year to convert proved undeveloped reserves. Refer to Item 1203(c) of Regulation S -K.
4. In response to prior comment 6, you state that future income taxes used to calculate the standardized measure of discounted future net cash flows as of December 31, 2015 were $0 as you would not be subject to income tax for the projected life of your reser ves at price levels for that period. Please provide us with additional detail supporting this assertion.
Form 8 -K filed February 24, 2016
5. We have reviewed your response to prior comment 7. For a more balanced presentation that will provide a comprehens ive disclosure of changes in your proved reserves, revise your current presentation of the metric “production replacement” to also present a metric that include all changes to your proved reserves during the period.
Form 8 -K filed August 2, 2016
6. As noted in prior comment 10, your presentation of “Adjusted earnings (loss) per diluted common share” does not appear to include a reconciliation on a per share basis to the most directly comparable GAAP measure. Revise your reconciliation to present the per share impact of each individual adjustment. Refer to Item 10(e)(i)(B) of Regulation S -K and Question 102.05 of the Compliance and Disclosure Interpretations for Non -GAAP Financial Measures for further guidance.
7. You present the non -GAAP measure “Adjusted EBI TDAX” in the introductory section of your press release along with “GAAP Net cash provided by operating activities.” As you have identified “Adjusted EBITDAX” as a non -GAAP performance measure, revise to also present it here with Net Income / Loss. Refer to Item 10(e)(i)(A) of Regulation S -K
A. Wade Pursell SM Energy Company October 14 , 201 6 Page 3
and Question 102.10 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures.
You may contact Wei Lu, Staff Accountant, at (202) 551 -3725 or Ethan Horowitz, Accounting, Branch Chief, at (202) 551 -3311 if you have questions regarding comments on the financial statements and related matters. Please contact Parhaum J. Hamidi, Attorney -Adviser, at (202) 551 -3421 , or me at (202) 551 -3642 with any other questions.
Sincerely,
/s/ Loan Lauren P. Nguyen
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Mail Stop 4628 October 14 , 201 6 A. Wade Pursell Chief Financial Officer SM Energy Company 1775 Sherman Street, Suite 1200 Denver, Colorado 80203 Re: SM Energy Company Form 10 -K for Fiscal Year Ended December 31, 201 5 Filed February 2 4, 201 6 Form 8 -K filed February 24, 2016 Form 8 -K filed August 2, 2016 File No. 1 -31539 Dear Mr. Pursell : We have reviewed your August 2, 2016 response to our comment letter and have the following comments. In some of our comments , we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Unless we no te otherwise, our references to prior comments are to comments in our July 19, 2016 letter . Form 10 -K for Fiscal Year Ended December 31, 2015 Reserves, page 8 Proved Undeveloped Reserves, page 10 1. We note your response to prior comment 1 regarding drilled but uncompleted wells. Revise to provide additional disclosure specifying the planned timing and the capital expenditures included in estimated future development costs necessary to complete drilled but uncompleted wells. A. Wade Pursell SM Energy Company October 14 , 201 6 Page 2 2. In your Form 1 0-K, you state that 2.8 MMBOE of proved undeveloped reserves had been on your books in excess of five years, but were scheduled to be completed in 2016. Tell us whether these uncompleted wells have been completed and quantify any reserves added during 201 6 which are associated with drilled but uncompleted wells that are not scheduled to be developed within five years from the date of initial booking. Supplemental Oil & Gas Information, page 137 Standardized Measure of Discounted Future Net Cash Flows, p age 139 3. Your response to prior comment 5 indicates that $314.5 million was expended during 2015 to convert proved undeveloped reserves to proved developed reserves. However, on page 11 of your Form 10 -K, you disclose the amount of $415 million for expend itures associated with proved undeveloped reserves booked at the end of 2014. Revise to separately disclose capital expenditures made during the year to convert proved undeveloped reserves. Refer to Item 1203(c) of Regulation S -K. 4. In response to prior comment 6, you state that future income taxes used to calculate the standardized measure of discounted future net cash flows as of December 31, 2015 were $0 as you would not be subject to income tax for the projected life of your reser ves at price levels for that period. Please provide us with additional detail supporting this assertion. Form 8 -K filed February 24, 2016 5. We have reviewed your response to prior comment 7. For a more balanced presentation that will provide a comprehens ive disclosure of changes in your proved reserves, revise your current presentation of the metric “production replacement” to also present a metric that include all changes to your proved reserves during the period. Form 8 -K filed August 2, 2016 6. As noted in prior comment 10, your presentation of “Adjusted earnings (loss) per diluted common share” does not appear to include a reconciliation on a per share basis to the most directly comparable GAAP measure. Revise your reconciliation to present the per share impact of each individual adjustment. Refer to Item 10(e)(i)(B) of Regulation S -K and Question 102.05 of the Compliance and Disclosure Interpretations for Non -GAAP Financial Measures for further guidance. 7. You present the non -GAAP measure “Adjusted EBI TDAX” in the introductory section of your press release along with “GAAP Net cash provided by operating activities.” As you have identified “Adjusted EBITDAX” as a non -GAAP performance measure, revise to also present it here with Net Income / Loss. Refer to Item 10(e)(i)(A) of Regulation S -K A. Wade Pursell SM Energy Company October 14 , 201 6 Page 3 and Question 102.10 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures. You may contact Wei Lu, Staff Accountant, at (202) 551 -3725 or Ethan Horowitz, Accounting, Branch Chief, at (202) 551 -3311 if you have questions regarding comments on the financial statements and related matters. Please contact Parhaum J. Hamidi, Attorney -Adviser, at (202) 551 -3421 , or me at (202) 551 -3642 with any other questions. Sincerely, /s/ Loan Lauren P. Nguyen Loan Lauren P. Nguyen Legal Branch Chief Office of Natural Resources