SM Energy Flags ~$220M Q2 Derivative Loss; Realized Oil at $96.85 Before Hedges

summarizeSummary

SM Energy previewed Q2 2026 results, revealing a ~$220 million net derivative settlement loss and realized oil prices of $96.85/bbl before hedges ($80.62 after). The derivative loss will significantly impact earnings.

check_boxKey Events · Earnings and Guidance · SM

• ~$220M Q2 Derivative Loss

  A net derivative settlement loss of approximately $220 million is anticipated for Q2 2026, a large charge that will materially reduce reported earnings.

• Realized Oil at $96.85 Before Hedges

  Before hedging, SM realized $96.85/bbl for oil in Q2. After derivative settlements, the effective oil price dropped to $80.62/bbl, reflecting the cost of its hedge book.

• Weak Gas Realizations

  Natural gas realizations were just $0.17/Mcf before hedges, though hedges lifted the effective price to $1.54/Mcf. NGLs realized $24.69/bbl before hedges ($24.83 after).

• Follows Q1 Derivative-Driven Loss

  This derivative loss comes after Q1 2026 already included a large non-cash derivative loss tied to rising oil prices, suggesting hedging continues to be a drag on reported results.

auto_awesomeAnalysis · SM · Energy & Transportation

Preliminary Q2 2026 metrics from SM Energy reveal a $220 million net derivative settlement loss—a substantial hit that will weigh on earnings. While realized oil prices before hedges were strong at $96.85/bbl, hedging dragged the effective oil price down to $80.62. Gas realizations were extremely weak at $0.17/Mcf before hedges, though hedges boosted that to $1.54. The derivative loss is the headline number here: it's large enough to meaningfully impact quarterly results and follows a Q1 that already included a big non-cash derivative loss. Investors should brace for another noisy quarter.