SM Energy Co. (SM) witnessed a sharp decline of 5.01% in its stock price during intraday trading on Friday, February 21, 2025. The plummet appears to be driven by mixed signals from the company's fourth quarter 2024 earnings report and 2025 operating plan, which were discussed in detail during the earnings call.

On the positive side, SM Energy forecasted a substantial 40% increase in free cash flow for 2025, supported by a projected 30% growth in oil production. The company also maintains a strong balance sheet, aiming to achieve a leverage ratio of 1 times by the second half of the year. Furthermore, the recent acquisition of assets in the Uinta Basin has bolstered SM Energy's gross inventory count by approximately 40%, enhancing its production capabilities.

However, the company's guidance for the first quarter of 2025 indicated a temporary setback in production due to a three-month gap in TILs, caused by dropping a South Texas frac crew in the previous quarter. Additionally, transport delays, including rail delays and refinery downtime, have impacted the timing of sales recognition, posing operational challenges. The wider guidance range for 2025 production, attributed to timing-related fluctuations, has also contributed to investor uncertainty.