SM Energy's Eagle Ford production eclipsed 200 mmcfe/d in the second quarter and the company's well completion schedule will be weighted toward the latter half of the year. Even though production grew 16% over the first quarter, the numbers were below expectations due to downstream pipeline curtailments and delays in receiving equipment.

SM completed 26 operated wells in the first half of the year and has seven operated drilling rigs running as of August. A total of 67 wells are planned to be completed during 2012, so 41 of those will come in Q3 and Q4.

SM Energy's Non-Operated Acreage

The company also has a significant non-operated position that is operated by Anadarko Petroleum. Production from Anadarko operated acreage averaged 9.5 mboe/d in the second quarter. Anadarko has 9 drilling rigs and 1 spudder rig working the Eagle Ford and is expected to hold that level through the remainder of the year.

In a complex twist to joint venture agreements, Anadarko has increased the pace of expansion of its midstream assets, which in turn increase the capital needs of SM Energy for the year. Midstream expenses are not treated the same at development expenses and are not carried under the JV agreement with Mitsui.