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SM Energy Co (SM -2.83%)
Q1 2020 Earnings Call
May 7, 2020, 10:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Jennifer Samuels -- Vice President, Investor Relations
Welcome to SM Energy's First Quarter 2020 Webcast. Today, our President and CEO, Jay Ottoson, will briefly discuss the first quarter and the current environment.
Please turn to Slide 2. Today's discussion and associated presentation include forward-looking statements about our plans, expectations and assumptions regarding future performance, including expectations for capital expenditures in 2020. As a reminder, these statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements. Please refer to the cautionary information about forward-looking statements in today's earnings release, the related presentation posted to our website and the Risk Factors section of our most recently filed Form 10-K and Form 10-Q.
Discussion of first quarter results also includes non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of those measures to the most directly comparable GAAP measures and other information about these non-GAAP measures are provided in our earnings release and the investor presentation referenced during this call.
I will now turn it over to Jay Ottoson.
Javan D. Ottoson -- President and Chief Executive Officer
Thank you, Jennifer, and welcome, everyone. On behalf of our whole team here at SM Energy, I would like to express our sincere hope that you, your family, friends and coworkers are well. As you know, along with many other things right now, business conditions in our industry are very different than they were just a few short months ago. In times like this, it is good to be a premier operator of top-tier assets and to have strong hedge positions.
Our long-term objectives remain unchanged: to generate growing amounts of free cash flow and reduce absolute debt and leverage. Our first quarter results were supportive of those goals. We came in at the high-end of expectations, with capital investment levels consistent with our plan, generated substantial free cash flow and reduced debt.
We continued to see strong performance from new wells completed. The big drop in commodity prices that occurred near the end of the quarter had little effect on our realizations. Our operations execution was outstanding during the quarter. And as you will see in the accompanying slides, we continue to make significant gains in efficiency and cost reduction.
With the onset of the COVID-19 pandemic and concurrent economic disruption, our immediate priorities have been to ensure the safety of our team members while maintaining business continuity and controls, and to thoughtfully adjust our investment plans and pace of activity given lower oil prices. Our previous efforts in business continuity risk management have paid off. We have excellent systems that have allowed us to keep our staff working remotely at high efficiency. None of our team members has experienced serious illness to date. And I am happy to report that our field team, including all of our contractors, worked the entire first quarter without an OSHA recordable injury or illness, a remarkable achievement given all the possible distractions.
Given the fall in oil prices, capital costs are moving lower quickly. And it makes sense to defer activity. We have sharply reduced our investment pace at this point. We expect that capital invested for the remainder of this year will be 30% or more below our original plan, with total annual capex down 20% or more. I should note that given the high level of uncertainty associated with potential for significant interruptions in production due to low prices, decreasing storage capacity and possible government prorationing, we have simply withdrawn our previously issued production guidance.
Operating costs will fall as well in this environment. And our general and administrative costs have been reduced as a result of a restructuring we initiated late last year and reductions in executive pay levels. We will continue our keen focus on maintaining safe and responsible operations during these volatile times. And our 2020 compensation plans tie a portion of our compensation to the achievement of targets for safety methane and other greenhouse gas emissions and spill volumes.
Lastly, I would note that we have completed the semiannual borrowing base redetermination for our bank group revolving credit line.
That concludes my commentary for this quarter. Thanks again for your interest in our Company, and I look forward to seeing you all again when we can do so.
Questions and Answers:
Duration: 5 minutes
Call participants:
Jennifer Samuels -- Vice President, Investor Relations
Javan D. Ottoson -- President and Chief Executive Officer
