SM Energy to Shift Drilling Away From Uinta Basin
The company may temporarily move rigs out of Utah's Uinta Basin in early 2027 as takeaway capacity constraints persist.
Updated on Nov. 4, 2026 in Oil and Gas
SM Energy said it may temporarily shift drilling away from Utah's Uinta Basin starting January 1, 2027, after takeaway constraints and an unplanned outage cut its third-quarter oil production by about 4,000 barrels per day. The company reported quarterly net income of $93 million, or 39 cents per diluted share, for the most recent quarter.
Why it matters
Specialized transportation requirements for the basin's crude limit takeaway capacity, and rail-loading constraints continue to restrict production there. The potential reallocation signals how infrastructure bottlenecks can shape where operators deploy capital.
SM Energy's quarterly net income fell to $93 million, or 39 cents per diluted share, from $155 million, or $1.35 per diluted share, a year earlier. The company narrowed its full-year 2026 capital spending outlook to about $2.75 billion and lowered its oil-production forecast by 1% to 220,000–222,000 barrels per day.
The players
SM Energy
SM Energy is an independent oil and natural gas exploration and production company with operations in the Uinta Basin.
The details
SM Energy evaluated the drilling reallocation on its post-earnings call while awaiting additional takeaway capacity in the Uinta Basin. An unplanned outage and a refinery disruption contributed to the third-quarter production shortfall, and the refinery has since returned to service.
Timeline
Third quarter 2026: An outage and refinery disruption reduce oil production by about 4,000 barrels per day.
November 3, 2026: SM Energy reports quarterly earnings.
November 4, 2026: The company says it may shift drilling away from the Uinta Basin.
Early 2027: A planned crude-oil terminal expansion is expected to enter service and ease rail-loading constraints.
Market Landscape
Takeaway constraints continue to limit production in the Uinta Basin, where crude requires specialized transportation. Operators must wait for expanded rail-loading capacity before drilling volumes can grow in the basin.
Residents and investors tracking energy output in Utah should watch whether production shifts as rail-loading capacity changes. Drilling reallocation could affect local employment and state energy revenues if the constraints persist.
The takeaway
Infrastructure capacity, not just resource quality, increasingly determines where energy companies deploy capital. Readers following Utah's energy sector should track terminal and rail projects alongside production figures.
What happens next
A planned crude-oil terminal expansion is expected to enter service in early 2027, which could allow operators to resume drilling in the Uinta Basin.
Further reading
For more on the region's drilling activity, see Oil and Gas coverage across Utah.
