Good morning. My name is Rob, and I will be your conference operator today. At this time, I'd like to welcome everyone to the SM Energy fourth quarter 2022 results and 2023 plan Q&A discussion. All lines have been placed on mute to prevent any background noise. After the speaker's brief remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Jennifer Samuels, Vice President, Investor Relations and ESG Stewardship, you may begin your conference.
Thanks, Rob. Good morning, everyone. We come to you this morning from a chilly Denver. It just warmed up to - 2 degrees. Thank you for joining us today. To answer your questions, we have our President and CEO, Herb Vogel, and CFO, Wade Pursell. As usual, before we get started, I will remind you that our discussion today may include forward-looking statements and discussion of non-GAAP measures. I direct you to slide two of the accompanying slide deck, page eight of the accompanying earnings release, and the Risk Factors section of our most recently filed 10-K, which describe risks associated with forward-looking statements that could cause actual results to differ. We may also refer to non-GAAP measures. Please see the slide deck appendix and earnings release for definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures and discussion of forward-looking non-GAAP measures.
As a reminder, we have posted to our website an investor presentation and the transcript to our prerecorded call that we may reference today. Also look for our 2022 annual report filed on Form 10-K this morning. With that, I will turn it back to Rob to open it up for questions. Rob?
At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up. We'll pause for just a moment to compile the Q&A roster. Again, if you'd like to ask a question, press star one on your telephone keypad. We have our first question from the line of Zach Parham from JP Morgan. Your line is open.
Hey, guys. Thanks for taking my question. I guess, first off, you know, you started buying back stock a couple of quarters ago. You know, you've met your balance sheet goals and, you know, exited the year with almost $450 million in cash on the balance sheet. Can you just talk a little bit about your plans for cash return going forward and, you know, what your plans are for allocating that cash balance?
Yeah, good morning. This is Wade. Yeah, good question. I think we mentioned in our remarks that we're very pleased to continue with the, you know, the return on capital program, which we were happy to announce last year as we met our leverage targets. We feel that's a very sustainable program, and we even reminded everyone that we ran that at $60 and $3. You know, the dividend, obviously, that will continue to be paid. The $500 million that we committed to on the stock buyback and believe we said through 2024, we'll continue that program. It'll be methodical.
People like to ask, "How are we gonna run that?" We're saying the same thing we said before, that it'll just be a methodical buyback. We'll support the stock, looking at it on a daily basis. As far as anything beyond that, obviously, that'll have a lot to do with commodity price and the level of free cash flow that we generate. You know, there's clearly some upside to that, given the fact that we stated that we ran it at $60 and $3. You know, beyond that, we'll just monitor conditions going forward.
You know, we did mention at one time that and we still believe it, that running the balance sheet in a kind of in a 1x area is a prudent place to be. One of the reasons that cash is so high is because that's a net debt number. At some point, we could reduce absolute debt. We could do that anytime, a lot of flexibility with those bonds. For now, there's a lot of uncertainty as we enter 23, it just feels prudent to have some cash on the balance sheet and just kind of monitor things how they develop.
Got it. Then for my follow-up, just wanted to ask on LOE, the guidance for the year was up pretty significantly, a little higher than we were modeling. I know you mentioned workovers in there, but can you just talk about the drivers of LOE moving higher year-over-year?
Zach, this is Herb. You know, the capital inflation last year was much stronger than the operating cost inflation. There are certain cost areas that went up. Workovers increase is probably the single biggest. We've got water and just general inflation. That's really the contributors there. Labor is also up. We've got that integrated in that estimate also. Those are really the major components. The good news is diesel's way down. That'll play into capital and operating expense on a downward trajectory right now.
Thanks, Herb. Appreciate the color.
Your next question comes from the line of Alisa Dong from Bloomberg. I'm sorry. It just disconnected. Again, if you would like to ask a question, please press star one to reenter the queue. We have no further questions at this time. I'm going to turn it back to Herb Vogel. Yes, to Herb Vogel for some final closing comments.
Okay. Well, thank you for joining the call and your interest in SM Energy, and we're looking forward to a outstanding 2023.
This concludes today's conference call. Thank you for your participation. You may now disconnect.