- SM Energy and Civitas Resources announced a definitive merger agreement involving an all-stock transaction aiming to create a combined enterprise valued at approximately 12.8 billion dollars. - Each Civitas share will be exchanged for 1.45 shares of SM Energy to form the new company. - The combined company's portfolio will encompass about 823,000 net acres across top U.S. shale basins, primarily in the Permian. - The pro forma full-year 2025 free cash flow is expected to exceed 1.4 billion dollars, supporting sustained capital returns. - The merger is projected to generate approximately 200 million dollars in annual synergies, with potential to reach 300 million dollars. - Identified synergies include reductions in overhead, drilling, completion costs, operational expenses, and cost of capital. - The merger is expected to be immediately accretive to key financial metrics such as operating cash flow and net asset value before synergies. - Free cash flow will be prioritized for debt reduction aiming for a leverage ratio of 1.0x by the end of 2027, assuming oil and gas prices. - The combined company plans to maintain a sustainable quarterly dividend of 0.20 dollars per share, which has increased 33 percent since 2022. - The new leadership team will have 11 board members, with six from SM Energy and five from Civitas, headquartered in Denver, Colorado. - Herb Vogel will serve as CEO, with Beth McDonald continuing her transition to the role. - The merger has received unanimous approval from the boards of both companies and is expected to close in the first quarter of 2026 pending regulatory and shareholder approvals. - Advisors involved include Evercore and Gibson Dunn & Crutcher for SM Energy, and J.P. Morgan with Kirkland & Ellis for Civitas. - A joint conference call will be held to discuss the merger, accessible via webcast or phone, on November 3, 2025.

SM ENERGY AND CIVITAS RESOURCES TO COMBINE IN $12.8 BILLION TRANSFORMATIONAL COMBINATION DELIVERING SUPERIOR STOCKHOLDER VALUE

News provided by SM Energy Company

Nov 03, 2025, 06:15 ET

Value-Enhancing Scale

Premier portfolio across the highest-return U.S. shale basins drives significant free cash flow and enhanced stockholder value

Pro forma second quarter of 2025 production totaled 526 MBoe/d

Pro forma full-year 2025 consensus free cash flow of more than $1.4 billion

Step-change in free cash flow supports sustained return of capital

Value-Driven Synergies

Proven management and a world-class technical team positioned to deliver identified and achievable annual synergies of approximately $200 million with upside potential

Synergies create potential for accelerated debt repayment and improved through-cycle returns

Value-Accretive Substance

Significant accretion on key per share financial metrics, before synergies

Free cash flow to be prioritized for debt reduction and sustainable quarterly fixed dividend of $0.20 per share

Committed to leading in sustainability and environmental stewardship while expanding our positive impact in the communities where we operate

Companies to host a live Q&A call today at 8:00 a.m. Mountain time/10:00 a.m. Eastern time

DENVER, Nov. 3, 2025 /PRNewswire/ -- SM Energy Company ("SM Energy") (NYSE: SM) and Civitas Resources, Inc. ("Civitas") (NYSE: CIVI) today announced they have entered into a definitive merger agreement involving an all-stock transaction (the "Transaction").

Under the terms of the Transaction, each common share of Civitas will be exchanged for 1.45 shares of SM Energy common stock. The combined company's enterprise value of approximately $12.8 billion is inclusive of each company's net debt.

The combined company will have a premier portfolio of approximately 823,000 net acres, with the Permian position being the cornerstone. Pro forma full-year 2025 consensus free cash flow generation of more than $1.4 billion enables sustained capital returns, and increased market capitalization enhances trading liquidity with broader investment appeal.

Transformational Combination Delivering Superior ValueValue-Enhancing Scale . The combined company will operate a premier asset portfolio consisting of approximately 823,000 net acres across the highest-return U.S. shale basins, immediately transformed into a top-10 U.S. independent oil-focused producer. We expect that this premier portfolio will deliver a step-change in free cash flow enabling sustained capital returns.
Synergy-Enhanced Free Cash Flow. Identified and achievable annual synergies totaling $200 million, with upside potential to $300 million, is expected to enhance stockholder value. Identified synergies include opportunities across the combined organization consisting of overhead and G&A, drilling and completion and operational costs, and cost of capital. These synergies are expected to accelerate deleveraging and support a sustainable returns strategy.
Proven Management. A trusted leadership team, supported by a combined world-class technical team, equipped with the processes and infrastructure to deliver a successful integration.
Significant Accretion on Key Financial Per Share Metrics, Before Synergies. The combination is expected to be immediately accretive to key per share financial metrics, including operating cash flow, debt-adjusted cash flow, free cash flow, and net asset value.
Financial Discipline. Free cash flow will be prioritized for debt reduction with path to 1.0x net leverage by YE 2027 at $65/Bbl WTI and $3.50/MMBtu Henry Hub with substantial liquidity and an improved credit profile.
Sustainable Quarterly Fixed Dividend Maintained at $0.20/Share. The combined company will deliver sustainable dividends, a program that SM Energy has grown on a per share basis by 33% since the program was introduced in 2022.
Advancing Our Collective Commitment to Sustainability and Stewardship . The combined company will uphold its long-standing focus on responsible operations, safety, and environmental excellence, while integrating best practices.

SM Energy Chief Executive Officer Herb Vogel comments: "This strategic combination creates a leading oil and gas company with enhanced scale, numerous value-adding synergies, and significant free cash flow, driving superior value to stockholders. Congratulations to the Civitas team on building a leading sustainable energy company in the Permian and DJ basins since its inception in 2021. Their operational excellence and talent are reflected in today's transaction. Together, we look forward to unlocking stockholder value as a unified organization."

SM Energy President and Chief Operating Officer Beth McDonald comments: "This merger combines two premier operators and establishes a company with transformative scale in the highest-return U.S. shale basins. By combining two complementary portfolios, we expect to unlock significant free cash flow to strengthen our balance sheet, accelerate stockholder returns, and position us for sustainable growth through every cycle."

Civitas Interim Chief Executive Officer Wouter van Kempen comments: "Today marks a pivotal moment for Civitas and SM Energy as we announce a merger that unlocks new potential to deliver enhanced stockholder value and achieve outcomes beyond the reach of either company alone. By combining our strong technical teams and complementary assets, we gain scale, sharpen our competitive edge, and strengthen our ability to responsibly produce energy that contributes to energy security and prosperity. This merger positions us to lead with operational and environmental excellence, generate meaningful synergies, and accelerate value creation."

"This transformative transaction will immediately create a leading independent E&P company, with a strong asset position across the premium oil oriented basins in the U.S.," said Ben Dell from Kimmeridge. "The step-change in scale coupled with identified operational synergies should enhance long-term value to all shareholders for years to come."

TRANSACTION DETAILS

Under the terms of the agreement, Civitas stockholders will receive 1.45 shares of SM Energy common stock at closing. After closing, the company will continue to trade as SM Energy (NYSE: SM). Upon completion of the Transaction, SM Energy stockholders will own approximately 48% of the combined company and Civitas stockholders will own approximately 52% on a fully diluted basis. At this exchange ratio, and the respective companies' closing share prices on October 31, 2025, inclusive of net debt, the combined company would have an enterprise value of approximately $12.8 billion. SM Energy will issue approximately 126.3 million shares of common stock as consideration to the holders of Civitas common shares in accordance with the terms of the merger agreement.

GOVERNANCE AND LEADERSHIP

Following the merger, the Board of Directors will total 11 members and will be comprised of 6 representatives from SM Energy and 5 representatives from Civitas. Julio Quintana will serve as Non-Executive Chairman. The combined company will be headquartered in Denver, Colorado.

Herb Vogel will serve as Chief Executive Officer of the combined company, and the previously announced expected CEO transition to Beth McDonald remains on-track.

TIMING AND APPROVALS

The combination has been unanimously approved by the boards of directors of both companies. The Transaction is expected to close in the first quarter of 2026. The Transaction is subject to customary closing conditions, including approvals by SM Energy and Civitas stockholders and regulatory clearances.

ADVISORS

Evercore is serving as financial advisor and Gibson, Dunn & Crutcher LLP as legal advisor to SM Energy.

J.P. Morgan is serving as financial advisor and Kirkland & Ellis LLP as legal advisor to Civitas Resources.

CONFERENCE CALL AND ADDITIONAL MATERIALS

November 3, 2025 – Please join SM Energy and Civitas management at 8:00 a.m. Mountain time/10:00 a.m. Eastern time today for a joint conference call to discuss the Transaction.

The discussion will be accessible via:Telephone – join the live conference call by registering at https://event.choruscall.com/mediaframe/webcast.html?webcastid=M2QTXycV. Dial-in for domestic toll free/International is 877-407-6050 / +1 201-689-8022.
Webcast (available for live and replay) – on each company's website at www.sm-energy.com and www.civitasresources.com.

An investor presentation regarding the Transaction can also be found at www.sm-energy.com and www.civitasresources.com.

SM Energy's third quarter 2025 earnings pre-recorded webcast originally scheduled for November 4, 2025, and the live Q&A session originally scheduled for November 5, 2025, have been cancelled and replaced with today's joint conference call.

ABOUT SM ENERGY

SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs in the states of Texas and Utah. SM Energy routinely posts important information about the Company on its website. For more information about SM Energy, please visit its website at www.sm-energy.com.