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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
SM ENERGY AND CIVITAS RESOURCES TO COMBINE IN $12.8 BILLION TRANSFORMATIONAL COMBINATION DELIVERING SUPERIOR STOCKHOLDER VALUE
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
Transformational Combination Delivering Superior Value
- Value-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.
- Synergy-Enhanced Free Cash Flow: Identified and achievable annual synergies totaling $200 million, with upside potential to $300 million, expected to enhance stockholder value.
- Proven Management: A trusted leadership team supported by a combined world-class technical team.
- Significant Accretion on Key Financial Metrics: The combination is expected to be immediately accretive to key per share financial metrics.
- Financial Discipline: Free cash flow prioritized for debt reduction with path to 1.0x net leverage by YE 2027.
- Sustainable Dividend: Quarterly fixed dividend maintained at $0.20 per share.
- Sustainability Commitment: The combined company will uphold responsible operations, safety, and environmental excellence.
Executive Comments
SM Energy CEO Herb Vogel: “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.” SM Energy President and COO Beth McDonald: “This merger combines two premier operators and establishes a company with transformative scale in the highest-return U.S. shale basins.” Civitas Interim CEO Wouter van Kempen: “This merger unlocks new potential to deliver enhanced stockholder value and achieve outcomes beyond the reach of either company alone.” Ben Dell, 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, SM Energy stockholders will own approximately 48% of the combined company and Civitas stockholders will own approximately 52% on a fully diluted basis.Governance and Leadership
The combined company’s Board of Directors will include 11 members (6 from SM Energy, 5 from Civitas). Julio Quintana will serve as Non-Executive Chairman. The combined company will be headquartered in Denver, Colorado. Herb Vogel will serve as CEO, with the planned CEO transition to Beth McDonald remaining on track.Timing and Approvals
The combination has been unanimously approved by both boards of directors. The transaction is expected to close in Q1 2026, subject to stockholder and regulatory approvals.Advisors
- SM Energy: Evercore (financial advisor); Gibson, Dunn & Crutcher LLP (legal advisor)
- Civitas: J.P. Morgan (financial advisor); Kirkland & Ellis LLP (legal advisor)
Conference Call Information
Date: November 3, 2025 Time: 8:00 a.m. MT / 10:00 a.m. ET- Telephone: Register here (877-407-6050 / +1 201-689-8022)
- Webcast: Available at www.sm-energy.com and www.civitasresources.com
