SM Energy, Civitas Resources to combine in $12.8B all-stock transaction

SM Energy (SM) and Civitas Resources (CIVI) announced they have entered into a definitive merger agreement involving an all-stock 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 $12.8B is inclusive of each company’s net debt. The combined company will have a portfolio of approximately 823,000 net acres. The companies noted identified and achievable annual synergies totaling $200M, with upside potential to $300M. 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. 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. 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, inclusive of net debt, the combined company would have an enterprise value of approximately $12.8B. SM Energy will issue approximately 126.3M shares of common stock as consideration to the holders of Civitas common shares in accordance with the terms of the merger agreement. Following the merger, the board of directors will total 11 members and will be comprised of six representatives from SM Energy and five 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 CEO of the combined company, and the previously announced expected CEO transition to Beth McDonald remains on-track. 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.