SM Energy and Civitas Resources have completed a $12.8 billion all‑stock merger that values the combined company at enterprise value, including each firm’s net debt. The transaction exchanges 1.45 SM Energy shares for each Civitas share, giving Civitas shareholders 52 % of the new entity and SM Energy shareholders 48 % on a fully diluted basis. SM Energy will issue 126.3 million shares of common stock to Civitas shareholders.
The merged portfolio covers roughly 823,000 net acres, centered on the Permian Basin and extending into the DJ Basin and Colorado. Pro‑forma second‑quarter 2025 production is projected at 526,000 barrels of oil equivalent per day, and full‑year 2025 free cash flow is expected to exceed $1.4 billion. The parties anticipate annual synergies of about $200 million, with upside potential to $300 million, driven by cost efficiencies and complementary asset footprints.
The merger is positioned to create a top‑10 U.S. independent oil‑focused producer, leveraging scale to enhance free cash flow, accelerate debt reduction, and improve margins. The deal reflects a broader consolidation trend in the U.S. shale industry, as companies seek resilience against price volatility, regulatory pressures, and capital constraints. The combined entity will be headquartered in Denver, Colorado, and will maintain a quarterly fixed dividend of $0.20 per share.
Prior to the merger, SM Energy reported revenue of $3.1 billion and an operating margin of 34.23 %, with a debt‑to‑equity ratio of 0.59. Civitas had been selling assets to pay down debt, resulting in a significant increase in total debt between Q1 2023 and Q2 2025. The transaction values Civitas at approximately $30.29 per share, a 5 % premium to its October 31, 2025 closing price. The combined company will benefit from SM Energy’s robust operating performance and Civitas’s strategic asset base.
Leadership will be led by SM Energy CEO Herb Vogel, with former Civitas interim CEO Wouter van Kempen joining the board. The previously announced transition of SM Energy’s CEO role to Beth McDonald remains on track, ensuring continuity in executive oversight. The transaction is expected to close in the first quarter of 2026, subject to customary closing conditions, including shareholder and regulatory approvals.
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