SM Energy, Civitas Agree $12.8B Merger

SM Energy and Civitas Resources agreed to an all-stock merger valuing the combined company at about $12.8 billion inclusive of net debt, creating one of the largest independent U.S. oil-focused producers anchored in the Permian Basin. Under the deal Civitas shareholders will receive 1.45 SM shares (SM will issue roughly 126.3 million shares), leaving Civitas with about 52% ownership and SM about 48%, and the merged company will continue to trade as SM Energy. The merger combines roughly 823,000 net acres, gives pro forma Q2 2025 production of about 526,000 barrels of oil equivalent per day, and is expected to deliver over $1.4 billion of pro forma free cash flow in 2025 while targeting identified annual synergies of about $200 million with upside to $300 million. Governance will include an 11-member board with Julio Quintana as non‑executive chair, SM CEO Herb Vogel initially leading the company with a planned transition to Beth McDonald, and the company will prioritize dividends and debt reduction. The deal, which includes a planned $0.20 quarterly fixed dividend and a target of roughly 1.0x net leverage by year-end 2027, was unanimously approved by both boards, is expected to close in the first quarter of 2026 subject to shareholder and regulatory approvals, and stocks saw positive premarket gains following the announcement.