The merger brings together an asset base of roughly 823,000 net acres, which includes the Permian Basin
- SM Energy and Civitas Resources announced an all-stock transaction to create a combined oil and gas company with an enterprise value of about $12.8 billion.
- SM Energy will own around 48% of the combined entity, while Civitas will own approximately 52%.
- SM Energy’s net income for Q3 fell despite an increase in oil production
Shares of SM Energy (SM) and Civitas Resources (CIVI) were trading higher in premarket on Monday, after the energy companies announced a merger agreement.
$12.8 Billion Combined Entity
SM Energy and Civitas Resources announced an all-stock transaction to create a combined oil and gas company with an enterprise value of about $12.8 billion. The merger is expected to close in the first quarter of 2026.
Under the deal, Civitas shareholders will receive 1.45 shares of SM Energy common stock for each Civitas share. SM Energy shareholders will own around 48% of the combined entity, while Civitas stockholders will own approximately 52%.
The merger combines an asset base of approximately 823,000 net acres, which includes the Permian Basin in the southern US. The basin is known for its rich petroleum and natural gas deposits.
The combined firm is expected to generate over $1.4 billion in free cash flow in 2025 and achieve an annual production value of $200 million, potentially rising to $300 million. The transaction is projected to be immediately accretive to key per-share metrics.
“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,” said Beth McDonald, President and Chief Operating Officer of SM Energy.
SM’s Q3 Results
Earlier in the day, SM Energy posted its Q3 results. Production in the third quarter totaled 19.7 million barrels of oil equivalent. Total daily production rose 26% while oil output jumped 47%. Net income for the quarter was $155.1 million, compared with $240.5 million a year earlier. The decline in earnings was mainly due to lower realized prices, reduced derivative gains, and higher depreciation, depletion, and amortization (DD&A) expenses.
What Are Stocktwits Users Saying?
The news of the merger prompted a shift in retail sentiment to ‘bullish’ from ‘neutral’ for both companies on Stocktwits.
SM Energy shares were up 2.9% at $21.5, while Civitas’ stock shot up 4.8% to $30.2.
Both stocks have been under heavy selling pressure this year, with CIVI’s stock declining 38.3% and SM’s shares tanking more than 47%.
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