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SM Energy and Civitas Resources: Major Merger Announcement

In a significant move within the energy sector, SM Energy and Civitas Resources, Inc. announced critical details regarding their anticipated merger. This transaction, poised for completion, emphasizes commitment to enhancing shareholder value and operational efficiency through substantial synergies.

Leadership Changes Post-Merger

Upon the consummation of this merger, the management structure will feature a highly experienced leadership team. Key appointments include:

• - Beth McDonald as President and CEO,
• - Wade Pursell as Executive VP and CFO,
• - Blake McKenna as Executive VP and COO, and
• - James Lebeck will serve as Executive VP - Corporate Development and General Counsel.

The Board of Directors is set to comprise 11 members, with representatives from both organizations. SM Energy will contribute six members while Civitas will provide five. Julio Quintana will take charge as the Non-Executive Chairman, ensuring a balanced governance structure.

Financial Strategy and Divestitures

SM Energy has laid out ambitious financial strategies aimed at strengthening its balance sheet post-merger. The company anticipates divesting over $1 billion in assets within the first year after the merger's completion. This strategy not only strengthens its financial positioning but also aims at expediting the return of capital to shareholders.

Expected Synergies

The merger is projected to yield significant synergies estimated between $200 million and $300 million annually, enhancing operational efficiencies and margin improvements. The Net Present Value of these synergies is projected at approximately $1.0 billion to $1.5 billion, accounting for 22% to 32% of the pro-forma market capitalization. Expected synergies will be actively pursued in 2026, with at least $200 million expected to benefit the company in 2027.

Examples of Cost Savings

• - Operational Synergies: Projected savings of $100 million to $150 million from optimized operations in the Permian Basin and other productive areas.
• - Administrative Synergies: Expected savings between $70 million to $95 million due to streamlined governance and IT systems integration.
• - Capital Cost Savings: Anticipated savings of $30 million to $55 million from refinanced debts and enhanced cash flow.

Positive Ratings from Agencies

The planned merger has attracted favorable ratings from leading agencies. Both S&P Global Ratings and Fitch Ratings have placed SM Energy on a positive watch, indicating robust confidence in the post-merger outlook, bolstered by enhanced operational scale and diversification.

Upcoming Investor Conferences

As part of their proactive strategy, SM Energy has announced its participation in several important investor conferences:

• - November 20, 2025: Stephens Annual Investment Conference, featuring a fireside chat with Beth McDonald and Wade Pursell.
• - December 2, 2025: Bank of America Leveraged Finance Conference, focusing on capital structure insights and future individual meetings.
• - December 9, 2025: Engagements at both the Mizuho Power, Energy, and Infrastructure Conference and Capital One Securities Energy Conference, showcasing plans and future projects with potential investors.

These conferences will foster direct engagement with investors, offering insights into the anticipated benefits and strategies as the companies navigate this pivotal transformation.

Conclusion

The merger between SM Energy and Civitas Resources represents a strategic alignment aimed at cultivating greater efficiency in operations and enhancing shareholder value. With sound leadership in place, targeted divestitures, and a clear path to achieving substantial synergies, this partnership is poised to redefine their operational landscape within the energy sector. For ongoing updates and detailed disclosures, stakeholders are encouraged to visit both companies' websites and transact within the prescribed frameworks.

For further information about SM Energy and its initiatives, please visit www.sm-energy.com.

For Civitas Resources, additional information is accessible at www.civitasresources.com.