SM Energy Company and Civitas Resources have agreed to merge in an all-stock transaction valued at approximately $12.8bn, including net debt.
The merger will create a combined entity with an extensive portfolio of around 823,000 net acres, primarily focused on the Permian Basin.
Under the terms of the merger agreement, Civitas’ shareholders will receive 1.45 shares of SM Energy stock for each Civitas share held.
Based on this exchange ratio, the companies' closing share prices on 31 October 2025 and net debt, the combined entity’s enterprise value stands at $12.8bn.
SM Energy will issue approximately 126.3 million shares of common stock as consideration.
The transaction, which has been unanimously approved by both companies' boards, is expected to close in the first quarter of 2026, subject to shareholder and regulatory approvals.
Upon closing, SM Energy shareholders will hold around 48% of the combined company, while Civita’s shareholders will own approximately 52%.
The merged entity will continue to operate under the SM Energy name and be headquartered in Denver, Colorado, US.
SM Energy CEO Herb Vogel said: “This strategic combination creates a leading oil and gas company with enhanced scale, numerous value-adding synergies and significant free cash flow, driving superior value to stockholders.
“Congratulations to the Civitas team on building a leading sustainable energy company in the Permian and DJ basins since its inception in 2021.
“Their operational excellence and talent are reflected in today's transaction. Together, we look forward to unlocking stockholder value as a unified organisation.”
The combined company’s Board of Directors will consist of 11 members, with six representatives from SM Energy and five from Civitas.
Julio Quintana will be appointed as non-executive chairman, while Herb Vogel will assume the role of CEO of the combined company.
It will operate a portfolio of assets across the highest-return US shale basins, aiming to deliver free cash flow and sustained capital returns.
Evercore and Gibson, Dunn & Crutcher served as advisors to SM Energy, while JP Morgan and Kirkland & Ellis advised Civitas on this transaction.
Civitas interim CEO Wouter van Kempen said: “Today marks a pivotal moment for Civitas and SM Energy as we announce a merger that unlocks new potential to deliver enhanced stockholder value and achieve outcomes beyond the reach of either company alone.
“By combining our strong technical teams and complementary assets, we gain scale, sharpen our competitive edge, and strengthen our ability to responsibly produce energy that contributes to energy security and prosperity.
“This merger positions us to lead with operational and environmental excellence, generate meaningful synergies and accelerate value creation.”
