A class action lawsuit was filed against Civitas Resources (CIVI) by Levi & Korsinsky on May 2, 2025. The plaintiffs (shareholders) alleged that they bought CIVI stock at artificially inflated prices between February 27, 2024 and February 24, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Civitas Resources stock during that period can click here to learn about joining the lawsuit.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
Civitas Resources is an independent, domestic oil and natural gas producing company. It develops premier assets in the Denver-Julesburg (DJ) and Permian basins. Civitas describes itself as Colorado’s first carbon-neutral oil and gas producer.
The company’s claims regarding its oil production capacity for Q4FY24 and fiscal 2025 are at the heart of the current complaint.
Civitas Resources’ Misleading Claims
According to the lawsuit, Civitas and two of its senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the potential for significant oil production reduction in 2025, and ancillary issues, from SEC filings and related material.
During the Class Period, the CEO reiterated that Civitas was well positioned to create sustainable, long-term value for its shareholders. He added that the company had built a solid, premier asset base in Fiscal 2023, providing a long runway of high-return development opportunities. The company’s focus for Fiscal 2024 was clear: maximizing free cash flow, returning cash to owners, and maintaining a strong balance sheet.
Finally, during an August 2, 2024 earnings call, the CEO stated that the company’s oil production was running ahead of plan, and that costs were below expectations, leading to reduced operating costs and improved margins.
However, subsequent events (discussed below) revealed that the defendants had failed to inform investors that the company had experienced a production peak in the DJ Basin in Q4 2024 and a low TIL (turning in line) count at the end of 2024. Both factors were expected to affect the Basin’s future oil production capacity.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the company’s oil production capacity at the end of fiscal 2024 and beyond.
The information became clear on February 24, 2025, when Civitas released its Q4 and full year Fiscal 2024 results. The company failed to meet analysts’ expectations for both revenue and adjusted earnings per share (EPS). Additionally, it provided disappointing guidance for the first quarter of fiscal 2025. Civitas indicated that oil volumes were expected to be the low point for the year, averaging 140 to 145 MBbl/d (thousand barrels of oil per day), mainly because of a low number of TILs in late 2024 and early 2025.
Moreover, lower oil volumes in the DJ Basin were the result of peak production in Q4, a low TIL count at the end of 2024 and in Q1FY25. The company also mentioned other headwinds, such as severe winter weather and unplanned third-party processing downtime in Q1, as factors impacting the future outlook. What’s worse, Civitas announced a 10% workforce reduction across all levels, aimed at solidifying its low-cost structure. Following the news, CIVI stock plunged 16.9% on February 25.
In order to boost oil production, Civitas would need to acquire additional acreage and development locations, which would, in turn, increase the company’s debt and cause it to sell corporate assets to offset acquisition costs. These steps would also force the company to implement drastic cost-reduction measures, including a significant workforce reduction.
To conclude, the company misled investors about the declining oil production expectations and the related challenges in boosting production. Owing to these issues, CIVI stock declined 39.2% so far this year.
