SM Energy and Civitas Resources announce additional details on merger

SM Energy (SM) and Civitas Resources (CIVI) announced additional details in connection with their planned merger. Upon closing of the Transaction, a leadership team with industry experience supported by a technical team will consist of: Beth McDonald, President and CEO; Wade Pursell, EVP and CFO; Blake McKenna, EVP and COO; James Lebeck, EVP – Corporate Development and General Counsel. Upon closing, the Board will total 11 members and be comprised of six representatives from SM Energy and five representatives from Civitas. Julio Quintana will serve as the Non-Executive Chairman. The company announced a target of at least $1B of planned divestitures within the first year following the closing of the transaction. Identified and achievable annual expected synergies totaling $200M, with upside potential to $300M, are expected to generate meaningful cost savings and margin improvements. The NPV-10 of the expected synergies is $1.0B-$1.5B, representing 22%-32% of the pro-forma market cap. Synergies across all categories are expected to be actioned in 2026, and at least $200M will be realized in 2027, with upside for an additional $100M of potential synergies. Management has identified opportunities to realize savings in all cost categories across its combined cornerstone Permian assets, along with similar expected savings across its other basins. Additionally, management anticipates improved subsurface development planning to yield stronger individual well performance through optimized lateral placement in stacked pay areas. Expects G&A annual synergies of $70M-$95M – 21%-28% of total expected category spend -. The cost of capital annual synergies is expected to be $30M-$55M, or 5%-10% of total expected category spend.