I went to my alma mater The University of Chicago this past weekend and joined my thesis advisors Fred Ziegler, Frank Richter, and others to celebrate the life of Professor David Rowley, who unfortunately passed away one year ago. It was a special occasion for me to meet Dave’s family and many old friends. We shared our admiration and love for Dave—a truly unique human being who touched so many lives with his broad shoulders, big heart, and focus on global issues.
Now, let’s take a look at a trending newsbyte from the past week.
Shangyou Nie
Editor, Well Read
SM Energy and Civitas Merge as U.S. Shale Players Consolidate
Piotr Swat/Shutterstock.com
SM Energy Co. and Civitas Resources announced on 3 November that both companies have entered into a no-premium, all stock merger to create a $12.8 billion company. The new company will become one of the top 10 oil focused, U.S. independent producers.
About the merger:
The deal is subject to shareholder approvals from both companies and is expected to close in Q1 2026.
According to SM Energy, under the terms of the transaction, the combined company will retain the SM Energy name and trade under the ticker SM.
The new company will also operate out of SM Energy’s HQ in Denver.
Each Civitas share will be exchanged for 1.45 shares of SM common stock.
Initial annual synergy cost savings will be around $200 million, with an upside of $300 million.
Based on the merger call to the analysts, synergy savings will mostly come from GA headcount reduction and capital borrowing, not from asset adjacency, as there is not too much asset overlap from the two companies.
SM Energy shares rose 7.9 percent, while Civitas rose 5.8 percent in pre-market trading on Nov 3.
Post-merger:
After the deal is completed, Civitas shareholders will own about 52 percent of the combined company.
Quarterly dividends will be maintained at $0.20 per share.
The new SM will have:
An enterprise value of $12.8 billion, including debt from both companies
526,000 barrels of oil equivalent per day of production and 823,000 net acres
A focus on the Permian Basin (with 48 percent of the combined production and 46 percent of proved reserves)
Assets in the DJ Basin (Colorado), Uinta Basin (Utah), and Eagle Ford Basin (Texas)
A new board with 11 directors, five from each company, plus current SM Energy Chairman of the Board Julio Quintana, who will continue in his role.
Beth McDonald, current president and COO for SM Energy, will take over as CEO of the new SM.
McDonald was previously EVP for strategic planning, field development, and marketing for Dallas-based Pioneer Natural Resources.
According to McDonald at the merger conference call, a key focus will be to lower the new company’s debt level, estimated to achieve at 1X level by end 2027 at $65 oil price.
About SM Energy:
SM Q2 2025 production was 209,000 barrels of oil equivalent per day, and has a net proved reserves of 678 million barrels of oil equivalent.
Currently, SM has:
325,000 net acres
1,250 net locations
An estimated $1.4 billion 2025 CapEx program
A market cap of $2.2 billion and a 2.7 P/E ratio
$2.7 billion in debt
About Civitas:
Civitas’ Q2 2025 production was 315,000 barrels of oil equivalent per day, and net proved reserves of 798 million barrels of oil equivalent.
Civitas currently has:
498,000 net acres
1,150 net locations.
An estimated $1.9 billion 2025 CapEx program
A market cap of $2.6 billion and a 3.6 P/E ratio
$5.3 billion in debt
Civitas has been selling assets in the DJ Basin to pay down debt. It was considering selling the entire DJ Basin but did not get an attractive enough offer, according to Bloomberg.
The bigger picture:
U.S. onshore M&A activity has been slow during the three quarters of 2025.
As low oil prices persist and oil price expectations converge, M&A activities are expected to pick up, with companies combining forces to fend off the weak price environment.
What to watch:
The no-premium mergers amongst equals will likely continue, perhaps to include both U.S. onshore oil and gas deals.
Will big majors such as ExxonMobil, Chevron, or COP, be able to get more of the action? ExxonMobil bought Sinochem’s Permian Basin assets last week, for example.
Will any overseas investors from the Middle East, Asia, and Europe join the M&A action as part of the commitment to President Trump to invest in the U.S. energy sector?
SM said during the merger call that it would do some “opportunistic” divestments to help pay down the debt. Which assets will be on the list?
For full details of the SM Energy and Civitas combination, refer here.
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