Civitas Resources, Inc. (NYSE:CIVI) shares traded higher premarket on Monday after the company inked a merger deal with SM Energy Company (NYSE:SM) for approximately $12.8 billion.
Details
As per the deal, Civitas shareholders will receive 1.45 shares of SM Energy for each Civitas share.
As part of the transaction, SM Energy will issue around 126.3 million shares to Civitas shareholders.
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Synergies
The merger is expected to deliver $200 million in identified annual synergies, with potential upside to $300 million, enhancing shareholder value.
The deal is anticipated to be immediately accretive to key per-share metrics, including operating cash flow, debt-adjusted cash flow, free cash flow, and net asset value.
Combined Company
The combined company will hold a premier portfolio of about 823,000 net acres in top U.S. shale basins, anchored by its Permian assets.
The pro forma second quarter 2025 production reached 526 MBoe/d for the combined company.
The company will continue to trade as SM Energy (NYSE:SM).
Following the closing, SM Energy shareholders will own roughly 48% and Civitas shareholders about 52% of the merged company on a fully diluted basis.
The pro forma 2025 consensus free cash flow is expected to exceed $1.4 billion for the combined company.
The merged company is expected to maintain sustainable dividends, building on SM Energy's track record of 33% per-share growth in its dividend program since its launch in 2022.
Management Commentary
SM Energy chief executive officer Herb Vogel stated, “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.”
Price Action: CIVI shares are up 3.12% at $29.73 premarket at the last check on Monday.
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