Started From the Bottom – Merger of SM Energy and Civitas Resources Will Propel Them Higher

Two Denver-based E&Ps that each started out small but quickly expanded through a series of acquisitions will now combine to form one of the nation’s larger crude-oil-focused producers. With the planned stock-for-stock merger of SM Energy and Civitas Resources, the pro forma company — which will retain the SM Energy moniker — will be a significant player in the Permian, South Texas, the Denver-Julesburg (DJ) and the Uinta. In today’s RBN blog, we’ll discuss the planned combination of these two E&Ps and their rationale for it.

We’ll start with a look at SM Energy and its history, follow that with a review of Civitas Resources, and then discuss the pro forma’s assets and plans. The company now known as SM Energy started out in 1908 as St. Mary Parish Land Co. with the aim of acquiring land (and mineral rights) along the Louisiana coast for farming, cattle ranching and salt mining. Those efforts didn’t amount to much, but in 1938, Texaco made a major oil discovery — later dubbed the Horseshoe Bayou Field — on land it had leased from St. Mary.

More leases to oil companies followed; so did more discoveries and the royalties that came with them. In 1978 and 1991, respectively, St. Mary invested in small E&Ps in the Anadarko in Oklahoma and the Williston Basin/Bakken in Montana and North Dakota. (Those holdings were later divested.) In 1992, the company renamed itself St. Mary Land & Exploration, went public and started acquiring other oil and gas assets, including an initial 30,000 acres in the Permian’s Midland Basin in 1994. In the early years of the Shale Revolution, St. Mary bought into the Maverick Basin at the southern edge of the Eagle Ford Shale (mostly in Webb County, TX) and renamed itself once again, this time to SM Energy.

SM Energy’s most significant acquisitions since then came in 2016 and 2017, when it acquired 65,000 net acres in the Midland Basin in West Texas’s Howard and Martin counties for $2.6 billion; in 2023, when it acquired another 29,700 net acres in the Midland (bringing its total there to 111,000 acres); and in 2024, when it bought an undivided 80% interest in XCL Resources’ oil and gas assets in the Uinta Basin in northeastern Utah for just over $2 billion. (Northern Oil & Gas bought the other 20%; see I Want Your Wax for details.) In Q3 2025, SM Energy produced an average of 214 Mboe/d (53% oil), including 86 Mboe/d (26% oil) in South Texas, 82 Mboe/d (63% oil) in the Midland, and 46 Mboe/d (88% oil) in the waxy-crude Uinta.

As for Civitas Resources, it was formed in May 2021, when Bonanza Creek Energy and Extraction Oil & Gas, two DJ-focused producers with a combined 425,000 net acres and 117 Mboe/d of production, announced a $2.6 billion “merger of equals” and the new company name. The following month, Civitas unveiled plans to acquire another DJ E&P, Crestone Peak Resources, that would increase the company’s holdings to more than 500,000 net acres and its production to 160 Mboe/d. The merger and the Crestone acquisition closed that November. Civitas was just getting started. In March 2022, it closed on the purchase of privately held Bison Oil & Gas II LLC — yet another DJ producer — in a cash, stock and debt-assumption deal valued at $346 million. The Bison II acquisition added another 40,000 net acres and 9 Mboe/d of production, and made Civitas the DJ’s second-largest producer.

In August 2023, Civitas expanded into the Permian with a pair of multibillion-dollar acquisitions that gave it immediate scale in both the Delaware and Midland basins. First, it purchased a portion of Tap Rock Resources’ Delaware Basin assets for $2.45 billion. The assets included about 30,000 net acres, mostly in New Mexico’s Eddy and Lea counties, 59 Mboe/d of production, and 350 or so high-quality drilling locations. Second, Civitas bought Hibernia Resources’ Midland Basin assets for $2.25 billion. The assets included about 38,000 net acres in West Texas’s Reagan and Upton counties, 41 Mboe/d of production, and about 450 drilling locations.

Another couple of Permian acquisitions followed soon thereafter. In January 2024, Civitas closed on the $2.1 billion purchase of Vencer Energy, which added another 44,000 net acres and 62 Mboe/d (50% oil) in the Midland; a year later it acquired another 19,000 net acres in the southern Midland for about $300 million. Finally, this past August, Civitas announced two deals totaling $435 million, this time to divest non-core assets in the DJ with 12 Mboe/d of production, a small fraction of the company’s Q2 2025 output of 317 Mboe/d (47% oil). Of that Q2 production, by the way, 146 Mboe/d was in the DJ (45% oil), 113 Mboe/d in the Midland (49% oil), and 57 Mboe/d in the Delaware Basin (49% oil).

All of which brings us to the SM Energy/Civitas merger announced on November 3. The deal, which is expected to close in Q1 2026, calls for each common share of Civitas (stock symbol CIVI) to be exchanged for 1.45 shares of SM Energy (SM). The pro forma company, which will use the SM Energy name, will have an enterprise value of $12.8 billion, including $8 billion in debt from SM Energy and Civitas. It will have 823,000 net acres and 1,476 MMboe of estimated net proven reserves (as of year-end 2024), “with the Permian position being the cornerstone,” according to a jointly issued statement. Figure 1 below summarizes the companies’ view of the merged entity’s four primary production areas.