425: Civitas, SM Energy Merger Approved by Stockholders

Stockholders of Civitas Resources and SM Energy Company have overwhelmingly approved the all-stock merger, with closing expected on January 30, 2026.

Summary

• Civitas Resources, Inc. (Civitas) and SM Energy Company (SM Energy) stockholders approved all proposals necessary for their previously announced all-stock merger.
• The merger is expected to close on January 30, 2026, subject to customary closing conditions.
• At Civitas's special meeting, 82.9% of outstanding shares were represented, with approximately 97.7% voting to adopt the merger agreement.
• Specifically, for the merger agreement proposal, Civitas stockholders cast 69,136,817 'For' votes, 1,304,552 'Against' votes, and 288,657 'Abstentions'.
• Civitas stockholders also approved, on a non-binding advisory basis, executive compensation related to the merger, with 60,434,236 'For' votes, 9,889,615 'Against' votes, and 406,175 'Abstentions'.
• At SM Energy's special meeting, approximately 76.5% of outstanding shares were represented.
• SM Energy stockholders voted approximately 99.1% to approve the issuance of SM Energy common stock to Civitas stockholders.
• SM Energy stockholders also voted approximately 98.6% to approve an amendment to increase the number of authorized shares.
• Each share of Civitas Common Stock will be converted into the right to receive 1.45 shares of common stock of SM Energy.

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to the successful and overwhelming stockholder approval of a significant strategic merger. Management comments are optimistic about the combined company's future prospects, including enhanced scale, top-tier assets, free cash flow generation, and long-term value creation. The expected closing date is imminent, indicating smooth progress.

Positives

• Strong endorsement from stockholders of both companies for the transformative merger.
• The combination creates a leading oil and gas company with enhanced scale and top-tier assets.
• The combined entity is focused on generating significant free cash flow and delivering superior, long-term value for stockholders.
• The merger strengthens the competitive position in high-return U.S. shale basins.
• Anticipated meaningful synergies and free cash flow are expected to drive long-term, sustainable growth and value creation.

Risks

• The expected timing and likelihood of completion of the mergers may differ from current expectations.
• Challenges may arise in successfully integrating the businesses of the combined company.
• The occurrence of any event, change, or other circumstances could lead to the termination of the Merger Agreement.
• The parties may not be able to satisfy the conditions to the mergers in a timely manner or at all.
• The mergers could disrupt management time from ongoing business operations.
• Announcements related to the mergers could have adverse effects on the market price of SM Energy's or Civitas's common stock.
• The mergers and their announcement could adversely affect the ability to retain customers, hire key personnel, and maintain relationships with suppliers and customers.
• The pending mergers could distract management of both entities and incur substantial costs.
• Problems may arise in successfully integrating the businesses, potentially resulting in the combined company not operating as effectively and efficiently as expected.
• The combined company may be unable to achieve anticipated synergies, or it may take longer than expected to achieve them.

Future Outlook

The combined company is expected to be a leading oil and gas entity with enhanced scale, top-tier assets, and a strengthened competitive position in high-return U.S. shale basins. Management anticipates generating significant free cash flow, unlocking meaningful synergies, and driving superior, long-term value and sustainable growth through every cycle.

Management Comments

• Herb Vogel, SM Energy Chief Executive Officer, commented: "We are delighted with the strong endorsement of this transformative merger by our stockholders. This combination brings together two highly complementary organizations to create a leading oil and gas company with enhanced scale and top-tier assets. Our team is focused on generating significant free cash flow and delivering superior, long-term value for our stockholders."
• Wouter van Kempen, Civitas Interim Chief Executive Officer, commented: "Today's merger approval brings together two premier operators with exceptional assets and technical talent. This combination strengthens our competitive position in the highest return U.S. shale basins and will ultimately unlock meaningful synergies and free cash flow, better positioning the organization to drive long term, sustainable growth and value creation through every cycle."

Industry Context

This merger represents a significant consolidation within the independent energy sector, creating a larger, more competitive player focused on crude oil, natural gas, and NGLs production. The emphasis on 'enhanced scale' and 'top-tier assets' in 'highest return U.S. shale basins' aligns with broader industry trends towards efficiency, strategic asset optimization, and free cash flow generation in a volatile energy market.

Corporate Governance

Stakeholder Impact

• Shareholders of Civitas Resources will receive 1.45 shares of SM Energy common stock for each Civitas share, becoming shareholders of the combined entity.
• Shareholders of SM Energy will experience dilution due to the issuance of new shares but are expected to benefit from the enhanced scale, synergies, and value creation of the combined company.
• Employees of both companies may face integration challenges and potential changes in roles or organizational structure, as noted in the risks related to retaining key personnel.
• Customers and suppliers of both companies may experience changes in relationships or operational processes as the businesses integrate, with risks noted regarding maintaining these relationships.

Next Steps

• The merger is expected to close on January 30, 2026, subject to satisfaction of other customary closing conditions.

Key Dates

Recommendation

The filing confirms the successful stockholder approval of the previously announced merger, solidifying the strategic path for both companies. For existing shareholders, this is an expected event that confirms the transaction will proceed, leading to the formation of a larger, more competitive entity with anticipated synergies. While the long-term outlook for the combined company is presented positively by management, this specific filing primarily confirms a procedural step rather than introducing new financial performance data. Therefore, a 'hold' recommendation is appropriate for existing investors awaiting the full integration and realization of the projected benefits, as the immediate impact of this confirmation is likely priced in.

Keywords

Merger, Acquisition, Stockholder Vote, SM Energy, Civitas Resources, Oil and Gas, E&P, Energy Sector, Corporate Action, Shareholder Approval