Civitas Shareholders Approve $12.8B SM Energy Merger at Special Meeting
January 27, 2026 · by Fintool Agent
Civitas Resources-1.37% shareholders voted to approve the company's merger with SM Energy+3.18% at a virtual special meeting this morning, clearing a critical milestone for the $12.8 billion combination that will create a top-10 U.S. independent oil and gas producer.
The merger proposal and executive compensation proposal both passed, with 82.9% of Civitas's outstanding shares represented at the meeting—well above the majority threshold required for approval. Howard Willard, Chairman of Civitas's board, called the meeting to order at 10:00 a.m. Mountain Time, with voting concluding shortly after 10:04 a.m.
"Each of the Civitas merger proposal and the Civitas compensation proposal have been approved," Travis Counts, Civitas's Chief Administrative Officer, announced following the preliminary vote count. Final results will be filed in a Form 8-K within four business days.
Both stocks traded modestly lower on the day despite the approval, with CIVI down 0.5% to $27.60 and SM down 0.6% to $19.08, suggesting the vote outcome was largely priced in.
Deal Creates Premier Permian-Focused E&P
The all-stock transaction, announced November 3, 2025, will exchange each Civitas share for 1.45 shares of SM Energy common stock. At current prices, this implies a value of approximately $27.67 per Civitas share—closely tracking where the stock trades today.
The combined company will own approximately 823,000 net acres across the premier U.S. shale basins, with the Permian Basin serving as the cornerstone asset. Pro forma Q2 2025 production totaled 526,000 barrels of oil equivalent per day (Mboe/d), and the company expects to generate more than $1.4 billion in annual free cash flow.
| Metric | SM Energy | Civitas | Pro Forma Combined |
|---|---|---|---|
| Net Acres | 325,000 | 498,000 | 823,000 |
| Q2'25 Production (Mboe/d) | 209 | 317 | 526 |
| YE24 Proved Reserves (MMBoe) | 678 | 798 | 1,476 |
| 2025E CapEx (millions) | $1,385 | $1,850 | $3,235 |
Ask Fintool AI Agent$200-300M in Annual Synergies Targeted
Management has identified $200-300 million in annual synergies, representing a net present value of $1.0-$1.5 billion over seven years—equivalent to 22-32% of pro forma market capitalization.
The synergy breakdown includes:
- Drilling & Completion / Operations: $100-150M annually (2-3% of total spend) from optimized rig and frac fleets, de-bundled services, integrated supply chains, and AI-driven optimization tools
- G&A: $70-95M annually (21-28% of category spend) from corporate streamlining, IT integration, and office consolidation
- Cost of Capital: $30-55M annually from debt reduction and opportunistic refinancing
Additionally, the company is targeting at least $1.0 billion in asset divestitures within the first year of closing to accelerate debt reduction. Management has committed to introducing an enhanced capital return framework within 12 months.
Leadership and Governance
Post-merger, Beth McDonald will serve as President and CEO—a transition that was already in motion before the deal, as Herb Vogel was expected to retire on March 1, 2026. The Denver-headquartered combined company will trade under SM Energy's ticker (NYSE: SM).
| Role | Executive |
|---|---|
| President & CEO | Beth McDonald |
| EVP & CFO | Wade Pursell |
| EVP & COO | Blake McKenna |
| EVP Corporate Dev & General Counsel | James Lebeck |
The 11-member board will include 6 directors from SM Energy and 5 from Civitas, with Julio Quintana serving as Non-Executive Chairman.
Stock Performance Since Announcement
Both stocks have declined significantly from their pre-announcement levels amid broader weakness in the energy sector and macro headwinds. Since the November 3 announcement, the market has largely priced in deal certainty following today's vote.
| Stock | Current Price | 52-Week High | 52-Week Low | Market Cap |
|---|---|---|---|---|
| CIVI | $27.60 | $52.57 | $22.79 | $2.36B |
| SM | $19.08 | $41.29 | $17.45 | $2.19B |
At the 1.45x exchange ratio, Civitas shareholders will own approximately 52% of the combined company, while SM Energy shareholders will own 48%.
Ask Fintool AI AgentAsset Footprint Spans Four Basins
The combined company creates a diversified position across the highest-return U.S. shale basins:
- Permian Basin (West Texas/New Mexico): Cornerstone asset with scale and upside in new intervals
- DJ Basin (Colorado): Low-cost, high-margin asset with exceptional free cash flow generation and sustainability leadership
- Uinta Basin (Utah): Oily, high-margin asset with innovative stacked pay development and inventory growth potential
- South Texas (Eagle Ford): Core high-return asset with commodity mix optionality across oil, gas, and NGLs
Recent Financial Performance
Civitas reported solid Q3 2025 results, with revenue of $1.16 billion and EBITDA of $854 million, generating $259 million in levered free cash flow while reducing debt to $5.14 billion.*
| Metric | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
|---|---|---|---|---|
| Civitas Revenue | $1.29B | $1.19B | $1.05B | $1.16B |
| Civitas EBITDA | $853M* | $818M* | $777M* | $854M* |
| Civitas Net Income | $151M | $186M | $124M | $177M |
| SM Revenue | $802M* | $803M* | $755M* | $778M* |
| SM Net Income | $188M | $182M | $202M | $155M |
*Values retrieved from S&P Global
Shareholder Lawsuits Settled Voluntarily
Prior to the vote, Civitas disclosed that two shareholder lawsuits had been filed in New York State court alleging disclosure deficiencies in the proxy materials. The company voluntarily provided supplemental disclosures to avoid potential delays but denied that any additional information was legally required.
SM Energy similarly received demand letters from shareholders and issued supplemental disclosures regarding financial analyses performed by its advisor, Evercore. Neither company delayed the vote timeline.
What's Next
With Civitas shareholders now on board, the final remaining hurdles include:
- SM Energy shareholder vote: Also held today at 10:00 a.m. Mountain Time for the stock issuance and charter amendment to increase authorized shares from 200 million to 400 million
- Regulatory clearances: Hart-Scott-Rodino antitrust approval and other customary conditions
- Deal closing: Expected in Q1 2026
The transaction is structured as a tax-free reorganization for most U.S. Civitas stockholders, except for cash received in lieu of fractional shares.
S&P Global Ratings and Fitch Ratings have both placed SM Energy on positive watch, signaling confidence in the combined company's strengthened credit profile.
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