In a move set to shake up the American oil landscape, SM Energy Co. announced Monday it will merge with Civitas Resources Inc. in a $12.8 billion all-stock deal, forging one of the nation’s largest independent energy producers.
Advised by Gibson Dunn & Crutcher LLP, SM Energy will exchange 1.45 shares of its common stock for each Civitas share, according to a joint statement. When the deal closes, Civitas shareholders will own 52% of the combined entity, while SM Energy shareholders will hold 48% on a fully diluted basis.
Transforming Into a Shale Titan
The merger unites two of the strongest operators in the U.S. shale oil scene. SM Energy, with deep roots in Texas and Utah, focuses on the acquisition, exploration, and development of crude oil, natural gas, and natural gas liquids. Civitas, led by Kirkland & Ellis LLP, brings prime assets in the Permian Basin of Texas and New Mexico and the DJ Basin of Colorado.
Together, the two will control 823,000 net acres across some of the most profitable oil regions in the country. The deal promises to “immediately transform” the combined firm into a top-10 U.S. independent oil producer, according to Monday’s announcement.
“This merger combines two premier operators and establishes a company with transformative scale in the highest-return shale basins,” said Beth McDonald, SM Energy’s president and chief operating officer. She added that the combined strength will “unlock significant free cash flow, strengthen our balance sheet, and accelerate shareholder returns.”
