Civitas Resources, Inc. ( CIVI ) shares traded higher premarket on Monday after the company inked a merger deal with SM Energy Company ( SM ) for approximately $12.8 billion.

Details

As per the deal, Civitas shareholders will receive 1.45 shares of SM Energy ( SM ) for each Civitas share.

As part of the transaction, SM Energy ( SM ) 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 ( SM ) .

Following the closing, SM Energy ( SM ) 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 ( SM ) track record of 33% per-share growth in its dividend program since its launch in 2022.

Management Commentary

SM Energy ( SM ) 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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