06:55 AM EST, 11/03/2025 (MT Newswires) -- SM Energy ( SM ) and Civitas Resources ( CIVI ) said Monday they have signed a definitive merger agreement for an all-stock transaction.

The deal values the combined entity at about $12.8 billion, inclusive of both companies' net debt, according to the companies.

Under the terms of the agreement, each Civitas common share will be exchanged for 1.45 SM Energy ( SM ) common shares. Upon closing, SM Energy ( SM ) shareholders will own about 48% of the combined company, while Civitas shareholders will hold about 52% on a fully diluted basis, they said. The merged company will continue to trade under the SM Energy ( SM ) name.

According to the statement, SM Energy ( SM ) will issue about 126.3 million common shares as consideration to Civitas shareholders. The combined company will hold around 823,000 net acres, including the Permian Basin position. The companies expect pro forma 2025 free cash flow to exceed $1.4 billion.

The combined entity's board will consist of 11 members, including six from SM Energy ( SM ) and five from Civitas, the companies said. Julio Quintana will serve as non-executive chairman.

The combined company will be headquartered in Denver, Colorado, and led by SM Energy ( SM ) CEO Herb Vogel, the statement said, adding that the previously announced CEO transition to Beth McDonald remains on track.

Both companies said their boards unanimously approved the merger, which is expected to close in Q1 2026, pending shareholder and regulatory approvals. The combined entity will maintain a quarterly dividend of $0.20 per share.