10:29 AM EST, 11/03/2025 (MT Newswires) -- SM Energy ( SM ) and Civitas Resources ( CIVI ) agreed to merge in an all-stock deal, creating one of the largest independent oil-focused producer operating across US shale basins.

Shareholders of Civitas will receive 1.45 shares of SM Energy ( SM ), valuing the combined entity at about $12.8 billion, including debt, the exploration and production companies said in a joint statement Monday. SM Energy ( SM ) will issue roughly 126.3 million shares as consideration to Civitas' stockholders.

"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," SM Energy ( SM ) Chief Executive Herb Vogel said in the statement.

SM Energy's ( SM ) shares dropped 6.9% in Monday trade, while Civitas' fell 1.4%.

The deal, which requires approval from regulators and both companies' shareholders, is expected to complete in the first quarter of 2026. Following completion, SM Energy's ( SM ) investors will own 48% of the merged company, while Civitas' stockholders will control the remaining 52% stake.

"By combining our strong technical teams and complementary assets, we gain scale, sharpen our competitive edge, and strengthen our ability to responsibly produce energy that contributes to energy security and prosperity," Civitas interim CEO Wouter van Kempen said.

The combined entity is expected to operate 823,000 net acres across US shale basins, including its position in the Permian Basin. The companies anticipate the merger to generate annual synergies of $200 million, potentially rising to $300 million.

The merged company will be headquartered in Colorado, with Vogel serving as CEO. In September, SM Energy ( SM ) said Vogel will retire as CEO on March 1, with Chief Operating Officer Elizabeth McDonald to succeed him.

That transition remains on track, according to the Monday announcement.

Separately, SM Energy ( SM ) on Monday reported third-quarter adjusted earnings of $1.33 per share, down from $1.62 the year before, but topping the FactSet-polled consensus of $1.26. Revenue climbed to $811.6 million from $643.6 million, compared with the Street's view of $836.1 million.

Price: 19.43, Change: -1.46, Percent Change: -6.99