Civitas Eyes Strategic Merger With SM Energy Amid Permian Boom

Per Bloomberg, Civitas Resources, Inc. CIVI, which has been exploring strategic options including a possible sale, is reportedly in advanced talks with SM Energy Company SM for a merger of equals. The proposed deal, still under discussion, could create a combined entity valued at more than $14 billion, including debt, one of the largest oil and gas mergers of the year.Civitas, currently carrying a Zacks Rank #5 (Strong Sell), was formed in 2021 through the merger of Bonanza Creek Energy and Extraction Oil & Gas — a product of industry consolidation. Since then, the company has expanded into one of the largest independent shale producers in the United States, fueled by a series of strategic bolt-on acquisitions — including Crestone Creek Resources, Vencer Energy and Bison Oil & Gas — as well as asset purchases from Hibernia Energy III and Tap Rock Resources.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Consolidation Accelerates in Permian & BeyondRecently, the Mergers and Acquisitions (M&A) activity of mid-sized operators to pursue scale and efficiency in the Permian and beyond is gaining momentum. The abovementioned announcement adds to the ongoing trend of shale consolidation, following a series of major M&A deals in recent years — most notably EOG Resources, Inc.’s EOG $5.6 billion acquisition of Encino and Viper Energy, Inc.’s VNOM $4.1 billion purchase of Sitio Royalties over the past two quarters. In recent months, Crescent Energy’s $3.1 billion acquisition of Vital Energy further emphasized the ongoing trend. A Civitas-SM Energy tie-up would unite two well-positioned public players in the basin, expanding their footprint and operational leverage.Complementary Assets Across Key U.S. BasinsCivitas, valued at about $3.2 billion, operates across roughly 141,000 net acres in the Permian, while SM Energy’s 110,000-acre position lies in the prolific Midland Basin. Beyond the Permian, SM’s assets span the Eagle Ford shale in South Texas and Utah’s Uinta Basin, while Civitas maintains a strong hold in Colorado’s Denver-Julesburg Basin.Reshaping Portfolios & LeadershipCivitas has been streamlining operations through asset sales to reduce debt, including divesting lower-margin properties in Colorado. The company recently underwent a leadership change, with Wouter van Kempen stepping in as interim CEO in August, signaling a strategic reset as it considers transformational opportunities like the SM Energy merger.Quantum Computing Stocks Set To SoarArtificial intelligence has already reshaped the investment landscape, and its convergence with quantum computing could lead to the most significant wealth-building opportunities of our time.Today, you have a chance to position your portfolio at the forefront of this technological revolution. In our urgent special report, Beyond AI: The Quantum Leap in Computing Power, you'll discover the little-known stocks we believe will win the quantum computing race and deliver massive gains to early investors.Access the Report Free Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report EOG Resources, Inc. (EOG): Free Stock Analysis Report SM Energy Company (SM): Free Stock Analysis Report Viper Energy Inc. (VNOM): Free Stock Analysis Report Civitas Resources, Inc. (CIVI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks