SM Energy Reports 110% Revenue Increase and $335 Million Net Loss Following Civitas Merger

SM Energy Company reported significant financial changes in its latest 10-Q filing for the first quarter of 2026, primarily driven by the completion of its merger with Civitas Resources, Inc. on January 30, 2026. The company recorded operating revenues of $1.48 billion, a substantial increase of 110% from $703 million in the previous quarter. This surge in revenue was attributed to a 79% rise in average daily equivalent production, which reached 371.2 thousand barrels of oil equivalent (MBOE) per day, and a 20% increase in total realized prices per BOE. However, the company also faced a net loss of $335 million, or $1.68 per diluted share, compared to a net income of $109 million, or $0.95 per diluted share, in the prior quarter, largely due to a $697 million net derivative loss linked to rising oil prices amid geopolitical tensions.

The merger with Civitas significantly altered SM Energy's operational landscape, expanding its asset base and production capabilities. The company reported that revenue from Civitas operations contributed approximately $736 million during the quarter. The merger also resulted in a notable increase in total assets, which rose to $19.14 billion from $9.25 billion at the end of 2025. The company’s total stockholders’ equity increased to $6.87 billion, reflecting the issuance of 124 million shares to Civitas stockholders as part of the merger agreement.

Operationally, SM Energy's production metrics showed marked improvement, with oil production from the Permian Basin alone generating $729 million in revenue, up from $393 million in the previous quarter. The company also reported a significant increase in production expenses, which rose to $428 million, reflecting the integration of Civitas' higher-cost assets. The company’s general and administrative expenses surged to $174 million, primarily due to one-time costs associated with the merger, including severance and integration expenses.

Looking ahead, SM Energy has outlined a capital expenditure program for 2026 estimated between $2.65 billion and $2.85 billion, focusing on high-return projects across its expanded asset base. The company anticipates that the integration of Civitas will yield operational efficiencies and cost synergies, contributing to improved cash flow generation. Additionally, SM Energy plans to utilize proceeds from its recent South Texas divestiture, which netted approximately $900 million, to reduce debt and strengthen its capital structure. The company remains committed to maintaining financial flexibility while navigating the volatile commodity price environment, with expectations of continued operational improvements throughout the year.