2025 Results & 2026 Outlook FEBRUARY 25, 2026 NYSE: SM SM-Energy.com Disclaimers Forward-Looking Statements This presentation contains forward-looking statements within the meaning of securities laws. The words "action," "anticipate," "deliver," "demonstrate," "establish," "estimate," "expects," "goal," "generate," "guidance," "integrate," "maintain," "objectives," "optimize," "project," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this ...

Merger Overview - SM Energy Company has completed an all-stock merger with Civitas Resources, creating a combined entity named SM Energy Company, headquartered in Denver, Colorado, US [1] - The merger was valued at approximately $12.8 billion, including net debt, and received shareholder approval from both companies [1][4] Share Exchange and Ownership Structure - Each Civitas share is exchanged for 1.45 SM Energy shares, resulting in the issuance of approximately 126.3 million new shares of common stock by SM Energy [2] - Post-merger, SM Energy shareholders will own about 48% of the combined company, while Civitas shareholders will hold around 52% [2] Leadership and Governance - The Board of Directors will consist of 11 members, with six from SM Energy and five from Civitas [3] - The leadership team includes Beth McDonald as president and CEO, and Blake McKenna as executive vice-president and COO [2] Operational Focus and Financial Outlook - The combined entity manages a portfolio of approximately 823,000 net acres, focusing significantly on the Permian Basin [3] - Expected free cash flow is projected to exceed $1.4 billion for the full year 2025, aiming to enhance capital returns and investment appeal [3] Integration and Future Plans - The company aims to integrate effectively to unlock additional free cash flow, targeting annual synergies of $200–300 million and divestitures of at least $1 billion over the next year [5] - Plans to strengthen the balance sheet and accelerate capital returns to stockholders are in place, with an updated operating plan and return of capital framework to be shared in February 2026 [6]

Index Changes - S&P Dow Jones Indices will implement changes to the S&P MidCap 400 and S&P SmallCap 600 indices effective January 30 and February 2, 2026 [1][3] - TTM Technologies (TTMI) will be added to the S&P MidCap 400, replacing Civitas Resources (CIVI), which is being acquired by SM Energy [1][3] - Amneal Pharmaceuticals (AMRX) will be added to the S&P SmallCap 600, replacing TTM Technologies [1][3] - Dutch Bros (BROS), Advanced Energy Industries (AEIS), and American Healthcare REIT (AHR) will be added to the S&P MidCap 400 on February 2, 2026, with Comerica (CMA), Cadence Bank (CADE), and PotlatchDeltic (PCH) being removed [1][3] - Apellis Pharmaceuticals (APLS) and LegalZoom.com (LZ) will be added to the S&P SmallCap 600, replacing Advanced Energy Industries and Elme Communities (ELME), respectively [1][3] Acquisition Details - SM Energy is acquiring Civitas Resources, and the deal is expected to close soon, with SM Energy remaining in the S&P SmallCap 600 post-merger [3] - Rayonier is acquiring PotlatchDeltic, and will remain in the S&P MidCap 400 after the merger [3] - Fifth Third Bancorp is acquiring Comerica, which will also remain in the S&P MidCap 400 post-acquisition [3] - Huntington Bancshares is acquiring Cadence Bank, with Cadence being removed from the S&P MidCap 400 [3] - Elme Communities is undergoing liquidation activities, making it no longer suitable for the S&P SmallCap 600 [3]

Core Thesis - Chord Energy Corporation (CHRD) is viewed positively due to its strong balance sheet, disciplined operations, and shareholder-friendly capital allocation, returning over 90% of adjusted free cash flow to shareholders [2][5] Financial Performance - As of January 19th, CHRD's share price was $92.30, with a trailing P/E ratio of 31.18 [1] - The company has a robust capital return profile, combining an attractive base dividend with consistent share repurchases, retiring approximately 5–8% of outstanding shares annually [2] Asset Base and Operations - CHRD's asset base is highly concentrated, with about 98% of its acreage in the Williston Basin, which enhances its scale and operational efficiency [3] - The recent acquisition of Enerplus has improved CHRD's inventory depth and long-term capital efficiency [3] Market Position and Pricing - Williston Basin production primarily consists of light, sweet crude, benefiting from favorable pricing dynamics, which mitigates the impact of heavy oil supply from Venezuela on CHRD's pricing [3] - The company is well-positioned to endure prolonged commodity weakness, maintaining viable economics even at approximately $50 oil over a multi-year horizon [4] Valuation and Investment Opportunity - With shares trading around $90, CHRD is considered mispriced relative to its free cash flow yield and balance sheet strength [5] - The combination of asset quality, financial flexibility, and disciplined shareholder returns presents a compelling long-term value opportunity despite inherent commodity price volatility [5]

Group 1 - Civitas Resources, Inc. (NYSE:CIVI) is identified as one of the 10 cheapest oil and gas stocks, with a Hold rating and a price target of $29, indicating a potential upside of 12.5% from current levels [1] - The company received regulatory approval for its merger with SM Energy Company, which reduces antitrust uncertainty and is a significant milestone for the deal's completion [2] - Analysts have noted that the stock's valuation is expected to be closely tied to the merger deal until it is finalized, indicating limited upside potential in the short term [3] Group 2 - Civitas Resources focuses on the production, development, and acquisition of crude oil and associated liquids-rich natural gas, and was founded in 2010, headquartered in Denver, Colorado [3]

Core Viewpoint - SM Energy Company (NYSE:SM) is identified as a low-priced stock with significant upside potential, particularly following KeyBanc's revised price target of $28 from $36 while maintaining an Overweight rating due to increased confidence in the Civitas Resources Inc. merger [1]. Financial Performance - In Q3 2025, SM Energy reported a net income of $155.1 million, equating to $1.35 per diluted common share, surpassing analyst estimates of $1.30 per share [3]. - Total revenue for the quarter reached $846 million, aligning with market expectations [3]. - Total net daily production increased by 26% year-over-year, with oil production surging by 47%, highlighting the effectiveness of the company's acquisition and development strategies [3]. Strategic Insights - KeyBanc's confidence in SM Energy is based on three main pillars: robust free cash flow generation, a rapid deleveraging schedule, and a disciplined debt management plan [2]. - The merger with Civitas Resources, initially met with skepticism, has been validated through financial analysis and management discussions, reinforcing its strategic value [2]. Company Overview - SM Energy is an independent energy company focused on acquiring, exploring, developing, and producing oil, gas, and natural gas liquids primarily in Texas [4].

Digital Assets - Digital assets companies have made progress with the passage of a light-touch regulatory law for dollar-pegged stablecoins, facilitating broader use of the technology in everyday finance [1] - The crypto industry is pushing for a comprehensive rewrite of securities and commodities laws to establish favorable regulations for cryptoassets, supported by a $263 million campaign war chest amassed in super-PACs [1] Energy Sector - Energy companies have secured a tax break exceeding $1 billion for oil and gas producers as part of the Trump tax package, allowing deductions for certain drilling costs under a 15% corporate alternative minimum tax [2] Private Equity - Congressional Republicans resisted President Trump's initial demands to raise taxes on carried interest, preserving a tax break favored by private equity, while also achieving an expanded interest expensing tax break [3] Technology Sector - America's most valuable company, Nvidia, successfully countered efforts by Republican China hawks to prioritize US companies for its products, aided by CEO Jensen Huang's lobbying in Congress and the White House [4] Healthcare and Renewable Energy - The healthcare sector, along with renewable energy companies, faced legislative challenges, while chipmakers and drug companies managed to avoid significant congressional interventions [5] Tax Cuts and Corporate Benefits - The Republican-controlled Congress has been favorable to corporate America, highlighted by a $4 trillion tax cut package that extended and added generous breaks for businesses [6] - Drug companies largely blocked legislative efforts aimed at controlling their prices, despite Trump's rhetoric on requiring price cuts [6] Defense Industry - The defense industry successfully increased the Pentagon budget by $150 billion as part of Trump's tax and spending package, with notable beneficiaries including Anduril Industries, Palantir Technologies, and Boeing [9] Financial Sector - The passage of stablecoin legislation poses a threat to the banking sector's dominance in the payments system, although bankers managed to block legislation aimed at reducing credit card swipe fees [16] Casinos - Professional gamblers are now limited to deducting only 90% of their losses against winnings under the new tax bill, prompting major casino companies to seek repeal of this provision [17] Airlines - Airlines incurred significant losses during the longest government shutdown, with Delta Air Lines estimating a $200 million revenue hit [18] Importers - Retailers and importers affected by Trump's tariffs received minimal support from lawmakers, as Republicans largely refrained from intervening in trade issues [20]

Core Insights - The year 2025 has experienced significant volatility in equity markets due to tariff issues, inflation, softening job growth, and geopolitical tensions [1] - Despite market uncertainties, investors are encouraged to consider stocks with strong broker recommendations and improving earnings estimates [2][7] Stock Recommendations - Recommended stocks include Zumiez (ZUMZ), The Beachbody Company (BODI), CVR Energy (CVI), Civitas Resources (CIVI), and Adient (ADNT), all of which have shown strong earnings estimate revisions and favorable broker recommendations [2][7] - Zumiez is a specialty retailer focusing on apparel and accessories, with a strong performance driven by North American markets [6][7] - The Beachbody Company offers a vast digital fitness library and has consistently surpassed earnings estimates, showcasing a strong digital model [8][9] - CVR Energy is involved in renewable energy and petroleum refining, with a commitment to reducing carbon emissions [10][11] - Civitas Resources benefits from a strong presence in productive U.S. shale plays, enhancing its market position [11][12] - Adient has a diverse customer base and international presence, contributing to its growth potential [12][13] Screening Strategy - A screening strategy was developed to identify stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks [4] - Key parameters include net upgrades in broker ratings, percentage change in earnings estimates, price-to-sales ratio, stock price above $5, average daily volume over 100,000 shares, and market capitalization in the top 3000 [5][6]

Core Insights - Civitas Resources, Inc. (NYSE:CIVI) is recognized as one of the 9 hot energy stocks to buy, with UBS maintaining a Neutral rating and a price target of $27 following the third-quarter 2025 earnings report [1][2] Production and Financial Performance - The company reported a 6% increase in overall output, averaging approximately 336,000 barrels of oil equivalent per day (mboepd) during the quarter [1] - Oil volumes rose to 158 thousand barrels per day, while cash operating costs decreased by 5% to $9.67 per barrel of oil equivalent [1] - Adjusted earnings per share for the third quarter were $1.93, significantly exceeding the consensus forecast of $1.34 [2] - Revenue for the quarter was $1.17 billion, slightly below analyst expectations of $1.20 billion [2] Operational Improvements - UBS noted that Civitas Resources demonstrated "continued operational improvements" during the quarter, which are expected to benefit the company moving forward [2]

Core Viewpoint - The merger between Civitas Resources, Inc. (CIVI) and SM Energy Company (SM) has raised concerns among shareholders regarding its potential impact on long-term investment value [1]. Company Analysis - Civitas Resources, Inc. is involved in the energy sector, specifically focusing on oil and gas production [1]. - The company has a beneficial long position in its shares, indicating confidence in its long-term performance despite merger concerns [2]. Industry Context - The energy industry is currently experiencing significant consolidation, with mergers and acquisitions being a common strategy for growth and market positioning [1].