SM Energy Co

Merger with Civitas

On November 2, 2025, we entered into the Merger Agreement with Civitas. On January 27, 2026, our stockholders voted in favor of both proposals necessary to complete the Civitas Merger, which included approval of (i) the issuance of shares of SM Energy common stock to Civitas stockholders as contemplated by the Merger Agreement, and (ii) an amendment of our Restated Certificate of Incorporation to increase the number of authorized shares of our common stock from 200 million shares to 400 million shares.

On January 30, 2026, we completed the Civitas Merger in accordance with the terms of the Merger Agreement. Civitas was an independent exploration and production company focused on the acquisition, development, and production of crude oil and associated liquids-rich natural gas in the DJ Basin in Colorado and the Permian Basin in Texas and New Mexico. We believe that the Merger will create a premier portfolio across the highest-return U.S. shale basins, driving significant free cash flow, enhancing stockholder value, and enabling the realization of significant operational and cost efficiencies.

Under the terms of the Merger Agreement, subject to certain exceptions, each share of Civitas common stock was converted into the right to receive 1.45 shares of SM Energy common stock, with cash paid in lieu of fractional shares. On January 30, 2026, we issued approximately 124 million shares to holders of Civitas common stock, representing 52 percent of the outstanding shares of SM Energy’s common stock upon the closing of the Merger. Based on the closing price of SM Energy common stock on January 30, 2026, the total stock consideration was valued at$2.4 billion.

Refer to Note 17 – Mergers, Acquisitions, and Divestitures in Part II, Item 8 of this report for additional discussion.

South Texas Asset Divestiture

On February 17, 2026, we entered into the PSA with Caturus to sell certain of our South Texas assets for a Purchase Price of $950 million, subject to certain customary purchase price adjustments set forth in the PSA. This Transaction is expected to advance our deleveraging goals and position us to substantially achieve our commitment to complete at least $1.0 billion of divestitures within one year following the closing of the Civitas Merger. Refer to Note 17 – Mergers, Acquisitions, and Divestitures in Part II, Item 8 for additional discussion and the definitions of Purchase Price and Transaction.

General Overview

Our purpose is to make people’s lives better by responsibly producing energy supplies, contributing to domestic energy security and prosperity, and having a positive impact in the communities where we live and work. We are a premier operator of top-tier assets in the Midland Basin, South Texas, and the Uinta Basin, utilizing state-of-the-art digital technology, data analytics, and AI in our operations, and continually seeking innovative ideas to help us optimize capital efficiency and well performance, while reducing our impact on shared natural resources and operating in an efficient, safe, and responsible manner.

Following the closing of the Civitas Merger, our asset portfolio consists of high-quality assets in the Midland Basin and Delaware Basin, both of which are part of the larger Permian Basin of Texas and New Mexico, the Maverick Basin of South Texas, the Uinta Basin of northeast Utah, and the DJ Basin of northeast Colorado. We believe our assets are capable of generating strong returns in the current macroeconomic environment and provide resilience to commodity price risk and volatility. Through disciplined capital spending, strategic acquisitions and divestitures, and continued development and optimization, we seek to maximize returns and increase the value of our top-tier asset base while maintaining financial flexibility and a sustainable approach to long-term value creation.

Our long-term vision and strategy are focused on sustainably growing value for all of our stakeholders by deploying our technical excellence and exceptional execution to improve and optimize our high-quality asset portfolio, generate cash flows, and maintain a disciplined, strong balance sheet. Our team executes our strategy by prioritizing safety, technological innovation, and stewardship of natural resources, which are foundational to our corporate culture. Our near-term strategic focus is the successful integration of Civitas following the closing of the Merger on January 30, 2026. Integration is centered on maintaining safe operations, delivering consistent operational execution, and continuing to generate cash flows that enable us to return value to stockholders through fixed dividend payments, debt reduction, and share repurchases. Refer to Outlookfor discussion of our 2026 capital program.

We are committed to exceptional safety, health, and environmental stewardship; supporting the professional development of a diverse and thriving team of employees; building and maintaining partnerships with our stakeholders by investing in and connecting with the communities where we live and work; and transparency in reporting our progress in these areas. The Governance and Sustainability Committee of our Board of Directors oversees, among other things, the effectiveness of our sustainability policies, programs and initiatives, monitors and responds to emerging trends, issues, and associated risks, and, together with management, reports to our Board of Directors regarding such matters. Further demonstrating our commitment to sustainable operations and environmental stewardship, compensation for our executives and employees under certain aspects of our compensation plans is calculated based on Company-wide performance metrics that include key financial, operational, environmental, health, and safety measures. Refer to our Definitive Proxy Statement on Schedule 14A for the 2026 annual meeting of stockholders to be filed within 120 days from December 31, 2025, for additional discussion of our compensation program.

Market Trends and Uncertainties

As global commodities, the prices of oil, gas, and NGLs, as well as broader financial markets, remain subject to heightened uncertainty and volatility. Market conditions are influenced by factors including real or perceived geopolitical risks, War and Geopolitical Instability, OPEC+ production decisions, fluctuations in global supply and demand (including demand from China), U.S. Federal Reserve monetary policy, movements in the strength of the U.S. dollar, shipping channel constraints and disruptions, tariffs or trade restrictions, and changes in global oil inventory in storage. These factors have resulted in commodity price volatility, contributed to instances of supply chain disruptions, inflation, and interest rate fluctuations, and could have further industry-specific impacts that may require us to adjust our business plan. The timing and magnitude of future effects are inherently unpredictable.

Historically, tariffs have led to increased costs for products exchanged in international trade, and have heightened global political tensions. Recent U.S. government policies, including new and higher tariffs on imported goods, have increased economic uncertainty. These tariffs, along with retaliatory tariffs from other countries, could lead to reduced trade resulting from increased costs for imported goods and decreased demand for U.S. exports, as well as reduced investment and technological exchange between major economies. These outcomes could negatively impact global economic conditions, financial market stability, and commodity prices. Volatility in political, trade, regulatory, and economic conditions could have a material adverse effect on our financial condition or results of operations. We are unable to reasonably estimate the period of time that these market conditions will exist or the extent to which they will impact our business, results of operations, and financial condition.

Continuing volatility in political, trade, regulatory and economic conditions could impact supply and demand fundamentals, and any related declines in oil, gas, and NGL prices could lead to proved and unproved property impairments in the future. Future impairments of proved and unproved properties are difficult to predict, especially in a volatile price environment.

Outlook

We expect our total 2026 capital program to be approximately $2.65 billion to $2.85 billion, excluding acquisitions, which we expect to fund with cash flows from operations, with any remaining cash needs being funded by borrowings under our revolving credit facility. We plan to focus our 2026 capital program on highly economic oil development projects in our Midland Basin, South Texas, Uinta Basin, and DJ Basin assets. Refer to Outlookin Part I, Items 1 and 2 of this report for additional discussion.

2025 Financial and Operational Highlights

During 2025:

•We completed the integration of the Uinta Basin assets into our portfolio. Refer to Note 17 – Mergers, Acquisitions, and Divestitures in Part II, Item 8 of this report for additional discussion of the Uinta Basin Acquisition.

•Net equivalent production of 75.5 MMBOE drove net income of $648 million, net cash provided by operating activities of $2.0 billion, and Adjusted EBITDAX, a non-GAAP financial measure, of $2.3 billion. Refer to Non-GAAP Financial Measures below for additional discussion, including our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities.

•Strong operating cash flow enabled us to reduce debt through $69 million in net repayments on our revolving credit facility, increase cash on hand to $368 million, and return capital to stockholders. We repurchased and subsequently retired 444,705 shares of our common stock at a cost of $12 million, excluding excise taxes, commissions, and fees, and paid $92 million in dividends.

Financial and Operational Results. Oil, gas, and NGL production revenue increased 17 percent to $3.1 billion for the year ended December 31, 2025, compared with $2.7 billion for 2024. This increase was primarily driven by a 21 percent increase in average net daily equivalent production to 206.8 MBOE, reflecting a full year of production from our Uinta Basin assets and continued strong well performance, partially offset by a three percent decrease in total realized price per BOE due to lower oil and NGL benchmark commodity prices. Oil, gas, and NGL production expense on a per BOE basis increased 15 percent to $11.72 per BOE for the year ended December 31, 2025, compared with 2024.

We recorded net derivative gains of $178 million and $50 million for the years ended December 31, 2025, and 2024, respectively. These amounts include net derivative settlement gains of $132 million and $69 million for the years ended December 31, 2025, and 2024, respectively.

Operational activities during the year ended December 31, 2025, resulted in the following:

•Net cash provided by operating activities of $2.0 billion, compared with $1.8 billion for 2024.

•Net income of $648 million, or $5.64 per diluted share, compared with net income of $770 million, or $6.67 per diluted share for 2024.

•Adjusted EBITDAX, a non-GAAP financial measure, of $2.3 billion, compared with $2.0 billion for 2024. Refer to Non-GAAP Financial Measures below for additional discussion, including our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities.

•Estimated net proved reserves decreased slightly to 673.0 MMBOE as of December 31, 2025 from 678.3 MMBOE as of December 31, 2024. As of December 31, 2025, 60 percent of our net proved reserves were liquids (oil and NGLs), and 61 percent were proved developed reserves. The decrease primarily related to 75.5 MMBOE produced in 2025, the removal of 40.7 MMBOE of certain net proved undeveloped reserves that are no longer expected to be developed within the five-year period from initial booking resulting from testing and delineation efforts, and 15.5 MMBOE of net performance and price revisions. The decreases were mostly offset by revisions of previous estimates of 87.0 MMBOE related to infill reserves, primarily related to our South Texas assets, and additions from extensions and discoveries of 39.7 MMBOE, primarily related to our Uinta Basin assets. Our proved reserve life index decreased to 8.9 years as of December 31, 2025, compared with 10.9 years as of December 31, 2024. Refer to Reserves in Part I, Items 1 and 2 of this report for additional discussion. The standardized measure of discounted future net cash flows was $6.0 billion as of December 31, 2025, compared with $7.3 billion as of December 31, 2024. The year-over-year decrease of 18 percent was primarily due to decreases in oil and NGL benchmark commodity prices during 2025. Refer to Supplemental Oil and Gas Information (unaudited) in Part II, Item 8 of this report for additional discussion.

Operational Activities. During 2025, successful operational execution drove strong well performance and capital efficiency across our asset portfolio. Our continued success in our Midland Basin, South Texas, and Uinta Basin programs is attributable to our top-tier assets and technical teams, and our commitment to geoscience, technology, and innovation.

In our Midland Basin program, we averaged three drilling rigs and one completion crew during 2025. Average net daily equivalent production volumes increased year-over-year by three percent to 82.8 MBOE. Costs incurred during 2025 totaled $548 million, or 38 percent, of our total 2025 costs incurred. Drilling and completion activities focused on developing formations within our RockStar and Sweetie Peck assets.

In our South Texas program, we averaged one drilling rig and one completion crew during 2025. Average net daily equivalent production volumes decreased year-over-year by one percent to 80.3 MBOE. Costs incurred during 2025 totaled $361 million, or 25 percent, of our total 2025 costs incurred. Drilling and completion activities were primarily focused on delineating and developing the Austin Chalk formation.

In our Uinta Basin program, we averaged three drilling rigs and one completion crew during 2025. Average net daily equivalent production volumes increased to 43.7 MBOE for the full year 2025, compared to 36.1 MBOE for the fourth quarter of 2024. Costs incurred during 2025 totaled $481 million, or 33 percent, of our total 2025 costs incurred. Drilling and completion activities primarily focused on delineating and developing the Lower Green River and Wasatch formations.

The table below provides a summary of changes in our drilled but not completed well count and current year drilling, completion, and acquisition activity in our operated programs for the year ended December 31, 2025:

(1) As of December 31, 2024, the drilled but not completed well count included nine gross (nine net) wells that were not included in our five-year development plan, eight of which were in the Eagle Ford shale. As of December 31, 2025, the drilled but not completed well count included two gross (two net) wells that were not included in our five year development plan, each of which are in the Eagle Ford shale.

(2) The South Texas adjustments relate to previously drilled wells that we no longer intend to complete.

(3) The Uinta Basin adjustment relates to the acquisition of additional working interest in existing drilled but not completed wells.

Costs Incurred. Costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, are summarized as follows:

(1) Refer to the caption Costs Incurredin Supplemental Oil and Gas Information (unaudited)in Part II, Item 8 of this report.

Production Results. The table below presents the disaggregation of our net production volumes by product type for each of our assets for the year ended December 31, 2025:

Net equivalent production increased 21 percent for the year ended December 31, 2025, compared with 2024. The increase was a result of a three percent increase from our Midland Basin assets, a full year of production from our Uinta Basin assets, and continued strong well performance. Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between 2025 and 2024 below for additional discussion of production.

Oil, Gas, and NGL Prices

Our financial condition and the results of our operations are significantly affected by the prices we receive for our oil, gas, and NGL production, which can fluctuate dramatically. When we refer to realized oil, gas, and NGL prices below, the disclosed price represents the average price for the respective period, before the effect of net derivative settlements. While quoted NYMEX oil and gas and OPIS NGL prices are generally used as a basis for comparison within our industry, the prices we receive are affected by quality, energy content, location and transportation differentials, and contracted pricing benchmarks for these products.

The following table summarizes commodity price data, as well as the effect of net derivative settlements, for the years ended December 31, 2025, and 2024:

(1)Our realized prices at local sales points may be affected by infrastructure capacity in the areas of our operations and beyond.

(2)Average OPIS price per barrel of NGL, historical or strip, assumes a composite barrel product mix of 42% Ethane, 28% Propane, 6% Isobutane, 11% Normal Butane, and 13% Natural Gasoline. This product mix represents the industry standard composite barrel and does not necessarily represent our product mix for NGL production. Realized prices reflect our actual product mix.

The following table summarizes 12-month strip prices for NYMEX WTI oil, NYMEX Henry Hub gas, and OPIS NGLs as of February 2, 2026, and December 31, 2025:

We use financial derivative instruments as part of our financial risk management program. We have a financial risk management policy governing our use of derivatives, and decisions regarding entering into commodity derivative contracts are overseen by a financial risk management committee consisting of certain senior executive officers and finance personnel. We make decisions about the amount of our expected production that we cover by derivatives based on the amount of debt on our balance sheet, the level of capital commitments and long-term obligations we have in place, and the terms and futures prices that are made available by our approved counterparties. With our current commodity derivative contracts, we believe we have partially reduced our exposure to volatility in commodity prices and basis differentials in the near term. Our use of costless collars for a portion of our derivatives allows us to participate in some of the upward movements in oil and gas prices while also setting a price floor below which we are insulated from further price decreases. Refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report and to Commodity Price Riskin Overview of Liquidity and Capital Resources below for additional information regarding our oil, gas, and NGL derivatives.