SM Energy Co

Merger and Acquisition Activity. On November 2, 2025, we entered into the Merger Agreement with Civitas. The Merger was completed on January 30, 2026, expanding our asset portfolio to include operations in the DJ Basin in Colorado and the Delaware Basin in New Mexico and Texas, while creating complementary development and exploration opportunities in the Midland Basin, where we already have a proven track record of successful operations. Combining our technical expertise and complementary asset programs expands our ability to responsibly produce energy in high-return basins while supporting the communities where we live and work.

Although this report is being filed following the closing of the Merger, unless otherwise specifically noted, information set forth herein only relates to the period as of and for the fiscal year ended December 31, 2025, and therefore does not include information relating to Civitas or its subsidiaries as of and for such period ended. Accordingly, unless otherwise specifically noted, references herein to "SM Energy" or the "Company" prior to the closing of the Merger do not include Civitas or the Civitas subsidiaries acquired in connection with the Civitas Merger.

The Civitas Merger will be accounted for as a business combination using the acquisition method of accounting with SM Energy treated as the accounting acquirer. Under the acquisition method of accounting, we will record all assets acquired and liabilities assumed from Civitas at their fair values as of the Closing Date. Following the closing of the Merger, Civitas’ post-Merger results of operations will be consolidated into SM Energy’s interim consolidated financial statements.

During the first quarter of 2025, we finalized post-closing adjustments related to the Uinta Basin Acquisition. The final adjusted purchase price was $2.1 billion. During the first half of 2025, we focused on the successful integration of our Uinta Basin assets, and during the second half of 2025, our focus shifted to optimizing operations and development to deliver sustained value from this core asset. The 2024 information presented in this report regarding our Uinta Basin assets pertains only to the fourth quarter of 2024 and does not represent the full-year 2024, as the assets were acquired on October 1, 2024.

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

Reserves and Capital Investment. Our total estimated net proved reserves decreased slightly to 673.0 MMBOE as of December 31, 2025 from 678.3 MMBOE as of December 31, 2024. This decrease primarily related to 75.5 MMBOE produced during 2025, 40.7 MMBOE of revisions of previous estimates related to the removal of certain net proved undeveloped reserve cases that are no longer expected to be developed within the five-year period from initial booking, and 15.5 MMBOE of net negative performance and price revisions. These decreases were mostly offset by positive 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 Areas of Operationand Reserves below for additional discussion of changes in estimated net proved reserves. Costs incurred decreased 59 percent from 2024 to $1.4 billion in 2025, as 2024 included the acquisition of proved and unproved properties related to the Uinta Basin Acquisition. Refer to Areas of Operation below, and to Supplemental Oil and Gas Information (unaudited)in Part II, Item 8 of this report for additional discussion.

Production, Pricing and Revenue, and Commodity Derivatives. Our average net daily equivalent production in 2025 increased 21 percent compared with 2024 to 206.8 MBOE, consisting of 110.5 MBbl of oil, 412.3 MMcf of gas, and 27.6 MBbl of NGLs, resulting from a full year of production from our Uinta Basin assets and continued strong well performance. Oil production as a percentage of total production increased to 53 percent in 2025 from 47 percent in 2024, resulting from a full year of oil production from our Uinta Basin assets, which averaged 87 percent oil production.

Realized prices before the effect of net derivative settlements (“realized price” or “realized prices”) for oil and NGLs decreased 15 percent and three percent, respectively, while realized gas prices increased 29 percent, for the year ended December 31, 2025, compared with 2024. 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, primarily due to the addition of production from our Uinta Basin assets for full year 2025. Oil production revenue was 82 percent of total production revenue for each of the years ended December 31, 2025, and 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.

Refer to Areas of Operation below and Overview of the Company in Part II, Item 7 of this report for additional discussion.