SM Energy Co
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 6, 2026
SM$29.92+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0000893538-26-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000893538-26-000121
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 158 previous paragraphs and 167 current paragraphs.
64 unchanged; 80 reworded; 23 added; 11 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Our oil-weighted, liquids-rich asset base spans four operating areas within the United States. Across all areas, gas composition is amenable to processing for NGL extraction, and each area provides future development and exploration opportunities within multiple proven formations.
Current report
Benchmark gas prices have been volatile throughout 2026, and our realized gas prices have been negatively impacted by basis differentials in both the Permian Basin and the DJ Basin. In the Permian Basin, gas gathering and takeaway capacity constraints contributed to significant basis differentials at the Waha hub throughout the first and second quarters of 2026, with differentials widening in April and May before narrowing in June. In June, additional pipeline capacity entered service and we expect additional pipeline capacity during the second half of 2026 to provide adequate takeaway capacity out of the Permian Basin. In the DJ Basin, unfavorable differentials at CIG Rockies persisted through the second quarter of 2026 as elevated storage inventories and continued spring shoulder season demand weakness kept regional prices below benchmark levels, with only modest improvement late in the second quarter as summer cooling demand increased.
Current report
The timing and magnitude of future effects of the factors discussed above are inherently unpredictable and could have a material adverse effect on our business, financial condition, and results of operations to an extent we are unable to reasonably estimate. Declines in oil, gas, and NGL prices are difficult to predict in a volatile price environment and could lead to impairments of proved and unproved properties.
Current report
During the second quarter of 2026:
Current report
•We continued to advance Merger integration efforts across key operational and organizational workstreams and made further progress on capturing synergies.
Current report
•We closed our South Texas Divestiture on April 30, 2026, and received net cash proceeds of $896 million.
Current report
•We redeemed the entire $400 million and $419 million aggregate principal amounts outstanding of our 2026 Civitas Senior Notes and 2026 Senior Notes, respectively, at par.
Current report
•We resumed activity under our Stock Repurchase Program by repurchasing and subsequently retiring 2.6 million shares of our common stock at a cost of $84 million, excluding excise taxes, commissions, and fees.
Current report
We subsequently announced that we instructed the trustee under the 2027 Senior Notes to issue a notice of full redemption of the $417 million aggregate principal amount outstanding to the holders of such notes.
Current report
Refer to Note 2 - Mergers, Acquisitions, and Divestitures, Note 5 - Equity, and Note 6 - Long-Term Debt in Part I, Item 1 of this report for additional discussion.
Current report
•Net cash provided by operating activities of $1.1 billion, compared with $640 million for the three months ended March 31, 2026.
Current report
(4) Includes adjustments related to normal business activities, including working interest changes for existing drilled but not completed wells and wells completed during the second quarter of 2026. Working interest changes can result from divestitures, joint development agreements, farm-outs, and other activities.
Current report
Selected Production and Financial Information
Current report
Note: Results for the three and six months ended June 30, 2026, reflect activity from the assets acquired in the Merger only after the Closing Date of January 30, 2026, and reflect activity from the assets sold in the South Texas Divestiture only for the period from January 1, 2026, through April 30, 2026.
Current report
Comparison of Financial Results and Trends Between the Three Months Ended June 30, 2026, and March 31, 2026, and Between the Six Months Ended June 30, 2026, and 2025
Current report
Gain on divestiture activity
Current report
We recorded an estimated gain on divestiture activity of $262 million for the three and six months ended June 30, 2026, related to the South Texas Divestiture. Refer to Note 2 - Mergers, Acquisitions, and Divestitures in Part I, Item 1 of this report for additional discussion.
Current report
Other operating income
Current report
Other operating income increased $80 million sequentially and $71 million YTD 2026-over-YTD 2025 primarily due to a Texas natural gas severance tax refund recorded during the three months ended June 30, 2026.
Current report
DD&A expense increased 37 percent sequentially and 82 percent YTD 2026-over-YTD 2025 primarily due to higher production volumes and the impact of the Merger on DD&A rates.
Current report
During the six months ended June 30, 2026, we made estimated payments, net of refunds received, of $25 million for federal income taxes and $7 million for state income taxes. In connection with IRC 382 analysis and state tax planning during the period, we are estimating more favorable utilization of tax attributes in 2026. As a result, the percent of estimated current federal and state income tax expense to the total income tax expense has decreased sequentially and YTD 2026-over-YTD 2025.
Current report
Under our stockholder return framework announced in February 2026, we currently target approximately 20 percent of free cash flow, calculated on a quarterly basis and after dividend payments, for share repurchases, with the potential to repurchase in excess of this level as we execute on our scaled portfolio and benefit from a higher commodity price environment.
Current report
On May 11, 2026, we used cash proceeds from the South Texas Divestiture to redeem all $400 million aggregate principal amount outstanding of our 2026 Civitas Senior Notes, at par, and on June 1, 2026, we used the remaining proceeds to redeem all $419 million aggregate principal amount outstanding of our 2026 Senior Notes, at par. Following these redemptions, we have no remaining Senior Notes maturities in 2026. Please refer to Note 6 - Long-Term Debtin Part I, Item 1 of this report for additional discussion.
Removed paragraphs (11)
Previous report
While benchmark gas prices increased sequentially, our realized gas prices during the three months ended March 31, 2026, were negatively impacted by basis differentials in both the Permian Basin and the DJ Basin. In the Permian Basin, gas gathering and takeaway capacity constraints contributed to widening basis differentials during the first quarter of 2026 and we expect these differentials to persist until additional pipeline capacity comes online in the region, which is anticipated in late 2026. In the DJ Basin, unfavorable differentials resulted from a different set of regional pressures, as a warm winter and spring shoulder season reduced demand while record-high production pushed storage inventories to record levels.
Previous report
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 impairments of proved and unproved properties in the future. Future impairments of proved and unproved properties are difficult to predict, especially in a volatile price environment.
Previous report
•We completed the Civitas Merger on January 30, 2026, and made meaningful progress on post-Merger integration, advancing key operational and organizational initiatives, and capturing synergies. Integration remains a key priority.
Previous report
•We announced our South Texas Divestiture, which subsequently closed on April 30, 2026.
Previous report
•Our Board of Directors approved an increase to our fixed dividend policy to $0.88 per share annually, paid in quarterly increments beginning in the first quarter of 2026.
Previous report
Refer to Note 2 - Mergers, Acquisitions, and Divestituresand Note 6 - Long-Term Debt in Part I, Item 1 of this report for additional discussion.
Previous report
•Net cash provided by operating activities of $640 million, compared with $452 million for the three months ended December 31, 2025. The increase in net cash provided by operating activities was primarily due to the inclusion of two months of operating activity from assets acquired in the Civitas Merger.
Previous report
(2)Average net daily production is calculated as total production for the quarter divided by 90 days. The results for the three months ended March 31, 2026 reflect only two months of production from the assets acquired in the Civitas Merger.
Previous report
DD&A expense increased 35 percent sequentially and 60 percent YTD 2026-over-YTD 2025, primarily driven by higher production volumes due to the inclusion of assets from the Civitas Merger. These increases were partially offset by a lower overall depletion rate for our Permian assets reflecting the new amortization base established upon the closing of the Merger, and cessation of recognizing DD&A expense for certain of our South Texas assets following classification as held for sale.
Previous report
Approximately $118 million of general and administrative expense during the three months ended March 31, 2026, is considered one-time Civitas Merger integration cost.
Previous report
In February 2026, we announced a new stockholder return framework designed to balance the allocation of free cash flow between debt reduction and returning capital to stockholders. Under this framework, after funding our fixed dividend, we expect to allocate approximately 20 percent of remaining free cash flow to share repurchases and approximately 80 percent to debt reduction. As leverage and absolute debt levels decline, we expect to increase the proportion of free cash flow allocated to share repurchases.
Reworded paragraphs (80)
Previous wording
The following discussion includes forward-looking statements. Refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements. Throughout the following discussion, we explain changes between the three months ended March 31, 2026, and the three months ended December 31, 2025 (“sequential quarterly” or “sequentially”), and the year-to-date (“YTD”) change between the three months ended March 31, 2026, and the three months ended March 31, 2025 (“YTD 2026-over-YTD 2025”).
Current wording
The following discussion includes forward-looking statements. Refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements. Throughout the following discussion, we explain changes between the three months ended June 30, 2026, and the three months ended March 31, 2026 (“sequential quarterly” or “sequentially”), and the year-to-date (“YTD”) change between the six months ended June 30, 2026, and the six months ended June 30, 2025 (“YTD 2026-over-YTD 2025”).
Previous wording
Our purpose. Our purpose is to improve communities with affordable, reliable energy. We are a premier operator of top-tier assets, 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.
Current wording
Our purpose. Our purpose is to improve communities by providing affordable, reliable energy. We are a premier operator of top-tier assets, utilizing state-of-the-art digital technology, data analytics, and artificial intelligence in our operations, and continually pursuing innovative ideas to optimize capital efficiency and well performance, while reducing our impact on shared natural resources and operating in an efficient, safe, and responsible manner.
Previous wording
Responsible operations and governance. 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.
Current wording
Responsible operations and governance. 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 Operations and EHS 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.
Previous wording
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.
Current wording
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 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.
Previous wording
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 creates a premier portfolio across the highest-return U.S. shale basins, enabling the realization of operational efficiencies and cost synergies and providing opportunities for increased free cash flow to drive long-term differentiated stockholder value.
Current wording
On January 30, 2026, we completed the 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 enhances our premier portfolio across high-return U.S. shale basins, enabling the realization of operational efficiencies and cost synergies and providing opportunities for increased free cash flow to drive long-term differentiated stockholder value.
Previous wording
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 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.
Current wording
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 124 million shares to holders of Civitas common stock, representing 52 percent of the shares of SM Energy’s common stock outstanding immediately following 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.
Previous wording
On April 30, 2026, we completed the South Texas Divestiture and received net cash proceeds of approximately $900 million, after preliminary purchase price adjustments and estimated selling costs. The final purchase price remains subject to customary post-closing adjustments. The South Texas Divestiture meaningfully advances our key priority of selling more than $1.0 billion in assets within one year of the completion of the Civitas Merger, which will enable us to reduce debt and strengthen our capital structure. See Note 2 - Mergers, Acquisitions, and Divestitures in Part I, Item 1 of this report for additional discussion.
Current wording
On April 30, 2026, we completed the South Texas Divestiture and received net cash proceeds of $896 million. The final purchase price remains subject to customary post-closing adjustments. The South Texas Divestiture substantially achieved our target of selling more than $1.0 billion in assets within one year of the completion of the Merger, which has enabled us to reduce debt and strengthen our capital structure. See Note 2 - Mergers, Acquisitions, and Divestitures in Part I, Item 1 of this report for additional discussion.
Previous wording
During and subsequent to the first quarter of 2026, we made meaningful progress toward strengthening our debt structure and addressing near-term maturities of certain of our Senior Notes. We issued our 2034 Senior Notes and used the majority of the net proceeds to repurchase $894 million in aggregate principal amount of our higher-coupon Civitas 2028 Senior Notes. Concurrent with the completion of the South Texas Divestiture, we announced our intent to use the net cash proceeds to fully redeem our Civitas 2026 Senior Notes and 2026 Senior Notes at par, with planned redemption dates of May 11, 2026, and June 1, 2026, respectively. Our semi-annual borrowing base redetermination was completed subsequent to quarter end, reaffirming our borrowing base and aggregate lender commitments at their existing levels. As of March 31, 2026, we had no outstanding borrowings under our revolving credit facility.
Current wording
During the six months ended June 30, 2026, and into the subsequent period, we made meaningful progress toward strengthening our debt structure and addressing near-term maturities of certain of our Senior Notes. We issued our 2034 Senior Notes and used the majority of the net proceeds to repurchase $894 million in aggregate principal amount of our higher-coupon 2028 Civitas Senior Notes. After the completion of the South Texas Divestiture, we used the net cash proceeds to fully redeem our 2026 Civitas Senior Notes and our 2026 Senior Notes at par, on May 11, 2026, and June 1, 2026, respectively. Subsequent to June 30, 2026, on August 5, 2026, we instructed the trustee under the 2027 Senior Notes to issue a notice of full redemption of the $417 million aggregate principal amount outstanding, plus accrued and unpaid interest, and intend to complete such redemption on September 4, 2026. Our semi-annual borrowing base redetermination was completed in April 2026, reaffirming our borrowing base and aggregate lender commitments at their existing levels. As of June 30, 2026, we had no outstanding borrowings under our revolving credit facility.
Previous wording
Our Permian Basin assets comprise approximately 229,000 net acres located in the Midland Basin and Delaware Basin of West Texas and New Mexico, (collectively referred to as the “Permian Basin”). Our acreage position in the Permian Basin provides future development and exploration opportunities within multiple oil-rich intervals, including the Spraberry, Wolfcamp, and Woodford formations in the Midland Basin and the Avalon, Bone Spring, and Wolfcamp formations in the Delaware Basin.
Current wording
Our Permian Basin assets comprise approximately 233,000 net acres located in the Midland Basin and Delaware Basin of West Texas and New Mexico (collectively referred to as the “Permian Basin”) with future development and exploration opportunities in the Spraberry, Wolfcamp, and Woodford formations in the Midland Basin; and the Avalon, Bone Spring, and Wolfcamp formations in the Delaware Basin.
Previous wording
Our DJ Basin assets comprise approximately 303,000 net acres located primarily in northeastern Colorado (“DJ Basin”) and provide future development and exploration opportunities within multiple oil-rich intervals in the Niobrara and Codell formations, and includes acreage with light sweet crude oil and gas composition amenable to processing for NGL extraction.
Current wording
Our DJ Basin assets comprise approximately 301,000 net acres located primarily in northeastern Colorado (“DJ Basin”) with future development and exploration opportunities in the Niobrara and Codell formations.
Previous wording
As of March 31, 2026, our South Texas assets comprised approximately 155,000 net acres located in Dimmit and Webb counties, Texas (“South Texas”). Our overlapping acreage position in South Texas covered a significant portion of the western Eagle Ford shale and Austin Chalk formations, and included acreage across the oil, gas-condensate, and dry gas windows with gas composition amenable to processing for NGL extraction. Subsequent to March 31, 2026, we finalized the South Texas Divestiture, consisting of approximately 61,000 net acres, including the portion of our position located in the dry gas window. Refer to Note 2 - Mergers, Acquisitions, and Divestitures in Part I, Item 1 of this report for additional information.
Current wording
Following the completion of the South Texas Divestiture, our South Texas assets comprise approximately 95,000 net acres located in Dimmit and Webb counties, Texas (“South Texas”) with future development and exploration opportunities across our overlapping acreage position covering a portion of the western Eagle Ford shale and Austin Chalk formations.
Previous wording
Our Uinta Basin assets comprise approximately 62,000 net acres in northeastern Utah (“Uinta Basin”) and provide future development and exploration opportunities within multiple oil-rich intervals in the Lower Green River and Wasatch formations, and include acreage with waxy crude and gas composition amenable to processing for NGL extraction.
Current wording
Our Uinta Basin assets comprise approximately 99,000 net acres in northeastern Utah (“Uinta Basin”), including acreage in Utah previously reported as other non-core acreage that has been reclassified to the Uinta Basin, with future development and exploration opportunities in the Lower Green River and Wasatch formations.
Previous wording
During the first quarter of 2026, benchmark oil prices reached their highest levels since 2022, reflecting strong global demand and ongoing supply-side constraints resulting from recent geopolitical developments in the Middle East. Despite the resulting price volatility, we do not anticipate material changes to our 2026 development plan and we remain focused on our key priorities of post-Merger integration, maximizing free cash flow, and bolstering our balance sheet.
Current wording
During the six months ended June 30, 2026, benchmark oil prices reached their highest levels since 2022, reflecting strong global demand and ongoing supply-side constraints resulting from geopolitical developments in the Middle East. Despite the resulting price volatility, we have not made material changes to our 2026 development plan and do not currently anticipate making material changes for the remainder of 2026.
Previous wording
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; Organization of the Petroleum Exporting Countries (“OPEC”) plus other non-OPEC oil producing countries (collectively referred to as “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 including restrictions in and closures of the Strait of Hormuz; tariffs and trade restrictions; the potential for economic recession in the U.S.; 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.
Current wording
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; Organization of the Petroleum Exporting Countries (“OPEC”) plus other non-OPEC oil producing countries (collectively referred to as “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 including restrictions in and closures of the Strait of Hormuz; tariffs and trade restrictions; the potential for economic recession in the U.S.; 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.
Previous wording
Historically, tariffs have led to increased costs for products exchanged in international trade, and have heightened global political tensions. Changes in the U.S. and international trade policies, including the imposition, modification, or repeal of tariffs, continue to contribute to economic and market uncertainty. In recent periods, U.S. tariff policies and related trade actions have shifted frequently, and retaliatory measures or additional policy changes by other countries remain possible. 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.
Current wording
Historically, tariffs have led to increased costs for products exchanged in international trade, and have heightened global political tensions. Changes in the U.S. and international trade policies, including the imposition, modification, or repeal of tariffs, continue to contribute to economic and market uncertainty. In recent periods, U.S. tariff policies and related trade actions have shifted frequently, and retaliatory measures or additional policy changes by other countries remain possible, and could contribute to broader economic and market instability.
Previous wording
First Quarter 2026 Overview and Outlook for the Remainder of 2026
Current wording
Second Quarter 2026 Overview and Outlook for the Remainder of 2026
Previous wording
Financial and Operational Results. Oil, gas, and NGL production revenue increased 110 percent sequentially to $1.5 billion for the three months ended March 31, 2026, compared with $703 million for the three months ended December 31, 2025. This increase was driven by a 79 percent sequential quarterly increase in average daily equivalent production to 371.2 MBOE and a 20 percent sequential quarterly increase in total realized price per BOE, before the effect of net derivative settlements (“realized price” or “realized prices”), resulting from increases in benchmark oil prices. Oil, gas, and NGL production expense increased 107 percent sequentially to $428 million for the three months ended March 31, 2026, compared with $207 million for the three months ended December 31, 2025. The sequential quarterly increases in production revenue, production expense, and average net daily equivalent production are primarily due to the inclusion of approximately two months of activity from the assets acquired in the Civitas Merger.
Current wording
Financial and Operational Results. Oil, gas, and NGL production revenue increased 46 percent sequentially to $2.2 billion for the three months ended June 30, 2026, compared with $1.5 billion for the three months ended March 31, 2026. This increase was primarily driven by an 18 percent sequential quarterly increase in average daily equivalent production to 439.7 MBOE per day, reflecting a full quarter of production from the assets acquired in the Merger, and a 22 percent sequential quarterly increase in total realized price per BOE, before the effect of net derivative settlements (“realized price” or “realized prices”), resulting from increases in benchmark oil prices. Oil, gas, and NGL production expense increased 30 percent sequentially to $556 million for the three months ended June 30, 2026, compared with $428 million for the three months ended March 31, 2026.
Previous wording
We recorded a net derivative loss of $697 million and a net derivative gain of $71 million for the three months ended March 31, 2026, and December 31, 2025, respectively. The net derivative loss during the first quarter 2026 resulted from rising oil prices primarily driven by the U.S.-Iran war, which began in late February 2026 and has significantly disrupted oil supply and shipping through the Strait of Hormuz. Included within these amounts are a net derivative settlement loss of $30 million and a net derivative settlement gain of $46 million for the three months ended March 31, 2026, and December 31, 2025, respectively.
Current wording
We recorded a net derivative gain of $272 million and a net derivative loss of $697 million for the three months ended June 30, 2026, and March 31, 2026, respectively. Included within these amounts are net derivative settlement losses of $220 million and $30 million for the three months ended June 30, 2026, and March 31, 2026, respectively.
Previous wording
•A net loss of $335 million, or $1.68 per diluted share, compared with net income of $109 million, or $0.95 per diluted share, for the three months ended December 31, 2025, primarily driven by a $697 million net derivative loss resulting from an increase in the forward oil price curves underlying our commodity derivative contracts as of March 31, 2026. Of this net derivative loss, $667 million relates to commodity derivative contracts that are scheduled to settle after March 31, 2026.
Current wording
•Net income of $1.1 billion, or $4.46 per diluted share, compared with a net loss of $335 million, or $1.68 per diluted share, for the three months ended March 31, 2026.
Previous wording
•Adjusted EBITDAX, a non-GAAP financial measure, of $970 million, compared with $509 million for the three months ended December 31, 2025. The increase in adjusted EBITDAX was primarily due to the inclusion of two months of operating activity from the assets acquired in the Civitas Merger. Refer to the caption Non-GAAP Financial Measures below for additional discussion and our definition of adjusted EBITDAX and reconciliations to net income (loss) and net cash provided by operating activities.
Current wording
•Adjusted EBITDAX, a non-GAAP financial measure, of $1.4 billion, compared with $970 million for the three months ended March 31, 2026. Refer to the caption Non-GAAP Financial Measures below for additional discussion and our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities.
Previous wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2026, and December 31, 2025, and Between the Three Months Ended March 31, 2026, and 2025 below for additional discussion.
Current wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended June 30, 2026, and March 31, 2026, and Between the Six Months Ended June 30, 2026, and 2025 below for additional discussion.
Previous wording
During the three months ended March 31, 2026, costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, totaled $725 million. Total costs incurred includes activity in our core areas of operations, corporate charges incurred in exploration activities, and costs related to exploration efforts outside of our core areas of operation.
Current wording
During the three and six months ended June 30, 2026, costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, totaled $734 million and $1.5 billion, respectively. Total costs incurred includes activity in our core areas of operations, corporate charges incurred in exploration activities, and costs related to exploration efforts outside of our core areas of operation.
Previous wording
In our Permian Basin program, we averaged six drilling rigs and two completion crews during the first quarter of 2026, and our operations focused on development optimization and delineation of our assets in the Midland Basin and Delaware Basin. Average net daily equivalent production increased sequentially by 117 percent to 182.6 MBOE, reflecting the inclusion of two months of production from the Civitas assets acquired on January 30, 2026. Costs incurred during the three months ended March 31, 2026, totaled $336 million, or 46 percent of our total costs incurred for the period. We anticipate operating an average of six drilling rigs and two completion crews for the remainder of 2026, focused on development of the Spraberry, Woodford, Bone Spring, Wolfcamp, and Avalon formations.
Current wording
In our Permian Basin program, we operated an average of seven drilling rigs and one completion crew during the second quarter of 2026, and our operations focused on development optimization and delineation of our assets in the Midland Basin and Delaware Basin. Average net daily equivalent production increased sequentially by 28 percent to 233.5 MBOE per day, reflecting a full quarter of production from the assets acquired in the Merger, compared to two months of production included in the first quarter of 2026 following the Closing Date of the Merger. Costs incurred during the three months ended June 30, 2026, totaled $300 million, or 41 percent of our total costs incurred for the period. We anticipate operating an average of six drilling rigs and two completion crews for the remainder of 2026, focused on development of the Spraberry, Woodford, Bone Spring, Wolfcamp, and Avalon formations.
Previous wording
In our DJ Basin program, we operated between one and two drilling rigs during the first quarter of 2026 and one completion crew for a portion of the quarter, and our operations focused primarily on delineation and development. Average net daily equivalent production was 81.4 MBOE for the three months ended March 31, 2026, reflecting the inclusion of two months of production from the Civitas assets acquired on January 30, 2026. Costs incurred during the three months ended March 31, 2026, totaled $113 million, or 16 percent of our total costs incurred for the period. We anticipate operating an average of one drilling rig and one completion crew for the remainder of 2026, focused on further development and delineation of the Niobrara and Codell formations.
Current wording
In our DJ Basin program, we operated two drilling rigs during the second quarter of 2026 and one completion crew for a portion of the quarter, and our operations focused primarily on delineation and development. Average net daily equivalent production increased sequentially by 46 percent to 118.8 MBOE per day reflecting a full quarter of production from the assets acquired in the Merger, compared to two months of production included in the first quarter of 2026 following the Closing Date of the Merger. Costs incurred during the three months ended June 30, 2026, totaled $178 million, or 24 percent of our total costs incurred for the period. We anticipate operating an average of one drilling rig and one completion crew for the remainder of 2026, focused on further development and delineation of the Niobrara and Codell formations.
Previous wording
In our South Texas program, we operated two drilling rigs and one completion crew during the first quarter of 2026, and our operations focused primarily on the development and further delineation of the Austin Chalk formation. Average net daily equivalent production decreased sequentially by 15 percent to 68.0 MBOE. Costs incurred during the three months ended March 31, 2026, totaled $120 million, or 17 percent of our total costs incurred for the period. We anticipate operating one drilling rig during the remainder of 2026 and averaging one completion crew through the end of the third quarter of 2026 on our retained South Texas acreage, focused primarily on developing the Austin Chalk formation.
Current wording
In our South Texas program, we operated one drilling rig and averaged one completion crew during the second quarter of 2026, and our operations focused primarily on the development and further delineation of the Austin Chalk formation. The three months ended June 30, 2026, reflect only one month of activity related to the divested assets prior to April 30, 2026. Average net daily equivalent production decreased sequentially by 30 percent to 47.4 MBOE per day, primarily due to the South Texas Divestiture. Costs incurred during the three months ended June 30, 2026, totaled $133 million, or 18 percent of our total costs incurred for the period. We anticipate operating one drilling rig during the remainder of 2026 and averaging one completion crew through the end of the third quarter of 2026, focused primarily on developing the Austin Chalk formation.
Previous wording
In our Uinta Basin program, we operated three drilling rigs and one completion crew during the first quarter of 2026, and our operations focused on delineation and development. Average net daily equivalent production decreased sequentially by eight percent to 39.1 MBOE. Costs incurred during the three months ended March 31, 2026, totaled $105 million, or 15 percent of our total costs incurred for the period. We anticipate operating between two and three drilling rigs and one completion crew during the remainder of 2026, focused primarily on delineating and developing the Lower Green River and Wasatch formations.
Current wording
In our Uinta Basin program, we operated two drilling rigs and one completion crew during the second quarter of 2026, and our operations focused on delineation and development. Average net daily equivalent production increased sequentially by two percent to 40.1 MBOE per day. Costs incurred during the three months ended June 30, 2026, totaled $123 million, or 17 percent of our total costs incurred for the period. We anticipate operating between two and three drilling rigs and one completion crew during the remainder of 2026, focused primarily on delineating and developing the Lower Green River and Wasatch formations.
Previous wording
The table below provides a quarterly summary of changes in our drilled but not completed well count and current year drilling and completion activity in our operated programs for the three months ended March 31, 2026:
Current wording
The table below provides a quarterly summary of changes in our drilled but not completed well count and current year drilling and completion activity in our operated programs for the three and six months ended June 30, 2026:
Previous wording
(2) We acquired these drilled but not completed wells as part of the Civitas Merger on January 30, 2026.
Current wording
(1) We acquired these drilled but not completed wells as part of the Merger on January 30, 2026.
Previous wording
(3) All drilling and completion activity related to the acquired assets in Permian Basin and DJ Basin occurred after the Closing Date of the Merger.
Current wording
(2) All drilling and completion activity related to the acquired assets in the Permian Basin and DJ Basin occurred after the Closing Date of the Merger.
Previous wording
(1) Subsequent to March 31, 2026, we divested 10 gross (10 net) drilled but not completed wells as part of the South Texas Divestiture.
Current wording
(3) On April 30, 2026, as part of the South Texas Divestiture, we sold 10 gross (10 net) drilled but not completed wells.
Previous wording
Production Results. The table below presents the disaggregation of our net production volumes by product type for each of our assets for the periods presented. The Permian Basin and DJ Basin amounts include activity related to the assets acquired in the Civitas Merger, which is reflected only for the portion of the quarter occurring after January 30, 2026.
Current wording
Production Results. The table below presents the disaggregation of our net production volumes by product type for each of our assets for the periods presented. The Permian Basin and DJ Basin results include production from properties acquired in the Merger after the Closing Date of January 30, 2026.
Previous wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2026, and December 31, 2025, and Between the Three Months Ended March 31, 2026, and 2025 below for discussion of production.
Current wording
Refer to Overview of Selected Production and Financial Information, Including Trendsand Comparison of Financial Results and Trends Between the Three Months Ended June 30, 2026, and March 31, 2026, and Between the Six Months Ended June 30, 2026, and 2025 below for discussion of production.
Previous wording
The tables below provide information regarding selected production and financial information for the three months ended March 31, 2026, and the preceding three quarters:
Current wording
The tables below provide information regarding selected production and financial information and selected performance metrics for the three months ended June 30, 2026, and the preceding three quarters.
Previous wording
(3) For the first quarter of 2026, G&A expense per BOE includes one-time Civitas Merger related integration costs. See below and refer to Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2026, and December 31, 2025, and Between the Three Months Ended March 31, 2026, and 2025 for additional discussion.
Current wording
(2) G&A expense per BOE for the three and six months ended June 30, 2026, includes one-time Merger-related integration costs, the majority of which were incurred during the first quarter of 2026. See below and refer to Comparison of Financial Results and Trends Between the Three Months Ended June 30, 2026, and March 31, 2026, and Between the Six Months Ended June 30, 2026, and 2025 for additional discussion.
Previous wording
(4) Net derivative settlements for the three months ended March 31, 2026, and 2025, are included within the net derivative loss line item in the accompanying statements of operations.
Current wording
(3) Net derivative settlements for the three months ended June 30, 2026, and for the six months ended June 30, 2026, and 2025, are included within the net derivative (gain) loss line item in the accompanying statements of operations.
Previous wording
The Civitas Merger, which closed on January 30, 2026, is expected to materially affect our future operating and financial results. The addition of the Civitas assets and operations is expected to increase production volumes and revenues and to impact oil, gas, and NGL production expense, general and administrative expense, and other expense categories. The magnitude and timing of these impacts will depend, in part, on integration activities, operating performance, commodity prices, and other factors and may not be directly comparable to our historical results. Results discussed below for the three months ended March 31, 2026, include Civitas operations after the Closing Date of January 30, 2026.
Current wording
The Merger, which closed on January 30, 2026, and the South Texas Divestiture, which closed on April 30, 2026, have materially affected our operating and financial results and will continue to affect comparability with prior periods. The addition of the Civitas assets and operations has increased production volumes and revenues and has impacted oil, gas, and NGL production expense, G&A expense, and other expense categories. The South Texas Divestiture also impacts comparability of our operating and financial results, as the three months ended June 30, 2026, reflect only one month of activity related to the divested assets prior to April 30, 2026. The magnitude and timing of ongoing impacts will depend, in part, on operating performance, commodity prices, Merger integration activities, and other factors and may not be directly comparable to our historical results.
Previous wording
Average net daily equivalent production for the three months ended March 31, 2026, increased 79 percent sequentially and 88 percent YTD 2026-over-YTD 2025 primarily driven by production from assets acquired in the Civitas Merger.
Current wording
Average net daily equivalent production for the three months ended June 30, 2026, increased 18 percent sequentially. The increase was primarily due to the inclusion of a full quarter of production from the assets acquired in the Merger, compared to two months of activity in the first quarter of 2026, partially offset by a decrease in production due to the South Texas Divestiture. Average net daily production increased 100 percent YTD 2026-over-YTD 2025 primarily driven by production from assets acquired in the Merger.
Previous wording
Our realized price on a per BOE basis increased 20 percent sequentially primarily due to increases in benchmark oil prices. Our realized price on a per BOE basis decreased six percent YTD 2026-over-YTD 2025 primarily due to decreases in both benchmark NGL prices and realized gas prices due to unfavorable price differentials at Waha and CIG Rockies during the first quarter 2026. We recognized a net loss on the settlement of our commodity derivative contracts of $0.90 per BOE during the three months ended March 31, 2026, and net gains of $2.39 and $0.44 per BOE during the three months ended December 31, 2025, and March 31, 2025, respectively.
Current wording
Our realized price on a per BOE basis increased 22 percent sequentially primarily due to increases in benchmark oil prices, partially offset by decreases in realized gas prices driven by a decline in benchmark gas prices and widening price differentials at Waha. Our realized price on a per BOE basis increased 12 percent YTD 2026-over-YTD 2025 primarily due to increases in benchmark oil prices, partially offset by decreases in realized gas prices driven by unfavorable price differentials at Waha and CIG Rockies during the first half of 2026. We recognized net losses on the settlement of our commodity derivative contracts of $5.50 per BOE and $0.90 per BOE during the three months ended June 30, 2026, and March 31, 2026, respectively. During the six months ended June 30, 2026 and 2025, we recognized a net loss of $3.41 per BOE and a net gain of $1.29 per BOE, respectively.
Previous wording
Lease operating expense (“LOE”) per BOE increased 13 percent sequentially and two percent YTD 2026-over-YTD 2025 primarily reflecting the integration of the Civitas assets, which have a higher LOE per BOE profile relative to our pre-Merger asset base. For the full-year 2026, we expect LOE per BOE to increase compared with 2025, driven by the inclusion of higher-cost acquired assets and a shift in production mix following the South Texas Divestiture which included assets that historically had the lowest LOE per BOE in our portfolio. We expect to realize operational and cost synergies which will partially offset this increase. We anticipate volatility in LOE per BOE as a result of changes in production mix, timing of workover projects, changes in service provider costs, integration-related activities and broader industry conditions, all of which affect total LOE.
Current wording
Lease operating expense (“LOE”) per BOE increased seven percent sequentially and 12 percent YTD 2026-over-YTD 2025 primarily as a result of assets acquired in the Merger, which have a higher LOE per BOE profile relative to our pre-Merger asset base, with the sequential quarterly increase also reflecting a full quarter of contribution from the assets acquired in the Merger and a shift in production mix following the South Texas Divestiture. For the full-year 2026, we expect LOE per BOE to increase compared with 2025, driven by the inclusion of higher-cost acquired assets and a shift in production mix following the South Texas Divestiture. We expect to realize operational and cost synergies which will partially offset this increase. We anticipate volatility in LOE per BOE as a result of changes in production mix, timing of workover projects, changes in service provider costs, integration-related activities and broader industry conditions, all of which affect total LOE.
Previous wording
Transportation costs per BOE remained flat sequentially as increases in transportation costs were in line with increases in production volumes. Transportation costs per BOE decreased seven percent YTD 2026-over-YTD 2025 primarily due to changes in our production mix. In general, we expect total transportation costs to fluctuate relative to changes in commodity and production mix across our areas of operations. For 2026, we expect transportation costs on a per BOE basis to remain relatively flat compared with 2025.
Current wording
Transportation costs per BOE remained flat sequentially. Transportation costs per BOE decreased 10 percent YTD 2026-over-YTD 2025 primarily due to changes in our production mix. In general, we expect total transportation costs to fluctuate relative to changes in commodity and production mix across our areas of operations. For 2026, we expect transportation costs on a per BOE basis to remain relatively flat compared with 2025.
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Previous report — wording carried elsewhere
During the first quarter of 2026:
Previous report — wording carried elsewhere
•We issued the 2034 Senior Notes and used the majority of the net proceeds to repurchase $894 million in aggregate principal amount of the Civitas 2028 Senior Notes, excluding premiums paid, through the Tender Offer, of which $110 million settled subsequent to March 31, 2026.
Previous report — wording carried elsewhere
Comparison of Financial Results and Trends Between the Three Months Ended March 31, 2026, and December 31, 2025, and Between the Three Months Ended March 31, 2026, and 2025