For two Denver, Colo,-based oil and gas companies—rivals, they’ve been called—the time has become just right to combine assets and forces, specifically in the Permian. The merger between SM Energy and Civitas Resources has created a new oil and gas big dog in an all-stock deal with multi-basin interests that also include the DJ Basin, Eagle Ford, and Uinta.  

Reese Energy Consulting today is following the latest news from this combo valued at $12.8 billion with debt attached. After all the paperwork is signed and blessed, SM Energy will become the surviving company name. Debt reduction is paramount, and divestitures no doubt lie ahead to satisfy free cash flow and shareholder returns and settle down an antsy Wall Street. With eyeballs on the Permian, SM proforma will hold 248,000 net acres in the Midland along with a new step into the Delaware in West Texas and N.M.

Outside the Permian, SM will also inherit 357,000 net acres in the DJ with an average 146 MBOED in production. Civitas is one of the largest operators in the DJ whose upstream and midstream assets might be the first to visit the SM sales department. We’ll keep an eye on this.