SM Energy Company (SM) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of 80% of Uinta Basin assets for $2.04 billion adds ~37,200 net acres, increases core net acreage by ~14%, and aligns with strategy to expand scale and oil production by ~45%.

• Increases pro forma production to ~195,000 BOE/d by 2025, with oil mix over 50% and enhances top-tier asset portfolio with high oil content and stacked pay potential.

• Adds ~390 net drilling locations, extending inventory life by two years to 12+ years and increasing total company inventory by 5%.

• Assets are in a high-quality, over-pressured oil window with attractive oil properties and high demand.

• Leverages technical expertise for resource upside and full stack co-development.

Financial terms and conditions

• $2.04 billion cash purchase for 80% of assets, with Northern Oil and Gas acquiring the remaining 20% for $510 million; total deal value is $2.55 billion.

• Funded through cash on hand, revolving credit, and a $1.2 billion, 364-day senior unsecured bridge facility, with potential for a senior notes offering.

• Purchase price equates to a 2.9x EBITDA multiple and $1.4 million per undeveloped location.

• No hedges transferred; new hedges to cover about 50% of acquired oil production through 2025.

• Board approved an 11% increase in fixed quarterly dividend to $0.20/share and a $500 million share repurchase program through 2027.

Synergies and expected cost savings

• Projected 2025E cash production margin to increase by ~11%, with Uinta Basin margins exceeding Midland Basin due to higher oil content and lower operating costs.

• Inventory of ~390 net locations with breakevens of $43–$57/Bbl, supporting competitive cost structure.

• Anticipated operational efficiencies and cost savings not included in acquisition cost; upside expected from integrating best practices.

• Capital efficiency and operating costs in Uinta are competitive with leading US shale plays.