SM Energy Energy reports $93 million net income for Q3 2026

Cover page 2 changes

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For the quarterly period ended June September 30, 2026

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As of July 23, October 22, 2026, the registrant had 237,854,068 235,019,304 shares of common stock outstanding.

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Financial Statements (unaudited) 6 changes

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June S eptember 30, , 2026, and December 31, 2025

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Three and Six Months Ended June 3 0 , 2026, and 2025

Three and Nine Months Ended September 30, 2026, and 2025

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Three and Six Nine Months Ended June September 30, 2026, and 2025

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Continuous Quarterly Presentation Ended June September 30, 2026, and 2025

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Six Nine Months Ended June September 30, 2026, and 2025

Exhibits 11 changes

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• changes in general economic and financial conditions, inflationary pressures, the potential for economic recession in the U.S., tariffs and trade restrictions, including the imposition of new and higher tariffs on imported goods, the uncertainty of evolving tariffs, and retaliatory tariffs implemented by other countries on U.S. goods, and the potential effects on our financial condition or results of operations;

• our outlook on future prices for crude oil, natural gas, and natural gas liquids (also referred to throughout this report as "oil," "gas," and "NGLs," respectively), well costs, service costs, production costs, and general and administrative ("G&A") costs, and the effects of inflation, tariffs, or trade restrictions, on each of these; and economic or geopolitical developments;

• changes in general economic and financial conditions, including inflationary pressures, the potential for economic recession, tariffs and trade restrictions, and War and Geopolitical Instability, as defined below;

• armed conflict, political instability, or civil unrest in oil and gas producing regions and shipping channels, including: instability in the Middle East; including armed conflicts and wars involving the U.S., United States, Israel, Iran, and other Middle Eastern countries and regional proxy groups; the war between Russia and Ukraine; restrictions in and closures of the Strait of Hormuz; and uncertainty regarding the implementation of the June 17, 2026 U.S.-Iran memorandum of understanding; and related potential effects on laws and regulations or the imposition of economic or trade sanctions ("War and Geopolitical Instability");

• the amount and nature of future capital expenditures, well costs, service costs, production costs, and general and administrative ("G&A") costs, the resilience of our assets to changes in commodity prices, the ability of our assets to generate returns in the current macroeconomic environment, and the availability of liquidity and capital resources to fund capital expenditures and other costs, each of which may be impacted by the factors discussed above;

• drilling and completion activities and other exploration and development activities undertaken by us, our joint development partners, and/or other third-party operators, each of which could be affected by supply chain disruptions, pipeline capacity, our ability to obtain permits and governmental approvals, and the factors discussed above;

• business strategies and other plans and objectives for future operations, including plans for expansion and growth of operations or reallocation of capital, plans with respect to future dividend payments, debt repayments or redemptions, equity repurchases, capital markets activities, sustainability goals and initiatives, and our outlook on our future financial condition or results of operations;

• possible or expected acquisitions and divestitures, including our plans to execute on our divestiture target within one year of the Merger, and the possible divestiture or farm-out of, or farm-in or joint development of, certain properties;

• risks related to the Merger, including our ability to successfully integrate Civitas' business, operations, systems and personnel; potential business disruptions resulting from the expectations regarding remaining Merger and related integration activities and our ability to realize the realization of anticipated benefits, synergies, efficiencies, or and cost savings from the Merger (including within expected timeframes, or at all); and the combined operations; see Note 2 - Mergers, Acquisitions, and Divestitures in Part I, Item 1 of this report for discussion and definitions definition of the Merger; and Civitas;

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• our drilling and completion activities and other exploration and development activities, each of which could be affected by supply chain disruptions, inflation, tariffs or trade restrictions, pipeline capacity, our ability to obtain permits and governmental approvals, and plans by us, our joint development partners, and/or other third-party operators;

• possible or expected acquisitions and divestitures, including our plans to execute on a divestiture target within one year of the Merger, and the possible divestiture or farm-out of, or farm-in or joint development of, certain properties;

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Financial statements 135 changes

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Accounts receivable 989 331

Derivative assets 145 83

Cash and cash equivalents $ 620 442 $ 368

Accounts receivable 1,175 331

Derivative assets 93 83

Prepaid expenses and other 146 107 29

Total current assets 1,900 1,817 811

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Proved oil and gas properties 23,214 23,924 16,012

Accumulated depletion, depreciation, and amortization ( 8,466 9,040 ) ( 8,793 )

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Derivative assets 56 6

Wells in progress 809 848 458

Other property and equipment, net of accumulated depreciation of $ 67 68 and $ 63 , respectively

Total property and equipment, net 16,548 16,755 8,202

Derivative assets 12 6

Other noncurrent assets 354 379 234

Total noncurrent assets 410 391 240

Total assets $ 18,858 18,963 $ 9,253

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Derivative liabilities 184 2

Accounts payable and accrued expenses $ 2,367 2,505 $ 690

Senior Notes, net 416 — 419

Derivative liabilities 552 2

Other current liabilities 122 130 58

Total current liabilities 3,089 3,187 1,169

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Derivative liabilities 1 2

Senior Notes, net 6,620 6,614 2,296

Asset retirement obligations 430 426 150

Deferred tax liabilities, net 630 609 724

Derivative liabilities 13 2

Other noncurrent liabilities 275 337 102

Total noncurrent liabilities 7,956 7,999 3,274

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Common stock, $ 0.01 par value - authorized: 400,000,000 and 200,000,000 shares, respectively; issued and outstanding: 237,494,374 235,615,045 and 114,630,905 shares, respectively

Additional paid-in capital 3,888 3,813 1,517

Retained earnings 3,921 3,961 3,291

Accumulated other comprehensive income 2 1 1

Total stockholders' equity 7,813 7,777 4,810

Total liabilities and stockholders' equity $ 18,858 18,963 $ 9,253

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June September 30, For the Six Nine Months Ended

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Gain on divestiture activity 262 — 262 —

Other operating income 82 8 84 13

Depletion, depreciation, and amortization 592 293 1,024 563

Exploration 21 15 47 27

General and administrative 79 42 253 81

Net derivative (gain) loss ( 272 ) ( 78 ) 425 ( 61 )

Other operating expense 28 2 48 7

Total operating expenses 1,004 498 2,781 1,066

Income from operations 1,496 295 1,198 571

Interest expense ( 111 ) ( 43 ) ( 224 ) ( 87 )

Income before income taxes 1,389 253 979 485

Income tax expense ( 318 ) ( 51 ) ( 243 ) ( 101 )

Net income $ 1,071 $ 202 $ 736 $ 384

Diluted net income per common share $ 4.46 $ 1.76 $ 3.34 $ 3.34

Oil, gas, and NGL production revenue $ 2,156 2,160 $ 785 811 $ 3,633 5,793 $ 1,625 2,436

Gain (loss) on divestiture activity ( 2 ) — 260 —

Other operating income 12 1 96 13

Total operating revenues and other income 2,500 793 3,979 1,637 2,170 812 6,149 2,449

Oil, gas, and NGL production expense 556 224 984 449 574 229 1,558 678

Depletion, depreciation, and amortization 590 325 1,614 888

Exploration 22 12 69 39

General and administrative 56 39 309 121

Net derivative (gain) loss 684 ( 45 ) 1,109 ( 107 )

Other operating expense 8 5 56 12

Total operating expenses 1,934 565 4,715 1,631

Income from operations 236 246 1,434 818

Interest expense ( 116 ) ( 43 ) ( 340 ) ( 130 )

Other non-operating income, net 4 — 5 — 3 1 8 1

Income before income taxes 123 204 1,102 689

Income tax expense ( 30 ) ( 49 ) ( 273 ) ( 150 )

Net income $ 93 $ 155 $ 829 $ 539

Basic weighted-average common shares outstanding 239 237 115 219 225 115

Diluted weighted-average common shares outstanding 240 239 115 220 226 115

Basic net income per common share $ 4.48 0.39 $ 1.76 1.35 $ 3.35 3.67 $ 3.35 4.70

Diluted net income per common share $ 0.39 $ 1.35 $ 3.66 $ 4.69

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Net income $ 1,071 $ 202 $ 736 $ 384

Total comprehensive income $ 1,072 $ 202 $ 737 $ 384

June September 30, For the Six Nine Months Ended

Net income $ 93 $ 155 $ 829 $ 539

Other comprehensive income, loss, net of tax:

Pension liability adjustment 1 ( 1 ) — — —

Total other comprehensive income, loss, net of tax 1 ( 1 ) — — —

Total comprehensive income $ 92 $ 155 $ 829 $ 539

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and 55 more changes in the filing

Note 1: Summary of Significant Accounting Policies 3 changes

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The accompanying unaudited condensed consolidated financial statements include our accounts and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, the instructions to Quarterly Report on Form 10-Q, and Regulation S-X. These financial statements do not include all information and notes required by GAAP for annual financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the our 2025 Form 10-K . In the opinion of management, all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. As a result of the Merger, we expanded our Permian Basin position by increasing our Midland Basin footprint and establishing a new presence in the Delaware Basin in West Texas and New Mexico. Accordingly, positions and activity previously presented as "Midland Basin" are now included within "Permian Basin". Refer to Note 2 - Mergers, Acquisitions, and Divestitures for additional discussion and definition of the Merger.

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The Our significant accounting policies we follow are set forth in Note 1 - Summary of Significant Accounting Policies in the our 2025 Form 10-K and are supplemented by the notes to the unaudited condensed consolidated financial statements included in this report. and in the policy description below. These unaudited condensed consolidated financial statements should be read in conjunction with the our 2025 Form 10-K .

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As of June September 30, 2026, and through the filing of this report, no accounting guidance applicable to us has been issued and not yet adopted in 2026 that would have a material effect on our unaudited condensed consolidated financial statements and related disclosures. For information about accounting guidance issued in previous years but not yet adopted by us, refer to Note 1 - Summary of Significant Accounting Policies in the our 2025 Form 10-K .

Note 2: Mergers, Acquisitions, and Divestitures 23 changes

On January 30, 2026 , (the ("Closing Date"), we completed our previously announced merger with Civitas Resources, Inc. ("Civitas"), through which we acquired 100 percent of the outstanding voting equity interests of Civitas ("Merger"). Civitas was an independent exploration and prod uction company focused on the acquisition, development, and production of crude oil and associated liquids-rich natural gas primarily in the DJ Basin in Colorado and the Permian Basin in Texas and New Mexico. We believe the Merger enhances our pr emier asset portfolio across high-return U.S. shale basins, enables the realization of operational and cost synergies, and provides opportunities for increased free cash flow to drive long-term differentiated stockholder value.

Under the terms of the Agreement and Plan of Merger (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. Upon completion of the Merger, we issued 124 million shares to holders of Civitas common stock. The Merger was structured as a tax-free reorganization for United States federal income tax purposes.

We incurred $ 17 18 million of transaction-related costs in connection with the Merger during the six nine months ended June September 30, 2026. These costs primarily consist of success fees paid to financial advisors and legal fees that have been expensed as incurred and are included in other operating expense in the accompanying unaudited condensed consolidated statements of operations ("accompanying statements of operations").

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The Merger was accounted for as a business combination using the acquisition method of accounting under Accounting Standard Standards Codification ("ASC") Topic 805, Business Combinations ("ASC 805") , with SM Energy treated as the accounting acquirer.

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Accounts payable and accrued expenses 1,314

Other noncurrent liabilities 351

Asset retirement obligations 326

Other current liabilities 90

Derivative liabilities 62

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The results of operations of Civitas subsequent to the Closing Date are included in our unaudited consolidated financial statements for the three and six nine months ended June September 30, 2026. Revenue attributable to Civitas included in our accompanying statements of operations for the three and six nine months ended June September 30, 2026, was $ 1.3 billion and $ 2.0 3.3 billion, respectively. We have determined that it is impracticable to disclose the amount of net income included in the accompanying statements of operations that is attributable to the Civitas assets, as the acquired operations were immediately integrated into our operations to leverage synergies. achieve our synergy targets. As a result, a significant portion of post-Merger expenses relate relates to the combined Company, and allocating these expenses would require significant assumptions by management.

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The results of Civitas' operations have been included in our consolidated financial statements since the Closing Date. The following unaudited pro forma financial information for the three and six nine months ended June September 30, 2026, and 2025, is based on historical consolidated financial statements adjusted to reflect the Merger as if it had occurred on January 1, 2025. The pro forma information is based on historical data and certain management assumptions and reflects accounting adjustments for transaction costs, certain restructuring and integration costs, depletion, depreciation, and amortization ("DD&A") expense, interest expense, and estimated tax effects related to the Merger.

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June September 30, For the Six Nine Months Ended

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Pro forma net income $ 1,090 $ 469 $ 805 $ 842

Pro forma oil, gas, and NGL production revenue $ 2,156 2,160 $ 1,839 1,971 $ 3,937 6,097 $ 3,871 5,842

Pro forma net income $ 93 $ 488 $ 898 $ 1,330

Pro forma basic net income per common share $ 4.56 0.39 $ 1.96 2.03 $ 3.36 3.79 $ 3.51 5.55

Pro forma diluted net income per common share $ 4.53 0.39 $ 1.95 2.02 $ 3.35 3.77 $ 3.51 5.53

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On April 30, 2026, we completed the previously announced sale of all of our rights, titles, and interests in certain producing and non-producing assets encompassing approximately 61,000 net acres located in our southern Maverick Basin position in Webb County, Texas (the ("South Texas Divestiture") to Caturus Energy, LLC, a Delaware limited liability company. During the six months ended June Subsequent to September 30, 2026, we received completed the final post-closing settlement, resulting in total cash proceeds of $ 896 894 million after preliminary final purchase price adjustments and selling costs (referred to throughout this report as "net cash proceeds") The final purchase price remains subject to customary post-closing adjustments and a final settlement is expected to occur in the third quarter of 2026. We recorded an estimated gain on divestiture activity of $ 262 260 million. related to the South Texas Divestiture for the three and six months ended June 30, 2026.

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The following table presents earnings before income taxes attributable to the assets included in the South Texas Divestiture. were $ 16 million and $ 25 million for the three months ended June 30, 2026, and 2025, respectively, and $ 61 million and $ 69 million for the six months ended June 30, 2026, and 2025, respectively. As the South Texas Divestiture closed on April 30, 2026, the 2026 amounts presented reflect one month and four months of activity for the three and six months ended June 30, 2026, respectively. Earnings before income taxes reflect oil, gas, and NGL production revenue, less oil, gas, and NGL production expense; DD&A expense; and exploration expense. Depletion expense ceased upon classification of the assets as held for sale during the first quarter of 2026.

For the Three Months Ended

September 30, For the Nine Months Ended

Earnings before income taxes attributable to the South Texas Divestiture assets (1)

(1) As the South Texas Divestiture closed on April 30, 2026, the earnings amount presented reflects four months of activity during the nine months ended September 30, 2026.

Note 3: Revenue from Contracts with Customers 46 changes

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June 30, Six Months Ended

The following table below presents oil, gas, and NGL production revenue by product type for each of our operating areas. The Permian Basin and DJ Basin results reflect activity from the assets acquired in the Merger only after the Closing Date of January 30, 2026 , and the South Texas results reflect activity from the assets sold in the South Texas Divestiture only for the period from January 1, 2026, through the divestiture date of April 30, 2026.

For the Three Months Ended

September 30, For the Nine Months Ended

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Permian Basin $ 1,135 $ 315 $ 1,835 $ 651

DJ Basin 486 — 753 —

South Texas 125 113 221 231

Uinta Basin 280 225 479 430

Total 2,026 653 3,288 1,312

Permian Basin $ 944 $ 312 $ 2,779 $ 963

DJ Basin 460 — 1,213 —

South Texas 127 131 348 362

Uinta Basin 285 226 764 656

Total 1,816 669 5,104 1,981

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Permian Basin ( 53 ) 27 ( 40 ) 83

South Texas 19 44 79 99

Uinta Basin 6 6 13 16

Permian Basin 123 32 83 115

South Texas 18 47 97 146

Uinta Basin 8 6 21 21

Total 209 84 348 282

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Permian Basin 28 — 44 —

South Texas 37 54 81 114

Total 115 54 206 115

Permian Basin 36 — 80 —

South Texas 39 58 120 172

Total 135 58 341 172

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Permian Basin 1,110 342 1,839 735

DJ Basin 579 — 921 —

South Texas 181 211 381 444

Uinta Basin 286 232 492 446

Total $ 2,156 $ 785 $ 3,633 $ 1,625

Permian Basin 1,103 344 2,942 1,079

DJ Basin 580 — 1,501 —

South Texas 184 235 565 680

Uinta Basin 293 232 785 677

Total $ 2,160 $ 811 $ 5,793 $ 2,436

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Permian Basin 51 % 43 % 51 % 45 %

South Texas 8 % 27 % 10 % 27 %

Uinta Basin 13 % 30 % 14 % 28 %

Permian Basin 51 % 42 % 51 % 44 %

South Texas 9 % 29 % 10 % 28 %

Uinta Basin 13 % 29 % 13 % 28 %

Note: Prior year Amounts may not calculate due to rounding.

As of June September 30, 2026, there were no material unsatisfied or partially unsatisfied performance obligations.

Accrued oil, gas, and NGL production revenue included in accounts receivable in the accompanying unaudited condensed consolidated balance sheets ("accompanying balance sheets") as of June September 30, 2026, and December 31, 2025, was $ 620 791 million and $ 193 million, respectively.

Note 4: Income Taxes 15 changes

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June September 30, For the Six Nine Months Ended

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Federal $ ( 4 ) $ ( 7 ) $ ( 9 ) $ ( 28 )

State 2 ( 1 ) ( 3 ) ( 3 )

Income tax expense $ ( 318 ) $ ( 51 ) $ ( 243 ) $ ( 101 )

Effective tax rate 22.9 % 20.1 % 24.8 % 20.8 %

Federal $ ( 35 ) $ 27 $ ( 44 ) $ ( 1 )

State ( 2 ) — ( 5 ) ( 3 )

Deferred portion of income tax (expense) ( 316 ) benefit 7 ( 43 76 ) ( 231 224 ) ( 69 145 )

Income tax expense $ ( 30 ) $ ( 49 ) $ ( 273 ) $ ( 150 )

Effective tax rate 24.9 % 24.1 % 24.8 % 21.7 %

Note: Prior year Amounts may not calculate due to rounding.

Income tax expense or benefit differs from the amount that would be calculated by applying the statutory United States federal income tax rate to income or loss before income taxes. These differences can relate to the effect of federal and state tax credits, state income taxes, excess tax benefits and deficiencies from stock-based compensation awards, tax deduction limitations on compensation of covered individuals, and the cumulative effect of other smaller permanent differences. The quarterly effective tax rate and the resulting income tax expense or benefit can also be affected by the proportional effects of forecast net income or loss and the correlative effect on the valuation allowance for each of the periods presented in the table above. Income tax expense or benefit can also reflect a period change from the remeasurement of deferred tax assets and liabilities resulting from a statutorily enacted tax rate change or a change in the composition of income and activities among multiple state tax jurisdictions due to a corporate reorganization. Due to the Merger and resulting increase in activity in the state of Colorado, we recorded a remeasurement tax expense during the first quarter of 2026, related to SM Energy's our historical net deferred tax balances.

As a result of the Merger, it was determined that an ownership change occurred under Sections 382 and 383 of the Internal Revenue Code ("IRC"), changing the timing of when we can utilize certain tax attributes. We have assessed the recoverability of our deferred tax assets by considering whether it is more likely than not that all or a portion of the combined Company's our deferred tax assets will be realized. In making such a determination, we considered both the positive and negative evidence, including our recent history of profitability, and concluded that no additional valuation allowance is currently required. We will continue to assess the realizability of our acquired tax attributes considering any potential impacts under IRC 382, as permitted under ASC 805.

On July 4, 2025, the One Big Beautiful Bill Act was enacted, introducing certain favorable changes to corporate tax provisions. As required, we recorded the full-year impact to current income tax expense during the third quarter of 2025.

We comply with authoritative accounting guidance regarding uncertain tax positions. The entire amount of unrecognized tax benefit we have reported would affect our effective tax rate if recognized. We do not expect a significant material change to our recorded unrecognized tax benefits in 2026.

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Note 5: Equity 18 changes

Stock Repurchase Program

Our stock repurchase program, which our Board of Directors authorized through December 31, 2027 , for the repurchase of up to $ 500 million in aggregate value of our outstanding common stock, permits us to repurchase our shares from time to time in open market transactions (including pursuant to Rule 10b5-1 trading plans), through privately negotiated transactions or by other means in accordance with federal securities laws and subject to certain provisions of our Credit Agreement and the indentures governing our Senior Notes, as defined in Note 6 - Long-Term Debt ("Stock Repurchase Program").

During the three and six months ended June 30, 2026, we repurchased and subsequently retired 2,643,506 shares of our common stock at a weighted-average share price of $ 31.73 , for a total cost of $ 84 million, excluding excise taxes, commissions, and fees. We did not repurchase any shares of our common stock during the three and six months ended June 30, 2025.

As of June 30, 2026, $ 404 million remained available for repurchases of our outstanding common stock through December 31, 2027 , under our Stock Repurchase Program.

During the first quarter of 2026, our Board of Directors approved a 10 percent increase to our fixed dividend policy to $ 0.88 per share annually, to be paid in quarterly increments of $ 0.22 per share. Beginning with the first quarter of 2026, dividends are declared and paid within the same quarter, rather than being paid in the quarter subsequent to declaration. As a result of this change in timing, during the six months ended June 30, 2026, we paid dividends that were declared in the fourth quarter of 2025 and the first and second quarters of 2026, totaling $ 0.64 per share, or $ 135 million.

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In February 2026, our Board of Directors approved a 10 percent increase to our annual base dividend to $ 0.88 per share, to be paid in quarterly increments of $ 0.22 per share. Beginning with the first quarter of 2026, dividends are declared and paid within the same quarter, rather than being paid in the quarter subsequent to declaration. As a result of this change in timing, during the nine months ended September 30, 2026, we paid dividends that were declared in the fourth quarter of 2025 and the first, second, and third quarters of 2026, totaling $ 0.86 per share, or $ 187 million.

Stock Repurchase Program

Our stock repurchase program, which our Board of Directors authorized in June 2024, for the repurchase of up to $ 500 million in aggregate value of our outstanding common stock through December 31, 2027 , permits us to repurchase our shares from time to time in open market transactions (including pursuant to Rule 10b5-1 trading plans), through privately negotiated transactions or by other means in accordance with federal securities laws and subject to certain provisions of our Credit Agreement and the indentures governing our Senior Notes ("Stock Repurchase Program"). Refer to Note 6 - Long-Term Debt for definition of Senior Notes.

The following table presents activity under our Stock Repurchase Program for the periods presented:

For the Three Months Ended

September 30, For the Nine Months Ended

Shares of common stock repurchased (1)

Weighted-average price per share (2)

Cost of shares of common stock repurchased (in millions) (2) (3)

(1) All repurchased shares of our common stock were subsequently retired.

(2) Amounts exclude excise taxes, commissions, and fees.

(3) Amounts may not calculate due to rounding.

As of September 30, 2026, $ 323 million remained available for repurchases of our outstanding common stock through December 31, 2027 , under our Stock Repurchase Program.

Note 6: Long-Term Debt 30 changes

Our Credit Agreement provides for a senior secured revolving credit facility with a maximum loan amount of $ 5.0 billion. The semi-annual borrowing base redetermination was most recently completed In April 2026. Our lenders reaffirmed both our borrowing base and aggregate lender commitments at existing amounts, after giving effect to the South Texas Divestiture. Accordingly, as of June 30, 2026, the borrowing base and aggregate revolving lender commitments under the Credit Agreement were $ 5.0 billion and $ 2.5 billion, respectively. The next borrowing base redetermination is scheduled to occur on October 1, 2026. In connection with the closing of the Merger on January 30, 2026 , we entered into the Fourth Amendment to the Credit Agreement ("Fourth Amendment") with our lenders to, among other things: (i) permit the assumption of outstanding Civitas senior unsecured notes and add the subsidiaries of Civitas as guarantors under the Credit Agreement, (ii) extend the scheduled maturity date for elected revolving commitments to January 30, 2031 , (iii) increase the aggregate revolving lender commitments available under the Credit Agreement from $ 2.0 billion to $ 2.5 billion and add three new lender counterparties, (iv) increase the borrowing base from $ 3.0 billion to $ 5.0 billion, (v) eliminate the credit spread adjustment applicable to term Secured Overnight Financing Rate ("SOFR") loans (as defined in the Credit Agreement), and (vi) make certain other amendments to the financial covenant definitions and provide additional flexibility under certain affirmative covenants, negative covenants and events of default. As of September 30, 2026, the borrowing base and aggregate revolving lender commitments under the Credit Agreement were $ 5.0 billion and $ 2.5 billion, respectively. Subsequent to September 30, 2026, we completed the semi-annual borrowing base redetermination, which reaffirmed both our borrowing base and our aggregate lender commitments at existing levels. The next borrowing base redetermination is scheduled to occur on April 1, 2027.

Interest and commitment fees associated with the revolving credit facility are accrued based on a borrowing base utilization grid set forth in the Credit Agreement, as presented in Note 5 - Long-Term Debt in the our 2025 Form 10-K . At our election, borrowings under the Credit Agreement may be in the form of Secured Overnight Financing Rate SOFR revolving loans, Alternate Base Rate ("ABR") revolving loans, or Swingline loans. SOFR revolving loans accrue interest at SOFR plus the applicable margin from the utilization grid, and ABR revolving loans and Swingline loans accrue interest at a market-based floating rate, plus the applicable margin from the utilization grid. Commitment fees are accrued on the unused portion of the aggregate revolving lender commitment amount at rates from the utilization grid.

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As of July 23, October 22, 2026 As of June September 30, 2026 As of December 31, 2025 (in millions)

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(1) Unamortized deferred financing costs attributable to the revolving credit facility are presented as a component of the other noncurrent assets line item in the accompanying balance sheets and totaled $ 21 20 million and $ 15 million as of June September 30, 2026, and December 31, 2025, respectively. These costs are being amortized over the term of the Credit Agreement on a straight-line basis.

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In connection with Upon the completion of the Merger, as contemplated by the Merger Agreement, we assumed $ 4.9 billion in aggregate principal amount of outstanding unsecured senior notes previously issued by Civitas ("Civitas Senior Notes"). Our Civitas Senior Notes were recorded at their respective fair values as of the Closing Date. Because the fair values exceeded the aggregate principal amounts outstanding, we recorded a premium, which is being amortized over the remaining terms of the notes.

On the Closing Date of the Merger, as contemplated by the Merger Agreement, we used cash on hand to repay in full the outstanding borrowings under the Civitas revolving credit facility, including accrued and unpaid interest and applicable fees, resulting in a total payment of $ 201 million. This repayment extinguished the related obligations and resulted in the release of released all associated liens. This payment was made by SM Energy on behalf of Civitas and has been reflected as consideration transferred in the preliminary purchase price allocation in accordance with ASC 805, as presented in Note 2 - Mergers, Acquisitions, and Divestitures .

The table below summarizes the interest rates, maturity dates, and semi-annual interest payment dates related to our Senior Notes (collectively referred to as "Senior Notes") as of June September 30, 2026:

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Senior Notes due 2027

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The Senior Notes, net line items in the accompanying balance sheets as of June September 30, 2026, and December 31, 2025, consisted of the following:

As of September 30, 2026

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6.625 % Senior Notes due 2027 (1)

8.375 % Senior Notes due 2028 (2) (1)

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8.625 % Senior Notes due 2030 (2) (1)

8.75 % Senior Notes due 2031 (2) (1)

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9.625 % Senior Notes due 2033 (2) (1)

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Total $ 6,873 $ 198 $ ( 35 ) $ 7,036

(1) As of June 30, 2026, the 6.625 % Senior Notes due 2027 ("2027 Senior Notes") are presented in the current liabilities section of the accompanying balance sheets.

Total $ 6,456 $ 190 $ ( 32 ) $ 6,614

(2) (1) Civitas Senior Notes assumed as part of the Merger.

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On March 18, 2026, we increased the maximum aggregate principal amount to be accepted in the Tender Offer up to $ 1.0 billion and amended the terms of the Tender Offer to provide that all notes validly tendered at or prior to April 1, 2026, would be eligible to receive the early tender premium. During the six months ended June 30, 2026, pursuant to the Tender Offer, we repurchased $ 894 million in aggregate principal amount of our 2028 Civitas Senior Notes and paid total consideration, including early tender premiums but excluding accrued interest, of $ 922 million. We recorded a loss on extinguishment of debt of $ 3 million, which included the early tender premium offset by the accelerated recognition of the related portion of unamortized fair value premium recorded on the Closing Date of the Merger. As of June 30, 2026, $ 456 million in aggregate principal amount of our 2028 Civitas Senior Notes remained outstanding.

On August 5, 2026, we instructed the trustee under our 2027 Senior Notes to issue a notice of full redemption of the $ 417 million aggregate principal amount outstanding, plus accrued and unpaid interest, to the holders of such notes. We intend to redeem our 2027 Senior Notes on September 4, 2026. Following the redemption, we will have no remaining Senior Notes maturities in 2027.

(1) As of December 31, 2025, the our 6.75 % Senior Notes due 2026 ("2026 Senior Notes") are presented in the current liabilities section of the accompanying balance sheets.

On In March 4, 2026, we commenced a cash tender offer ("Tender Offer") to purchase up to $ 750 million aggregate principal amount of the outstanding $ 1.35 billion aggregate principal amount a portion of our 8.375 % Senior Notes due 2028 ("2028 Civitas Senior Notes") originally issued by Civitas, at a repurchase price equal to 103.175 percent of the principal amount outstanding, on the date of repurchase, plus accrued and unpaid interest. on all Pursuant to the Tender Offer, we repurchased $ 894 million aggregate principal amount and paid total consideration, including the early tender premium and certain fees but excluding accrued interest, of $ 924 million. The remaining aggregate principal amount outstanding of our 2028 Civitas Senior Notes validly tendered by March 17, is $ 456 million as of September 30, 2026.

To fund the Tender Offer, on March 9, 2026 , we issued $ 1.0 billion in aggregate principal amount of our 6.625 % Senior Notes at par with a maturity date of due April 15, 2034 ("2034 Senior Notes") We received at par, receiving net proceeds of $ 984 million after deducting fees of $ 16 million, which are being amortized as deferred financing costs over the life of the 2034 Senior Notes. A majority of the net proceeds from the issuance of the 2034 Senior Notes were used to repurchase a portion of our 2028 Civitas Senior Notes pursuant to the Tender Offer.

On May 11, 2026, pursuant to the terms of the governing indenture, we redeemed all $ 400 million aggregate principal amount outstanding of our 5.0 % Senior Notes due October 15, 2026 ("2026 Civitas Senior Notes") at a redemption price equal to 100 percent of the principal amount outstanding, of our 2026 Civitas Senior Notes, plus accrued and unpaid interest. In connection with the redemption of our 2026 Civitas Senior Notes, we satisfied all remaining obligations under the governing indenture. Our redeemed 2026 Civitas Senior Notes and related guarantees were cancelled upon settlement.

On June 1, 2026, pursuant to the terms of the governing indenture, we redeemed all $ 419 million aggregate principal amount outstanding of our 2026 Senior Notes at a redemption price equal to 100 percent of the principal amount outstanding, of the 2026 Senior Notes, plus accrued and unpaid interest. In connection with the redemption of our 2026 Senior Notes, we satisfied all remaining obligations under the governing indenture as they related to our 2026 Senior Notes. Our redeemed 2026 Senior Notes and related guarantees were cancelled upon settlement.

On September 4, 2026, pursuant to the terms of the governing indenture, we redeemed all $ 417 million aggregate principal amount outstanding of our 6.625% Senior Notes due 2027 ("2027 Senior Notes") at a redemption price equal to 100 percent of the principal amount outstanding of the 2027 Senior Notes, plus accrued and unpaid interest. In connection with the redemption of our 2027 Senior Notes, we satisfied all remaining obligations under the governing indenture related to our 2027 Senior Notes.

During the nine months ended September 30, 2026, we recorded a $ 4 million net loss on extinguishment of debt related to the repurchases and redemptions of the Senior Notes discussed above. The net loss primarily relates to the partial repurchase of our 2028 Civitas Senior Notes which included the early tender premium and certain fees, partially offset by the accelerated recognition of the unamortized fair value premium recorded on the Closing Date of the Merger. Following these transactions, we have no Senior Notes maturities until mid-2028.

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We are subject to certain financial and non-financial covenants under the Credit Agreement and the indentures governing our Senior Notes that, among other terms, limit our ability to incur additional indebtedness, make restricted payments including dividends, sell assets, create liens that secure debt, enter into transactions with affiliates, make certain investments, or merge or consolidate with other entities. We were in compliance with all financial and non-financial covenants as of June September 30, 2026, and through the filing of this report.

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Capitalized interest costs for the three months ended June September 30, 2026, and 2025, totaled $ 13 15 million and $ 9 8 million, respectively, and for the six nine months ended June September 30, 2026, and 2025, totaled $ 28 43 million and $ 18 26 million, respectively. The amount of interest we capitalize generally fluctuates based on the amount borrowed, our capital program, and the timing and amount of costs associated with capital projects that are considered in progress. Capitalized interest costs are included in total costs incurred.

Note 7: Commitments and Contingencies 4 changes

We assumed various commitments through the Merger which are included in our commitments and contingencies disclosures as of June September 30, 2026. Other than the items discussed below, there have been no changes in commitments and contingencies that differ materially from those disclosed in the our 2025 Form 10-K through the filing of this report.

Drilling and Completion Commitments. During the six nine months ended June September 30, 2026, we entered into an agreement that requires requiring us to drill and complete minimum lateral footage requirements on certain existing leases. Failure to satisfy these obligations by March 31, 2028, will require us to pay liquidated damages based on the difference between the actual footage drilled and completed and the minimum requirements. As of June September 30, 2026, the liquidated damages could range from zero to a maximum of $ 80 64 million, with the maximum exposure assuming no additional development activity occurs prior to before March 31, 2028. As of the filing of this report, we expect to meet our obligations under this agreement.

In connection with the Merger, we assumed certain oil, gas, and produced water gathering agreements that collectively contain a drilling commitment. The commitment requires us to drill and complete a total of 106 qualifying wells by December 31, 2026, unless our obligation is excused under the terms of the agreements. As of June September 30, 2026, we do not expect to meet this commitment; however, we believe our nonperformance is excused under the terms of the agreements. We cannot reasonably estimate the amount of damages, if any, that might be incurred if our position is not sustained.

Delivery Commitments . As of June September 30, 2026, we have material, long-term transportation and delivery commitments with various parties. These agreements, some of which we assumed through the Merger, require us to make periodic deficiency payments for any shortfalls in delivering specified minimum volume commitments. In connection with the Merger, we assumed delivery commitments under which, as of June September 30, 2026, we are required to deliver a minimum of 61 56 MMBbl of oil through 2030 and 49 45 Bcf of gas through 2029. As of June September 30, 2026, if we fail to deliver any product under all applicable agreements, the aggregate undiscounted deficiency payments would total approximately $ 214 205 million. We do not expect to incur material penalties or shortfalls with regard to these commitments.

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Note 8: Derivative Financial Instruments 56 changes

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We have entered into fixed price oil and gas basis swaps in order to mitigate exposure to adverse pricing differentials between certain industry benchmark prices and the actual physical pricing points where our production is sold. As of June September 30, 2026, we had basis swap contracts with fixed price differentials between:

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As of June September 30, 2026, we had commodity derivative contracts with terms through the second quarter of 2028 as summarized in the table below:

Third Quarter 2026 Fourth Quarter 2026 2027 2028

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NYMEX WTI Volumes 6,398 7,673 10,530 —

NYMEX WTI Volumes 5,662 3,289 12,133 —

NYMEX WTI Volumes 7,673 12,542 —

Weighted-Average Contract Price $ 63.30 $ 61.22 $ 68.09 68.70 $ —

NYMEX WTI Volumes 3,289 13,157 —

Weighted-Average Floor Price $ 59.51 $ 58.66 $ 63.42 63.93 $ —

Weighted-Average Ceiling Price $ 69.09 $ 66.07 $ 72.07 72.37 $ —

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Weighted-Average Contract Price $ 0.99 $ 0.99 $ 1.02 $ —

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Weighted-Average Contract Price $ 1.97 $ 2.01 $ — $ —

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NYMEX WTI Volumes 4,047 719 — —

Weighted-Average Contract Price $ 0.59 $ 1.08 $ — $ —

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Weighted-Average Contract Price $ 4.07 $ 4.30 $ 4.03 3.96 $ — 4.05

Weighted-Average Contract Price $ 2.35 $ 3.13 $ 3.64 $ 1.14 1.11

Weighted-Average Floor Price $ 3.48 $ 3.53 $ 3.72 $ —

Weighted-Average Ceiling Price $ 4.33 $ 4.67 $ 4.60 $ —

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Weighted-Average Contract Price $ ( 1.31 ) $ ( 1.31 ) $ ( 0.77 ) $ —

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Weighted-Average Contract Price $ ( 0.57 ) $ ( 0.57 ) $ ( 0.37 ) $ —

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OPIS Ethane Mont Belvieu Non-TET Volumes 137 141 — —

Weighted-Average Contract Price $ 11.71 $ 11.71 $ — $ —

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Our commodity derivatives are measured at fair value and are included in the accompanying balance sheets as derivative assets and liabilities, with the exception of derivative instruments that meet the "normal purchase normal sale" exclusion. We do not designate our commodity derivative contracts as hedging instruments. The fair value of commodity derivative contracts at June September 30, 2026, and December 31, 2025, was a net asset liability of $ 16 460 million and a net asset of $ 85 million, respectively.

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Current assets $ 145 $ 83

Noncurrent assets 56 6

As of June September 30, 2026 As of December 31, 2025

Current assets $ 93 $ 83

Noncurrent assets 12 6

Total derivative assets $ 201 105 $ 89

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Current liabilities $ 184 $ 2

Noncurrent liabilities 1 2

Current liabilities $ 552 $ 2

Noncurrent liabilities 13 2

Total derivative liabilities $ 185 565 $ 4

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As of June September 30, 2026, and December 31, 2025, all derivative instruments held were subject to master netting arrangements with various financial institutions. In general, our agreements with counterparties provide for the offsetting of amounts payable or receivable, at the election of both parties, for transactions that settle on the same date and in the same currency. Our agreements also provide that in the event of an early termination, the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. Our accounting policy is to not offset these positions in our accompanying balance sheets.

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2026 December 31, 2025 June September 30,

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Net amounts $ 47 $ 85 $ ( 31 ) $ —

Gross amounts presented in the accompanying balance sheets $ 201 105 $ 89 $ ( 185 565 ) $ ( 4 )

Amounts not offset in the accompanying balance sheets ( 154 105 ) ( 4 ) 154 105 4

Net amounts $ — $ 85 $ ( 460 ) $ —

We recognize all gains and losses from changes in commodity derivative fair values immediately in earnings rather than deferring such amounts in accumulated other comprehensive income (loss). We had no commodity derivative contracts designated as hedging instruments as of June September 30, 2026, and December 31, 2025. Refer to Note 9 - Fair Value Measurements for more information regarding our derivative instruments, including our valuation techniques.

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June September 30, For the Six Nine Months Ended

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Oil contracts $ 340 $ ( 21 ) $ 410 $ ( 24 )

Gas contracts ( 119 ) ( 19 ) ( 159 ) ( 26 )

Oil contracts $ 251 $ ( 16 ) $ 661 $ ( 40 )

Gas contracts ( 43 ) ( 22 ) ( 202 ) ( 48 )

NGL contracts ( 1 ) — ( 1 2 ) 2

Total net derivative settlement (gain) loss $ 220 207 $ ( 40 39 ) $ 250 457 $ ( 47 86 )

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Oil contracts $ ( 238 ) $ ( 55 ) $ 561 $ ( 52 )

Gas contracts ( 31 ) ( 22 ) ( 243 ) ( 10 )

NGL contracts ( 3 ) ( 2 ) 107 —

Oil contracts $ 695 $ 1 $ 1,256 $ ( 51 )

Gas contracts ( 11 ) ( 46 ) ( 254 ) ( 56 )

NGL contracts — — 107 —

Total net derivative (gain) loss $ ( 272 ) 684 $ ( 78 45 ) $ 425 1,109 $ ( 61 107 )

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We only enter into derivative contracts with members of our Credit Agreement lender group and As of June September 30, 2026, all of our derivative counterparties were members of our Credit Agreement lender group. We do not enter into derivative contracts with counterparties that are not part of the lender group. Under the Credit Agreement, we are required to provide mortgage liens on assets having a value equal to at least 85 percent of the total PV-9, as defined in the Credit Agreement, of our proved oil and gas properties evaluated in the most recent reserve report. Collateral securing indebtedness under the Credit Agreement also secures our derivative agreement obligations.

Note 9: Fair Value Measurements 4 changes

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As of June September 30, 2026 As of December 31, 2025

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Both financial and non-financial assets and liabilities are categorized within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies we use as well as and the general classification of such instruments pursuant to the above fair value hierarchy.

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The following table reflects the fair value of our Senior Notes obligations measured using Level 1 inputs based on quoted secondary market trading prices. The Senior Notes were not presented at fair value in the accompanying balance sheets as of June September 30, 2026, or December 31, 2025, as the Senior Notes were recorded at carrying value, net of any unamortized premium or unamortized deferred financing costs. Refer to Note 6 - Long-Term Debt for additional information.

As of June September 30, 2026 As of December 31, 2025

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Note 10: Earnings Per Share 9 changes

Basic net income or loss per common share is calculated by dividing net income or loss available to common stockholders by the basic weighted-average number of common shares outstanding for the respective period. Diluted net income or loss per common share is calculated by dividing net income or loss available to common stockholders by the diluted weighted-average number of common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for this calculation consist primarily of non-vested restricted stock units ("RSU" or "RSUs") and contingent performance share units ("PSU" or "PSUs"), which were measured using the treasury stock method as presented below. Refer to Note 12 - Stock-Based Compensation in this report and Note 9 - Earnings Per Share and Note 10 - Stock-Based Compensation in the our 2025 Form 10-K for additional detail on these potentially dilutive securities.

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June September 30, For the Six Nine Months Ended

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Net income $ 1,071 $ 202 $ 736 $ 384

Net income $ 93 $ 155 $ 829 $ 539

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Diluted net income per common share $ 4.46 $ 1.76 $ 3.34 $ 3.34

Diluted weighted-average common shares outstanding 240 239 115 220 226 115

Basic net income per common share $ 4.48 0.39 $ 1.76 1.35 $ 3.35 3.67 $ 3.35 4.70

Diluted net income per common share $ 0.39 $ 1.35 $ 3.66 $ 4.69

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(1) The nine months ended September 30, 2026, amount includes shares issued in connection with the Merger that were outstanding during a portion of the six months ended June 30, 2026 that period .

Note 11: Segment Reporting 26 changes

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Our Chief Operating Decision Maker ("CODM") is the President and Chief Executive Officer . The CODM uses net income (loss) as presented in the accompanying statements of operations to measure E&P Segment profit or loss, and to evaluate income generated from E&P Segment assets in deciding whether to reinvest profits into operational activities or to use profits for other purposes, such as debt reduction, acquisitions, or our Stock Repurchase Program. Additionally, net income (loss) is used in assessing to assess budget versus actual results and in benchmarking to benchmark against our competitors . The measure of segment assets is reported on the accompanying balance sheets as total assets, and capital expenditures are reported in the accompanying statements of cash flows.

The following table summarizes the results of our segment revenue, significant expenses, and net income during the periods presented:

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Lease operating expense 268 105 477 214

Transportation costs 143 79 265 148

Production taxes 131 30 212 67

Ad valorem tax expense 14 10 30 20

For the Six Nine Months Ended

Total operating revenues and other income $ 2,500 2,170 $ 793 812 $ 3,979 6,149 $ 1,637 2,449

Lease operating expense 280 112 757 325

Transportation costs 141 74 406 222

Production taxes 138 33 350 100

Ad valorem tax expense 15 10 45 30

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Exploration 21 15 47 27

General and administrative 79 42 253 81

Net derivative (gain) loss ( 272 ) ( 78 ) 425 ( 61 )

Other operating expense 28 2 48 7

Interest expense 111 43 224 87

Income tax expense 318 51 243 101

Exploration 22 12 69 39

General and administrative 56 39 309 121

Net derivative (gain) loss 684 ( 45 ) 1,109 ( 107 )

Other operating expense 8 5 56 12

Interest expense 116 43 340 130

Other non-operating expense — 1 — 3 4 —

Income tax expense 30 49 273 150

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Note: Prior year amounts may not calculate due to rounding.

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Note 12: Stock-Based Compensation 2 changes

As of June September 30, 2026, 3.0 1.2 million shares of common stock were available for grant under the SM Energy Company 2025 Equity Incentive Compensation Plan and 3.8 3.1 million shares were available for grant under the Civitas Resources, Inc. 2024 Long Term Incentive Plan acquired as part of the Merger. These amounts reflect decreases from the shares of common stock available for grant as of June 30, 2026, resulting from annual grants of RSUs and PSUs made during the three months ended September 30, 2026.

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In total, 2.5 million RSUs were issued in the conversion, with an aggregate fair value of $ 49 million. Of this amount, $ 20 million was attributable to future service and was recorded as unrecognized stock-based compensation, which will be recognized over the remaining requisite service periods of the awards. Other than the impact of the converted awards, there were no material changes to our stock-based compensation arrangements during the three and six nine months ended June September 30, 2026.

Note 13: Restructuring Costs 5 changes

During 2026, in connection with the Merger and the South Texas Divestiture, we announced workforce reductions to better align staffing levels and the organizational structure with our strategy. During the three and six nine months ended June September 30, 2026, we incurred restructuring costs of $ 25 1 million and $ 122 123 million, respectively, which are included in G&A expense in the accompanying statements of operations. These restructuring costs represent a component of total one-time Merger integration costs and consist primarily of employee severance and retention and accelerated vesting of stock-based compensation awards. We expect to incur an additional $ 7 million As of restructuring costs September 30, 2026, we have incurred and anticipate that paid substantially all remaining expected restructuring costs. will be incurred and paid during 2026.

The following table summarizes restructuring cost activity during the six nine months ended June September 30, 2026, and our restructuring cost liabilities included in the accounts payable and accrued expenses line item in the accompanying balance sheets as of the periods dates presented:

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Restructuring costs paid or settled ( 106 121 )

Balance as of June September 30, 2026 $ 16 2

(1) Restructuring costs incurred exclude $ 33 36 million of other G&A integration costs including systems integration, advisory, and legal expenses, and salaries for transition employees.

MD&A 356 changes

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 September 30, 2026, and the three months ended March 31, June 30, 2026 ("sequential quarterly" or "sequentially"), and the year-to-date ("YTD") change between the six nine months ended June September 30, 2026, and the six nine months ended June September 30, 2025 ("YTD 2026-over-YTD 2025").

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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.

Our purpose. Our purpose is to improve communities by providing affordable, reliable energy. We are a premier operator of top-tier assets, utilizing using state-of-the-art digital technology, data analytics, and artificial intelligence in our operations, and continually pursuing innovative ideas innovating to optimize capital efficiency and well performance, while reducing our impact on shared natural resources and operating in an efficient, safe, efficiently, safely, and responsible manner. responsibly.

Strategic vision and value creation. 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 West Texas and New Mexico; the DJ Basin of Northeast Colorado; the Maverick Basin of South Texas; and the Uinta Basin of Northeast Utah. 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, allocation, active portfolio management, and continued development and optimization, we seek to maximize returns and increase the long-term value of our top-tier asset base while maintaining financial flexibility and a sustainable approach to long-term value creation. portfolio.

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 maintaining and optimize optimizing our high-quality asset portfolio, generate generating cash flows, and maintain maintaining 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 post-Merger integration; continuing to optimize operations across our multi-basin portfolio; maintaining safe operations; delivering consistent operational execution; maximizing free cash flow; and bolstering our balance sheet.

Responsible operations. We believe responsible operations and strong financial performance are mutually reinforcing. We are committed to operating safely and efficiently, managing environmental and operational risks, investing in our workforce, maintaining constructive relationships with the communities where we operate, and transparently reporting our performance. The Operations and Environmental, Health and Safety Committee of our Board of Directors assists the Board of Directors in overseeing operational performance, environmental stewardship, health and safety, sustainability reporting, and the management of operational and environmental risks. In addition, compensation for our executives and employees under certain aspects of our compensation plans is based in part on Company-wide performance metrics that include financial, operational, environmental, health and safety measures.

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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 asset 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.

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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.

On April 30, 2026, we completed the South Texas Divestiture. and received Subsequent to September 30, 2026, we completed the final post-closing settlement, resulting in total net cash proceeds of $896 $894 million The after 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.

During the nine months ended September 30, 2026, we strengthened our debt maturity profile and reduced higher-coupon debt through the following transactions:

• We issued our 2034 Senior Notes and used the majority of the net proceeds to repurchase $894 million in aggregate principal amount of certain of our higher-coupon 2028 Civitas Senior Notes.

• We used the net cash proceeds from the South Texas Divestiture to redeem, at par, all $819 million aggregate principal amount outstanding of our 2026 Civitas Senior Notes and our 2026 Senior Notes.

• We used cash flows from operations to redeem, at par, all $417 million aggregate principal amount outstanding of our 2027 Senior Notes.

As of September 30, 2026, we had no outstanding borrowings under our revolving credit facility. After these transactions, we have no Senior Notes maturities until mid-2028. Subsequent to September 30, 2026, we completed our semi-annual borrowing base redetermination, reaffirming our borrowing base and our aggregate lender commitments at their existing levels. See Note 6 - Long-Term Debt in Part I, Item 1 of this report for additional discussion.

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 described below provides future development and exploration opportunities within multiple proven formations, and gas composition across all areas is amenable to processing for NGL extraction.

Our Permian Basin assets comprise approximately 233,000 230,000 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 Woodford-Barnett formations in the Midland Basin; and the Avalon, Bone Spring, and Wolfcamp formations in the Delaware Basin.

Our DJ Basin assets comprise approximately 301,000 300,000 net acres located primarily in northeastern Colorado ("DJ Basin") with future development and exploration opportunities in the Niobrara and Codell formations.

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.

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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.

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.

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.

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.

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.

• We continued to advance Merger integration efforts across key operational and organizational workstreams and made further progress on capturing synergies.

• We closed our South Texas Divestiture on April 30, 2026, and received net cash proceeds of $896 million.

• 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.

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.

During the nine months ended September 30, 2026, benchmark oil prices were substantially higher than the prior year period, primarily due to global supply disruptions and heightened risk associated with War and Geopolitical Instability. Despite sustained higher near-term prices, we have maintained our disciplined approach to capital allocation and have not materially altered our 2026 development program. We continue to monitor commodity market developments, including potential inflationary pressures on oilfield services, materials, and other key inputs associated with the elevated commodity price environment and the ongoing conflict in the Middle East.

Benchmark gas prices have fluctuated throughout 2026. Regional basis differentials in the Permian Basin and the DJ Basin have adversely impacted our realized gas prices, particularly during the first half of 2026. These differentials moderated during the third quarter, although regional pricing constraints continue to influence our realized prices. In the Permian Basin, gas gathering and takeaway capacity constraints contributed to widening basis differentials at the Waha hub during the first half of 2026, with differentials improving late in the second quarter and stabilizing in the third quarter of 2026 as new pipeline capacity entered service. We expect additional pipeline capacity to come online during the remainder of 2026 to further support takeaway out of the Permian Basin. In the DJ Basin, differentials at CIG Rockies widened during the first half of 2026, reflecting elevated regional storage following a mild winter, as well as lower demand during the spring shoulder season. Differentials narrowed through the late second and third quarters as regional demand strengthened.

Commodity prices and broader financial markets continue to be influenced by geopolitical developments, global supply and demand fundamentals, production decisions by the Organization of the Petroleum Exporting Countries ("OPEC") plus other non-OPEC oil producing countries (collectively referred to as "OPEC+"), and broader economic and monetary conditions. The ongoing conflict in the Middle East, including disruptions to energy infrastructure and shipping routes such as the Strait of Hormuz, has contributed to elevated oil prices and increased uncertainty regarding future commodity market conditions.

These developments, together with evolving U.S. and international trade policies, including tariffs and other trade restrictions, may also contribute to inflationary pressures, supply chain disruptions, and increased costs for oilfield services, equipment, materials and other key inputs. We continue to monitor these conditions and their potential effects on our operating costs, capital expenditures, and development economics.

The duration and magnitude of these factors remain uncertain. Changes in commodity prices, regional pricing differentials, operating costs and broader economic conditions could materially affect our business, financial condition, and results of operations. In addition, sustained declines in oil, gas, and NGL prices could result in impairments of certain oil and gas properties.

Second Third Quarter 2026 Overview and Outlook for the Remainder of 2026

During the second third quarter of 2026:

• We substantially completed the integration of the Merger across all key operational and organizational workstreams and have captured targeted synergies from our combined operations, with remaining integration activities expected to continue in the normal course.

• We redeemed the entire $417 million aggregate principal amount outstanding of our 2027 Senior Notes, at par.

• We resumed activity under our Stock Repurchase Program by repurchasing repurchased and subsequently retiring 2.6 retired 2.3 million shares of our common stock at a cost of $84 $81 million, excluding excise taxes, commissions, and fees.

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Financial and Operational Results. Oil, gas, and NGL production revenue increased 46 percent remained relatively flat sequentially to at $2.2 billion. Average net daily equivalent production decreased two percent sequentially to 433.1 MBOE per day for the three months ended June September 30, 2026, compared with $1.5 billion 439.7 MBOE per day for the three months ended March 31, June 30, 2026. This increase was primarily driven decrease reflects the impact of the divestiture of a portion of our South Texas assets which contributed one month of production in the prior quarter, partially offset by an 18 percent sequential quarterly a net increase in average net daily equivalent production to 439.7 MBOE per day, reflecting a full quarter of production from the our retained assets, acquired in the Merger, and a 22 percent sequential quarterly increase in including our retained South Texas assets. Total realized price per BOE, before the effect of net derivative settlements ("realized price" or "realized prices") increased slightly sequentially, as higher realized natural gas prices, resulting from increases in narrower price differentials at Waha, and higher realized NGL prices were largely offset by lower benchmark oil prices. Oil, gas, and NGL production expense increased 30 three percent sequentially to $556 $574 million for the three months ended June September 30, 2026, compared with $428 $556 million for the three months ended March 31, June 30, 2026.

We recorded a net derivative gain loss of $272 $684 million and a net derivative loss gain of $697 $272 million for the three months ended June September 30, 2026, and March 31, June 30, 2026, respectively. Included within these amounts are net derivative settlement losses of $220 $207 million and $30 $220 million for the three months ended June September 30, 2026, and March 31, June 30, 2026, respectively.

Operational and financial activities during the three months ended June September 30, 2026, resulted in the following:

• Net income of $1.1 billion, $93 million, or $4.46 $0.39 per diluted share, compared with a net loss income of $335 million, $1.1 billion, or $1.68 $4.46 per diluted share, for the three months ended March 31, June 30, 2026, which included an estimated gain of $262 million related to the South Texas Divestiture.

• Net cash provided by operating activities of $1.1 billion remained unchanged compared with $640 million for the three months ended March 31, June 30, 2026.

• Adjusted EBITDAX, a non-GAAP financial measure, of $1.4 $1.3 billion, compared with $970 million $1.4 billion for the three months ended March 31, June 30, 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.

Refer to Overview of Selected Production and Financial Information, Including Trends and Comparison of Financial Results and Trends Between the Three Months Ended June September 30, 2026, and March 31, June 30, 2026, and Between the Six Nine Months Ended June September 30, 2026, and 2025 below for additional discussion.

Operational Activities. Our capital program for 2026 is expected to be approximately $2.65 billion to $2.85 $2.75 billion, excluding acquisitions. Our capital program remains We remain focused on applying our strength in geosciences and development optimization to highly economic oil and liquids rich liquids-rich development projects in our areas of operations that support our priority of strategic inventory replacement and growth. Refer to Overview of Liquidity and Capital Resources below for discussion of how we expect to fund the remainder of our 2026 capital program.

During the three and six nine months ended June September 30, 2026, costs incurred in oil and gas property acquisition, exploration, and development activities, whether capitalized or expensed, totaled $734 $782 million and $1.5 $2.2 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.

In our Permian Basin program, we operated an average of seven six drilling rigs and one two completion crew crews during the second third 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 decreased sequentially by 28 five percent to 233.5 222.7 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 September 30, 2026, totaled $300 $394 million, or 41 50 percent of our total costs incurred for the period. We anticipate operating an average of six drilling rigs and two an average of one completion crews crew for the remainder of 2026. focused on development of the Spraberry, Woodford, Bone Spring, Wolfcamp, and Avalon formations.

In our DJ Basin program, we operated two one drilling rigs during the second quarter of 2026 rig and one completion crew for a portion of during the third quarter and our operations focused primarily on delineation and development. of 2026. Average net daily equivalent production increased remained flat sequentially by 46 percent to 118.8 at 119.4 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 September 30, 2026, totaled $178 $145 million, or 24 19 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 one completion crew for a portion of the Niobrara and Codell formations. fourth quarter of 2026.

In our South Texas program, we operated one drilling rig and averaged one completion crew during the second third 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 remained flat sequentially by 30 percent to 47.4 at 46.3 MBOE per day, primarily due to despite the second quarter benefiting from one month of production from the divested South Texas Divestiture. assets. Costs incurred during the three months ended June September 30, 2026, totaled $133 $95 million, or 18 12 percent of our total costs incurred for the period. We anticipate operating one drilling rig during the remainder of 2026 and averaging one no completion crew through the end of crews for the third quarter remainder of 2026. focused primarily on developing the Austin Chalk formation.

In our Uinta Basin program, we operated an average of two drilling rigs and one completion crew during the second third quarter of 2026. and our operations focused on delineation and development. Average net daily equivalent production increased sequentially by two 12 percent to 40.1 44.7 MBOE per day. Costs incurred during the three months ended June September 30, 2026, totaled $123 $129 million, or 17 16 percent of our total costs incurred for the period. We anticipate operating between two and an average of 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.

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: by quarter:

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Wells drilled 37 29 11 8 7 7 9 7 64 51

Wells completed (33) (31) (25) (24) (6) (5) (14) (10) (78) (70)

Wells drilled but not completed at September 30, 2026 60 47 30 24 14 13 33 22 137 106

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(4) Includes adjustments related to normal business activities, including working interest changes for certain existing drilled but not completed wells and for certain wells completed during the second quarter of 2026. Working interest changes can result from divestitures, joint development agreements, farm-outs, and other activities.

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For the Three Months Ended For the Six Nine Months Ended

June 30, 2026 March 31, 2026 June September 30, 2026 June 30, 2025

2026 September 30, 2026 September 30, 2025

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Oil (MMBbl) 11.5 9.3 20.9 9.6

Gas (Bcf) 50.2 37.4 87.6 32.2

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and 296 more changes in the filing

Market risk 1 change

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Controls and procedures 3 changes

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Unregistered sales of stock 7 changes

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