SMHIGH SIGNALOPERATIONAL10-K

SM completed a transformational merger with Civitas Resources that more than doubled its share count and significantly expanded operations, while facing integration challenges that compressed margins despite revenue growth.

The dramatic increase in outstanding shares from 114M to 238M indicates SM has completed a major merger that fundamentally transforms the company's scale and structure. The explicit references to merger integration risks and the shift from company-specific strategic language to post-merger operational focus suggests investors should expect continued volatility as the combined entity works through integration challenges.

Comparing 2026-02-26 vs 2025-02-20View on EDGAR →
FINANCIAL ANALYSIS

The merger created a significantly larger entity with revenue growing 17% to $3.2B and operating cash flow increasing 13% to $2.0B, but profitability declined 16% to $648M due to higher interest costs and integration expenses. The company's balance sheet strengthened with current assets surging 87% and equity growing 14%, though current liabilities also increased 48%, reflecting the expanded operational scale. The sharp 85% reduction in share buybacks from $86M to $13M indicates management is prioritizing debt reduction and integration over shareholder returns in the near term.

FINANCIAL STATEMENT CHANGES
Current Assets
Balance Sheet
+86.6%
$434.7M→$811.0M

Current assets grew 86.6% — improving short-term liquidity or inventory/receivables build.

Share Buybacks
Cash Flow
-84.9%
$86.1M→$13.0M

Buyback activity reduced 84.9% — capital being redeployed elsewhere or cash conservation underway.

Current Liabilities
Balance Sheet
+48%
$790.0M→$1.2B

Current liabilities surged 48% — significant near-term obligations; verify ability to meet short-term debt.

Interest Expense
P&L
+23%
$140.7M→$173.0M

Interest costs rose 23% — monitor debt levels and coverage ratio in rising rate environment.

Revenue
P&L
+17.2%
$2.7B→$3.2B

Revenue growing 17.2% — solid top-line momentum, watch margins for quality of growth.

Net Income
P&L
-15.9%
$770.3M→$648.0M

Net income declined 15.9% — review whether driven by operations, interest costs, or non-recurring items.

Stockholders Equity
Balance Sheet
+13.5%
$4.2B→$4.8B

Equity base grew 13.5% — retained earnings accumulation or equity issuance strengthening the balance sheet.

Operating Cash Flow
Cash Flow
+12.8%
$1.8B→$2.0B

Operating cash flow grew 12.8% — strong conversion of earnings to cash, healthy business fundamentals.

LANGUAGE CHANGES
NEW — 2026-02-26
PRIOR — 2025-02-20
ADDED
As of February 2, 2026, the registrant had 238,359,166 shares of common stock outstanding.
Management s Discussion and Analysis of Financial Condition and Results of Operations 47 Overview of the Company 47 Financial Results of Operations and Additional Comparative Data 52 Comparison of Financial Results and Trends Between 2025 and 2024 55 Overview of Liquidity and Capital Resources 57 Critical Accounting Estimates 61 Accounting Matters 63 Environmental 63 Non-GAAP Financial Measures 64 Item 7A.
Forward-looking statements appear throughout this report, and unless otherwise specifically noted, refer to the post-Merger entity following the Merger with Civitas Resources, Inc.
( Civitas ); see Note 17 Mergers, Acquisitions, and Divestitures in Part II, Item 8 of this report and Glossary below for discussion and definition of the Civitas Merger.
military actions and heightened geopolitical tensions involving Venezuela; the war between Russia and Ukraine; instability in the Middle East including the war and armed conflicts between Israel and Hamas, Hezbollah, and Iran and its proxy forces; U.S.
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REMOVED
As of January 31, 2025, the registrant had 114,461,934 shares of common stock outstanding.
Management s Discussion and Analysis of Financial Condition and Results of Operations 41 Overview of the Company 41 Financial Results of Operations and Additional Comparative Data 45 Comparison of Financial Results and Trends Between 2024 and 2023, and Between 2023 and 2022 49 Overview of Liquidity and Capital Resources 52 Critical Accounting Estimates 56 Accounting Matters 58 Environmental 58 Non-GAAP Financial Measures 59 Item 7A.
Factors that may cause our financial condition, results of operations, business prospects or economic performance to differ from expectations include the factors discussed in Part I, Item 1A, Risk Factors below and elsewhere in this report.
BUSINESS AND PROPERTIES General We are an independent energy company engaged in the acquisition, exploration, development, and production of oil, gas, and NGLs in Texas and Utah.
Our long-term vision and strategy is to sustainably grow value for all of our stakeholders as a premier operator of top-tier assets by maintaining and optimizing our high-quality asset portfolio, generating cash flows, and maintaining a strong balance sheet.
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