Good morning and welcome to today's call. I'm joined today by our President and CEO Beth McDonald and Executive Vice President and CFO Wade Purcell. We're looking forward to sharing our latest results and our 2026 plan with you and answering your questions. Our discussion today includes forward looking statements. Please see slide two of our earnings presentation, page two of the earnings release, page three of our 2026 outlook release and the risk factor section of our most recent 10K, which was filed earlier this morning, for risks associated with these statements that could cause actual results to differ. We will also discuss non-GAAP measures and metrics. Definitions and reconciliations to the most directly comparable GAAP measures can be found in both the earnings release, outlook release, and slide deck. Now I'll turn the call over to Beth.

Thanks, Pat, and good morning, everyone. It's an exciting day as we provide our first release of the new SM Energy. 2025 was a pivotal year for our company, and it set the stage for 2026 in this transformational We improved on every part of our investment thesis, including returns to stockholders, operational execution, financial strength, and increasing the scale and quality of our portfolio. With the full details in our posted materials, I will quickly hit some highlights from 2025. We delivered record operating cash flow, adjusted EBITDAX production, and oil volumes. Importantly, oil was 53% of the total. Our teams found new ways to rapidly apply best practices and increase operational efficiencies through longer laterals and development of deeper zones. We integrated our oil-weighted UEN to assets. Since late 2024, we've applied our proven technical capabilities to unlock greater value from this high-quality oil basin and its multiple stack pays. We strengthened our financial position by reducing net debt by $437 million, ending the year at roughly one times leverage. As a result, we returned capital to stockholders, distributing $104 million through dividends and share repurchases. Lastly, we expanded our scale and inventory across the top U.S. basins through organic reserve growth and our announced merger with Civitas. Now let's turn to 2026. We have three strategic objectives that you will continue to hear throughout the year. are integrate, execute, Ulster. First, integrate. We are focused on integrating Civitas and capturing $200 to $300 million in synergies. To date, we have already actioned $185 million of our target, which is close to $1 billion in present value and just under 20% of our market cap. Total synergies could unlock up to $1.5 billion in present value or nearly 30% of our market Next, execute. Our plan maximizes sustainable free cash flow. By investing in our high return opportunities, we can continue to strengthen the balance sheet while accelerating the return of capital to stockholders. We will execute with a safety first mindset and seek new ways to efficiently develop our assets to maximize free cash flow through disciplined capital allocation we have reset and optimized our activity levels to accomplish this here are the key takeaways from the 2026 outlook our plan was developed to maximize free cash flow in a 60 oil and 350 gas environment capital investments will total 2.65 to 2.85 billion dollars with our high margin Permian activities receiving about 45% of the total. Total expected CAPEX is about 14% lower than pro forma 2025. With lower capital, we reset activity levels to 11 rigs, down three rigs from a pro forma average of 14. We have prioritized value over volume. First quarter estimates reflect only two months of Civitas. Looking forward, volumes in the second half of the year are expected to range between 420 and 430,000 BOE per day at 55% oil, more indicative of our go-forward run rate. There are a few slides in the presentation that provide more detail and a reconciliation of production for your reference. Ultimately, our plan reflects greater capital efficiency to maximize free cash flow, strengthen the balance sheet and accelerate return to capital lastly our final objective is to bolster this relates to our balance sheet and our return to capital framework i'll now turn the call over to wade to cover this important catalyst for us wade thanks beth good morning everyone so let's talk about bolster now and how we'll strengthen an already strong capital structure starting with the balance sheet on slide 15 this reflects the impact of the Civitas merger I believe the three categories for measuring balance sheet strength their number one liquidity

number two maturities profile and number three total leverage multiple of annually bid acts so first liquidity as we announced in late January in our secured bank facility the borrowing base was increased to five billion dollars with lender commitments increased to two and a half billion dollars the maturity date was extended to January 30th, 2031. Therefore, we currently have nearly $3 billion of liquidity. In addition, last week we announced the sale of select natural gas weighted South Texas assets totaling $950 million, which we expect to close in the second quarter. The metrics behind this deal are very favorable to where SM stock trades today. This will further strengthen our significant liquidity position, which leads me to number two maturities. We anticipate using some of this liquidity to take out all of the 2026 bond maturities this year and the $417 million bond due in 2027 at some point as well. The remaining maturities are staggered nicely. We'll continue to de-lever with our free cash flow. We may also look to term out some of the earlier maturities should the bond market terms look compelling. I should also mention that we recently received credit upgrades by S&P and Fitch. Now number three, total leverage multiple. Our total pro forma leverage is in the mid ones area. We are comfortable with this area given the liquidity and maturities profile just discussed. However, our goal is to drive it down into the low ones area, further strengthening our position, which is a perfect segue to return of capital on slide 16. The increased scale and quality of our assets combined with our strong balance sheet give us confidence to increase the fixed dividend by 10% to $0.88 per share annually. Our base fixed dividend remains a core component and with this increase provides a current yield of just under 4%. Remaining free cash flow will be allocated between debt reduction and stock buybacks, enabling us to delever from increased post-merger debt levels while continuing to take advantage of the compelling value we see in our equity. Today, our plan is to allocate 80% of our quarterly free cash flow after dividends to debt reduction and 20% to stock repurchases. Looking forward, as we reduce debt, we would expect to increase our allocation to share buybacks. And on that note, I'll turn the call back to Beth for closing remarks. Beth.

Thanks, Wade. As our results and plan demonstrate, We are relentlessly focused on maximizing free cash flow, reducing debt, and accelerating returns to stockholders. We have new flexibility in how we allocate capital across our expanded portfolio, where our inventory now spans more than eight years. As such, we are able to prioritize value over volume. We look forward to reporting on our progress throughout the year. Joe, this concludes our prepared remarks, and now we're ready to take questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please hold the poll for questions. And our first question comes from the line of Brian Velli with Capital One Securities. Please proceed. Good morning, everybody.

Thanks for taking my question. I just thought I could maybe dive in here real quick. In terms of total production guidance for this year, that you put out your initial numbers last night there, you pointed out in the release that a portion of the decline year-over-year is the result of the three-stream conversion to two-stream conversions. I wondered if you could talk through where those conversions are happening to help give us an idea of the magnitude of that piece of the impact. And then maybe after that, you know, how we can think about modeling or anticipating price realizations that go with those NGL and gas streams on those assets?

Yeah. Thanks, Brian, for that question. You know, the plan is really focused on prioritizing value over volumes. We're maximizing free cash flow to bolster the balance sheet and enhance our return to capital framework. We have a lot of confidence in this plan and we understand there's a lot of movement going on within the production itself. If you turn to slide nine, you can see a reconciliation for your reference and when you normalize for all those moving items the production change is not that different let's let's speak specifically to the question that you had on the three stream to two stream conversion you know um if you look at it by basin there's really no change for sm south texas or you went to basin clearly for the dj we would expect about 20% of DJBOEs to be allocated to NGLs. So when you're modeling that, you can continue to use CIVI historical gas and NGL realizations as estimates. When you turn to the Permian, the value is really small. We really only expect about 5% of the BOE to be reported as NGLs going forward there. And you can use CIVI's historical NGL realizations. And for Permian gas, you could use SM's realizations. So within that reconciliation, I think it's important that most of you guys kind of focus on the right-hand side of that slide, the second half 26 volumes, which are expected to be the 420 to 430 MBOE per day at 55% oil. And that's really where we start to see our capital efficiency increase as we have our go-forward run rate.

Yeah, if you look at total capital, Brian, about 45% will be in the second half. So if you think about what that run rate looks like, I think it's going to look pretty capital efficient.

Okay, that's great. Thanks, Wade. That's a good segue maybe to my follow-up if I can. I did notice, you know, 1Q CapEx, you know, it's a little bit of a heavier spend versus, you know, a straight routable through the year. I guess would it be fair to assume that piece of that is just the pro forma 14 rig total that Beth mentioned in the prepared remarks there, that that's kind of your starting point and you're in that presentation you're shedding down to about 11 regs by year end. So is that kind of what's driving that front half spending, or is there anything else at play that I should maybe be thinking about?

Yeah, I'll start and then let Wade finish on that. You know, we first of all, we just love the strength of our combined portfolio. And this transaction really provides us some optionality and really, frankly, optimization beyond what either company could do individually. With that, you know, we come into the year with 15 rigs. So we started with a high capex spend, and then it will lower throughout the year to average out around 11. And so, yes, there is that optimization of the program on the back half of the year. And we really look forward to our technical team seeing them in action on this new portfolio and seeing that continued optimization on the back half of the year. Wade, do you want to add anything?

No, that covered it well.

All right. Thanks very much. That'll be helpful, you know, modeling out everything going forward. Appreciate it. Thanks.

Thanks, Brian.

The next question comes from the line of Tim Resvin with KeyBank Capital Markets. Please proceed.

Hey, good morning, folks. Thank you for taking our questions. I want to follow up. We had a quick chat last night. You mentioned you're not going to have a formal debt or leverage target in place going forward. You know, our modeling, which is a work in process, you know, shows a path that's sub-5 billion in 2027. And I know you highlighted the liquidity. But we're also looking at the other side of things where we see, you know, we appreciate your honesty on that eight-year inventory life. So given that's, you know, maybe shorter than some peers or maybe where you want to be, you know, how do you think about the appropriate leverage profile given you're not really where you want to be with inventory life? I'm just trying to kind of weigh those two topics.

Yeah, that's a great question, Tim, by the way, we love our inventory, but on the leverage side, I mentioned we're in the mid ones area, which is not, we're very comfortable in that I said that in my remarks, I'll say it again, especially given all of our liquidity and the maturities profile and the fact that that's being calculated at an oil price that we believe is mid cycle or below. I think that's really important. Our desire is to get leverage into that low ones area, I'll just call it that, without getting too precise. And as we move down into that low ones area, when I say that, I'm one, two, one, three, then assuming the liquidity position is similar to what it is, assuming the maturity profile is manageable, assuming that's at a reasonable commodity price assumption, then you'll see us increase that stock buyback percentage.

Yeah, and then I'll just, Tim, I'll just hit on the inventory real quick since you brought it up. The inventory was run at 60 and 3. So that's quite different than last year where we had it at 70 and 325. And our inventory really is 3P high confidence locations rather than sticks on a map or acreage And so we're very confident in these high quality, low breakeven inventory that we have on here. It's resulting in longer laterals and greater capital efficiency.

Okay, I appreciate the context. And then as a follow-up, this is sort of a related theme, Beth. You know, the Permian assets you're acquiring from Civitas on the Midlands, you've operated there obviously many years. Civitas had commented in the past about really focusing on the Wolf Camp A and B for their inventory. They didn't talk about the Joe Mill, the C or D, or even the deeper intervals. So, I know it's early days, but that's probably the easiest asset to sort of integrate, given your skill level there. Can you talk about what's sort of baked into that eight-year number? Are you using those same assumptions that Civitas had? Or maybe broadly speaking, do you anticipate organic additions as you do more work on those Civitas Midland assets? Thank you.

Yeah, good question, Tim. The first thing I would say is that, you know, we love the strengthened position of our portfolio especially as it relates to the Midland Basin and our technical team is jumping right in and combining with the prior team from Civitas which we now just call those people our teammates at SM Energy but we're very happy with what we've done so far you know we're four weeks in but we'll continue to use our high quality multivariate analysis our you know geomechanical modeling that we have going on in the Southern Midland Basin as we optimize that stacked pay development, and we'll continue to see those optimizations in the back half of this year and in the 27th. So is the work done? No. We have a lot of work to do, but we have the best people and the best processes along with the best technical data to get us there.

Thank you.

Thanks, Jen.

The next question comes from Warren of Fufon with Roth Capital Partners. Please proceed.

Hey, morning. Thanks for having me on. Morning so much. My first question is going to be like, can you please walk us through the capital cadence of the 1026 and also the production cadence? I knew that you just said it's going to be 50 and half weight and also the production. It's going to be around 420 to 430,000 BOE per day in the second half of the year. But what I'm thinking right now is like if the first quarter capital is going to be the highest of the year and also the production will be picked in the second quarter of 26.

Yeah. So I'll start on that. And, you know, again, we're prioritizing value over volume in our plan to maximize free cash And we understand that the first quarter and even into the second quarter have some, you know variables and things changing in there which we've highlighted on slide nine one of the things that's really important to take into account is the the legacy Civitas assets you know those were front-loaded on their CapEx side and we from September into kind of January of this year there was a significant decline on those assets about 14% and so we have inherited that and pulled it into our program, and so that's a result also of the underlying decline that you're not seeing in this reconciliation. So that's one piece that's not shown on the slide here, but I think the important piece is as you move past this and you look at the second half of the year, that second half 26 run rate is clean.

We have 45% of our capital in the second half of the year and it's a 55% oil mix, and so that's really where you should focus, where there's less changes going on in the front two quarters and it's built to where it rolls right into 2027 with that level okay that's very helpful so maybe my same question would just be about the cash tax view I don't expect to pay any cash tax for January 6th yeah pretty pretty minimal this year please please to report and that's just that's just due to the benefit of IDC's some of the benefits from the big, beautiful bill. Even with the divestiture and the gain on that, we're not, we're projecting minimal cash taxes this year.

Thank you.

Thanks. Thank you.

The next question comes from the line of Oliver Huang with Tudor, Pickering and Holt.

Please proceed. Good morning, Beth, Wade and team, and thanks for taking the time here. Morning, Oliver. Morning, Oliver. For my first question, Just when you're thinking about the Permian program that you all have laid out for this year, any sort of color you can provide around the composition of the program, just how much of that activity is expected to come out of the Delaware, and then when we're looking at the Midland, any sort of split on your traditional oilier Rockstar area versus the southern part of the basin where assets carry a higher GOR mix.

So let me just dive in. Just like I just told Tim, we really love our strength in inventory position, especially as it relates to the Permian Basin. I think this is a cornerstone asset for us, and we'll continue to optimize it over time. You know, when you look at the program having most allocation going to the Permian because it has great returns and great margins, the composition of that program is about one-third Delaware, two-thirds Midland Basin. And then within the Midland Basin, we're still optimizing on kind of the allocation between the overall program. And we'll continue to do that and increase our returns and capital efficiency late through this year and into 27.

Okay, that's helpful, Culler. And maybe just for a follow-up question, I know you all mentioned earlier that back half the year run rate seems like a good starting point to carry forward. Just given all the moving pieces for A and D, the conversion to two-stream on certain volumes, any sort of color on where maintenance CapEx for you all sits on a pro forma basis at that run rate?

Well, I think looking into 2027, you know, and look, we haven't gone, you know, to the detailed level that we will do eventually. But if you're assuming, you know, a CapEx in the area of this year's CapEx or slightly less, you're going to be, you're definitely going to be in the ballpark.

Okay, perfect. And just to clarify, when you say this year's CapEx, is that assuming 12 months for both CIVI and SM or what you all kind of rolled out for the 11 months of CIVI and 12 months of SM? I'm assuming the guided number there when I say that.

That's one time.

Awesome. Thank you so much. You bet.

As a reminder, if you would like to ask a question, please press star one on your telephone keypad. And the next question comes from the line of Michael Ciala with Stevens. Please proceed.

Good morning, Mike. I wanted to ask, when I look at slide four and compare the percent production from each of your four core areas with the capex going into each on slide eight they look I guess somewhat similar I know productions an output not really something you're targeting but I guess as you look at those do you anticipate production growing in any areas that may be growing in the Uinta and declining of the DJ and Permian a bit or anything we can deduce from how much you're spending versus what you anticipate the production profile to be for each of those areas?

Yeah, thanks, Mike. I'll just start and then I'll let Wade add any color to what I'm saying. You know, if you look on slide four, those are really the 2025 production volumes and where that stands kind of on a pro forma basis and then as we roll into 2026 just like you said we're prioritizing value over volume specifically when we looked at the capital allocation across all of the basins we're really focused on maximizing free cash flow that's why on slide eight in the bottom right you see the capital allocation by basin and i think that really addresses most of where the production is, as well as kind of the split there in the Permian of one-third to Delaware and two-thirds to the Midland Basin. Trying to add anything?

No, that's good. I mean, as you know, Mike, it's that we built the plan with a desire for sustaining free cash flow through the years here with efficient operations in the areas. So that's all I would add.

Okay.

I guess I was just trying to think of is one area sort of looked at as more of a free cash flow generator or cash cow while you're trying to grow any of the areas it looks like Uinta maybe has some ability to grow is that a fair assumption say you know when you look at the combined portfolio we we've known that Uinta and South Texas both are growth areas for us we have multi-stack pay there with great returns and I think as we look at the combined portfolio and the strength and position that we have in the Permian Basin we'll continue to evaluate that with our technical teams to see how we can continue to grow that area because it has such great returns and great margins as well.

Appreciate that. I wanted to ask about the decision to increase the dividend. Your stock's lagged over the past year, and it's one of the cheapest in the sector on the EBITDA multiple. Just your thoughts around that decision. Was there pressure from investors? Do you feel like you need to increase the dividend to be competitive with the rest of the group? I just wanted to get some more color on that.

Yeah, I would say it was not due to pressure from investors. I would say it was more due to our confidence in the combined company going forward, strength of the balance sheet, quality of the assets, visibility. We set that fixed dividend back in late 2022 at a level that we felt comfortable with, but we expressed the desire as things develop and the company grows to increase it over time modestly. and I think this is the third time we've done that now. So it was really nothing more than that.

It was just to express our confidence in the company going forward. Got it. Thanks, Wade.

The next question comes from the line of Kevin McCurdy with Pickering Energy Partners. Please proceed.

Hey, good morning. It looks like the biggest difference between maybe the combined companies last year and your pro forma plan is in the DJ. And so maybe you could talk about what you saw in the DJ, what, you know, what Soda Tops was doing and how you wanted to approach that plan differently, you know, this year in 2026.

We really like the DJ program that we have. Let's start there, that it's great returns and it's very capitally efficient when you're looking at new wealth going forward. One of the things that slowing down enables us to do is strengthen our position as far as optionality and flexibility to where we go within the basin in order to maximize free cash flow and optimize really the plan and what the returns are coming out of there and so slowing down a little bit gives us the ability to take time since our technical teams haven't worked that and so we're we're basically integrating with the broader Civitas technical team looking at the broader portfolio slowing down a little bit allows us to optimize and strengthen our position there.

Great. And as a follow-up, and I apologize if this is already addressed on the call, but the, you know, if I look at slide 19, it appears that, you know, you're turning in line more wells than you're drilling in 2026. And I just want to kind of confirm that this is like, you know, are you drawing down ducks in 2026? And if so, is that, you know, happening in the first part of the year versus the second part of the year? And is that kind of, you know, I assume that's not sustainable in 2027, but maybe if you just kind of address that and unpack that a little bit.

Yeah, I'll just start that. Again, our capital allocation in our plan was really built on maximizing free cash flow. And as a result, we have the options to basically slow down and do that. Our duck count really is related to the timing of our active development. You know, we don't manage to that. We have a level and a balance that just really depends on the pad size, how many rigs we're running, and the activity levels that we're carrying. So the duck count is really just an artifact or an output of that planned activity slowdown, right? So we remain focused on capital efficiency and basically going in there with the fleet right after the rigs are finished in order to build a plan and deliver results that are maximizing free cash flow.

Thank you. Appreciate you taking my question.

Thanks, Kevin. Thank you. There are no further questions at this time. I'd like to hear the call back to Beth McDonald for closing remarks.

Thanks, Joe. Thank you all for your time today and your questions. You know, as we close, I want to reiterate our three strategic priorities of integrate, execute, and bolster. First, integrate. The Civitas integration is progressing well, and we are really pleased and proud with the strong performance of our team. We've already actioned $185 million of our $200 to $300 million target, which represents under $1 billion of present value or nearly 20% of our market cap. For execute, we're focused on execution across our scaled, strengthened portfolio to maximize free cash flow and deliver differential stockholder value. In bolster, we recently announced our $950 million dollar divestiture that will strengthen our balance sheet and accelerates return to capital to stockholders under our new return to capital program. We look forward to seeing many of you guys in the coming weeks. Have a great day.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Enjoy the rest of your day.