ACQUISITIONS AND DIVESTITURES

12 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

All mergers and acquisitions disclosed below are accounted for under the acquisition method of accounting for business combinations under ASC Topic 805, Business Combinations. Accordingly, we conducted assessments of the net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred. The fair value measurements of assets acquired and liabilities assumed were based on inputs that are not observable in the market, and therefore represent Level 3 inputs. The fair values of crude oil and natural gas properties were measured using valuation techniques that converted future cash flows to a single discounted amount. Significant inputs to the valuation of the crude oil and natural gas properties included estimates of reserves, future operating and development costs, future commodity prices, estimated future cash flows, reserve adjustment factors, and a market-based weighted-average cost of capital. These inputs required significant judgments and estimates by management at the time of the valuation.

Vencer Acquisition

On January 2, 2024, we completed the acquisition of certain crude oil and natural gas assets from Vencer for adjusted aggregate consideration of approximately $2.0 billion, inclusive of customary post-closing adjustments and $550.0 million in cash to be paid on or before January 3, 2025. In connection with and upon execution of the Vencer purchase and sale agreement, we deposited cash of $161.3 million with an escrow agent. This deposit, along with interest accrued thereon, was credited against the cash payable at closing. The following tables present the consideration transferred and the final purchase price allocation of the assets acquired and the liabilities assumed in the Vencer Acquisition:


Consideration (in thousands, except shares and per share amount)
Cash consideration	$	996,420
Deferred acquisition consideration(1)(3)	$	532,284

Shares of common stock issued	7,181,527
Closing price per share(2)	$	68.08
Equity consideration(4)	$	488,918

Total consideration	$	2,017,622

_______________________

(1)Based on discounted fixed and determinable future payments of cash.

(2)Based on the closing stock price of Civitas common stock on January 2, 2024.

(3)Amounts represent non-cash investing activities until such time payments are made, as applicable. Refer to Note 5 - Debt for additional information.

(4)Amounts represent non-cash financing activities.


Final Purchase Price Allocation (in thousands)
Assets Acquired
Proved properties	$	1,858,909
Unproved properties	231,627
Other property and equipment	666
Right-of-use assets	4,049
Total assets acquired	$	2,095,251

Liabilities Assumed
Accounts payable and accrued expenses	$	5,000
Crude oil and natural gas revenue distribution payable	28,423
Asset retirement obligations	40,157
Lease liability	4,049
Total liabilities assumed	77,629
Net assets acquired	$	2,017,622

The purchase price allocation for the Vencer Acquisition was finalized as of the fourth quarter of 2024 with immaterial adjustments made to the preliminary allocation initially presented in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 2, 2024.

Hibernia Acquisition

On August 2, 2023, we acquired all of the issued and outstanding equity ownership interests of Hibernia Energy III (“, LLC (“HE3”) and Hibernia Energy III-B, LLC (“HE3-B” and, together with HE3, “Hibernia”) for aggregate consideration of approximately $2.2 billion in cash, inclusive of customary post-closing adjustments (the “Hibernia Acquisition”). The following table presents the final purchase price allocation of the assets acquired and the liabilities assumed in the Hibernia Acquisition:


Final Purchase Price Allocation (in thousands)
Assets Acquired
Cash and cash equivalents	$	30,671
Accounts receivable - crude oil and natural gas sales	86,262
Accounts receivable - joint interest and other	4,463
Proved properties	2,150,872
Unproved properties	115,802
Other property and equipment	520
Right-of-use assets	30,393
Total assets acquired	$	2,418,983

Liabilities Assumed
Accounts payable and accrued expenses	$	110,022
Production taxes payable	10,320
Crude oil and natural gas revenue distribution payable	75,267
Asset retirement obligations	8,299
Lease liability	30,393
Total liabilities assumed	234,301
Net assets acquired	$	2,184,682

The purchase price allocation for the Hibernia Acquisition was finalized as of the third quarter of 2024 with immaterial adjustments made to the preliminary allocation initially presented in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 7, 2023.

Tap Rock Acquisition

On August 2, 2023, we acquired all of the issued and outstanding equity ownership interests of Tap Rock AcquisitionCo, LLC (“Tap Rock AcquisitionCo”), Tap Rock Resources II, LLC (“Tap Rock Resources II”), and Tap Rock NM10 Holdings, LLC (“Tap Rock NM10” and, together with Tap Rock AcquisitionCo and Tap Rock NM10, “Tap Rock”) for aggregate consideration of approximately $2.5 billion, inclusive of customary post-closing adjustments (the “Tap Rock Acquisition”). The following tables present the consideration transferred and final purchase price allocation of the assets acquired and the liabilities assumed in the Tap Rock Acquisition:


Consideration (in thousands, except shares and per share amount)
Cash consideration	$	1,502,880

Shares of common stock issued	13,538,472
Closing price per share(1)	$	73.14
Equity consideration	$	990,204

Total consideration	$	2,493,084

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(1)Based on the closing stock price of Civitas common stock on August 2, 2023.


Final Purchase Price Allocation (in thousands)
Assets Acquired
Cash and cash equivalents	$	6,543
Accounts receivable - crude oil and natural gas sales	105,509
Accounts receivable - joint interest and other	30,415
Prepaid expenses and other	17,930
Proved properties	2,334,678
Unproved properties	300,859
Other property and equipment	12,827
Right-of-use assets	626
Total assets acquired	$	2,809,387

Liabilities Assumed
Accounts payable and accrued expenses	$	157,606
Production taxes payable	9,692
Crude oil and natural gas revenue distribution payable	68,094
Ad valorem taxes	1,407
Asset retirement obligations	28,612
Lease liability	626
Deferred revenue	50,266
Total liabilities assumed	316,303
Net assets acquired	$	2,493,084

The purchase price allocation for the Tap Rock Acquisition was finalized as of the third quarter of 2024 with immaterial adjustments made to the preliminary allocation initially presented in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 7, 2023.

Revenue and earnings of the acquiree

The results of operations for the Vencer Acquisition since the closing date have been included in our consolidated financial statements during the year ended December 31, 2024. The amount of revenue of Vencer included in our accompanying consolidated statements of operations was approximately $769.5 million during the year ended December 31, 2024. We determined that disclosing the amount of Vencer-related net income included in the accompanying statements of operations is impracticable as the operations from the acquisition were integrated into our operations from the date of the acquisition.

Supplemental unaudited pro forma financial information

The results of operations for the Vencer, Hibernia, and Tap Rock acquisitions since their respective closing dates have been included in our consolidated financial statements and therefore do not require pro forma disclosure for the year ended December 31, 2024. The following unaudited pro forma financial information (in thousands, except per share amounts) represents a summary of the consolidated results of operations for the year ended December 31, 2023 and 2022, assuming the Vencer Acquisition had been completed as of January 1, 2023 and the Hibernia and Tap Rock acquisitions had been completed as of January 1, 2022. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the Vencer, Hibernia, and Tap Rock acquisitions had been effective as of those dates, or of future results, and includes certain nonrecurring pro forma adjustments that were directly related to these business combinations.


	Year Ended December 31,		Year Ended December 31,
	2023		2022
Total revenue	$	5,263,500	$	5,808,411
Net income	1,242,062		1,821,139
Earnings per common share - basic	$	12.25	$	18.48
Earnings per common share - diluted	12.16		18.37

Transaction costs

Transaction costs related to the aforementioned acquisitions are accounted for separately from the assets acquired and liabilities assumed and are included in transaction costs in the accompanying consolidated statements of operations. Transaction costs also include costs associated with our divestiture of certain non-core assets in the DJ Basin, completed in early 2024. We incurred transaction costs of $31.4 million, $84.3 million, and $24.7 million during the years ended December 31, 2024, 2023, and 2022, respectively.