Successful land optimization initiatives and
bolt-on acquisition expand high–quality development
inventory
Civitas Resources, Inc. (NYSE: CIVI) (“Civitas” or the
“Company”), today announced its 2025 outlook, including a new debt
reduction goal for the year, as well as an enhanced asset portfolio
and a recent bolt-on transaction in the Permian Basin.
Civitas President and CEO Chris Doyle said, “Our 2025 outlook is
designed to maximize free cash flow, capitalizing on the
sustainable efficiencies we have delivered in our first full year
of operating in the Permian Basin and our strong track record of
execution in the DJ Basin. We are maintaining a disciplined posture
in 2025 in the face of market volatility, sustaining year-on-year
activity levels, better level-loading investments through the year,
and allocating more of our free cash flow to debt reduction. Along
with our successful recent inventory capture, these actions are
strengthening the durability of the business through the cycle and
supporting our free cash flow delivery well into the future.”
2025 Outlook Highlights
- Reducing capital investments nearly 5% year-over-year to a
range of $1.8 to $1.9 billion
- Delivering oil production between 150 and 155 thousand barrels
per day (“MBbl/d”) on average
- Generating free cash flow(1) of approximately $1.1 billion (at
$70 WTI), representing a peer-leading free cash flow yield of
22%
- Sustaining a strong base dividend of $0.50 per share quarterly
(a nearly 4% yield)
- Reducing year-end 2025 net debt below $4.5 billion, with the
majority of free cash flow after the base dividend targeted for
debt reduction
- Expanding Permian Basin position with a $300 million bolt-on
transaction that adds 19,000 net acres and approximately 130 future
development locations in the Midland Basin
- Executing on new divestment target of $300 million
(1)
Free Cash Flow is a non-GAAP financial measure. Due to the
forward-looking nature of the 2025 Free Cash Flow projection and
the unavailability of the specific quantifications of the amounts
that would be required to reconcile such projections to the most
directly comparable GAAP financial measure, Civitas believes it to
be infeasible to provide accurate reconciliations.
For the year, slightly more than half of total capital
investments are planned to be allocated to the Permian Basin, with
the remainder to the DJ Basin. The Company expects to run
approximately five drilling rigs and two completion crews in the
Permian Basin, and two drilling rigs and two completion crews in
the DJ Basin. The plan is anticipated to deliver about 210 net turn
in lines (“TILs”) for the year, and results are expected to benefit
from long laterals in both basins, with an estimated lateral length
of more than 10,500 feet. In the Permian Basin, an increasing
percentage of capital is planned to be directed to the Delaware
Basin (~40% of Permian Basin activity), following extensive land
optimization initiatives. Estimated 2025 capital expenditures are
95% drilling, completion, and facility related.
Full-year capital investments are better level-loaded in support
of sustainable capital efficiencies, with approximately 55% of
investments planned for the first half of the year, as compared to
63% in the first half of 2024. This change is anticipated to lower
average annual oil volumes by approximately 3 MBbl/d as compared to
2024. First quarter oil volumes are expected to be the low point
for the year, averaging 140 to 145 MBbl/d, mostly as a result of
few TILs in late 2024 and early 2025. As compared to the fourth
quarter of 2024, lower volumes are primarily driven by the DJ
Basin, due to natural declines following peak production in the
fourth quarter, a low TIL count exiting 2024 and in the first
quarter of 2025, as well as severe winter weather and unplanned
third-party processing downtime in the first quarter. These items
are all temporary, and production is expected to grow meaningfully
in the middle part of the year, following TIL activity, with the
full year expected to average 150 to 155 MBbl/d.
Additionally, to solidify the Company’s low-cost structure,
Civitas announced an approximate 10% reduction in its workforce
across all levels of the organization.
Guidance details are available in the Company’s supplemental
materials provided on its website at www.civitasresources.com.
Free Cash Flow Allocation to Further Prioritize Balance
Sheet
Civitas plans to maintain its base dividend, while shifting more
of its free cash flow after the base dividend towards debt
reduction.
Free cash flow generated in 2025 is anticipated to cover the
payment of the base dividend and meet the Company’s year-end net
debt target of below $4.5 billion. The Company has instituted a
2025 divestment target of at least $300 million, which will be
prioritized to further debt reduction, and the Company will be
opportunistic in executing share buybacks.
Civitas’ long-term leverage target remains unchanged at 0.75x
EBITDAX (earnings before interest, taxes, depreciation and
exploration).
Dividend to be Paid in March
The Company’s Board of Directors approved a quarterly dividend
of $0.50 per share, payable on March 28, 2025 to shareholders of
record as of March 14, 2025.
Enhanced Asset Portfolio with Land Initiatives and Bolt-on
Transaction
Civitas has been successfully replacing and extending its
high-quality inventory in both the DJ and Permian Basins through
land transactions (acreage trades/swaps and lease acquisitions),
optimized development strategy, and attractive bolt-on
acquisitions. From the beginning of 2024 through the end of
February 2025 (inclusive of the Permian bolt-on transaction
announced today), the Company has added approximately two years of
development to its Permian Basin and DJ Basin inventory. The
Company has an estimated inventory of approximately 1,200 gross
locations in the Permian Basin and 800 gross locations in the DJ
Basin.
In early 2025, Civitas agreed to acquire certain operated
Midland Basin assets consisting of 19,000 net acres in Howard,
Glasscock, and Upton counties for approximately $300 million.
Production associated with the assets represents approximately one
percent of the Company’s full-year 2025 total volume and oil
expectations.
The Company has identified 130 future drilling locations on the
acquired acreage with an average lateral length of two miles. The
identified locations include primary development in the Wolfcamp A,
B, and D zones, with additional development in the Wolfcamp C and
Barnett/Woodford.
Closing of the transaction is anticipated at the end of February
2025, and Civitas plans to fund the purchase price through
additional borrowings on its revolving credit facility. In February
2025, the Company amended its revolving credit facility to increase
elected commitments from $2.2 to $2.5 billion.
Webcast and Conference Call Details
A webcast and conference call are planned for 6:30 a.m. MT (8:30
a.m. ET), on Tuesday, February 25, 2025. The dial-in number for the
call is 888-510-2535, with passcode 4872770. A live webcast and
replay of this event will be available on the Investor Relations
section of the Company’s website at www.civitasresources.com.
About Civitas
Civitas Resources, Inc. is an independent exploration and
production company focused on the acquisition, development, and
production of crude oil and liquids-rich natural gas from its
premier assets in the DJ Basin in Colorado and the Permian Basin in
Texas and New Mexico. Civitas’ proven business model to maximize
shareholder returns is focused on four key strategic pillars:
generating significant free cash flow, maintaining a premier
balance sheet, returning capital to shareholders, and demonstrating
ESG leadership. For more information about Civitas, please visit
www.civitasresources.com.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this press release concerning future
opportunities for Civitas, future financial performance and
condition, guidance, and any other statements regarding Civitas’
future expectations, beliefs, plans, objectives, financial
conditions, returns to shareholders, assumptions, or future events
or performance that are not historical facts are “forward-looking”
statements based on assumptions currently believed to be valid.
Forward-looking statements are all statements other than statements
of historical facts. The words “anticipate,” “believe,” “ensure,”
“expect,” “if,” “intend,” “estimate,” “probable,” “project,”
“forecasts,” “predict,” “outlook,” “aim,” “will,” “could,”
“should,” “would,” “potential,” “may,” “might,” “anticipate,”
“likely,” “plan,” “positioned,” “strategy,” and similar expressions
or other words of similar meaning, and the negatives thereof, are
intended to identify forward-looking statements. Specific
forward-looking statements included in this press release include
statements regarding the Company’s plans and expectations with
respect to the future production, capital expenditures, dividend
payments, and share repurchases, and the effects of such on the
Company’s results of operations, financial position, growth
opportunities, reserve estimates and competitive position. The
forward-looking statements are intended to be subject to the safe
harbor provided by Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934 (the
“Exchange Act”), as amended, and the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, future
financial condition, results of operations, strategy and plans; the
ability of Civitas to realize anticipated synergies related to
Civitas' recent acquisitions in the timeframe expected or at all;
the effects of commodity prices; the risks of oil and gas
activities; and the fact that operating costs and business
disruption may be greater than expected. Additionally, risks and
uncertainties that could cause actual results to differ materially
from those anticipated also include: declines or volatility in the
prices we receive for our crude oil, natural gas, and NGL; general
economic conditions, whether internationally, nationally, or in the
regional and local market areas in which we do business, including
any future economic downturn, the impact of continued or further
inflation, disruption in the financial markets, and the
availability of credit on acceptable terms; our ability to identify
and select possible additional acquisition and disposition
opportunities; the effects of disruption of our operations or
excess supply of crude oil and natural gas and other effects of
world health events, and the actions by certain crude oil and
natural gas producing countries; the ability of our customers to
meet their obligations to us; our access to capital on acceptable
terms; our ability to generate sufficient cash flow from
operations, borrowings, or other sources to enable us to fully
develop our undeveloped acreage positions; the presence or
recoverability of estimated crude oil and natural gas reserves and
the actual future sales volume rates and associated costs;
uncertainties associated with estimates of proved crude oil and
natural gas reserves; changes in local, state, and federal laws,
regulations, or policies that may affect our business or our
industry (such as the effects of tax law changes, and changes in
environmental, health, and safety regulation and regulations
addressing climate change, and trade policy and tariffs);
environmental, health, and safety risks; seasonal weather
conditions as well as severe weather and other natural events
caused by climate change; lease stipulations; drilling and
operating risks, including the risks associated with the employment
of horizontal drilling and completion techniques; our ability to
acquire adequate supplies of water for drilling and completion
operations; availability of oilfield equipment, services, and
personnel; exploration and development risks; operational
interruption of centralized crude oil and natural gas processing
facilities; competition in the crude oil and natural gas industry;
management’s ability to execute our plans to meet our goals;
unforeseen difficulties encountered in operating in new geographic
areas; our ability to attract and retain key members of our senior
management and key technical employees; our ability to maintain
effective internal controls; access to adequate gathering systems
and pipeline take-away capacity; our ability to secure adequate
processing capacity for natural gas we produce, to secure adequate
transportation for crude oil, natural gas, and NGL we produce, and
to sell the crude oil, natural gas, and NGL at market prices; costs
and other risks associated with perfecting title for mineral rights
in some of our properties; pandemics and other public health
epidemics; political conditions in or affecting other producing
countries, including conflicts or hostilities in or relating to the
Middle East, South America, and Russia (including the current
events involving Russia and Ukraine), and other sustained military
campaigns or acts of terrorism or sabotage and the effects
therefrom; and other economic, competitive, governmental,
legislative, regulatory, geopolitical, and technological factors
that may negatively impact our businesses, operations, or
pricing.
Additional information concerning other factors that could cause
results to differ materially from those described above can be
found under Item 1A. “Risk Factors” and “Management’s Discussion
and Analysis” sections in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2024, subsequently filed Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and other
filings made with the Securities and Exchange Commission.
All forward-looking statements speak only as of the date they
are made and are based on information available at the time they
were made. The Company assumes no obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
Disclaimer
Civitas’ share repurchase program permits the Company to make
repurchases on a discretionary basis as determined by management
and the Board, subject to market conditions, applicable legal
requirements, available liquidity, compliance with the Company's
debt agreements, and other appropriate factors. Repurchases under
the share repurchase program are to be made through open market or
privately negotiated transactions and may be made pursuant to plans
entered into in accordance with Rule 10b5-1 and/or Rule 10b-18 of
the Exchange Act. The share repurchase program does not have a
termination date, does not obligate Civitas to acquire any
particular amount of common stock, and may be modified, extended,
suspended, or discontinued at any time without prior notice. No
assurance can be given that any particular amount of common stock
will be repurchased.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250224436850/en/
Civitas Contacts Investor Relations: Brad Whitmarsh,
bwhitmarsh@civiresources.com, 832.736.8909 Mae Herrington,
mherrington@civiresources.com, 832.913.5444
Media: Rich Coolidge, info@civiresources.com
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