North American Oil & Gas Pulse Check: SM/CRGY Post-Initiation Feedback

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North American Oil & Gas Pulse Check: SM/CRGY Post-Initiation Feedback

it can

continue deleveraging or fund higher capital returns.

SM - Inventory. Another focus of investor feedback was on SM's inventory,

viewed as light, even post-CIVI. We estimate a ~8.6 year reserve life after the

South Texas sale, competitive with peers, but below the 10+ years level that'd give

investors more comfort. Further delineation on SM's Midland acreage (Woodford-

Barnett, Wolfcamp D) and on the CIVI Delaware assets offers resource upside.

FY25's 11% y-o-y Uinta proved reserves increase is a demonstration of how SM's

current team can lift an asset's potential through integration and testing.

CRGY - M&A & Royalties. With CRGY's M&A history, investors were interested

in if we viewed near-term deal making as likely. Broadly, we expect that

CRGY eventually builds more Permian scale, in the TX Delaware rather than the

more expensive NM Delaware. For now, however, we see CRGY focused though

on integrating VTLE, asset execution and synergy extraction. Investors are positive

on CRGY's royalties optionality, and we did not receive pushback on our $2.50-

$3.50/sh equity value net to CRGY estimate for Crescent Royalties.

CRGY - Debt & Synergies. Despite CRGY having a similar leverage profile as SM,

with both ~2x at end of 2Q26 in our models, we received less feedback on CRGY's

debt than SM, likely due to CRGY's lower absolute debt ($5.0Bn vs. SM's $6.5Bn)

in our 2Q26 forecast. CRGY's 2029 notes have been paid down and its 2030 notes

step down to par in mid-October, so absolute debt reduction can be undertaken in

2H26, after 1H26 featured a debt refinancing. Further debt repayment lifts

CRGY's financing synergies, and with its 2Q26 earnings, we look for an update on