Civitas Resources Provides 2025 Outlook Focused on Free Cash Flow and Debt Reduction

Successful land optimization initiatives and bolt-on acquisition expand high--quality development inventory

DENVER--(BUSINESS WIRE)--February 24, 2025-- 

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.

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