Civitas Resources, Inc. Reports First Quarter 2025 Results

Implementing cost optimization and operational efficiency initiatives to deliver over $100 million in annualized free cash flow

Management Quote

CEO Chris Doyle commented, "Our high-quality, low-breakeven assets continue to position us well in the current environment, following our disciplined start to the year with a plan that prioritizes free cash flow generation and strengthens the balance sheet. We continue to take important steps to further enhance free cash flow and improve our performance, including launching a $100 million cost optimization and efficiency improvement plan across all aspects of the business. We are reiterating our full year 2025 outlook; however, we are positioned to adjust activity levels lower should market conditions deteriorate further."

Strengthening Civitas in Current Market Volatility

The Company has taken the following actions in response to current market volatility:

• Removed over $150 million of capital when announcing the Company's original 2025 plan
  • Elected to level-load and sustain activity rather than adding capex to maintain 2024 production level
• Launched a $100-plus million cost optimization and efficiency initiative
  • Savings expected to come through capital efficiencies, production optimization, commercial/midstream opportunities, and streamlined corporate costs
  • Approximately $40 million to benefit 2025 free cash flow, with the entire amount additive to 2026
• Added commodity downside protection through additional hedging
  • Nearly 50% of remaining 2025 oil production hedged with an average floor price of $68 per barrel WTI
  • Approximately 40% of remaining 2025 natural gas production hedged with an average floor price of $3.74 per MMBtu; added 93,000 MMBtu/d of basis swaps for the remainder of the year
  • Hedge positions at the end of April 2025 (including April settlements) valued at approximately $290 million
• Increased elected commitment on the Company's revolving credit facility to $2.5 billion
  • Ended the first quarter with $1.5 billion in financial liquidity
• Prioritized net debt reduction through free cash flow generation and asset divestments
  • Targeting $4.5 billion net debt by year-end 2025 (a reduction of approximately $800 million from pro-forma year-end 2024⁽¹⁾)
  • Pursuing $300 million in asset divestments by year-end 2025

Doyle added, "These actions will strengthen our Company as we focus on delivering sustainable returns for our shareholders. We are always looking for ways to optimize our diverse asset portfolio, and we were highly encouraged by the interest we saw in our divestment process earlier this year. Market volatility precluded a transaction at a value representative of the quality of the assets, yet we remain confident in achieving our divestment target for the year."

Key First Quarter 2025 Results

First Quarter 2025 Operational Highlights

• Total sales volumes and oil production were within the Company's guidance ranges. Approximately 53% of volumes for the first quarter were contributed by the Company's Permian Basin assets, with the remainder from the DJ Basin.
• As compared to the fourth quarter, first quarter volumes primarily reflect anticipated production declines in the DJ Basin following a low TIL count at the end of 2024 and in early 2025, along with a modest impact to volumes in the first quarter as a result of severe winter weather and wind storms in both basins.
  • Approximately 80% of the quarter-on-quarter change in oil volumes occurred in the DJ Basin.
• Capital expenditures were slightly below plan primarily due to the timing of activities in the DJ Basin, which shifted some capital into the second quarter.
• Permian Basin activity for the quarter included 22, 33, and 47 net operated wells drilled, completed, and turned to sales, respectively. The Company's average lateral length completed in the quarter was 2.3 miles.
  • 42% of the Permian Basin wells drilled in the quarter occurred in the Delaware Basin, with the remainder of wells drilled and all of the wells completed and turned to sales in the Midland Basin. Drilling cycle times in the Delaware Basin were 10% faster than plan in the first quarter.
  • Simulfrac operations in the Midland Basin have averaged 160 thousand barrels of fluid pumped per day per crew, approximately five percent higher than the fourth quarter of last year.
• DJ Basin activity for the quarter included 25, 30, and 3 net operated wells drilled, completed, and turned to sales, respectively. The Company's average lateral length completed in the quarter was 2.1 miles.
  • During the quarter, the Company increased its utilization of local sand in its completions from approximately 50% to more than 90%.

First Quarter 2025 Financial Highlights

• Crude oil, natural gas and NGL revenues totaled $1.2 billion.
  • Crude oil realizations benefited from the Company's higher-quality crude production, while natural gas realizations reflected strong seasonal Colorado Interstate Gas pricing. Natural gas liquid realizations strengthened to 34% of the West Texas Intermediate oil price for the period.
• Cash operating expenses, including lease operating expense ("LOE"), midstream operating expense, gathering, transportation, and processing, and cash G&A⁽³⁾, totaled $11.39 per barrel of oil equivalent ("BOE"). Higher than anticipated LOE was impacted by a third-party's inability to fulfill water takeaway obligations in the Permian Basin, along with additional repair and maintenance costs following adverse weather and wind storms in both basins.
  • Included in cash G&A⁽³⁾ was $4 million associated with a previously-announced workforce reduction.
  • These short-term items impacted cash operating cost per BOE by approximately $0.43 for the quarter.
• Transaction fees totaled $6 million, primarily related to the Midland Basin bolt-on announced in the first quarter. In addition, other expenses include $9 million related to the mark-to-market on crude oil pipeline linefill agreements.
• Financial liquidity at the end of the first quarter 2025 totaled $1.5 billion, representing cash on hand and borrowings available under the Company's revolving credit facility. Long-term debt at the end of the first quarter totaled $5.1 billion.

First Quarter 2025 Strategic Highlights

• The Company returned $121 million to shareholders, including $50 million in dividends and $71 million in share repurchases (repurchased 1.5 million shares).
• In 2025, Civitas has added approximately 17 MBbl/d of oil hedges and 103,000 MMBtu/d of natural gas hedges on average for the remainder of 2025.
• Also in February, Civitas expanded the size of its Board of Directors from nine to ten directors and appointed Lloyd W. "Billy" Helms, Jr., the former President of EOG Resources, Inc. to the Board.

Dividend to be Paid in June

The Company's Board of Directors approved a quarterly dividend of $0.50 per share, payable on June 26, 2025, to shareholders of record as of June 12, 2025.

Second Quarter Outlook

The Company has reiterated its full year guidance for 2025. For the second quarter, Civitas anticipates approximately five percent oil volume growth at the midpoint of the Company's guidance range, primarily resulting from new wells coming online in the Permian Basin. Second quarter capital expenditures are expected to be modestly higher than the first quarter of the year, reflecting a slight shift of DJ Basin capital from the first quarter to the second. The Company is currently operating five drilling rigs and two frac crews in the Permian Basin and two rigs and two frac crews in the DJ Basin.

Webcast / Conference Call Information

The Company plans to host a webcast and conference call at 6:30 a.m. MT (8:30 a.m. ET) on Thursday, May 8, 2025. The webcast will be available on the Investor Relations section of the Company's website at www.civitasresources.com. The dial-in number for the call is 888-510-2535, with passcode 4872770.

About Civitas Resources, Inc.

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 Permian Basin in Texas and New Mexico and the DJ Basin in Colorado. 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 drilling and completion activity, achievement of the Company's net debt and divestiture targets, future production, sales volumes, capital expenditures, and cash operating expenses, 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, 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; declines or volatility in the prices we receive for our crude oil, natural gas, and NGLs; 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, the imposition of tariffs or trade or other economic sanctions, political instability, and the availability of credit on acceptable terms; our ability to identify, select, and consummate 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 events, and actions taken by OPEC+ as it pertains to global supply and demand of, and prices for, crude oil, natural gas, and NGLs; 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 and to meet our capital allocation initiatives; 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; 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.

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