Civitas Resources Stock

Civitas Resources, Inc. (Civitas) is an independent exploration and production company.

The company focuses on the acquisition, development, and production of crude oil and associated liquids-rich natural gas primarily in the Denver-Julesburg Basin in Colorado (the ‘DJ Basin’) and the Permian Basin in Texas and New Mexico. These basins are among the major producing basins in the United States and are characterized by extensive production histories, mature infrastructure, long reserve lives, multiple producing horizons, enhanced recovery potential, and a large number of operators.

On August 2, 2023, the company completed the acquisition of Hibernia Energy III Holdings, LLC and Hibernia Energy III-B Holdings, LLC (the ‘Hibernia Acquisition’) and Tap Rock AcquisitionCo, LLC, Tap Rock Resources II, LLC, and Tap Rock NM10 Holdings, LLC (the ‘Tap Rock Acquisition’). These acquisitions, along with other minor asset acquisitions, repositioned the company’s operations by adding high-quality and scaled assets in the Permian Basin, resulting in the addition of approximately 68,500 net acres and approximately 106,000 Boe per day for the quarter ended December 31, 2023. The Hibernia Acquisition included approximately 38,000 net acres in the Midland Basin and certain related oil and gas assets. The Tap Rock Acquisition included approximately 30,000 net acres in the Delaware Basin and certain related oil and gas assets. Furthermore, on October 3, 2023, the company entered into a purchase and sale agreement with Vencer Energy, LLC to acquire certain oil and gas properties, interests, and related assets (the ‘Vencer Acquisition’), which closed on January 2, 2024. The Vencer Acquisition included approximately 44,000 net acres and approximately 62,000 Boe per day in the Midland Basin.

Operations

The company’s operations are concentrated in the DJ Basin and Permian Basin.

DJ Basin. The company’s DJ Basin assets are consisted of approximately 453,600 net acres located primarily in Weld, Arapahoe, Adams, Boulder, and Broomfield counties, Colorado. The company’s operations in the DJ Basin primarily target the Niobrara and Codell formations.

Permian Basin. The company’s Permian Basin assets are consisted of approximately 68,500 net acres located primarily in Upton, Reagan, Ward, and Reeves counties, Texas; and Eddy and Lea counties, New Mexico. The company’s operations in the Permian Basin primarily target the Spraberry and Wolfcamp formations of the Midland Basin and the Wolfcamp and Bone Spring formations of the Delaware Basin, both of which are part of the larger Permian Basin in Texas and New Mexico.

Customers

In 2023, the company had two customers that represented a combined total of 44% of the company’s revenue.

Regulation

FERC regulates interstate natural gas transportation rates and service conditions, which affects the marketing of natural gas that the company produces, as well as the revenues the company receives for sales of its natural gas.

The company’s sales of natural gas are also subject to requirements under the Commodity Exchange Act (‘CEA’), and regulations promulgated thereunder by the Commodity Futures Trading Commission (‘CFTC’).

The following is a summary of the more significant environmental and health and safety laws and regulations to which the company is subject include:

The Clean Air Act (‘CAA’) and comparable state and local laws and regulations;

The U.S. Environmental Protection Agency;

The Colorado Department of Public Health and Environment’s Air Quality Control Commission;

The federal Safe Drinking Water Act (‘SDWA’) and comparable state statutes;

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (‘CERCLA’), also known as the Superfund law, and comparable state laws;

The Resource Conservation and Recovery Act (‘RCRA’) and comparable state statutes;

The Federal Water Pollution Control Act or the Clean Water Act (‘CWA’) and analogous state laws;

The Endangered Species Act and Migratory Bird Treaty Act;

The National Environmental Policy Act; and

The Oil Pollution Act of 1990.

The company utilizes major hydraulic fracturing service companies who track and report additive chemicals that are used in fracturing as required by the appropriate government agencies, including FracFocus, the national hydraulic fracturing chemical registry managed by the Ground Water Protection Council and Interstate Oil and Gas Compact Commission.

The company’s operations are subject to close supervision by state and federal regulators (including the BLM with respect to federal acreage), who frequently inspect the company’s fracturing operations.

The company’s properties located in Colorado are subject to the authority of the ECMC, as well as other state agencies.

The company’s properties located in New Mexico are subject to the authority of the New Mexico Environment Department and the Energy, Minerals and Natural Resources Department’s OCD, as well as other state agencies.

The U.S. Department of Transportation has adopted safety regulations with respect to the design, construction, operation, maintenance, inspection, and management of the company’s pipeline and storage facilities.

The company is monitoring GHG emissions from its operations in accordance with the EPA’s GHG emissions reporting rule and Colorado’s GHG emissions inventory and reporting rules more recently adopted.

The company is subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act (‘OSHA’), and comparable state statutes, the purpose of which are to protect the health and safety of workers. In addition, OSHA’s hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in the company’s operations, and that this information be provided to employees, state and local government authorities, and citizens.

History

Civitas Resources, Inc. was founded in 1999. The company was incorporated in 2010.