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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

 

FORM 8-K

 

 

 

Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): January 2, 2024

 

 

 

Civitas Resources, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-35371   61-1630631
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer
Identification No.)

 

555 17th Street, Suite 3700
Denver, Colorado 80202
(Address of principal executive offices, including zip code)
 

 

Registrant’s telephone number, including area code: (303) 293-9100

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

  

Title of each class   Trading Symbol   Name of exchange on which registered
Common Stock, par value $0.01 per share   CIVI   New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Explanatory Note

 

On August 2, 2023, Civitas Resources, Inc., a Delaware corporation (the “Company”), filed a Current Report on Form 8-K (the “Original Report”) with the Securities and Exchange Commission announcing the completion, on August 2, 2023, of the Company’s acquisition of all of the issued and outstanding equity interests of (i) Hibernia Energy III, LLC, a Delaware limited liability company (“Hibernia Energy”), and Hibernia Energy III-B, LLC, a Delaware limited liability company, and (ii) Tap Rock AcquisitionCo, LLC, a Delaware limited liability company (“Tap Rock AcquisitionCo”), Tap Rock Resources II, LLC, a Delaware limited liability company (“Tap Rock II”), and Tap Rock NM10 Holdings, LLC, a Delaware limited liability company (the “Acquisition”). The Company amended the Original Report on September 29, 2023 to file (i) the audited consolidated financial statements of Hibernia Energy as of December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, (ii) the unaudited consolidated financial statements of Hibernia Energy as of June 30, 2023 and for the six months ended June 30, 2023 and 2022, (iii) the audited consolidated financial statements of Tap Rock AcquisitionCo as of December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, (iv) the unaudited consolidated financial statements of Tap Rock AcquisitionCo as of June 30, 2023 and for the six months ended June 30, 2023 and 2022, (v) the audited consolidated financial statements of Tap Rock II as of December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, (vi) the unaudited condensed consolidated financial statements of Tap Rock II as of June 30, 2023 and for the six months ended June 30, 2023 and 2022 and (vii) the unaudited pro forma condensed combined financial information of the Company as of June 30, 2023, for the six months ended June 30, 2023, and for the year ended December 31, 2022. The Company is filing this Current Report on Form 8-K to provide certain additional pro forma financial information relating to the Acquisition.

 

Item 8.01.Other Events.

 

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2023 is filed herewith and attached hereto as Exhibit 99.1, and is incorporated herein by reference.

 

Item 9.01.Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
No.
  Description
99.1   Unaudited Pro Forma Condensed Combined Financial Information of Civitas Resources, Inc. for the nine months ended September 30, 2023.
104   Cover Page Interactive Data File (formatted as Inline XBRL).

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: January 2, 2024   Civitas Resources, Inc.
     
  By: /s/ Adrian Milton
  Name: Adrian Milton
  Title: Senior Vice President, General Counsel and Assistant Corporate Secretary

 

 

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

The unaudited pro forma condensed combined financial information and related footnotes (the “Pro Forma Financial Statements”) have been prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information. The Pro Forma Financial Statements of Civitas Resources, Inc., a Delaware corporation (“Civitas” or the “Company”), present the combination of the financial information and the pro forma effect with respect to the following transactions (collectively, the “Transactions”), further details of which are included within the footnotes to the Pro Forma Financial Statements.

 

On June 19, 2023, the Company entered into a membership interest purchase agreement (the “Hibernia Acquisition Agreement”) with Hibernia Energy III Holdings, LLC and Hibernia Energy III-B Holdings, LLC, pursuant to which the Company agreed to purchase all of the issued and outstanding equity interests of Hibernia Energy III, LLC (“HE3”) and Hibernia Energy III-B, LLC (“HE3-B” and, together with HE3, “Hibernia”).

 

On August 2, 2023 (the “Closing Date”), the Company completed the transactions contemplated by the Hibernia Acquisition Agreement (the “Hibernia Acquisition”) for aggregate consideration of approximately $2.2 billion in cash, subject to certain customary purchase price adjustments set forth in the Hibernia Acquisition Agreement.

 

On June 19, 2023, the Company entered into a membership interest purchase agreement (as amended from time to time, the “Tap Rock Acquisition Agreement”) with Tap Rock Resources Legacy, LLC, a Delaware limited liability company (“Tap Rock I Legacy”), Tap Rock Resources Intermediate, LLC, a Delaware limited liability company (“Tap Rock I Intermediate” and, together with Tap Rock I Legacy, the “Tap Rock I Sellers”), Tap Rock Resources II Legacy, LLC, a Delaware limited liability company (“Tap Rock II Legacy”), Tap Rock Resources II Intermediate, LLC, a Delaware limited liability company (“Tap Rock II Intermediate” and, together with Tap Rock II Legacy, the “Tap Rock II Sellers”), Tap Rock NM10 Legacy Holdings, LLC, a Delaware limited liability company (“NM10 Legacy”), and Tap Rock NM10 Holdings Intermediate, LLC, a Delaware limited liability company (“NM10 Intermediate” and together with NM10 Legacy, the “NM10 Sellers”, solely in its capacity as “Sellers’ Representative” (as defined therein), Tap Rock I Legacy, and solely for the limited purposes set forth therein, Tap Rock Resources, LLC a Delaware limited liability company, pursuant to which the Company agreed to purchase all of the issued and outstanding equity interests of Tap Rock AcquisitionCo, LLC, a Delaware limited liability company, Tap Rock Resources II, LLC, a Delaware limited liability company, and Tap Rock NM10 Holdings, LLC, a Delaware limited liability company (collectively, “Tap Rock”), from the Tap Rock I Sellers, the Tap Rock II Sellers and the NM10 Sellers, respectively.

 

On the Closing Date, the Company completed the transactions contemplated by the Tap Rock Acquisition Agreement (the “Tap Rock Acquisition”) for aggregate consideration of approximately $2.5 billion, which was comprised of (i) $1.5 billion in cash and (ii) 13,538,472 shares of common stock, par value $0.01 per share, of the Company valued at approximately $1.0 billion, subject to certain customary anti-dilution and purchase price adjustments set forth in the Tap Rock Acquisition Agreement.

 

The Pro Forma Financial Statements of Civitas present the combination of the financial information and the pro forma effects with respect to the Hibernia Acquisition and the Tap Rock Acquisition (collectively, the “Acquisitions”), further details of which are included within the notes to the Pro Forma Financial Statements. The Pro Forma Financial Statements have been prepared from the respective historical consolidated financial statements of Civitas, Hibernia and Tap Rock adjusted to give effect to the Acquisitions and exclude historical financial data from the HE3-B historical financial statements. The unaudited pro forma condensed combined statements of operations (the “Pro Forma Statements of Operations”) for the nine months ended September 30, 2023 and the year ended December 31, 2022, have been prepared to give effect to the Acquisitions as if they had been consummated on January 1, 2022. The Pro Forma Financial Statements contain certain reclassification adjustments to conform the historical Hibernia and Tap Rock financial statement presentation to Civitas’ financial statement presentation.

 

The Pro Forma Financial Statements are presented to reflect the Acquisitions and do not represent what Civitas’ results of operations would have been had the Acquisitions occurred on the date noted above, nor do they project the results of operations of the combined company following the effective dates. The Pro Forma Financial Statements are intended to provide information about the continuing impact of the Acquisitions as if they had been consummated earlier. The transaction accounting adjustments are based on information and certain estimates and assumptions that management believes are reasonable based on currently available information. In the opinion of management, all adjustments necessary to present fairly the Pro Forma Financial Statements have been made.

 

1

 

 

The Acquisitions have been accounted for using the acquisition method of accounting, with Civitas identified as the acquirer. The acquisition method of accounting requires fair values to be estimated and determined for the merger consideration, as well as the assets acquired and liabilities assumed by Civitas. As of the date of this filing, the determination of these fair value estimates is still preliminary as Civitas continues to complete the detailed valuation analysis to arrive at the required final estimates, which will be completed as soon as practicable, and will not extend beyond the one-year measurement period from the close of the Transactions provided under Accounting Standards Codification 805, Business Combinations (“ASC 805”). Any increases or decreases in the fair values of assets acquired and liabilities assumed upon completion of the final valuation analysis may be materially different from the information reflected in the Pro Forma Financial Statements herein. The Pro Forma Financial Statement should be read in conjunction with:

 

·the audited consolidated financial statements contained in Civitas’ Annual Report on Form 10-K as of and for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on February 22, 2023;

 

·the unaudited condensed consolidated financial statements contained in Civitas’ Quarterly Report on Form 10-Q as of and for the quarter ended September 30, 2023 filed with the SEC on November 7, 2023;

 

·the audited consolidated financial statements of HE3 for the year ended December 31, 2022, filed with the SEC on Form 8-K/A dated August 2, 2023;

 

·the unaudited consolidated financial statements and notes of HE3 for the period ended September 30, 2023;

 

·the audited consolidated financial statements of Tap Rock AcquisitionCo, LLC for the year ended December 31, 2022, filed with the SEC on Form 8-K/A dated August 2, 2023;

 

·the audited consolidated financial statements of Tap Rock Resources II, LLC for the year ended December 31, 2022, filed with the SEC on Form 8-K/A dated August 2, 2023; and

 

·the unaudited consolidated financial statements and notes of Tap Rock Resources II, LLC for the period ended September 30, 2023.

 

2

 

 

CIVITAS RESOURCES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2023

(in thousands, except per share data)

 

   Historical           Pro Forma
Combined
 
   Civitas
Resources
   Hibernia   Hibernia
Reclass
Adjustments
(Note 2)
   Hibernia
Transaction
Accounting
Adjustments
(Note 3)
   Civitas
Resources
(Excluding Tap
Rock)
 
                     
   (in thousands, except per share data) 
Operating net revenues:                         
Oil and natural gas sales  $2,352,464   $-   $402,640   $-   $2,755,104 
Oil   -    354,729    (354,729)   -    - 
Natural gas   -    18,407    (18,407)   -    - 
Natural gas liquids   -    51,997    (51,997)   -    - 
Realized gain on commodity derivatives   -    23,725    (23,725)   -    - 
Other   -    -    -    -    - 
Operating expenses:                         
Lease operating expense   191,728    32,230    2,075    -    226,033 
Midstream operating expense   35,041    -    -    -    35,041 
Gathering, transportation, and processing   209,765    -    -    -    209,765 
Production taxes, transportation, processing and gathering   -    -    -    -    - 
Workover   -    2,075    (2,075)   -    - 
Severance and ad valorem taxes   188,242    -    23,897    -    212,139 
Production, ad valorem and severance tax   -    23,897    (23,897)   -    - 
Production taxes   -    -    -    -    - 
Revenue deductions   -    22,493    (22,493)   -    - 
Exploration   1,546    -    -    -    1,546 
Depreciation, depletion, and amortization   754,558    91,092    -    10,623(a)   856,273 
Unused commitments   4,696    -    -    -    4,696 
Bad debt expense   559    -    -    -    559 
Transaction costs   60,077    -    -    -    60,077 
General and administrative expense   106,553    6,571    226    -    113,350 
Equity compensation expense   -    226    (226)   -    - 
Total operating expenses   1,552,765    178,584    (22,493)   10,623    1,719,479 
Other income (expense):                         
Derivative gain   (120,574)   -    53,225    (53,225)(b)   (120,574)
Interest expense   (92,669)   (18,037)   -    (66,977)(c)   (177,683)
Gain (loss) on property transactions, net   (254)   9    -    232(d)   (13)
Other income   34,356    76    -    -    34,432 
Unrealized gain on commodity derivatives   -    29,500    (29,500)   -    - 
Total other income (expense)   (179,141)   11,548    23,725    (119,970)   (263,838)
Income from operations before income taxes   620,558    281,822    -    (130,593)   (771,787)
Income tax expense   (139,138)   (1,729)   -    (42,548)(e)   (183,415)
Net income  $481,420   $280,093   $-   $(173,141)  $588,372 
Net income attributable to non-controlling interest   -    -    -    -    - 
Net Income attributable to controlling interest  $481,420   $280,093   $-   $(173,141)  $588,372 
                          
Net income per common share:                         
Basic  $5.75                  $7.03 
Diluted  $5.70                  $6.97 
Weighted-average common shares outstanding:                         
Basic   83,700                   83,700 
Diluted   84,468                   84,468 

 

See accompanying “Notes to Unaudited Pro Forma Condensed Combined Financial Statements”

 

3

 

 

CIVITAS RESOURCES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (Continued)

Nine Months Ended September 30, 2023

(in thousands, except per share data)

 

   Civitas
Resources
Pro Forma
(Excluding
Tap Rock)
   Tap Rock
AcquisitionCo
Historical
   Tap Rock II
Historical
   Tap Rock
AcquisitionCo
Reclass
Adjustments
(Note 2)
   Tap Rock II
Reclass
Adjustments
(Note 2)
   Tap Rock
Transaction
Accounting
Adjustments
(Note 4)
   Civitas
Resources
Pro Forma
Combined
 
                             
   (in thousands, except per share data) 
Operating net revenues:                                   
Oil and natural gas sales  $2,755,104   $382,658   $167,580   $-   $-   $-   $3,305,342 
Oil   -    -    -    -    -    -    - 
Natural gas   -    -    -    -    -    -    - 
Natural gas liquids   -    -    -    -    -    -    - 
Realized gain on commodity derivatives   -    -    -    -    -    -    - 
Other   -    1,004    -    (1,004)   -    -    - 
Operating expenses:                                   
Lease operating expense   226,033    66,515    47,938    -    -    -    340,486 
Midstream operating expense   35,041    -    -    -    -    -    35,041 
Gathering, transportation, and processing   209,765    9,617    -    -    2,058    -    221,440 
Production taxes, transportation, processing and gathering   -    -    15,180    -    (15,180)   -    - 
Workover   -    -    -    -    -    -    - 
Severance and ad valorem taxes   212,139    -    -    30,915    13,122    -    256,176 
Production, ad valorem and severance tax   -    -    -    -    -    -    - 
Production taxes        30,915    -    (30,915)   -    -    - 
Revenue deductions   -    -    -    -    -    -    - 
Exploration   1,546    -    -    -    -    -    1,546 
Depreciation, depletion, and amortization   856,273    89,315    66,049    -    -    47,374(a)   1,059,011 
Unused commitments   4,696    -    -    -    -    -    4,696 
Bad debt expense   559    -    -    -    -    -    559 
Transaction costs   60,077    -    -    -    -    -    60,077 
General and administrative expense   113,350    15,189    15,632    -    -    -    144,171 
Equity compensation expense   -    -    -    -    -    -    - 
Total operating expenses   1,719,479    211,551    144,799    -    -    47,374    2,123,203 
Other income (expense):                                   
Derivative gain   (120,574)   18,598    24,237    -    -    (42,835)(b)   (120,574)
Interest expense   (177,683)   (46,659)   (9,532)   -    -    (13,128)(c)   (247,002)
Gain (loss) on property transactions, net   (13)   -    -    -    -    -    (13)
Other income   34,432    -    -    1,004    -    -    35,436 
Unrealized gain on commodity derivatives   -    -    -    -    -    -    - 
Total other income (expense)   (263,838)   (28,061)   14,705    1,004    -    (55,963)   (332,153)
Income from operations before income taxes   (771,787)   144,050    37,486    -    -    (103,337)   849,986 
Income tax expense   (183,415)   -    -    -    -    (23,284)(d)   (206,699)
Net income  $588,372   $144,050   $37,486   $-   $-   $(126,621)  $643,287 
Net income attributable to non-controlling interest   -    8,457    -    -    -    (8,457)(e)   - 
Net Income attributable to controlling interest  $588,372   $135,593   $37,486   $-   $-   $(118,164)  $643,287 
                                    
Net income per common share:                                   
Basic  $7.03                            $6.62 
Diluted  $6.97                            $6.56 
Weighted-average common shares outstanding:                                   
Basic   83,700                             97,238 
Diluted   84,468                             98,006 

 

See accompanying “Notes to Unaudited Pro Forma Condensed Combined Financial Statements”

 

4

 

 

CIVITAS RESOURCES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

Year Ended December 31, 2022

(in thousands, except per share data)

 

   Historical           Pro Forma
Combined
 
   Civitas
Resources
   Hibernia   Hibernia
Reclass
Adjustments
(Note 2)
   Hibernia
Transaction
Accounting
Adjustments
(Note 3)
   Civitas
Resources
(Excluding
Tap Rock)
 
                     
   (in thousands, except per share data) 
Operating net revenues:                         
Oil and natural gas sales  $3,791,398   $-   $625,003   $-   $4,416,401 
Oil   -    509,874    (509,874)   -    - 
Natural gas   -    58,746    (58,746)   -    - 
Natural gas liquids   -    79,363    (79,363)   -    - 
Realized loss on commodity derivatives   -    (111,712)   111,712    -    - 
Other   -    -    -    -    - 
Operating expenses:                         
Lease operating expense   169,986    32,576    3,018    -    205,580 
Midstream operating expense   31,944    -    -    -    31,944 
Gathering, transportation, and processing   287,474    -    -    -    287,474 
Workover   -    3,018    (3,018)   -    - 
Severance and ad valorem taxes   305,701    -    38,495    -    344,196 
Production, ad valorem and severance tax   -    38,495    (38,495)   -    - 
Production taxes   -    -    -    -    - 
Revenue deductions   -    22,980    (22,980)   -    - 
Exploration   6,981    -    -    -    6,981 
Depreciation, depletion, and amortization   816,446    86,411    -    22,857(a)   925,714 
Abandonment and impairment of unproved properties   17,975    -    -    -    17,975 
Unused commitments   3,641    -    -    -    3,641 
Bad debt expense   (950)   -    -    -    (950)
Merger transaction costs   24,683    -    -    3,790(f)   28,473 
General and administrative expense   143,477    7,455    2,102    -    153,034 
Equity compensation expense   -    2,102    (2,102)   -    - 
Total operating expenses   1,807,358    193,037    (22,980)   26,647    2,004,062 
Other income (expense):                         
Derivative loss   (335,160)   -    (82,623)   82,623(b)   (335,160)
Interest expense   (32,199)   (11,255)   -    (154,062)(c)   (197,516)
Gain on property transactions, net   15,880    20    -    (1,679)(d)   14,221 
Other income   21,217    37    -    -    21,254 
Unrealized gain on commodity derivatives   -    29,089    (29,089)   -    - 
Total other income (expense)   (330,262)   17,891    (111,712)   (73,118)   (497,201)
Income from operations before income taxes   1,653,778    361,125    -    (99,765)   (1,915,138)
Income tax expense   (405,698)   (3,012)   -    (46,423)(e)   (455,133)
Net income  $1,248,080   $358,113   $-   $(146,188)  $(1,460,005)
Net income attributable to non-controlling interest   -    -    -    -    - 
Net income attributable to controlling interest  $1,248,080   $358,113   $-   $(146,188)  $(1,460,005)
                          
Net income per common share:                         
Basic  $14.68                  $17.18 
Diluted  $14.58                  $17.06 
Weighted-average common shares outstanding:                         
Basic   85,005                   85,005 
Diluted   85,604                   85,604 

 

See accompanying “Notes to Unaudited Pro Forma Condensed Combined Financial Statements”

 

5

 

 

CIVITAS RESOURCES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (Continued)

Year Ended December 31, 2022

(in thousands, except per share data)

 

   Civitas
Resources
Pro Forma
(Excluding
Tap Rock)
   Tap Rock
AcquisitionCo
Historical
   Tap Rock II
Historical
   Tap Rock
AcquisitionCo
Reclass
Adjustments
(Note 2)
   Tap Rock II
Reclass
Adjustments
(Note 2)
   Tap Rock
Transaction
Accounting
Adjustments
(Note 4)
   Civitas
Resources
Pro Forma
Combined
 
                             
   (in thousands, except per share data) 
Operating net revenues:                                   
Oil and natural gas sales  $4,416,401   $1,069,308   $322,702   $-   $-   $-   $5,808,411 
Oil   -    -    -    -    -    -    - 
Natural gas   -    -    -    -    -    -    - 
Natural gas liquids   -    -    -    -    -    -    - 
Realized loss on commodity derivatives   -    -    -    -    -    -    - 
Other   -    2,051    15    (2,051)   (15)   -    - 
Operating expenses:             -         -         - 
Lease operating expense   205,580    138,410    60,326    -    -    -    404,316 
Midstream operating expense   31,944    -    -    -    -    -    31,944 
Gathering, transportation, and processing   287,474    20,859    3,916    -    -    -    312,249 
Workover   -    -    -    -    -    -    - 
Severance and ad valorem taxes   344,196    -    -    90,034    27,790    -    462,020 
Production, ad valorem and severance tax   -    -    -    -    -    -    - 
Production taxes   -    90,034    27,790    (90,034)   (27,790)   -    - 
Revenue deductions   -    -    -    -    -    -    - 
Exploration   6,981    -    -    -    -    -    6,981 
Depreciation, depletion, and amortization   925,714    160,103    83,959    -    -    132,899(a)   1,302,675 
Abandonment and impairment of unproved properties   17,975    -    -    -    -    -    17,975 
Unused commitments   3,641    -    -    -    -    -    3,641 
Bad debt expense   (950)   -    -    -    -    -    (950)
Merger transaction costs   28,473    -    -    -    -    5,264(f)   33,737 
General and administrative expense   153,034    32,511    12,869    -    -    -    198,414 
Equity compensation expense   -    -    -    -    -    -    - 
Total operating expenses   2,004,062    441,917    188,860    -    -    138,163    2,773,002 
Other income (expense):             -         -           
Derivative loss   (335,160)   (125,580)   (28,610)   -    -    154,190(b)   (335,160)
Interest expense   (197,516)   (23,759)   (3,977)   -    -    (106,234)(c)   (331,486)
Gain on property transactions, net   14,221    -    -    -    -    -    14,221 
Other income   21,254    -    -    2,051    15    -    23,320 
Unrealized gain on commodity derivatives   -    -    -    -    -    -    - 
Total other income (expense)   (497,201)   (149,339)   (32,587)   2,051    15    47,956    (629,105)
Income from operations before income taxes   (1,915,138)    480,103    101,270    -    -    (90,207)   (2,406,304) 
Income tax expense   (455,133)   -    -    -    -    (130,032)(d)   (585,165)
Net income  $(1,460,005)   $480,103   $101,270   $-   $-   $(220,239)  $(1,821,139) 
Net income attributable to non-controlling interest   -    19,792    -    -    -    (19,792)(e)   - 
Net Income attributable to controlling interest  $(1,460,005)   $460,311   $101,270   $-   $-   $(200,447)  $(1,821,139) 
                                    
Net income per common share:                                   
Basic  $17.18                            $18.48 
Diluted  $17.06                            $18.37 
Weighted-average common shares outstanding:                                   
Basic   85,005                             98,543 
Diluted   85,604                             99,142 

 

See accompanying “Notes to Unaudited Pro Forma Condensed Combined Financial Statements”

 

6

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

NOTE 1 – BASIS OF PRESENTATION

 

The Civitas, Hibernia, and Tap Rock historical financial information has been derived from each respective company’s historical financial statements which have been filed by the Company with the Securities and Exchange Commission or included elsewhere in this filing, as applicable. Certain of Hibernia’s and Tap Rock’s historical amounts have been reclassified to conform to Civitas’ financial statement presentation, as discussed further in Note 2. The Pro Forma Financial Statements should be read in conjunction with each company’s historical financial statements and the notes thereto. The Pro Forma Statements of Operations for the nine months ended September 30, 2023, and the year ended December 31, 2022, give effect to the Acquisitions as if they had been completed on January 1, 2022.

 

The Pro Forma Financial Statements do not purport to be indicative of the results of operations of the combined company that would have occurred if the Acquisitions had occurred on the date indicated, nor are they indicative of Civitas’ future results of operations. In addition, future results may differ significantly from those reflected in the Pro Forma Financial Statements. Further, the Pro Forma Financial Statements exclude historical financial data from HE3-B’s historical financial statements.

 

NOTE 2 - RECLASSIFICATION ADJUSTMENTS

 

The Pro Forma Financial Statements have been adjusted as follows to reflect reclassifications of Hibernia’s and Tap Rock’s historical financial statements to conform to Civitas’ financial statement presentation.

 

(a)Hibernia Reclassification Adjustments

 

Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2023

 

·Reclassification of approximately $354.7 million from Revenues – Oil, approximately $18.4 million from Revenues – Natural gas, approximately $52.0 million from Revenues – Natural gas liquids, and approximately $22.5 million from Revenue deductions to Oil and natural gas sales;

 

·Reclassification of approximately $29.5 million from Unrealized gain on commodity derivatives and approximately $23.7 million from Revenues – Realized gain on commodity derivatives to Derivative gain;

 

·Reclassification of approximately $2.1 million from Workover to Lease operating expense;

 

·Reclassification of approximately $23.9 million from Production, ad valorem and severance tax to Severance and ad valorem taxes; and

 

·Reclassification of approximately $0.2 million from Equity compensation expense to General and administrative expense.

 

7

 

 

Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022

 

·Reclassification of approximately $509.9 million from Revenues – Oil, approximately $58.7 million from Revenues – Natural gas, approximately $79.4 million from Revenues – Natural gas liquids, and approximately $23.0 million from Revenue deductions to Oil and natural gas sales;

 

·Reclassification of approximately $29.1 million from Unrealized gain on commodity derivatives and approximately $111.7 million Revenues – Realized loss on commodity derivatives to Derivative loss;

 

·Reclassification of approximately $3.0 million from Workover to Lease operating expense;

 

·Reclassification of approximately $38.5 million from Production, ad valorem and severance tax to Severance and ad valorem taxes; and

 

·Reclassification of approximately $2.1 million from Equity compensation expense to General and administrative expense.

 

(b)Tap Rock AcquisitionCo Reclassification Adjustments

 

Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2023

 

·Reclassification of approximately $1.0 million from Revenues – Other to Other income; and

 

·Reclassification of approximately $30.9 million from Production taxes to Severance and ad valorem taxes.

 

Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022

 

·Reclassification of approximately $2.1 million from Revenues – Other to Other income; and

 

·Reclassification of approximately $90.0 million from Production taxes to Severance and ad valorem taxes.

 

(c)Tap Rock Resources II, LLC Reclassification Adjustments

 

Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2023

 

·Reclassification of approximately $2.1 million from Production taxes, transportation, processing and gathering to Gathering, transportation, and processing; and

 

·Reclassification of approximately $13.1 million from Production taxes, transportation, processing and gathering to Severance and ad valorem taxes.

 

Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022

 

·Reclassification of approximately $0.02 million from Revenues – Other to Other income; and

 

·Reclassification of approximately $27.8 million from Production taxes to Severance and ad valorem taxes.

 

NOTE 3 – HIBERNIA PRELIMINARY ACQUISITION ACCOUNTING AND PRO FORMA ADJUSTMENTS

 

Civitas has determined it is the accounting acquirer for the Hibernia Acquisition which will be accounted for under the acquisition method of accounting for business combinations in accordance with ASC 805. The allocation of the preliminary purchase price with respect to the Hibernia Acquisition is based upon management’s estimates of and assumptions related to the fair values of assets acquired and liabilities assumed as of the acquisition date. The Pro Forma Statements of Operations have been adjusted to give effect to the Hibernia Acquisition as follows:

 

(a)Reflect the pro forma adjustments to Depreciation, depletion, and amortization to calculate depletion expense based on the preliminary fair value of the proved properties acquired in accordance with the successful efforts method of accounting.

 

(b)Reflect the adjustment to remove the effect of derivatives not assumed as part of the Hibernia Acquisition.

 

8

 

 

(c)Reflect the following pro forma adjustments related to Interest expense for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively:

 

·an increase to Interest expense of approximately $16.8 million and approximately $28.9 million, respectively related to the draw on the Company's reserve-based revolving facility (the “Civitas Credit Facility”);

 

·an increase to Interest expense of approximately $64.2 million and approximately $128.4 million, respectively related to the issuance of $1.5 billion in 8.375% Senior Notes due 2028 and 8.750% Senior Notes due 2031 (“Acquisition Senior Notes”);

 

·an increase to Interest expense of approximately $1.5 million and approximately $3.0 million, respectively related to the amortization of the debt discount associated with the Acquisition Senior Notes;

 

·an increase to Interest expense of approximately $2.5 million and approximately $5.0 million, respectively related to the amortization of debt issuance costs associated with the Acquisition Senior Notes and borrowings on the Civitas Credit Facility;

 

·a decrease to Interest Expense of approximately $18.0 million and approximately $11.3 million related to the elimination of historical interest expense on the Hibernia credit facility; and

 

·a one-eighth percent increase or decrease in the interest rate would have changed interest expense related to the Civitas Credit Facility by $0.3 million and $0.5 million, respectively.

 

(d)Reflect the pro forma adjustments to Gain on property transactions, net to reclassify certain amounts previously capitalized by Hibernia under the full cost method of accounting in order to conform to the presentation to the successful efforts method of accounting used by Civitas for oil and gas properties.

 

(e)Reflect the pro forma income tax expense effect of the Hibernia Acquisition accounting adjustments based upon a statutory federal and blended state tax rate of 23.77% for the nine months ended September 30, 2023 and the year ended December 31, 2022.

 

(f)Reflect non-recurring transaction related costs of approximately $3.8 million related to the Hibernia Acquisition. These transaction related costs are not reflected in the historical September 30, 2023 condensed consolidated statement of operations, but are reflected in the Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022 as if incurred on January 1, 2021, and include fees paid for financial advisors, legal services and professional accounting services.

 

NOTE 4 – TAP ROCK PRELIMINARY ACQUISITION ACCOUNTING AND PRO FORMA ADJUSTMENTS

 

Civitas has determined it is the accounting acquirer for the Tap Rock Acquisition which will be accounted for under the acquisition method of accounting for business combinations in accordance with ASC 805. The allocation of the preliminary purchase price with respect to the Tap Rock Acquisition is based upon management’s estimates of and assumptions related to the fair values of assets acquired and liabilities assumed as of the acquisition date. The Pro Forma Statements of Operations have been adjusted to give effect to the Tap Rock Acquisition as follows:

 

(a)Reflect the pro forma adjustments to Depreciation, depletion, and amortization to calculate depletion expense based on the preliminary fair value of the proved properties acquired in accordance with the successful efforts method of accounting.

 

(b)Reflect the adjustment to remove the effect of derivatives not assumed as part of the Tap Rock Acquisition.

 

9

 

 

(c)Reflect the following pro forma adjustments related to Interest expense for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively:

 

·an increase to Interest expense of approximately $14.6 million and approximately $25.1 million, respectively related to the draw on the Civitas Credit Facility;

 

·an increase to Interest expense of approximately $51.4 million and approximately $102.8 million, respectively related to the issuance of $1.2 billion in Acquisition Senior Notes;

 

·an increase to Interest expense of approximately $1.2 million and approximately $2.4 million, respectively related to the amortization of the debt discount associated with the Acquisition Senior Notes;

 

·an increase to Interest expense of approximately $2.1 million and approximately $3.7 million, respectively related to the amortization of debt issuance costs associated with the Acquisition Senior Notes and borrowings on the Civitas Credit Facility;

 

·a decrease to Interest expense of approximately $56.2 million and approximately $27.7 million, respectively related to elimination of historical interest expense on the Tap Rock term loan and credit facility; and

 

·a one-eighth percent increase or decrease in the interest rate would have changed interest expense related to the Civitas Credit Facility by $0.3 million and $0.4 million, respectively.

 

(d)Reflect the pro forma income tax expense effect of the Tap Rock Acquisition accounting adjustments based upon a statutory federal and blended state tax rate of 24.32% for the nine months ended September 30, 2023 and the year ended December 31, 2022.

 

(e)Reflect the elimination of the non-controlling interests as Civitas acquired 100% of Tap Rock.

 

(f)Reflect non-recurring transaction related costs of approximately $5.3 million related to the Tap Rock Acquisition. These transaction related costs are not reflected in the historical September 30, 2023 condensed consolidated statement of operations, but are reflected in the Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022 as if incurred on January 1, 2021, and include fees paid for financial advisors, legal services and professional accounting services.

 

10

 

v3.23.4
Cover
Jan. 02, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Jan. 02, 2024
Entity File Number 001-35371
Entity Registrant Name Civitas Resources, Inc.
Entity Central Index Key 0001509589
Entity Tax Identification Number 61-1630631
Entity Incorporation, State or Country Code DE
Entity Address, Address Line One 555 17th Street
Entity Address, Address Line Two Suite 3700
Entity Address, City or Town Denver
Entity Address, State or Province CO
Entity Address, Postal Zip Code 80202
City Area Code 303
Local Phone Number 293-9100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol CIVI
Security Exchange Name NYSE
Entity Emerging Growth Company false

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