SM Energy

None of the serious warning signs we check for were found. 1 thing worth knowing.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 26 Feb 2026, plus the 10-Q filed 6 Aug 2026 and 14 later 8-Ks.

• Changed auditor

  Worth knowing

  The company changed its auditor (the firm that checks its books) in the last two years.

  “On February 4, 2026, the Audit Committee of the Board of Directors (the “Audit Committee”) of SM Energy Company (the “Company”) dismissed Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm, and appointed Deloitte & Touche LLP (“Deloitte”) for the fiscal year ending December 31, 2026.”

  From an 8-K filed 9 February 2026: Change of auditor. Read it in the filing

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• • The historical business relationships of SM Energy and Civitas may be subject to disruption due to uncertainty associated with the…

  Could happen

  • The historical business relationships of SM Energy and Civitas may be subject to disruption due to uncertainty associated with the Merger, which could have a material adverse effect on our results of operations, cash flows and financial position.

• • We may be unable to successfully integrate Civitas’ business into our business or achieve the anticipated benefits of the Merger, which…

  Could happen

  • We may be unable to successfully integrate Civitas’ business into our business or achieve the anticipated benefits of the Merger, which may have a material adverse effect on our business, financial condition or results of operations.

• Risks Related to Litigation and Government Regulations

  Could happen

  • Senate Bill 181’s requirement, which applies to our Colorado operations, that we own or control more than 45 percent of the working or mineral interest in order to statutorily pool our applicable interest may make it much more difficult for us to develop such interests, which could have a material adverse effect on our business, financial condition, and results of operations.

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• Our ability to utilize certain tax attributes may be limited as a result of the Civitas Merger.

  Could happen

  Our ability to utilize the former SM Energy’s carryover research and development credits and the former Civitas’ net operating losses (“NOL” or “NOLs”) and other tax attributes may be limited. The former Civitas had a material amount of federal tax NOLs that remained unutilized as of the Closing Date of the Merger.

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• Our ability to utilize certain tax attributes may be limited as a result of the Civitas Merger.

  Could happen

  Our ability to utilize these tax attributes to reduce future taxable income and reduce future tax liability depends on many factors, including our future income, which cannot be assured. Sections 382 and 383 of the Code (“Sections 382 and 383”) generally impose an annual limitation on the amount of attributes that can be used when a corporation has undergone an “ownership change” (as determined under Sections 382 and 383). An ownership change generally occurs if one or more stockholders (or groups of stockholders) who are each deemed to own at least five percent of such corporation’s stock has increased their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. In the event that an ownership change occurs, utilization of the relevant corporation’s tax attributes would be subject to an annual limitation under Sections 382 and 383.

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