Am I missing something on SM Energy ($SM)? The post-merger pessimism seems completely overblown if WTI holds above $90.

The market seems hyper-focused on the debt $SM took on from the Civitas merger, treating the stock like a liability rather than an asset. But looking at their massive unhedged exposure, I feel like a sustained $90+ oil price for the next two months completely flips the script. I dug into their recent late-February/March updates, and I’m seeing some really strong catalysts that aren’t being priced in:

Management just set a strict 80/20 rule, funneling 80% of free cash flow into debt reduction and 20% toward a $488M buyback that scales up as debt drops. They are already attacking the expensive 8.375% Civitas debt with a $750M tender offer right now, which pairs with a $950M asset sale to heavily slash future interest expenses. By the second half of the year, the merger dust will settle and the company will be running on a 55% pure crude mix. Since they leave a huge chunk of that crude completely unhedged, holding WTI around $90 means they will print cash way faster than Wall Street models currently predict. Everyone is stressing over a noisy first quarter while completely missing this aggressive balance sheet cleanup and the massive torque it creates for H2.