On October 17, 2023, Civitas Resources, Inc. completed its previously announced offering (the ?Offering?) of $1,000,000,000 aggregate principal amount of 8.625% Senior Notes due 2030. The Company expects to use the net proceeds from the Offering, together with cash on hand, to fund a portion of the cash purchase price for the recently announced pending acquisition of certain oil and gas properties, interests and related assets located in the Midland Basin from Vencer Energy, LLC (such acquisition, the ?Acquisition?). Pending the potential use of the net proceeds of the Offering to fund a portion of the consideration for the Acquisition, the Company may temporarily apply the net proceeds to repay outstanding borrowings under the Company?s credit facility.

The Notes are subject to a special mandatory redemption such that if (i) the consummation of the Acquisition does not occur on or before January 31, 2024 or (ii) prior thereto, the Company notifies Computershare Trust Company, N.A., the trustee of the Notes, that it will not pursue the consummation of the Acquisition, it will be required to redeem all Notes then outstanding at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the date of the Special Mandatory Redemption. The Notes were issued by the Company pursuant to an indenture, dated October 17, 2023 (the ?Indenture?), among the Company, the guarantors party thereto, and the Trustee. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company?s existing subsidiaries and are expected to be guaranteed by certain other future subsidiaries that may be required to guarantee the Notes.

The following is a brief description of the material provisions of the Indenture and the Notes. The Notes will mature on November 1, 2030. Interest on the Notes will accrue at the rate of 8.625% per annum and will be payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2024.

At any time prior to November 1, 2026, the Company may redeem all or part of the Notes, in whole or in part, at a redemption price equal to the sum of (i) the principal amount thereof, plus (ii) the ?make-whole? premium at the redemption date, plus (iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption (subject to the right of the noteholders on the relevant record date to receive interest on the relevant interest payment date). On or after November 1, 2026, the Company may redeem all or part of the Notes at redemption prices (expressed as percentages of the principal amount redeemed) equal to (i) 104.313% for the twelve-month period beginning on November 1, 2026; (ii) 102.156% for the twelve-month period beginning on November 1, 2027; and (iii) 100.000% for the period beginning November 1, 2028 and at any time thereafter, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of the noteholders on the relevant record date to receive interest on the relevant interest payment date).

The Company may redeem up to 35% of the aggregate principal amount of the Notes at any time prior to November 1, 2026 with an amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 108.625% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the redemption date, provided, however, that (i) at least 65.0% of the aggregate principal amount of Notes originally issued on the issue date (but excluding Notes held by the Company and its subsidiaries) remains outstanding immediately after the occurrence of such redemption (unless all such Notes are redeemed substantially concurrently) and (ii) the redemption occurs within 180 days after the date of the closing of such equity offering.