2023 performance advances business strategy
with strong free cash flow generation, efficient production growth
and lower than expected capital investments
2024 outlook to benefit from recent
transformational acquisition that brings efficient, high-margin
production, product diversification, additional capital
efficiencies, free cash flow generation and balance sheet
flexibility
SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the
Company”) today announced operating and financial results for the
fourth quarter and full year 2023. Supplemental slides have been
posted to SilverBow’s website and can be accessed at www.sbow.com.
The Company plans to host a conference call at 9 a.m. CT (10 a.m.
ET) on Thursday, February 29, 2024. Participation details can be
found within this release.
Full Year 2023
Highlights:
- Generated net income of $298 million, or $12.63 per diluted
share (all per share amounts stated on a diluted basis), non-GAAP
Adjusted EBITDA of $536 million1 and non-GAAP free cash flow
(“FCF”) of $56 million1
- Created additional scale and commodity optionality through
transformational acquisition of South Texas assets, adding more
than 300 high-return locations and 32 thousand barrels of oil
equivalent per day (“MBoe/d”); SilverBow has more than 1,000
high-value locations, or more than a decade of inventory at its
current development pace
- Reported average net production of 59.4 MBoe/d (39%
oil/liquids), in the upper half of guidance; more than doubled
year-over-year net oil production to 14.6 thousand barrels of oil
per day (“MBbls/d”)
- Invested $409 million in capital (below guidance midpoint),
excluding acquisitions
- Achieved full year 2023 return on capital employed (“ROCE”) of
16%; three-year average ROCE (2021-23) of 21%1
- Advanced key elements of its corporate strategy, including
expanding its portfolio of high-return opportunities, profitably
growing production, creating capital efficiencies to enhance
margins, delivering FCF and strengthening the balance sheet
Fourth Quarter 2023
Highlights:
- Generated net income of $183 million, or $7.12 per share,
non-GAAP Adjusted EBITDA of $172 million1 and non-GAAP FCF of $74
million1, the highest quarterly amount in SilverBow's history
- Reported average net production of 72.1 MBoe/d (43%
oil/liquids), in the upper half of guidance; grew year-over-year
net oil production to 19.3 MBbls/d, an increase of nearly 75%
- Invested $79 million in capital (below midpoint of guidance),
excluding acquisitions
2024 Outlook:
- In response to commodity prices, the Company lowered its
previously planned capital investments in dry gas-focused areas by
approximately $75 million, resulting in a revised 2024 capital
program budget of $470 - $510 million
- At current commodity prices, the Company expects to generate
$125 - $150 million of estimated FCF, which is currently earmarked
for significant debt reduction
- The Company is maintaining planned investment in oil and
liquids projects while keeping oil and liquids production guidance
at previously announced levels. Revised capital investments reduce
expected natural gas volumes by 13%
- Production is expected to increase approximately 50%
year-over-year to 85.2 - 93.5 MBoe/d, post-recent acquisition, oil
production is expected to increase 70% year-over-year and comprise
25% - 30% of 2024 production mix
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, said, “We
performed exceptionally well in 2023, advancing our strategy to
create value and dramatically strengthen SilverBow with the recent
high-value South Texas acquisition. Our team has a track record of
successfully integrating acquisitions and will apply our proven
operating practices and low-cost platform to generate synergies and
to extract value from this transaction. As we enter 2024, SilverBow
has a more durable asset base, flexibility to shift investments
between oil and gas, and a longer runway of high-quality drilling
opportunities. Our recent South Texas acquisition was a game
changer and significantly improves the trajectory of our business.
We are confident in our ability to unlock capital efficiencies,
improve well productivity and returns, and continue to create value
for our shareholders.”
FOURTH QUARTER FINANCIAL AND OPERATING SUMMARY
For the fourth quarter of 2023, SilverBow reported net income of
$183 million, or $7.12 per share, which included a net unrealized
gain on the value of the Company's derivative contracts of $161
million. Non-GAAP Adjusted EBITDA was $172 million and non-GAAP FCF
was $74 million1. Financial results in the period were driven by
production results in the upper half of SilverBow's guidance.
Quarterly average net production increased 37% over the prior year
to 72.1 MBoe/d. Oil production averaged 19.3 MBbls/d, up nearly 75%
over the comparable period. Production mix for the fourth quarter
consisted of 57% natural gas, 27% crude oil and 16% natural gas
liquids ("NGLs").
Strong production in the quarter was related to performance from
the Central Oil area, where the Company recently brought online a
four-well pad with a 30-day pad average of 4,605 Boe/d (83% oil,
8,280’ average lateral length). In its Eastern Extension area,
SilverBow brought online a three-well pad with a 30-day pad average
of 4,279 Boe/d (71% oil, 9,240' average lateral length).
Stated without the impact of hedging, crude oil and natural gas
realizations for the quarter were 97% and 83% of West Texas
Intermediate (“WTI”) and Henry Hub, respectively. Average realized
prices by product were $76.21 per barrel of oil, $2.39 per thousand
cubic feet of natural gas (“Mcf”) and $20.83 per barrel of NGLs
(27% of WTI benchmark). Please refer to the tables included in this
release for complete production volumes and pricing
information.
Total production expenses in the quarter, which include lease
operating expenses, transportation and processing expenses and
production taxes, were $8.67 per barrel of oil equivalent (“Boe”),
in-line with expectations.
Capital investments during the quarter were in the lower half of
guidance and totaled $79 million on an accrual basis. In the
quarter, the Company operated two rigs and brought online 12 net
wells.
FULL YEAR 2023 FINANCIAL AND OPERATING SUMMARY
For full year 2023, SilverBow reported net income of $298
million, or $12.63 per share, which includes a net unrealized gain
on the value of the Company's derivative contracts of $151 million.
Non-GAAP Adjusted EBITDA was $536 million and non-GAAP FCF was $56
million1. Financial results in the period were driven by average
production results in the upper half of SilverBow's guidance.
Average net production was above the midpoint of guidance and
increased 32% over the prior year to 59.4 MBoe/d. Oil production
averaged 14.6 MBbls/d, up 100% over the comparable period.
Production mix for the full year consisted of 61% natural gas, 25%
crude oil and 14% NGLs.
Stated without the impact of hedging, crude oil and natural gas
realizations in the year were 97% and 85% of WTI and Henry Hub,
respectively. Average realized prices by product were $75.32 per
barrel of oil, $2.34 per Mcf of natural gas and $20.74 per barrel
of NGLs (27% of WTI benchmark). Please refer to the tables included
in this release for complete production volumes and pricing
information.
SilverBow posted significant year-over-year operational
efficiency gains in 2023, completing 16% more stimulation stages
per day, with average pumping efficiencies up 13%. Fourth quarter
pumping efficiencies were 84%, the highest quarterly rate achieved
during the year. Performance reflected less downtime with an
average of 14.3 completed stages per day. Drilling costs decreased
throughout 2023 due to efficiencies from high-graded rigs and
ongoing cost deflation, particularly in rig rates and tubular
products. As a result, 2023 total well costs per lateral foot
decreased 3% year-over-year, and highlighting the magnitude of cost
improvement throughout the year, fourth quarter well costs per
lateral foot decreased 20% year-over-year. For the year, drilling
and completion (“D&C”) costs were 10% below planned costs.
Capital investments for the year, excluding acquisitions,
totaled $409 million on an accrual basis, which was below the
midpoint of the Company's $400 - $425 million guidance. Including
cash acquisition cost of $605 million, SilverBow invested
approximately $1.0 billion in 2023. The Company brought online 49
net wells during the year.
PROVED RESERVES
SilverBow increased its proved reserves by 20% year-over-year.
SEC proved reserves at year-end 2023 were 446 million barrels of
oil equivalent (“MMBoe”), of which 37% were oil/liquids and 45%
were proved developed. The increase in proved reserves was
primarily related to acquisitions and an increase in oil reserves
through extensions due to successful drilling on existing leases,
as well as new leases acquired in 2023. Excluding the impact of
acquisitions and commodity prices, proved reserve replacement was
more than 200% of 2023 production. The Standardized Measure was
$2.3 billion and the pre-tax present value of future net cash flows
discounted at 10% was $2.7 billion utilizing SEC prices (“SEC PV-10
Value,” a non-GAAP measure).
The table below reconciles 2022 proved reserves to 2023 proved
reserves:
Total (MBoe)
Proved reserves as of December 31,
2022
372,437
Extensions, discoveries, and other
additions
43,687
Revisions of prior reserve estimates
(91,346
)
Purchases of minerals in place
142,738
Production
(21,667
)
Proved reserves as of December 31,
2023
445,850
SEC prices used in the 2023 calculation were $76.79 per barrel
of oil, $2.30 per Mcf of natural gas and $25.43 per barrel of NGLs,
as compared to $94.36 per barrel of oil, $6.14 per Mcf of natural
gas and $34.76 per barrel of NGLs used in 2022.
2024 OUTLOOK
Mr. Woolverton commented, “Our outlook for 2024 reflects the
positive impacts of our recent transaction and ability to exercise
flexibility in our operating plan in response to commodity prices.
Given low natural gas prices, we reduced our planned investments in
our Webb County Gas area to preserve valuable inventory for the
future, while our development activity in our expanded oil
opportunities continues. This flexibility is a result of our
acquisition strategy and allows us to capitalize on our competitive
advantage in the Eagle Ford. Our current 2024 plan high-grades our
large, high-return portfolio of opportunities to create a plan that
maximizes free cash flow and allows for debt reduction. We are
positioned to benefit from the significant and sustainable capital
efficiencies we have created over the past year, and expect to
continue optimizing our development program in real-time as
dictated by our returns-focused mindset.”
SilverBow’s current planned capital investments are $470 - $510
million, with approximately 90% allocated to D&C activity. This
represents a $75 million, or 13%, reduction when compared to the
midpoint of the Company's preliminary 2024 outlook. The plan is
expected to generate $125 - $150 million of FCF at current prices.
Annual production is expected to average 85.2 - 93.5 MBoe/d, a 50%
increase over the prior year. Oil volumes are expected to average
23.5 - 26.5 MBbls/d, a 71% increase over the prior year.
SilverBow's full year gas volumes are expected to be 13% lower at
the midpoint compared to its prior guidance range.
The Company plans to operate three drilling rigs through the
first half of 2024, and operate two drilling rigs in the second
half of the year. The Company is directing the majority of its
investments to liquids development, including approximately 50% of
its full year D&C activity directed toward its Western
Condensate area and approximately 30% of its D&C activity
directed toward its Central Oil and Eastern Extension areas.
SilverBow expects to drill 62 gross (49 net) operated wells
drilled, compared to 46 gross (45 net) operated wells drilled in
2023.
For the first quarter of 2024, the Company expects to produce
86.5 - 93.3 MBoe/d, with expected oil volumes of 22.5 - 25.0
MBbls/d. Additional detail on SilverBow's guidance can be found in
the table included in this release.
RISK MANAGEMENT
SilverBow consistently uses the derivatives market to mitigate
commodity price risks and ensure cash flow to fund its annual
capital program. As of February 23, 2024, SilverBow had
approximately 60% of total production hedged for full year 2024,
using the midpoint of guidance; approximately 75% of full year 2024
gas production is hedged at a weighted average price of $3.83 per
Mcf, using the floor price of collars. For complete disclosure on
the Company’s hedging program, please see the most recent
presentation posted to the Investor Relations section of the
Company's website.
CAPITAL STRUCTURE
Due to the underlying strength of SilverBow's business and
increasing scale, the Company’s liquidity more than doubled
year-over-year. At year-end 2023, SilverBow had approximately $479
million of liquidity, consisting of $1 million of cash and $478
million of availability under its senior secured revolving credit
facility (“Credit Facility”). As of January 31, 2024, the Company
had $509 million of undrawn capacity and $1 million of cash
resulting in $510 million of liquidity. This represents $60 million
of total debt reduction in the two months since closing the South
Texas acquisition; debt reduction remains the primary use of FCF in
the near-term.
For full year 2023, SilverBow reported year-end debt of $1.2
billion and non-GAAP Adjusted EBITDA for Leverage Ratio of $782
million2, which, in accordance with the leverage ratio calculation
in its Credit Facility, includes pro forma contributions from
acquired assets prior to their closing dates totaling $245 million.
At year-end 2023, the Company had a leverage ratio of 1.56x2 and
25.4 million total common shares outstanding as of February 23,
2024.
CONFERENCE CALL DETAILS
SilverBow plans to host a conference call for investors at 9 a.m
CT (10 a.m. ET), on Thursday, February 29, 2024. Investors and
participants can listen to the call by dialing 1-888-415-4465
(U.S.) or 1-646-960-0140 (International) and requesting SilverBow
Resources' Fourth Quarter and Full Year 2023 Earnings Conference
Call (Conference ID: 5410161) or by visiting the Company's website.
A simultaneous webcast of the call may be found at
www.sbow.com/investor-relations/Investor-Relations-Events-Presentations/event-calendar/default.aspx.
The webcast will be archived for replay on the Company's website
for 14 days.
ABOUT SILVERBOW RESOURCES, INC.
SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy
company actively engaged in the exploration, development, and
production of oil and gas in the Eagle Ford Shale and Austin Chalk
in South Texas. With over 30 years of history operating in South
Texas, the Company possesses a significant understanding of
regional reservoirs which it leverages to assemble high quality
drilling inventory while continuously enhancing its operations to
maximize returns on capital invested. For more information, please
visit www.sbow.com. Information on our website is not part of this
release.
FORWARD-LOOKING STATEMENTS
This release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements represent management's
expectations or beliefs concerning future events, and it is
possible that the results described in this release will not be
achieved. These forward-looking statements are based on current
expectations and assumptions and are subject to a number of risks
and uncertainties, many of which are beyond our control. All
statements, other than statements of historical fact included in
this press release, including those regarding our strategy, the
benefits of the acquisitions, future operations, guidance and
outlook, financial position, well expectations and drilling plans,
estimated production levels, expected oil and natural gas pricing,
long-term inventory estimates, estimated oil and natural gas
reserves or the present value thereof, reserve increases, service
costs, impact of inflation, future free cash flow and expected
leverage ratio, value and development of locations, capital
expenditures, budget, projected costs, prospects, plans and
objectives of management are forward-looking statements. When used
in this report, the words “will,” “could,” “believe,” “anticipate,”
“intend,” “estimate,” “budgeted,” “guidance,” “expect,” “may,”
“continue,” “potential,” “plan,” “project,” "positioned," "should"
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. Important factors that could cause actual
results to differ materially from our expectations include, but are
not limited to, the following risks and uncertainties: further
actions by the members of the Organization of the Petroleum
Exporting Countries, Russia and other allied producing countries
with respect to oil production levels and announcements of
potential changes in such levels; risk related to recently
completed acquisitions and integrations of these acquisitions;
volatility in natural gas, oil and NGL prices; ability to obtain
permits and government approvals; our borrowing capacity, future
covenant compliance, cash flow and liquidity, including our ability
to satisfy our short- or long-term liquidity needs; asset
disposition efforts or the timing or outcome thereof; ongoing and
prospective joint ventures, their structures and substance, and the
likelihood of their finalization or the timing thereof; the amount,
nature and timing of capital expenditures, including future
development costs; timing, cost and amount of future production of
oil and natural gas; availability of drilling and production
equipment or availability of oil field labor; availability, cost
and terms of capital; timing and successful drilling and completion
of wells; availability and cost for transportation and storage
capacity of oil and natural gas; costs of exploiting and developing
our properties and conducting other operations; competition in the
oil and natural gas industry; general economic and political
conditions, including inflationary pressures, further increases in
interest rates, a general economic slowdown or recession,
instability in financial institutions, political tensions and war
(including future developments in the ongoing conflicts in Ukraine
and the Gaza Strip); the severity and duration of world health
events, including health crises, and related economic
repercussions, including disruptions in the oil and gas industry,
supply chain disruptions, and operational challenges; opportunities
to monetize assets; our ability to execute on strategic
initiatives, including acquisitions; effectiveness of our risk
management activities, including hedging strategy; counterparty and
credit market risk; pending legal and environmental matters,
including potential impacts on our business related to climate
change and related regulations; actions by third parties, including
customers, service providers and shareholders; current and future
governmental regulation and taxation of the oil and natural gas
industry; developments in world oil and natural gas markets and in
oil and natural gas-producing countries; uncertainty regarding our
future operating results; and other risks and uncertainties
discussed in the Company’s reports filed with the SEC, including
its annual report on Form 10-K for the year ended December 31,
2023.
All forward-looking statements speak only as of the date of this
news release. You should not place undue reliance on these
forward-looking statements. The Company’s capital budget, operating
plan, service cost outlook and development plans are subject to
change at any time. Although we believe that our plans, intentions
and expectations reflected in or suggested by the forward-looking
statements we make in this release are reasonable, we can give no
assurance that these plans, intentions or expectations will be
achieved. The risk factors and other factors noted herein and in
the Company's SEC filings could cause its actual results to differ
materially from those contained in any forward-looking statement.
These cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf.
All subsequent written and oral forward-looking statements
attributable to us or to persons acting on our behalf are expressly
qualified in their entirety by the foregoing. We undertake no
obligation to publicly release the results of any revisions to any
such forward-looking statements that may be made to reflect events
or circumstances after the date of this release or to reflect the
occurrence of unanticipated events, except as required by law.
(Footnotes)
1 Adjusted EBITDA, FCF and ROCE are non-GAAP measures defined
and reconciled in the tables included in this news release.
2 Leverage ratio is defined as total long-term debt, before
unamortized discounts, divided by Adjusted EBITDA for Leverage
Ratio (a non-GAAP measure defined and reconciled in the tables
included in this news release) for the trailing twelve-month
period.
(Financial Highlights to Follow)
Consolidated Balance Sheets
(Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except share amounts)
December 31, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
969
$
792
Accounts receivable, net
138,343
89,714
Fair value of commodity derivatives
116,549
52,549
Other current assets
5,590
2,671
Total Current Assets
261,451
145,726
Property and Equipment:
Property and Equipment, Full-Cost Method,
including $28,375 and $16,272 of unproved property costs not being
amortized
3,597,160
2,529,223
Less – Accumulated depreciation,
depletion, amortization and impairment
(1,223,241
)
(1,004,044
)
Property and Equipment, Net
2,373,919
1,525,179
Right of use assets
12,888
12,077
Fair value of long-term commodity
derivatives
55,114
24,172
Other long-term assets
31,090
9,208
Total Assets
$
2,734,462
$
1,716,362
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities
$
98,816
$
60,200
Deferred acquisition liability
50,000
—
Fair value of commodity derivatives
5,509
40,796
Accrued capital costs
31,900
56,465
Current portion of long-term debt
28,125
—
Accrued interest
9,668
2,665
Current lease liability
4,001
8,553
Undistributed oil and gas revenues
20,425
27,160
Total Current Liabilities
248,444
195,839
Long-term debt, net of current portion
1,173,766
688,531
Non-current lease liability
8,899
3,775
Deferred tax liabilities, net
99,227
16,141
Asset retirement obligations
11,584
9,171
Fair value of long-term commodity
derivatives
2,504
7,738
Other long-term liabilities
710
3,588
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized, none issued
—
—
Common stock, $.01 par value, 40,000,000
shares authorized, 25,914,956 and 22,663,135 shares issued and
25,429,610 and 22,309,740 shares outstanding
259
227
Additional paid-in capital
679,202
576,118
Treasury stock held, at cost, 485,346 and
353,395 shares
(10,617
)
(7,534
)
Retained earnings
520,484
222,768
Total Stockholders’ Equity
1,189,328
791,579
Total Liabilities and Stockholders’
Equity
$
2,734,462
$
1,716,362
Consolidated Statements of Operations
(Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except per-share amounts)
Year Ended December 31,
2023
Year Ended December 31,
2022
Revenues:
Oil and gas sales
$
652,358
$
753,420
Operating Expenses:
General and administrative, net
24,520
21,395
Depreciation, depletion, and
amortization
219,116
133,982
Accretion of asset retirement
obligations
985
534
Lease operating expense
87,368
55,329
Workovers
2,694
1,655
Transportation and gas processing
59,032
32,989
Severance and other taxes
38,701
41,761
Total Operating Expenses
432,416
287,645
Operating Income (Loss)
219,942
465,775
Non-Operating Income (Expense)
Net gain (loss) on commodity
derivatives
241,309
(73,885
)
Interest expense
(80,119
)
(41,948
)
Other income (expense), net
197
95
Income (Loss) Before Income Taxes
381,329
350,037
Provision (Benefit) for Income Taxes
83,613
9,600
Net Income (Loss)
$
297,716
$
340,437
Per Share Amounts:
Basic: Net Income (Loss)
$
12.74
$
17.24
Diluted: Net Income (Loss)
$
12.63
$
16.94
Weighted Average Shares Outstanding -
Basic
23,371
19,748
Weighted Average Shares Outstanding -
Diluted
23,571
20,097
Consolidated Statements of Operations
(Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except per-share amounts)
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
Revenues:
Oil and gas sales
$
212,041
$
198,978
Operating Expenses:
General and administrative, net
7,100
6,555
Depreciation, depletion, and
amortization
72,080
44,886
Accretion of asset retirement
obligations
266
169
Lease operating expense
24,950
18,233
Workovers
431
722
Transportation and gas processing
22,030
10,206
Severance and other taxes
10,137
11,578
Total Operating Expenses
136,994
92,349
Operating Income (Loss)
75,047
106,629
Non-Operating Income (Expense)
Net gain (loss) on commodity
derivatives
183,706
83,932
Interest expense, net
(25,373
)
(15,316
)
Other income (expense), net
76
37
Income (Loss) Before Income Taxes
233,456
175,282
Provision (Benefit) for Income Taxes
50,398
1,922
Net Income (Loss)
$
183,058
$
173,360
Per Share Amounts:
Basic: Net Income (Loss)
$
7.20
$
7.77
Diluted: Net Income (Loss)
$
7.12
$
7.65
Weighted Average Shares Outstanding -
Basic
25,430
22,310
Weighted Average Shares Outstanding -
Diluted
25,703
22,650
Consolidated Statements of Cash Flows
(Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands)
Year Ended December 31,
2023
Year Ended December 31,
2022
Cash Flows from Operating Activities:
Net income
$
297,716
$
340,437
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities-
Depreciation, depletion, and
amortization
219,116
133,982
Accretion of asset retirement
obligations
985
534
Deferred income tax expense (benefit)
83,086
9,625
Share-based compensation expense
5,526
5,086
(Gain) Loss on commodity derivatives,
net
(241,309
)
73,885
Cash settlements received (paid) on
derivatives
88,679
(219,626
)
Settlements of asset retirement
obligations
(716
)
(48
)
Write-down of debt issuance cost
1,239
350
Other
3,528
3,010
Change in operating assets and
liabilities-
(Increase) decrease in accounts receivable
and other assets
(25,439
)
(29,522
)
Increase (decrease) in accounts payable
and accrued liabilities
7,172
11,788
Increase (decrease) in income taxes
payable
525
(229
)
Increase (decrease) in accrued
interest
7,003
1,969
Net Cash Provided by (Used in) Operating
Activities
447,111
331,241
Cash Flows from Investing Activities:
Additions to property and equipment
(421,273
)
(272,443
)
Acquisition of oil and gas properties
(604,955
)
(367,024
)
Proceeds from the sale of property and
equipment
713
4,347
Payments on property sale obligations
—
(750
)
Net Cash Provided by (Used in) Investing
Activities
(1,025,515
)
(635,870
)
Cash Flows from Financing Activities:
Proceeds from long-term debt
356,965
—
Payments of long-term debt
(14,250
)
—
Proceeds from bank borrowings
672,000
841,000
Payments of bank borrowings
(492,000
)
(526,000
)
Net proceeds from issuances of common
stock
97,309
—
Net proceeds from stock options
exercised
—
39
Purchase of treasury shares
(3,083
)
(3,397
)
Payments of debt issuance costs
(30,600
)
(7,342
)
Net Cash Provided by (Used in) Financing
Activities
586,341
304,300
Net Increase (Decrease) in Cash, Cash
Equivalents and Restricted Cash
7,937
(329
)
Cash, Cash Equivalents and Restricted Cash
at Beginning of Year
792
1,121
Cash, Cash Equivalents and Restricted Cash
at End of Year
$
8,729
$
792
Supplemental Disclosures of Cash Flows
Information:
Cash paid during period for interest
$
68,116
$
36,994
Changes in capital accounts payable and
capital accruals
$
(13,679
)
$
54,372
Non-cash equity consideration for
acquisitions
$
—
$
(156,252
)
Non-cash deferred consideration for
acquisitions
$
(50,000
)
$
—
Non-cash contingent consideration for
acquisitions
$
(16,933
)
$
—
Definition of Non-GAAP Measures as Calculated by the Company
(Unaudited)
The following non-GAAP measures are presented in addition to
financial statements as SilverBow believes these metrics and
performance measures are widely used by the investment community,
including investors, research analysts and others, to evaluate and
useful in comparing investments among upstream oil and gas
companies in making investment decisions or recommendations. These
measures, as presented, may have differing calculations among
companies and investment professionals and may not be directly
comparable to the same measures provided by others. A non-GAAP
measure should not be considered in isolation or as a substitute
for the related GAAP measure or any other measure of a company's
financial or operating performance presented in accordance with
GAAP. A reconciliation of each of these non-GAAP measures to the
most directly comparable GAAP measure or measures is presented
below. These measures may not be comparable to similarly titled
measures of other companies.
Adjusted EBITDA: The Company presents Adjusted EBITDA
attributable to common stockholders in addition to reported net
income (loss) in accordance with GAAP. Adjusted EBITDA is
calculated as net income (loss) plus (less) depreciation, depletion
and amortization, accretion of asset retirement obligations,
interest expense, impairment of oil and natural gas properties, net
losses (gains) on commodity derivative contracts, amounts collected
(paid) for commodity derivative contracts held to settlement,
income tax expense (benefit); and share-based compensation expense.
Adjusted EBITDA excludes certain items that SilverBow believes
affect the comparability of operating results, including items that
are generally non-recurring in nature or whose timing and/or amount
cannot be reasonably estimated. Adjusted EBITDA is used by the
Company's management and by external users of SilverBow's financial
statements, such as investors, commercial banks and others, to
assess the Company's operating performance as compared to that of
other companies, without regard to financing methods, capital
structure or historical cost basis. It is also used to assess
SilverBow's ability to incur and service debt and fund capital
expenditures. Adjusted EBITDA should not be considered an
alternative to net income (loss), operating income (loss), cash
flows provided by (used in) operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. Adjusted EBITDA is important as it is
considered among the financial covenants under the Company's First
Amended and Restated Senior Secured Revolving Credit Agreement with
JPMorgan Chase Bank, National Association, as administrative agent,
and certain lenders party thereto (as amended, the “Credit
Agreement”), a material source of liquidity for SilverBow. Please
reference the Company's 2023 Form 10-K for discussion of the Credit
Agreement and its covenants.
Adjusted EBITDA for Leverage Ratio: In accordance with
the Leverage Ratio calculation for SilverBow's Credit Facility, the
Company makes certain adjustments to its calculation of Adjusted
EBITDA. Adjusted EBITDA for Leverage Ratio is calculated as
Adjusted EBITDA (defined above) plus (less) pro forma EBITDA
contributions related to closed acquisitions. The Company believes
that Adjusted EBITDA for Leverage Ratio is useful to investors
because it reflects the last twelve months EBITDA used by the
administrative agent for SilverBow's Credit Facility in the
calculation of its leverage ratio covenant.
Cash General and Administrative Expenses: Cash G&A
expenses is a non-GAAP measure calculated as net general and
administrative costs less share-based compensation. The Company
reports cash G&A expenses because it believes this measure is
commonly used by management, analysts and investors as an indicator
of cost management and operating efficiency on a comparable basis
from period to period. In addition, SilverBow believes cash G&A
expenses are used by analysts and others in valuation, comparison
and investment recommendations of companies in the oil and gas
industry to allow for analysis of G&A spend without regard to
stock-based compensation which can vary substantially from company
to company. Cash G&A expenses should not be considered as an
alternative to, or more meaningful than, total G&A
expenses.
Free Cash Flow: Free cash flow is calculated as Adjusted
EBITDA (defined above) plus (less) monetized derivative contracts,
cash interest expense, capital expenditures and current income tax
(expense) benefit. The Company believes that free cash flow is
useful to investors and analysts because it assists in evaluating
SilverBow's operating performance, and the valuation, comparison,
rating and investment recommendations of companies within the oil
and gas industry. SilverBow uses this information as one of the
bases for comparing its operating performance with other companies
within the oil and gas industry. Free cash flow should not be
considered an alternative to net income (loss), operating income
(loss), cash flows provided by (used in) operating activities or
any other measure of financial performance or liquidity presented
in accordance with GAAP. From time to time the Company provides
forward-looking free cash flow estimates or targets; however,
SilverBow is unable to provide a quantitative reconciliation of
these forward-looking non-GAAP measures to the most directly
comparable forward-looking GAAP measure because the items necessary
to estimate such forward-looking GAAP measure are not accessible or
estimable at this time without unreasonable efforts. The
reconciling items in future periods could be significant.
Net Debt: Net debt is calculated as the total principal
amount of second lien notes plus borrowings on the Company's Credit
Facility less cash and cash equivalents.
Return on Capital Employed (“ROCE”): ROCE is defined as
(A) Adjusted EBITDA less DD&A expense, divided by (B) the
average of Capital Employed - Beginning of Year (Total Debt plus
Shareholders Equity) and Capital Employed - Year-End. SilverBow
believes ROCE presents a comparable metric across multiple business
sectors and sizes and is a meaningful measure because it quantifies
how well the Company generates Adjusted EBITDA relative to the
capital it has employed in its business and illustrates the
profitability of a business or project taking into account the
capital employed. SilverBow uses ROCE to assist in capital resource
allocation decisions and in evaluating business performance.
Additionally, the Company also evaluates average ROCE over a
trailing three-year period to adjust for short term (one year)
fluctuations and illustrate profitability over a longer time
period. Although ROCE is commonly used as a measure of capital
efficiency, definitions of ROCE differ, and SilverBow's computation
of ROCE may not be comparable to other similarly titled measures of
other companies.
Reconciliation of Net Income (Loss) to Adjusted EBITDA and
Free Cash Flow (Unaudited) SilverBow Resources, Inc. and
Subsidiary (in thousands, except share amounts)
The below tables provide the calculation of Adjusted EBITDA,
Free Cash Flow and Adjusted EBITDA for Leverage Ratio for the
following periods (in thousands).
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
Net Income (Loss)
$
183,058
$
173,360
Plus:
Depreciation, depletion and
amortization
$
72,080
$
44,886
Accretion of asset retirement
obligations
266
169
Interest expense
25,373
15,316
Loss (gain) on commodity derivatives,
net
(183,706
)
(83,932
)
Derivative cash settlements
collected/(paid) (1)
23,053
(33,856
)
Income tax expense/(benefit)
50,398
1,922
Share-based compensation expense
1,483
1,185
Adjusted EBITDA
$
172,005
$
119,050
Plus:
Cash interest and bank fees, net
(18,683
)
(14,293
)
Capital expenditures (2)
(78,685
)
(102,702
)
Current income tax (expense)/benefit
(204
)
207
Free Cash Flow
$
74,433
$
2,262
(1) Amounts relate to settled contracts
covering the production months during the period
(2) Excludes proceeds/(payments) related
to the divestiture/(acquisition) of oil and gas properties and
equipment, outside of regular way land and leasing costs
Year Ended December 31,
2023
Year Ended December 31,
2022
Net Income (Loss)
$
297,716
$
340,437
Plus:
Depreciation, depletion and
amortization
219,116
133,982
Accretion of asset retirement
obligations
985
534
Interest expense
80,119
41,948
Derivative (gain)/loss
(241,309
)
73,885
Derivative cash settlements
collected/(paid) (1)
90,395
(212,416
)
Income tax expense/(benefit)
83,613
9,600
Share-based compensation expense
5,526
5,086
Adjusted EBITDA
$
536,161
$
393,056
Plus:
Cash interest and bank fees, net
(70,853
)
(44,038
)
Capital expenditures (2)
(408,591
)
(327,504
)
Current income tax (expense)/benefit
(526
)
26
Free Cash Flow
$
56,191
$
21,540
Adjusted EBITDA
$
536,161
$
393,056
Plus:
Pro forma contribution from closed
acquisitions
245,488
118,329
Adjusted EBITDA for Leverage Ratio
(3)
$
781,649
$
511,385
(1) Amounts relate to settled contracts
covering the production months during the period
(2) Excludes proceeds/(payments) related
to the divestiture/(acquisition) of oil and gas properties and
equipment, outside of regular way land and leasing costs
(3) Adjusted EBITDA for Leverage Ratio,
which is calculated in accordance with SilverBow's Credit Facility,
includes pro forma EBITDA contributions reflecting the results of
acquired assets' operations for referenced time periods preceding
the acquired assets' close date. Leverage Ratio is calculated as
total debt, defined as Credit Facility borrowings plus Second Lien
notes, divided by Adjusted EBITDA for Leverage Ratio for the most
recently completed twelve month period. The below table provides
the calculation for Leverage Ratio for the following periods:
Year Ended December 31,
2023
Year Ended December 31,
2022
Credit Facility Borrowings
$
722,000
$
542,000
Second Lien Notes
500,000
150,000
Total debt
$
1,222,000
$
692,000
Adjusted EBITDA for Leverage Ratio (3)
781,649
511,385
Leverage Ratio
1.56x
1.35x
Reconciliation of General & Administrative Expenses to
Cash General & Administrative Expenses (Unaudited)
SilverBow Resources, Inc. and Subsidiary (in thousands, except per
unit amounts)
The below tables provide the calculation of cash G&A for the
following periods (in thousands).
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
General and administrative, net
$
7,100
$
6,555
Less: Share-based compensation expense
1,483
1,185
Cash general and administrative,
net
$
5,617
$
5,370
General and administrative, net (per
Boe)
$
1.07
$
1.36
Less: Share-based compensation expense
(per Boe)
0.22
0.25
Cash general and administrative, net
(per Boe)
$
0.85
$
1.11
Year Ended December 31,
2023
Year Ended December 31,
2022
General and administrative, net
$
24,520
$
21,395
Less: Share-based compensation expense
5,526
5,086
Cash general and administrative,
net
$
18,994
$
16,309
General and administrative, net (per
Boe)
$
1.13
$
1.30
Less: Share-based compensation expense
(per Boe)
0.25
0.31
Cash general and administrative, net
(per Boe)
$
0.88
$
0.99
Reconciliation of Net Income (Loss) to Return on Capital
Employed (Unaudited) SilverBow Resources, Inc. and Subsidiary
(in thousands, except share amounts)
The below tables provide the calculation of Return on Capital
Employed for the following periods (in thousands).
Year Ended December 31,
2023
Year Ended December 31,
2022
Year Ended December 31,
2021
Net Income (Loss)
$
297,716
$
340,437
$
86,759
Plus:
Depreciation, depletion and
amortization
219,116
133,982
68,629
Accretion of asset retirement
obligations
985
534
306
Interest expense
80,119
41,948
29,129
Derivative (gain)/loss
(241,309
)
73,885
123,018
Derivative cash settlements
collected/(paid) (1)
90,395
(212,416
)
(73,256
)
Income tax expense/(benefit)
83,613
9,600
6,398
Share-based compensation expense
5,526
5,086
4,645
Adjusted EBITDA
$
536,161
$
393,056
$
245,628
Less: Depreciation, depletion and
amortization
(219,116
)
(133,982
)
(68,629
)
Adjusted EBIT (A)
$
317,045
$
259,074
$
176,999
Total Debt
$
692,000
$
377,000
$
430,000
Shareholders Equity (2)
791,579
292,532
446,981
Capital Employed - Beginning of
Year
$
1,483,579
$
669,532
$
876,981
Total Debt
$
1,222,000
$
692,000
$
377,000
Shareholders Equity
1,189,328
791,579
292,532
Capital Employed - Year-End
$
2,411,328
$
1,483,579
$
669,532
Average Capital Employed (B)
(3)
$
1,947,454
$
1,076,556
$
773,257
Return on Capital Employed (ROCE) (A /
B)
16
%
24
%
23
%
(1) Includes accruals for settled
contracts covering commodity deliveries during the period where the
actual cash settlements occur outside of the period.
(2) Shareholder's Equity at Beginning of
Year 2021 excludes the impact of write-down of oil and gas
properties during 2020
(3) B = Average of Beginning of Year and
Year-End Capital Employed
Calculation of Standardized Measure of Discounted Future Net
Cash Flows
The following table provides a reconciliation between the
Standardized Measure (the most directly comparable financial
measure calculated in accordance with U.S. GAAP) and SEC PV-10
Value of the Company's proved reserves:
As of December 31,
(in millions)
2023
2022
2021
Standardized Measure of Discounted
Future Net Cash Flows
$
2,319
$
4,040
$
1,558
Adjusted for: Future income taxes
(discounted at 10%)
345
924
259
SEC PV-10 Value
$
2,664
$
4,964
$
1,817
Production Volumes & Pricing
(Unaudited)
SilverBow Resources, Inc. and
Subsidiary
Year Ended December 31,
2023
Year Ended December 31,
2022
Production volumes:
Oil (MBbl)
5,347
2,634
Natural gas (MMcf) (1)
79,900
70,958
Natural gas liquids (MBbl)
3,003
1,950
Total (MBoe)
21,667
16,410
Oil, natural gas and natural gas liquids
sales:
Oil
$
402,728
$
239,247
Natural gas
187,340
451,863
Natural gas liquids
62,291
62,310
Total
$
652,358
$
753,420
Average realized price:
Oil (per Bbl)
$
75.32
$
90.84
Natural gas (per Mcf)
2.34
6.37
Natural gas liquids (per Bbl)
20.74
31.96
Average per Boe
$
30.11
$
45.91
Price impact of cash-settled
derivatives:
Oil (per Bbl) (2)
$
(0.68
)
$
(19.78
)
Natural gas (per Mcf)
1.03
(2.21
)
Natural gas liquids (per Bbl)
3.79
(1.88
)
Average per Boe
$
4.17
$
(12.94
)
Average realized price including impact of
cash-settled derivatives:
Oil (per Bbl) (2)
$
74.64
$
71.05
Natural gas (per Mcf)
3.38
4.16
Natural gas liquids (per Bbl)
24.54
30.08
Average per Boe
$
34.28
$
32.97
(1) Natural gas converted at the rate of
six Mcf to one barrel
(2) Excludes approximately $3.6 million in
settled oil hedges related to our Sundance acquisition in 2022
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
Production volumes:
Oil (MBbl)
1,778
1,023
Natural gas (MMcf) (1)
22,791
19,129
Natural gas liquids (MBbl)
1,058
621
Total (MBoe)
6,634
4,832
Oil, Natural gas and Natural gas liquids
sales:
Oil
$
135,465
$
83,681
Natural gas
54,538
100,237
Natural gas liquids
22,039
15,059
Total
$
212,041
$
198,978
Average realized price:
Oil (per Bbl)
$
76.21
$
81.80
Natural gas (per Mcf)
2.39
5.24
Natural gas liquids (per Bbl)
20.83
24.25
Average per Boe
$
31.96
$
41.18
Price impact of cash-settled
derivatives:
Oil (per Bbl)
$
(0.85
)
$
(5.89
)
Natural gas (per Mcf)
0.95
(1.58
)
Natural gas liquids (per Bbl)
2.90
3.36
Average per Boe
$
3.48
$
(7.01
)
Average realized price including impact of
cash-settled derivatives:
Oil (per Bbl)
$
75.36
$
75.91
Natural gas (per Mcf)
3.34
3.66
Natural gas liquids (per Bbl)
23.73
27.61
Average per Boe
$
35.44
$
34.17
(1) Natural gas converted at the rate of
six Mcf to one barrel
Reserve Replacement Ratio Calculation (Unaudited):
Reserve replacement ratio is calculated by dividing the sum of
extensions, discoveries, and other additions, purchases and sales
of minerals in place, and total revisions for the year by
production:
Reserve Replacement
(in MBoe)
Year Ended December 31,
2023
Proved reserves as of December 31,
2022
372,437
Extensions, discoveries, and other
additions
43,687
Revisions of previous estimates
(91,346
)
Purchases of minerals in place
142,738
Production
(21,667
)
Proved reserves as of December 31,
2023
445,850
Reserve replacement ratio
439
%
First Quarter 2024 & Full
Year 2024 Guidance
Guidance
1Q 2024
FY 2024
Production Volumes:
Oil (MBbls/d)
22.5 - 25.0
23.5 - 26.5
Natural Gas (MMcf/d)
285 - 305
280 - 300
NGLs (MBbls/d)
16.5 - 17.5
15.0 - 17.0
Total Reported Production (MBoe/d)
86.5 - 93.3
85.2 - 93.5
% Oil/Liquids
45%
46%
Product Pricing:
Crude Oil NYMEX Differential ($/Bbl)
($5.00) - ($2.00)
N/A
Natural Gas NYMEX Differential ($/Mcf)
($0.40) - $0.00
N/A
Natural Gas Liquids (% of WTI)
30% - 34%
N/A
Operating Costs & Expenses:
Lease Operating Expenses ($/Boe)
$3.80 - $4.20
$3.70 - $4.10
Transportation & Processing
($/Boe)
$4.40 - $4.80
$4.60 - $5.00
Production Taxes (% of Revenue)
6.0% - 7.0%
6.0% - 7.0%
Cash G&A, net ($MM)
$4.0 - $4.5
$21.0 - $22.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240228740525/en/
Jeff Magids Vice President of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW
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