SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the
“Company”) today announced operating and financial results for the
second quarter 2017. Highlights include:
- Net production averaged 146 Mmcfe/d
which was above the high end of guidance
- Oil and gas revenues of $45.8 million,
an 8% increase from first quarter 2017
- Net Income of $16.2 million, or $1.41
per diluted share
- Adjusted EBITDA (a non-GAAP measure) of
$27.2 million, a 26% increase from first quarter 2017
- Acquired approximately 13,500 acres in
core Eagle Ford fairway
- Initiated liquids-rich drilling program
in Artesia area, achieving new technical limits including drilling
an 11,000 foot lateral, the longest in the Company’s history
- Initial well in Oro Grande drilled,
completed, and producing on a pressure managed program
- Continued expansion of hedge book
Management Comments
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
“We executed on a number of key operational and financial
initiatives during the quarter. We expanded our drilling inventory
through a strategic grassroots leasing initiative, achieved
outstanding drilling results, and improved our financial position
while locking in our cash flows and project returns through a
disciplined hedging program.”
Mr. Woolverton continued, “Our relentless focus on capital
efficiency and full-cycle economics drives our improved performance
in the Eagle Ford. Our talented technical team drilled the fastest
well in the Company’s history in Artesia in just five days,
reducing cycle time by 50% compared to our previous wells in that
area, despite drilling longer laterals. Additionally, based on the
strong performance of our recent Fasken wells, one of which
included a well partially producing from the Upper Eagle Ford, we
have decided to test a two well Upper Eagle Ford program in Fasken
during the third quarter. As a result, we are updating our full
year 2017 production guidance hydrocarbon mix to reflect this
change in rig schedule. The steps we have taken during the first
and second quarters to strengthen our balance sheet and improve
well productivity through reduced drilling times and enhanced
completions position us to execute on our plan to grow production
twenty to twenty-five percent throughout the year.”
OPERATIONS HIGHLIGHTS
SilverBow’s total net production for the second quarter 2017
averaged approximately 146 Mmcfe/d, which was above the high end of
guidance. Production mix during the second quarter consisted of
approximately 83% natural gas, 11% NGLs, and 6% oil.
Fasken Area:
The Company has completed nine Fasken wells thus far in 2017.
SilverBow continues to be pleased by the performance of its most
recent completion design which utilizes 300 foot frac stage spacing
and 1,500 pounds of proppant per foot of lateral. Given these
results, the Company intends to bring a rig back to the area in the
third quarter for a two well program targeting the Upper Eagle Ford
and complete an additional well in the Lower Eagle Ford.
Second quarter 2017 net production from Fasken was approximately
95.8 Mmcfe/d.
AWP Area:
SilverBow completed two gas wells in AWP in the quarter, the
Bracken 21H and 22H, which utilized 300 foot frac stage spacing and
1,500 pounds of proppant per foot of lateral. The Company
instituted a pressure management program on these two wells with
initial results suggesting that pressure managed wells will
outperform non-pressure managed wells within the first twelve
months on a cumulative gas production basis.
Second quarter 2017 net production from AWP totaled
approximately 38.4 Mmcfe/d. The production mix from AWP consisted
of approximately 51% natural gas, 29% NGLs and 20% oil.
Artesia Area:
The Company returned to this area for the first time since 2013
to deploy the newest generation of drilling and completion
technology. The average drilling costs of $2.0 million for the
first four wells drilled in Artesia during the second quarter
decreased 38% from our 2013 drilling campaign. Additionally, the
average completion costs of $2.9 million decreased 24% despite
increasing proppant volumes by nearly 75% compared to our average
completions in 2013.
Second quarter 2017 net production from Artesia totaled
approximately 10.4 Mmcfe/d. Production mix consisted of
approximately 46% natural gas, 39% NGLs, and 15% oil.
Oro Grande Area:
SilverBow completed its first well in Oro Grande in the second
quarter. The completion design in Oro Grande utilized 200 foot frac
stage spacing and 3,500 pounds of proppant per foot of lateral,
representing the largest completed frac in the Company’s history
and one of the largest in the basin. The Company is currently
utilizing a pressure managed program and expects to discuss these
initial results on its third quarter earnings conference call in
November. The Company plans to drill and complete an additional
well in Oro Grande in the fourth quarter.
2017 GUIDANCE
The Company reiterated its 2017 capital spending guidance
of $190 million to $200 million with approximately 73% of the
capital earmarked for drilling and completions expenditures. At
this level of capital spending, the Company now anticipates full
year production of 148 - 152 Mmcfe/d. SilverBow also guided for
third quarter production of 154 - 160 Mmcfe/d. Additional detail
concerning the Company's third quarter 2017 and full year financial
and operational guidance can be found in the table included with
today’s news release and the Corporate Presentation uploaded to the
Investor Relations section of the Company’s website before the
conference call.
FINANCIAL RESULTS
The Company reported total oil and gas revenues of $45.8 million
for the second quarter 2017 which increased 8% compared to first
quarter 2017 levels. On a GAAP basis, the Company reported net
income of $16.2 million for the second quarter 2017,
which includes a gain on the value of the Company's hedge portfolio
of $5.1 million.
The Company’s average realized natural gas price excluding the
effect of hedging was $3.16 per Mcf compared with $3.07 per Mcf in
the first quarter of 2017. The average realized crude oil selling
price excluding the effect of hedging was $46.82 per barrel in the
second quarter of 2017, down from $49.26 per barrel in the first
quarter of 2017. The average realized NGL selling price in the
second quarter of 2017 was $18.49 per barrel versus $20.33 per
barrel in the first quarter of 2017.
Additionally, the Company reported Adjusted EBITDA of $27.2
million. Adjusted EBITDA is a non-GAAP financial measure. Please
see the tables included with today's news release for a
reconciliation of net income to Adjusted EBITDA.
Capital expenditures incurred during the quarter totaled
approximately $58.7 million.
HEDGING UPDATE
Hedging continues to be an important element of SilverBow’s
strategy. The Company maintains an active hedging philosophy to
provide predictable cash flows while still allowing for flexibility
in capturing increases in prices. Using the mid-point of full year
2017 production guidance, SilverBow has approximately 65% of total
production volumes hedged for the balance of 2017 and continues to
layer on additional hedges in 2018 and 2019. Please see the
Company’s Form 10-Q filing, which we expect to be filed on
Wednesday, August 9, 2017, for a detailed summary of derivative
contracts.
CAPITAL STRUCTURE AND LIQUIDITY
The Company had liquidity of approximately $123
million as of June 30, 2017, primarily consisting of
availability on the Company’s $330 million bank credit facility,
which was increased from $250 million on April 19, 2017. The
Company's bank credit facility is expected to remain at $330
million until the next semi-annual redetermination of the
borrowing base in the fourth quarter 2017.
As of August 7, 2017, the Company had 11.5 million total
common shares outstanding.
CONFERENCE CALL & UPDATED INVESTOR PRESENTATION
SilverBow will host a conference call for investors
on Wednesday, August 9, 2017, at 11:00 a.m. Central
Time (12:00 p.m. Eastern Time). Interested investors can
listen to the call by dialing 1-877-420-2751 (U.S.) or
1-442-275-1680 (International) and requesting SilverBow’s Second
Quarter 2017 Earnings Conference Call or by visiting our
website.
A simultaneous webcast of the call may be accessed over the
internet by visiting our website at www.sbow.com, clicking on “Investor Relations” and
“Events and Presentations” and then clicking on the “Second Quarter
2017 Earnings Conference Call” link. The webcast will be archived
for replay on the SilverBow website for 14 days.
Additionally, an updated Corporate Presentation will be uploaded
to the Investor Relations section of the Company's website before
the conference call.
ABOUT SILVERBOW RESOURCES, INC.
SilverBow Resources (NYSE: SBOW) is a Houston-based energy
company actively engaged in the exploration, development, and
production of oil and gas from the Eagle Ford Shale in South Texas.
With almost 30 years of history operating in South Texas, the
Company possesses a significant understanding of regional
reservoirs which we leverage to assemble high quality drilling
inventory while continuously enhancing our operations to maximize
returns on capital invested. For more information, please visit
www.sbow.com.
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.
The opinions, forecasts, projections, or other statements other
than statements of historical fact, are forward-looking statements.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, no assurances can
be given that such expectations will prove to have been correct.
Certain risks and uncertainties inherent in the Company’s business
are set forth in the filings of SilverBow Resources, Inc. with the
Securities and Exchange Commission.
(Financial Highlights to Follow)
Condensed Consolidated Balance
Sheets
SilverBow Resources and Subsidiaries (in
thousands, except share amounts)
Successor June 30, 2017
December 31, 2016 (Unaudited) ASSETS
Current Assets: Cash and cash equivalents $ 6,627 $ 303 Accounts
receivable, net 18,956 17,490 Other current assets 6,623
3,686 Total Current Assets 32,206 21,479
Property and Equipment: Property and Equipment, full cost
method, including $39,919 and $33,354 of unproved property costs
not being amortized at the end of each period 608,158 517,074 Less
– Accumulated depreciation, depletion, amortization &
impairment (190,379 ) (169,879 ) Property and Equipment, Net
417,779 347,195 Other Long-Term Assets 10,161
8,625 Total Assets $ 460,146 $ 377,299
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities:
Accounts payable and accrued liabilities $ 41,820 $ 56,257 Accrued
capital costs 18,164 11,954 Accrued interest 1,631 1,721
Undistributed oil and gas revenues 11,549 9,192 Total
Current Liabilities 73,164 79,124 Long-Term
Debt 211,000 198,000 Asset Retirement Obligations 23,399 22,291
Other Long-Term Liabilities 815 1,829 Commitments and Contingencies
(Note 10) Stockholders' Equity: Preferred stock, $.01 par
value, 10,000,000 shares authorized, none issued — — Common stock,
$.01 par value, 40,000,000 shares authorized, 11,554,226 and
10,076,059 shares issued and 11,510,674 and 10,053,574 shares
outstanding, respectively 116 101 Additional paid-in capital
275,282 232,917 Treasury stock, held at cost, 43,552 and 22,485
shares (1,293 ) (675 ) Accumulated deficit (122,337 ) (156,288 )
Total Stockholders’ Equity 151,768 76,055 Total
Liabilities and Stockholders’ Equity $ 460,146 $ 377,299
Condensed Consolidated Statements of
Operations (Unaudited)
SilverBow Resources and Subsidiaries (in
thousands, except per-share amounts)
Successor Predecessor
Three Months Ended June 30,
2017
Period from April 23, 2016
through June 30, 2016
Period from April 1, 2016
through April 22, 2016
Revenues: Oil and gas sales $ 45,782 $ 30,581 $ 8,660
Operating Expenses: General and administrative, net 6,811 4,228
1,127 Depreciation, depletion, and amortization 10,828 13,334 3,194
Accretion of asset retirement obligations 576 832 319 Lease
operating costs 4,776 7,781 2,627 Transportation and gas processing
4,761 4,186 1,035 Severance and other taxes 2,280 1,864 1,585
Write-down of oil and gas properties — 133,496 —
Total Operating Expenses 30,032 165,721 9,887
Operating Income (Loss) 15,750 (135,140 ) (1,227 )
Non-Operating Income (Expense) Net gain (loss) on commodity
derivatives 5,132 (9,912 ) — Interest expense, net (4,642 ) (4,257
) (5,281 ) Reorganization items, net — (276 ) 966,571 Other income
(expense), net 1 (16 ) (150 ) Income (Loss) Before
Income Taxes 16,241 (149,601 ) 959,913 Provision (Benefit)
for Income Taxes — — — Net Income
(Loss) $ 16,241 $ (149,601 ) $ 959,913 Per
Share Amounts- Basic: Net Income (Loss) $ 1.41 $ (14.96 ) $
21.45 Diluted: Net Income (Loss) $ 1.41 $ (14.96 ) $ 21.03
Weighted Average Shares Outstanding - Basic 11,487 10,000
44,754 Weighted Average Shares Outstanding - Diluted 11,554
10,000 45,648
Condensed Consolidated Statements of
Cash Flows (Unaudited)
SilverBow Resources and Subsidiaries (in
thousands)
Successor Predecessor
Six Months Ended June 30,
2017
Period from April 23, 2016
through June 30, 2016
Period from January 1,
2016 through April 22, 2016
Cash Flows from Operating Activities: Net income (loss) $ 33,951 $
(149,601 ) $ 851,611 Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities- Depreciation,
depletion, and amortization 20,543 13,334 20,439 Write-down of oil
and gas properties — 133,496 77,732 Accretion of asset retirement
obligations 1,140 832 1,610 Share-based compensation expense 3,136
191 886 Loss (gain) on derivatives (16,068 ) 9,912 — Cash
settlements on derivatives (2,586 ) — — Settlements of asset
retirement obligations (1,894 ) (486 ) (16 ) Write-down of debt
issuance cost 2,401 — — Reorganization items (non-cash) — —
(977,696 ) Other 482 438 229 Change in operating assets and
liabilities- (Increase) decrease in accounts receivable and other
current assets (1,486 ) 13,379 (5,474 ) Increase (decrease) in
accounts payable and accrued liabilities 4,437 (6,135 ) (10,479 )
Increase (decrease) in accrued interest (90 ) 573 (308 ) Net
Cash Provided by (Used in) Operating Activities 43,966
15,933 (41,466 ) Cash Flows from Investing
Activities: Additions to property and equipment (85,655 ) (20,876 )
(24,530 ) Proceeds from the sale of property and equipment 460
— 48,661 Net Cash Provided by (Used in)
Investing Activities (85,195 ) (20,876 ) 24,131 Cash
Flows from Financing Activities: Proceeds from bank borrowings
300,000 21,000 328,000 Payments of bank borrowings (287,000 )
(20,000 ) (324,900 ) Net proceeds from issuances of common stock
39,244 — — Purchase of treasury shares (618 ) — (4 ) Payments of
debt issuance costs (4,073 ) (502 ) (6,482 ) Net Cash Provided by
(Used in) Financing Activities 47,553 498 (3,386 )
Net increase (decrease) in Cash and Cash Equivalents 6,324
(4,445 ) (20,721 ) Cash and Cash Equivalents at Beginning of
Period 303 8,739 29,460 Cash and Cash
Equivalents at End of Period $ 6,627 $ 4,294 $ 8,739
Supplemental Disclosures of Cash Flow Information:
Cash paid during period for interest, net of amounts
capitalized $ 8,847 $ 3,246 $ 10,367 Cash paid for reorganization
items $ — $ 4,080 $ 15,643 Changes in capital accounts payable and
capital accruals $ 5,356 $ (8,353 ) $ 1,843
SilverBow Resources, Inc.
Non-GAAP Financial Measures
Reconciliation of Net Income (GAAP) to
Adjusted EBITDA (Non-GAAP)
(In thousands)
(Unaudited)
We present adjusted EBITDA attributable to common stockholders
(“Adjusted EBITDA”) in addition to our reported net income (loss)
in accordance with U.S. GAAP. Adjusted EBITDA is a non-GAAP
financial measure that is used as a supplemental financial measure
by our management and by external users of our financial
statements, such as investors, commercial banks and others, to
assess our operating performance as compared to that of other
companies in our industry, without regard to financing methods,
capital structure or historical costs basis. It is also used to
assess our ability to incur and service debt and fund capital
expenditures.
Our 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 U.S. GAAP.
Our Adjusted EBITDA may not be comparable to similarly titled
measures of another company because all companies may not calculate
Adjusted EBITDA in the same manner.
Successor Predecessor
Three Months Ended June 30,
2017
April 23, 2016 - June, 30
2016
April 1, 2016 - April 22,
2016
Net Income (Loss) $ 16,241 $ (149,601 ) $
959,913 Plus: Depreciation, depletion and amortization 10,828
13,334 3,194 Accretion of asset retirement obligations 576 832 319
Interest expense 4,642 4,257 5,281 Impairment of oil and gas
properties — 133,496 — Reorganization items — 276 (966,571 )
Derivative (gain)/loss (5,132 ) 9,912 — Derivative cash settlements
collected/(paid) (1) (1,621 ) — — Share-based compensation expense
1,632 191 —
Adjusted
EBITDA $ 27,166 $ 12,697 $ 2,136
(1) This includes accruals for settled contracts
covering commodity deliveries during the period where the actual
cash settlements occur outside of the period.
Production Volumes & Pricing
(Unaudited)
SilverBow Resources and Subsidiaries
Three Months Ended June 30,
2017 (Successor)
April 23 - June, 30 2016
(Successor)
April 1 - April 22, 2016
(Predecessor)
Production volumes: Oil (MBbl) (1) 139 254 96 Natural gas (MMcf)
11,078 8,064 2,234 Natural gas liquids (MBbl) (1) 228
246 70 Total (MMcfe) 13,282
11,061 3,228 Oil, Natural gas and Natural gas liquids
sales: Oil $ 6,527 $ 11,246 $ 3,583 Natural gas 35,043 15,855 4,239
Natural gas liquids 4,215 3,479 838
Total $ 45,785 $ 30,580 $ 8,659
Average realized price: Oil $ 46.82 $ 44.35 $ 37.49 Natural gas
3.16 1.97 1.90 Natural gas liquids 18.49 14.15
11.96 Total $ 3.45 $ 2.76 $ 2.68
Price impact of cash-settled derivatives: Oil $ (0.11 ) $ —
$ — Natural gas (0.14 ) — — Natural gas liquids —
— — Total $ (0.12 ) $ — $ —
Average realized price including cash settled derivatives:
Oil $ 46.71 $ 44.35 $ 37.49 Natural gas 3.02 1.97 1.90 Natural gas
liquids 18.49 14.15 11.96 Total $ 3.33
$ 2.76 $ 2.68
(1) Oil and natural gas liquids are
converted at the rate of one barrel of oil equivalent to six
Mcfe.
Third Quarter & Full Year 2017
Guidance
Guidance
3Q 2017 FY 2017
Production Volumes: Oil (Bbls/d) 1,800 - 1,875 1,780 - 1,850
NGLs (Bbls/d) 2,830 - 3,000 2,700 - 2,800 Natural Gas (Mmcf/d)
126 - 131 121 -
125 Million Cubic Feet of Gas Equivalent (Mmcfe/d)
154 - 160 148 - 152
Operating Costs & Expenses:
Lease Operating Expense ($/Mcfe) $0.47 - $0.48 $0.43 - $0.46
Transportation & Processing Expense ($/Mcfe) $0.35 - $0.37
$0.34 - $0.36 Production & Ad Val Taxes (% of O&G Revenue)
4.5% - 5.0% 4.5% - 5.0% Cash G&A, net (in millions) $4.8 – 5.2
$22.0 - $24.0 DD&A Expense ($/Mcfe) $0.80 - $0.85 $0.82 - $0.87
Cash Interest Expense ($MM) $3.0 N/A
Product Pricing:
Natural Gas NYMEX Differential (per Mcf)
($0.03 - $0.08)
N/A Crude Oil NYMEX Differential (per Bbl) ($1.50 - $2.50) N/A
Natural Gas Liquids (% of WTI) 36% - 38% N/A
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170808006559/en/
SilverBow Resources, Inc.Doug Atkinson, CFA, (281) 874-2700,
(800) 777-2412Senior Manager - Finance & Investor Relations
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