SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the
“Company”) today announced operating and financial results for the
fourth quarter and full year 2019.
Highlights for the fourth quarter
include:
- Net production averaged 234 million cubic feet of natural gas
equivalent per day (“MMcfe/d”), a 3% increase over the fourth
quarter of 2018, while net oil production of 4,760 barrels per day
("Bbls/d") increased 103% over the same time period. Oil and
natural gas liquids ("NGLs") comprised 25% of the Company's total
net production compared to 16% in the fourth quarter of 2018
- Daily oil and NGL volumes both exceeded the high end of
guidance, while expenses were at or below the midpoint of their
respective ranges
- Oil and gas sales of $69.9 million (excluding hedge impact),
net income of $6.2 million, and Adjusted EBITDA1 (as defined
herein, a non-GAAP measure) of $57.6 million. Oil and NGL sales
comprised 45% of total sales compared to 23% in the fourth quarter
of 2018
- SilverBow's six-well pad in Webb County ("La Mesa project")
achieved a peak rate of 100 million cubic feet per day ("MMcf/d"),
at a development cost of $6.3 million per well. From acquisition to
first sales, the Company executed this project in just six
months
- Year-end leverage ratio of 2.06x, down from 2.35x at year-end
2018. Year-end net debt of $477.6 million, calculated as long-term
debt of $479.0 million less cash and cash equivalents of $1.4
million, a $1.5 million decrease from the third quarter of 2019,
with year-end liquidity of $122.4 million
Highlights for the full year 2019
include:
- Net production averaged 231 MMcfe/d, a 25% increase
year-over-year, and net oil production averaged 4,397 Bbls/d, a
133% increase year-over-year. Overall net liquids production
comprised 24% of total net production, up from 16% in 2018
- Oil and gas sales of $288.6 million (excluding hedge impact),
net income of $114.7 million and Adjusted EBITDA1 (a non-GAAP
measure) of $232.6 million, a 38% increase year-over-year. Liquids
sales comprised 41% of total sales, an increase from 29% in
2018
- Average realized prices for crude oil and natural gas were each
101% of West Texas Intermediate ("WTI") and Henry Hub,
respectively, excluding hedging, as a result of favorable basis
pricing in the Eagle Ford Shale
- Lease operating expenses ("LOE") of $0.25 per million cubic
feet of gas equivalent ("Mcfe") were down from $0.26/Mcfe, a 3%
decrease from the prior year
- Year-end 2019 estimated proved reserves of 1.4 trillion cubic
feet of gas equivalent ("Tcfe") (41% proved developed), a
Standardized Measure of $868 million and a pre-tax present value of
future net cash flows discounted at 10% (“PV-10 Value," a non-GAAP
measure)1 of $976 million at Securities and Exchange Commission
("SEC") pricing. Proved oil reserves grew by 4.3 million barrels,
an increase of 34% from year-end 2018. Liquids comprised 32% of
PV-10 value for year-end 2019
- Return on Capital Employed ("ROCE", a non-GAAP measure) of 18%
and trailing three-year average of 19%
2020 Capital Program and
Guidance:
- Full year capital program of $175-$195 million, a 30% decrease
year-over-year at the midpoint, with 100% of drilling and
completions capital allocation towards liquids locations
- Full year estimated production guidance of 215 - 228 MMcfe/d,
targeting 70% year-over-year growth in net oil production at the
midpoint guidance to average 7,300 - 7,600 Bbls/d. On an
exit-to-exit basis, the Company is targeting to double its net
daily oil production by year end 2020 compared to its year end 2019
exit rate
- Strategic objective to reach a high-water mark of 10,000 Bbls/d
of net oil production during 2020, demonstrating the successful
expansion of oil within the Company's portfolio
- As of February 25, 2020, the Company had 56% of total estimated
production volumes hedged for full year 2020, using the midpoint of
production guidance. Expected oil production is 85% hedged at
$55.26 per barrel ("Bbl") and expected gas production is 56% hedged
at $2.66 per thousand cubic feet ("Mcf")
- 2020 focus on free cash flow with the ability to adjust cadence
of capital program to achieve strategic goals
- Targeting full year all-in cash operating expenses2 of less
than $1.00/Mcfe furthering the Company's low-cost structure
1 Adjusted EBITDA, Adjusted EBITDA Margin, PV-10 and ROCE are
non-GAAP measures that are defined and reconciled at the end of
this press release. "GAAP" refers to the accounting principles
generally accepted in the United States
2 All-in cash operating expenses include LOE, transportation and
processing expenses ("T&P"), production taxes and cash general
and administrative expenses
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
"I am proud to report that 2019 showcased the efforts of our
pivot-to-liquids strategy and operational shift to a balanced
commodity portfolio across the Eagle Ford. SilverBow’s liquids
production doubled year-over-year, to approximately 25% of our
fourth quarter 2019 production, and in 2020, we will continue to
focus on liquids-rich opportunities with a goal of reaching 10,000
Bbls/d of net oil production. This would be a significant milestone
for SilverBow, demonstrating both the oil growth potential of our
Eagle Ford asset base and our ability to successfully execute on
our objectives. Our dedicated team continued to set operational
efficiency records across the Company, and saw significant
year-over-year progress. In 2019, we achieved a 32% increase in
lateral feet drilled per day and an 111% increase in the number of
stages completed per day, all while realizing year-over-year cost
reductions of approximately 25% across our drilling and completions
business. Our La Mesa project, offsetting our prolific Fasken field
in Webb County, has been a prime example of SilverBow’s efficiency
and execution. Our team transformed this asset from lease to first
production in just over six months, and from initial spud to first
production safely and without incident in less than 100 days. This
exceeded almost every historical operating metric in the Company’s
history.”
Mr. Woolverton commented further, “Operationally and
financially, SilverBow outperformed our expectations this year. We
doubled our oil production, reduced our all-in cash operating
expenses to below our target of $1.00/Mcfe and achieved our stated
goal of delivering free cash flow neutrality in the second half of
2019. Our focus on execution resulted in a full year Adjusted
EBITDA margin of 74%, up from 71% in 2018, while reducing our
capital expenditures by 15% year-over-year. Our track record of
execution combined with the resilience of a balanced portfolio and
access to premium markets is a key competitive differentiator. We
look forward to the coming year with optimism as we expect our
capital program to double oil production for another consecutive
year."
OPERATIONS HIGHLIGHTS
During the fourth quarter of 2019, the Company brought six net
wells online. For the full year, the Company drilled 27 net wells
and completed 30 net wells. The Company's drilling and completion
activity was focused primarily on its liquids-rich areas, namely
McMullen Oil and La Salle Condensate, as well as the completion of
the first two wells on SilverBow's new acreage block in Dimmit
County.
In the McMullen Oil area, the Company brought seven net wells
online in 2019. Two of the longest laterals in the Company's
history were brought online during the second quarter and are
continuing to perform well. Utilizing that experience, SilverBow
drilled two additional 10,300 foot laterals in 21 days, further
emphasizing the drilling team's focus on executional performance.
Those wells were brought online in late January 2020 and are
performing within expectations.
In the La Salle Condensate area, the Company brought 11 net
wells online in 2019. These wells were identified in an
under-exploited area of the Company's position as part of its pivot
to liquids development. The wells continue to perform well and are
achieving much higher per well recoveries than historical wells in
the area.
In Dimmit County, SilverBow added approximately 16,000 net acres
at favorable entry costs during 2019. The Company brought two net
wells online which have performed in line with expectations. The
team is focused on early delineation and geoscience work to
identify optimal targeting and large-scale development
planning.
With the strong performance and liquids development focus in the
near term, the Company expects to remain active in the McMullen Oil
area with some added development plans for the La Salle Condensate
area. The Company has also planned additional delineation drilling
in Dimmit County.
In the Webb County Gas area, the Company brought 11 net wells
online in 2019. Five of the net wells were brought online early in
the year, and no further activity was expected until the Company
opportunistically closed on the La Mesa farm-in. This allowed the
development of a six-well pad with each well’s lateral extending to
10,000 feet. As a direct result of the new project planning
processes, the Company was able to close the La Mesa farm-in and
turn six wells to sales in just six months, achieving a peak rate
of 100 MMcf/d in December. SilverBow utilized two completion
spreads for the La Mesa project to most efficiently complete and
bring online the six-well pad. The two crews were able to complete
18 stages per day on average, and at peak efficiency the crews
reached a maximum of 28 stages per day, while placing 147 million
pounds of proppant.
In the Southern Eagle Ford Gas area, the Company brought three
wells online. The team was able to reduce the average per well cost
from $12 million to $8 million, a 33% decrease from the prior year,
displaying the Company's commitment to operational excellence.
2019 marked a year of execution and performance as the Company
implemented a number of planning and operational processes which
resulted in higher operational efficiencies and lower cycle times.
The Company drilled 32% more lateral footage per day while lowering
the per lateral foot costs by 24% as compared to 2018 performance.
On the completion side, improved well site management doubled the
number of stages per day completed as compared to 2018, while
reducing costs by 26%. The improved well site management processes
further lowered the time from rig release to first stage pumped by
six days, accelerating time to first sales. When combined, the
average time from spud to first sales was reduced significantly
from 71 days in 2018 to 43 days in 2019. SilverBow's continued
success in reducing costs is a direct result of its operational and
supply teams working with vendors to negotiate the best prices and
logistical considerations for the materials used in its
operations.
PRODUCTION VOLUMES, OPERATING COSTS AND REALIZED
PRICES
The Company's total net production for the fourth quarter
averaged 234 MMcfe/d, which was at the high end of guidance.
Production mix for the fourth quarter consisted of 12% crude oil,
13% NGLs, and 75% natural gas. Liquids comprised 45% of total oil
and gas sales for the fourth quarter, compared to 24% in the fourth
quarter of 2018.
Lease operating expenses of $0.26/Mcfe were in line with the
Company’s guidance range. Excluding $1.1 million of non-cash
compensation expense, cash general and administrative costs of $4.6
million came in below the low end of the Company's guidance range,
with a per unit cash cost of $0.22/Mcfe. Transportation and
processing expenses came in at $0.33/Mcfe and production and ad
valorem taxes were 4.1% of oil and gas revenue for the fourth
quarter. Both metrics were at or below the low end of the Company's
guidance range. The Company received the cumulative benefit of
favorable adjustments to estimated severance tax rates for several
of its Webb County Gas area wells. Total production expenses, which
include LOE, T&P and production taxes, were $0.72/Mcfe for the
quarter. The Company's all-in cash operating expenses for the
quarter, which include cash general and administrative costs, were
$0.94/Mcfe.
The Company continues to benefit from strong basis pricing in
the Eagle Ford. Crude oil and natural gas realizations in the
fourth quarter were 98% and 96% of WTI and Henry Hub, respectively,
excluding hedging. The Company’s average realized natural gas
price, excluding the effect of hedging, was $2.40/Mcf in the fourth
quarter compared to $2.32/Mcf in the third quarter. The average
realized crude oil selling price, excluding the effect of hedging,
was $55.70/Bbl in the fourth quarter, down from $57.14/Bbl in the
third quarter. The average realized NGL selling price in the fourth
quarter was $14.65/Bbl, compared to $11.99/Bbl in the third
quarter. Despite lower commodity prices, the Company realized
strong growth in Adjusted EBITDA year-over-year, driven by an
increase in production, effective cost control and greater
percentage of oil and gas sales contribution from liquids.
YEAR-END 2019 RESERVES
The Company reported year-end estimated proved reserves of 1.4
Tcfe, a 6% increase over year-end 2018. Specific highlights from
the Company’s year-end reserve report include:
- All-sources reserve replacement ratio of 189%
- Standardized Measure of $868 million
- PV-10 Value (non-GAAP measure) of $976 million
The table below reconciles 2018 reserves to 2019 reserves:
Total (MMcfe)
Proved reserves as of December 31,
2018
1,345,362
Extensions, discoveries and other
additions
434,834
Purchases of minerals in place
336
Revisions of prior reserve estimates:
Reclassification of PUD to unproved under
SEC 5-year rule
(191,303
)
Price and performance revisions
(84,471
)
Production
(84,320
)
Proved reserves as of December 31,
2019
1,420,439
Developed reserves accounted for 41% of the Company's total
estimated proved reserves at December 31, 2019. Total capital costs
incurred during 2019 were $260.0 million, which included
approximately $236.2 million for development costs, $22.8 million
for leasehold acquisition and prospect costs, and $0.9 million for
property acquisitions.
The SEC prices used for reporting the Company's year-end 2019
estimated proved reserves, which have been adjusted for basis and
quality differentials, were $2.62 per Mcf for natural gas, $16.83
per Bbl for natural gas liquids and $58.37 per Bbl for crude oil
compared to $3.04 per Mcf, $26.63 per Bbl, and $66.96 per Bbl in
2018. Using the SEC prices, the Company's year-end 2019 reserves
had a Standardized Measure of $868 million and a PV-10 Value of
$976 million.
FINANCIAL RESULTS
The Company reported total oil and gas sales of $69.9 million
for the fourth quarter. On a GAAP basis, the Company reported net
income of $6.2 million for the fourth quarter, which includes a net
loss on the value of the Company's hedge portfolio of $10.1
million.
The Company reported Adjusted EBITDA of $57.6 million for the
fourth quarter, up 2% over the fourth quarter of 2018. 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 fourth quarter totaled
$54.2 million, which includes $1.5 million for leasing
expenditures.
2020 CAPITAL PROGRAM
The Company provided its 2020 capital budget range of $175-$195
million, which provides for 26 gross (25 net) operated wells
drilled compared to 29 gross (27 net) operated wells drilled in
2019. Approximately 90% of the 2020 capital budget is allocated
toward drilling and completion activity, with the continuation of
one rig primarily dedicated to the development of the La Salle
Condensate area and the McMullen Oil area. By year-end, the Company
expects oil and NGL volumes to approach nearly 40% of total
production. In addition, the Company plans to further its
delineation program in its newest acreage position in Dimmit
County. The Company believes its balanced portfolio and development
approach allow it to deliver low-risk growth and expose its
shareholders to significant upside and organic inventory
expansion.
2020 GUIDANCE
For the first quarter, the Company is guiding for estimated
production of 231 - 238 MMcfe/d, with oil volumes expecting to
comprise 4,550 - 4,700 Bbls/d. For the full year, the Company is
guiding for estimated production of 215 - 228 MMcfe/d, with oil
volumes expecting to comprise 7,300 - 7,600 Bbls/d. The midpoint of
the oil production guidance range implies a 70% increase
year-over-year as the Company continues to focus on
liquids-weighted development. Additional detail concerning the
Company's first quarter and full year 2020 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.
HEDGING UPDATE
Hedging continues to be an important element of SilverBow’s
strategy to protect cash flow. The Company maintains an active
hedging program to provide predictable cash flows while still
allowing for flexibility in capturing price increases. As of
February 25, 2020, the Company had 56% of total estimated
production volumes hedged for full year 2020, using the midpoint of
production guidance. The Company had 6,364 Bbls/d of oil hedged at
an average price of $55.26/Bbl and 86 MMcf/d hedged at an average
price of $2.66/Mcf.
CAPITAL STRUCTURE AND LIQUIDITY
The Company's liquidity as of December 31, 2019, was $122.4
million, primarily consisting of $1.4 million of cash and $121.0
million of availability under the Company’s credit facility. The
Company believes it has sufficient liquidity to meet its
obligations for at least the next twelve months and execute its
long-term development plans. As of January 31, 2020, the Company
had 11.8 million total common shares outstanding.
CONFERENCE CALL AND UPDATED INVESTOR PRESENTATION
The Company will host a conference call for investors on
Thursday, March 5, 2020, at 9:00 a.m. Central Time (10:00 a.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 Fourth Quarter and Full Year 2019 Earnings
Conference Call or by visiting the Company's website.
A simultaneous webcast of the call may be accessed over the
internet by visiting the Company's website at www.sbow.com,
clicking on “Investor Relations” and “Events and Presentations” and
then clicking on the “Fourth Quarter and Full Year 2019 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, 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 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.
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 subject to a number
of risks and uncertainties, many of which are beyond our control,
which could cause actual results to differ materially from the
results discussed in the forward-looking statements, including
among other things: oil and natural gas price levels and
volatility; our ability to satisfy our short- or long-term
liquidity needs; our ability to execute our business strategy,
including the success of our drilling and development efforts;
timing, cost and amount of future production of oil and natural
gas; expectations regarding future free cash flow; and other
factors discussed in the Company’s reports filed with the SEC,
including its Annual Report on Form 10-K for the year ended
December 31, 2019 and Quarterly Reports on Form 10-Q filed
thereafter. All statements, other than statements of historical
fact included in this press release, regarding our strategy, future
operations, financial position, future cash flows, estimated
production levels, expected oil and natural gas pricing, estimated
oil and natural gas reserves or the present value thereof, reserve
increases, capital expenditures, budget, projected costs,
prospects, plans and objectives of management are forward-looking
statements.
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. 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. New factors emerge from time to
time, and it is not possible for us to predict all such
factors.
(Financial Highlights to Follow)
Consolidated Balance Sheets
(Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except share amounts)
December 31, 2019
December 31, 2018
ASSETS
Current Assets:
Cash and cash equivalents
$
1,358
$
2,465
Accounts receivable, net
36,996
46,472
Fair value of commodity derivatives
12,833
15,261
Other current assets
2,121
2,126
Total Current Assets
53,308
66,324
Property and Equipment:
Property and Equipment, Full-Cost Method,
including $41,201 and $56,715 of unproved property costs not being
amortized
1,247,717
986,100
Less – Accumulated depreciation,
depletion, amortization and impairment
(380,728
)
(284,804
)
Property and Equipment, Net
866,989
701,296
Right of Use Assets
9,374
—
Fair value of long-term commodity
derivatives
3,854
4,333
Deferred Tax Asset
22,669
—
Other Long-Term Assets
3,622
5,567
Total Assets
$
959,816
$
777,520
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities
$
39,343
$
48,921
Fair value of commodity derivatives
6,644
2,824
Accrued capital costs
17,889
38,073
Accrued interest
1,397
1,513
Current Lease Liability
6,707
—
Undistributed oil and gas revenues
9,166
14,681
Total Current Liabilities
81,146
106,012
Long-term debt
472,900
387,988
Non-Current Lease liability
2,813
—
Deferred tax liabilities, net
1,582
1,014
Asset retirement obligations
4,055
3,956
Fair value of long-term commodity
derivatives
1,613
3,723
Other long-term liabilities
—
—
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, 11,895,032 and 11,757,972 shares issued and
11,806,679 and 11,692,101 shares outstanding
119
118
Additional paid-in capital
292,916
286,281
Treasury stock held, at cost, 88,353 and
65,871 shares
(2,282
)
(1,870
)
Retained earnings (Accumulated
deficit)
104,954
(9,702
)
Total Stockholders’ Equity
395,707
274,827
Total Liabilities and Stockholders’
Equity
$
959,816
$
777,520
See accompanying Notes to Consolidated
Financial Statements.
Consolidated Statements of Operations
(Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except per-share amounts)
Year Ended
December 31, 2019
Year Ended
December 31, 2018
Revenues:
Oil and gas sales
$
288,631
$
257,286
Operating Expenses:
General and administrative, net
24,851
22,570
Depreciation, depletion, and
amortization
95,915
68,035
Accretion of asset retirement
obligations
329
419
Lease operating expense
20,763
17,643
Workovers
628
—
Transportation and gas processing
26,968
23,848
Severance and other taxes
13,874
11,394
Total Operating Expenses
183,328
143,909
Operating Income (Loss)
105,303
113,377
Non-Operating Income (Expense)
Net gain (loss) on commodity
derivatives
24,242
(9,777
)
Interest expense, net
(36,561
)
(27,666
)
Other income (expense), net
90
(391
)
Income (Loss) Before Income Taxes
93,074
75,543
Provision (Benefit) for Income Taxes
(21,582
)
928
Net Income (Loss)
$
114,656
$
74,615
Per Share Amounts:
Basic: Net Income (Loss)
$
9.76
$
6.40
Diluted: Net Income (Loss)
$
9.74
$
6.34
Weighted Average Shares Outstanding -
Basic
11,753
11,655
Weighted Average Shares Outstanding -
Diluted
11,778
11,764
Consolidated Statements of Operations
(Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except per-share amounts)
Three Months Ended December
31, 2019
Three Months Ended December
31, 2018
Revenues:
Oil and gas sales
$
69,850
$
88,152
Operating Expenses:
General and administrative, net
5,705
5,714
Depreciation, depletion, and
amortization
25,145
23,041
Accretion of asset retirement
obligations
73
88
Lease operating expense
5,689
4,715
Workovers
15
—
Transportation and gas processing
7,051
7,263
Severance and other taxes
2,830
3,238
Total Operating Expenses
46,508
44,059
Operating Income (Loss)
23,342
44,093
Non-Operating Income (Expense)
Net gain (loss) on commodity
derivatives
(10,070
)
20,930
Interest expense, net
(9,061
)
(7,979
)
Other income (expense), net
(80
)
85
Income (Loss) Before Income Taxes
4,131
57,129
Provision (Benefit) for Income Taxes
(2,117
)
379
Net Income (Loss)
$
6,248
$
56,750
Per Share Amounts:
Basic: Net Income (Loss)
$
0.53
$
4.85
Diluted: Net Income (Loss)
$
0.53
$
4.82
Weighted Average Shares Outstanding -
Basic
11,795
11,692
Weighted Average Shares Outstanding -
Diluted
11,804
11,783
Consolidated Statements of Cash Flows
(Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands)
Year Ended December 31,
2019
Year Ended December 31,
2018
Cash Flows from Operating Activities:
Net income (loss)
$
114,656
$
74,615
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities-
Depreciation, depletion, and
amortization
95,915
68,035
Accretion of asset retirement
obligations
329
419
Deferred income tax benefit
(22,101
)
1,014
Share-based compensation expense
6,148
5,980
(Gain) Loss on derivatives, net
(24,242
)
9,777
Cash settlements (paid) received on
derivatives
24,631
(19,677
)
Settlements of asset retirement
obligations
(83
)
(187
)
Write-down of debt issuance cost
82
—
Other
2,930
5,293
Change in operating assets and
liabilities-
(Increase) decrease in accounts receivable
and other assets
11,605
(20,470
)
Increase (decrease) in accounts payable
and accrued liabilities
(7,100
)
(2,686
)
Increase (decrease) in income taxes
payable
519
53
Increase (decrease) in accrued
interest
(116
)
(593
)
Net Cash Provided by (Used in) Operating
Activities
203,173
121,573
Cash Flows from Investing Activities:
Additions to property and equipment
(282,660
)
(266,532
)
Acquisition of producing properties
—
(1,002
)
Proceeds from (adjustments to) the sale of
property and equipment
(96
)
27,673
Payments on property sale obligations
(5,112
)
(8,740
)
Transfer of company funds in restricted
cash
—
(222
)
Net Cash Provided by (Used in) Investing
Activities
(287,868
)
(248,823
)
Cash Flows from Financing Activities:
Proceeds from bank borrowings
381,000
306,800
Payments of bank borrowings
(297,000
)
(184,800
)
Net proceeds from issuances of common
stock
—
709
Purchase of treasury shares
(412
)
(418
)
Payments of debt issuance costs
—
(602
)
Net Cash Provided by (Used in) Financing
Activities
83,588
121,689
Net Increase (Decrease) in Cash and Cash
Equivalents and Restricted Cash
(1,107
)
(5,561
)
Cash, Cash Equivalents and Restricted Cash
at Beginning of Year
2,465
8,026
Cash, Cash Equivalents and Restricted Cash
at End of Year
$
1,358
$
2,465
Supplemental Disclosures of Cash Flows
Information:
Cash paid during period for interest, net
of amounts capitalized
$
34,408
$
24,794
Changes in capital accounts payable and
capital accruals
$
(21,584
)
$
45,349
Changes in other long-term liabilities for
capital expenditures
$
—
$
(5,000
)
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”) and Adjusted EBITDA Margin in addition to our
reported net income (loss) in accordance with U.S. GAAP. Adjusted
EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures
that are used as supplemental financial measures 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. We define
Adjusted EBITDA 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
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by
the sum of oil and gas sales and derivative cash settlements
collected or paid. Our Adjusted EBITDA and Adjusted EBITDA Margin
should not be considered alternatives 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 and Adjusted EBITDA Margin may not be comparable to
similarly titled measures of another company because all companies
may not calculate Adjusted EBITDA and Adjusted EBITDA Margin in the
same manner.
Calculation of Adjusted EBITDA and Adjusted EBITDA
Margin
The below tables provide the calculation of Adjusted EBITDA and
Adjusted EBITDA Margin for the following periods.
Three Months Ended December
31, 2019
Three Months Ended December
31, 2018
Net Income (Loss)
$
6,248
$
56,751
Plus:
Depreciation, depletion and
amortization
25,145
23,041
Accretion of asset retirement
obligations
73
88
Interest expense
9,061
7,979
Derivative (gain)/loss
10,070
(20,930
)
Derivative cash settlements
collected/(paid) (1)
8,035
(12,523
)
Income tax expense/(benefit)
(2,117
)
379
Share-based compensation expense
1,057
1,739
Adjusted EBITDA
$
57,572
$
56,524
Adjusted EBITDA Margin (2)
74
%
75
%
(1) This includes accruals for settled
contracts covering commodity deliveries during the period where the
actual cash settlements occur outside of the period.
(2) Adjusted EBITDA Margin equals Adjusted
EBITDA divided by the sum of Oil and Gas Sales and Derivative Cash
Settlements Collected or Paid.
Year Ended December 31,
2019
Year Ended December 31,
2018
Net Income (Loss)
$
114,656
$
74,615
Plus:
Depreciation, depletion and
amortization
95,915
68,035
Accretion of asset retirement
obligations
329
419
Interest expense
36,561
27,666
Derivative (gain)/loss
(24,242
)
9,777
Derivative cash settlements
collected/(paid) (1)
24,808
(19,060
)
Income tax expense/(benefit)
(21,582
)
928
Share-based compensation expense
6,148
5,980
Adjusted EBITDA
$
232,593
$
168,360
Adjusted EBITDA Margin (2)
74
%
71
%
(1) This includes accruals for settled
contracts covering commodity deliveries during the period where the
actual cash settlements occur outside of the period.
(2) Adjusted EBITDA Margin equals Adjusted
EBITDA divided by the sum of Oil and Gas Sales and Derivative Cash
Settlements Collected or Paid.
SilverBow Resources, Inc. Non-GAAP
Financial Measures Calculation of ROCE (Non-GAAP) (In
thousands) (Unaudited)
We define ROCE as (A) Adjusted EBITDA, excluding DD&A
expense, divided by (B) the average of Capital Employed - Beginning
of Year (Total Debt plus Shareholders Equity) and Capital Employed
- Year-End. We believe ROCE presents a comparable metric across
multiple business sectors and sizes and is a meaningful measure
because it quantifies how well we generate Adjusted EBITDA relative
to the capital we have employed in our business and illustrates the
profitability of a business or project taking into account the
capital employed. We use ROCE to assist in capital resource
allocation decisions and in evaluating business performance.
Although ROCE is commonly used as a measure of capital efficiency,
definitions of ROCE differ, and our computation of ROCE may not be
comparable to other similarly titled measures of other
companies.
Calculation of Return on Capital Employed
The below table provides the calculation of ROCE for the
following periods:
Year Ended December 31,
2019
Year Ended December 31,
2018
Year Ended December 31,
2017
Net Income (Loss)
$
114,656
$
74,615
$
71,971
Plus:
Depreciation, depletion and
amortization
95,915
68,035
46,933
Accretion of asset retirement
obligations
329
419
2,322
Interest expense
36,561
27,666
15,070
Derivative (gain)/loss
(24,242
)
9,777
(17,913
)
Derivative cash settlements
collected/(paid) (1)
24,808
(19,060
)
(1,545
)
Income tax expense/(benefit)
(21,582
)
928
(1,954
)
Share-based compensation expense
6,148
5,980
6,849
Adjusted EBITDA
$
232,593
$
168,360
$
121,733
Less: Depreciation, depletion and
amortization
(95,915
)
(68,035
)
(46,933
)
Adjusted EBIT (A)
$
136,678
$
100,325
$
74,800
Total Debt
$
395,000
$
273,000
$
159,000
Shareholders Equity
274,827
193,458
76,055
Capital Employed - Beginning of
Year
$
669,827
$
466,458
$
235,055
Total Debt
$
479,000
$
395,000
$
273,000
Shareholders Equity
395,707
274,827
193,458
Capital Employed - Year-End
$
874,707
$
669,827
$
466,458
Average Capital Employed (B)
(2)
$
772,267
$
568,143
$
350,757
Return on Capital Employed (ROCE) (A /
B)
18
%
18
%
21
%
(1) This includes accruals for settled
contracts covering commodity deliveries during the period where the
actual cash settlements occur outside of the period.
(2) 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 PV-10 Value of
the Company's proved reserves:
As of December 31,
(in millions)
2019
2018
2017
PV-10 Value
$
976
$
1,128
$
805
Less: Future income taxes (discounted at
10%)
108
134
73
Standardized Measure of Discounted
Future Net Cash Flows
$
868
$
994
$
732
Production Volumes & Pricing
(Unaudited)
SilverBow Resources, Inc. and
Subsidiaries
Year Ended December 31,
2019
Year Ended December 31,
2018
Production volumes:
Oil (MBbl) (1)
1,605
688
Natural gas (MMcf)
64,388
56,665
Natural gas liquids (MBbl) (1)
1,717
1,123
Total (MMcfe)
84,320
67,530
Oil, Natural gas and Natural gas liquids
sales:
Oil
$
92,833
$
45,375
Natural gas
170,558
183,272
Natural gas liquids
25,241
28,639
Total
$
288,631
$
257,286
Average realized price:
Oil (per Bbl)
$
57.84
$
65.93
Natural gas (per Mcf)
2.65
3.23
Natural gas liquids (per Bbl)
14.70
25.51
Average per Mcfe
$
3.42
$
3.81
(1) Oil and NGLs are converted at the rate
of one barrel of oil equivalent to six Mcf
Three Months Ended December
31, 2019
Three Months Ended December
31, 2018
Production volumes:
Oil (MBbl) (1)
438
215
Natural gas (MMcf)
16,114
17,584
Natural gas liquids (MBbl) (1)
467
330
Total (MMcfe)
21,543
20,855
Oil, Natural gas and Natural gas liquids
sales:
Oil
$
24,391
$
13,173
Natural gas
38,617
67,455
Natural gas liquids
6,841
7,526
Total
$
69,850
$
88,154
Average realized price:
Oil (per Bbl)
$
55.70
$
61.19
Natural gas (per Mcf)
2.40
3.84
Natural gas liquids (per Bbl)
14.65
22.81
Average per Mcfe
$
3.24
$
4.23
(1) Oil and NGLs are converted at the rate
of one barrel of oil equivalent to six Mcf
Reserve Replacement Ratio Calculation:
(Unaudited)
Reserve replacement ratio is calculated by dividing the sum of
extensions, discoveries, and other additions, purchases of minerals
in place, and total revisions for the year by production.
Reserve Replacement
(in MMcfe)
Year Ended December 31,
2019
Proved reserves as of December 31,
2018
1,345,362
Extensions, discoveries, and other
additions (1)
434,834
Purchases of minerals in place
336
Revisions of prior reserve estimates:
Reclassification of PUD to unproved under
SEC 5-year rule
(191,303
)
Price and performance revisions
(84,471
)
Production
(84,320
)
Proved reserves as of December 31,
2019
1,420,439
Reserve replacement ratio
189
%
(1) The additions in 2019 were primarily due to additions
from drilling results and leasing of adjacent acreage.
First Quarter 2020 & Full Year 2020
Guidance
Guidance
1Q 2020
FY 2020
Production Volumes:
Oil (Bbls/d)
4,550 - 4,700
7,300 - 7,600
Natural Gas (MMcf/d)
184 - 189
150 - 160
NGLs (Bbls/d)
3,300 - 3,400
3,450 - 3,650
Total Reported Production (MMcfe/d)
231 - 238
215 - 228
Product Pricing :
Crude Oil NYMEX Differential ($/Bbl)
($1.25) - ($0.25)
N/A
Natural Gas NYMEX Differential ($/Mcf)
($0.12) - ($0.07)
N/A
Natural Gas Liquids (% of WTI)
25% - 28%
N/A
Operating Costs & Expenses
:
Lease Operating Expenses ($/Mcfe)
$0.22 - $0.26
$0.23 - $0.27
Transportation & Processing
($/Mcfe)
$0.30 - $0.34
$0.27 - $0.31
Production Taxes (% of Revenue)
5.0% - 6.0%
5.1% - 5.6%
Cash G&A, net ($MM)
$4.9 - $5.3
$18.5 - $20.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200304005790/en/
Jeff Magids Senior Manager, Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW
SilverBow Resources (NYSE:SBOW)
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