Significantly reduces current year capital and
operating expenses
Plans to curtail production during second
quarter as a result of deteriorating commodity markets
Doubles acreage position in Eagle Ford dry gas
window to 165,000 net acres
Ability to pivot to gas development capital
program in late 2020 and early 2021
Targeting free cash flow yield greater than 75%
for full year 2020
SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the
“Company”) today announced revised full year plans and first
quarter of 2020 operating and financial results.
Strategic Highlights:
- Revised 2020 capital budget of $80-$95 million, a decrease of
approximately 55% or $100 million, compared to prior guidance
range
- Approximately $10 million of operating expense reductions
identified for 2020, with additional initiatives underway for
potential further expense reductions
- Curtailed approximately 50 million cubic feet per day
("MMcf/d") of natural gas production and approximately 2,000
barrels per day ("Bbls/d") of oil production beginning in
mid-March; assessing further curtailments as a result of
deteriorating commodity markets and the supporting production
economics
- Risk management program includes a mark-to-market ("MTM") value
of approximately $45 million as of May 4, 2020, majority of 2020
revenue protected at greater than $57.00 per barrel and $2.60 per
million British thermal units ("MMBtu"), and a realization of
approximately $38 million in cash from hedge unwinds occurring in
the first quarter
- Subsequent to quarter-end, SilverBow closed an acquisition
directly offsetting the Company’s existing assets bringing
SilverBow's combined leasehold to approximately 200,000 net acres
in the Eagle Ford
Operating and Financial Highlights:
- Free cash flow ("FCF") of $25.5 million (a non-GAAP measure
defined and reconciled below); targeting $40-50 million of FCF for
full year 2020
- Net production averaged approximately 228 million cubic feet of
natural gas equivalent per day (“MMcfe/d”), with production
curtailments implemented mid-March
- Total cash operating expenses of $0.97 per thousand cubic feet
of gas equivalent ("Mcfe") (a non-GAAP measure defined below) for
the quarter, a 4% decrease from the same period in 2019
- Oil and gas sales of $53.4 million (excluding hedge impact),
net loss of $5.9 million, and Adjusted EBITDA (a non-GAAP measure
defined and reconciled below) of $46.0 million
- Adjusted EBITDA Margin (a non-GAAP measure defined and
reconciled below) of 70%, driven by early operational success to
start 2020, partially offset by benchmark pricing declines and
production curtailments
- Net debt-to-Adjusted EBITDA (a non-GAAP measure defined and
reconciled below) was reduced to 2.02 times
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
“Due to ongoing market conditions, we made immediate and decisive
changes to our 2020 budget and operating plan. In this market, our
focus is on maximizing cash flows, preserving future value and
deleveraging the balance sheet. SilverBow's strategy of building a
well-balanced mix of both oil and gas locations within a low-cost,
single basin remains the same. We continue to take a
returns-focused approach to our decision making, by taking
near-term actions that align with the current environment our
industry is facing while at the same time focusing on long-term
shareholder value creation.”
Mr. Woolverton commented further, “During 2020 and 2021, we plan
to significantly increase our cash flow generation, and are
targeting FCF of $40-50 million in 2020 and more than $50 million
in 2021 based on current strip pricing. With an operating cost
structure of less than $1.00 per Mcfe and a hedge portfolio that
protects the majority of our revenue for the remainder of the year,
we are positioned to navigate the coming quarters with a
disciplined approach. Although we anticipate a decline in
production and revenue over the next two quarters, our plan is to
shift capital allocation to development of our high-quality dry gas
assets starting in the fourth quarter assuming economic and
industry conditions begin to return to more normalized conditions.
Our plan is to ramp up gas production in alignment with improving
natural gas prices starting towards the end of this year and
continuing into 2021. This strategy will position the Company to
efficiently return to operating and financial levels prior to the
disruption brought on by the novel coronavirus (“COVID-19”)
pandemic and the related economic repercussions that have created
significant volatility, uncertainty and turmoil in the oil and gas
industry.”
Mr. Woolverton concluded his statements, “At SilverBow our
greatest asset is our people. Our proven execution throughout 2019
and into 2020 has solidified our position not just as a
cost-and-efficiency-focused company, but as a team with a winning
strategy. I want to thank our entire organization for their
relentless determination over the past two months. There is no
doubt many challenges remain in the months ahead, but because of
our employees' and contractors' dedication, we are positioned to
weather these challenges and continue to create value for all of
our stakeholders.”
OPERATIONS HIGHLIGHTS
During the first quarter of 2020, SilverBow drilled 11 gross (11
net) wells while completing eight gross (eight net) wells and
bringing five gross (five net) wells online. The Company carried
forward its capital efficiency into 2020. For the first quarter,
SilverBow realized a 48% improvement in lateral feet drilled per
day over the full year 2019 average, resulting in a decrease in
average cost per lateral foot of 28%. On the completions side, the
Company averaged over nine stages per day while increasing the
total proppant pumped per day to over 4.9 million pounds per day, a
9% increase over the full year 2019 average.
SilverBow has eight wells in the McMullen Oil area that it
intends to complete and bring online based on the commodity price
environment; currently these wells are planned to be brought online
in the third quarter of 2020.
During the second half of March, the Company elected to curtail
approximately 35 MMcf/d of natural gas production. In April,
SilverBow elected to increase the amount of curtailed natural gas
production to approximately 50 MMcf/d and curtailed approximately
2,000 Bbls/d of oil production. As the year unfolds, the Company
will continue to assess and respond to the evolving commodity price
environment. SilverBow is focused on optimizing its capital program
by adjusting the cadence of its activity through the timing of
production curtailment and drilling and completion expenditures.
The Company is taking a measured approach to ensure return
thresholds are met and preserve optionality in order to respond
efficiently once market conditions show signs of recovery.
PRODUCTION VOLUMES, OPERATING COSTS AND REALIZED
PRICES
SilverBow's total net production for the first quarter averaged
approximately 228 MMcfe/d. Production mix for the first quarter
consisted of approximately 79% natural gas, 12% oil and 9% natural
gas liquids ("NGLs"). Natural gas comprised 59% of total oil and
gas sales for the first quarter, compared to 55% in the fourth
quarter of 2019.
Lease operating expenses ("LOE") were $0.28 per Mcfe for the
first quarter. After deducting $1.2 million of non-cash
compensation expense, cash general and administrative costs were
$4.7 million for the first quarter, which compared favorably to
guidance, with a per unit cash cost of $0.22 per Mcfe.
Transportation and processing expenses ("T&P") came in at $0.32
per Mcfe and production and ad valorem taxes were 5.6% of oil and
gas revenue for the first quarter. Both metrics were at or below
the low end of guidance. Total production expenses, which include
LOE, T&P and production taxes, were $0.74 per Mcfe for the
quarter. SilverBow's all-in cash operating expenses for the
quarter, which includes cash general and administrative costs, were
$0.97 per Mcfe.
The Company continues to benefit from strong basis pricing in
the Eagle Ford. Crude oil and natural gas realizations in the first
quarter were each 98% of West Texas Intermediate ("WTI") and Henry
Hub, respectively, excluding hedging. The Company’s average
realized natural gas price, excluding the effect of hedging, was
$1.91 per thousand cubic feet of natural gas ("Mcf") compared to
$3.22 per Mcf in the first quarter of 2019. The average realized
crude oil selling price, excluding the effect of hedging, was
$45.05 per barrel compared to $56.94 per barrel in the first
quarter of 2019. The average realized NGL selling price in the
quarter was $12.35 per barrel, compared to $19.30 per barrel in the
first quarter of 2019.
FINANCIAL RESULTS
SilverBow reported total oil and gas sales of $53.4 million for
the first quarter. On a GAAP basis, the Company reported a net loss
of $5.9 million for the first quarter. Due to the effects of
pricing and timing of projects, the Company reported a non-cash
impairment write-down, on a pre-tax basis, of $95.6 million on
SilverBow's oil and natural gas properties in the first quarter.
Additionally, included in the first quarter’s net loss is an
unrealized gain on the value of the Company's derivative contracts
of $36.9 million and a $1.2 million net tax benefit.
SilverBow generated Adjusted EBITDA of $46.0 million for the
first quarter. 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.
At quarter-end, the Company's net debt was $454.4 million,
calculated as total long-term debt of $490.0 million less $35.6
million of cash, a $23.2 million reduction compared to year-end
2019.
For the first quarter, SilverBow generated FCF of $25.5 million.
FCF is a non-GAAP measure defined and reconciled at the end of this
release.
Capital expenditures incurred during the first quarter totaled
$51.0 million on an accrual basis.
2020 GUIDANCE AND OUTLOOK
Second Quarter:
In response to deteriorating commodity markets, SilverBow has
suspended its drilling and completions activity until prices
warrant further investment. Production guidance for the second
quarter assumes significant curtailments of both oil and gas
volumes. Currently, the Company plans to return these volumes to
sales over the course of the third and fourth quarter. For the
second quarter, SilverBow is guiding for estimated production of
115-140 MMcfe/d, with natural gas volumes expected to comprise
105-120 MMcf/d, although additional curtailments necessitated by
storage constraints, commodity prices or other impacts from the
COVID-19 pandemic could result in lower second quarter production.
As SilverBow released its drilling rig early in the second quarter,
and has deferred bringing to production eight wells, second quarter
capital expenditures on an accrual basis are expected to be
minimal.
Full Year:
For the full year 2020, SilverBow is guiding to a revised 2020
capital budget of $80-$95 million. The timing of bringing curtailed
production back online and turning the eight wells to sales will be
optimized to align with higher prices. For the full year, the
Company is guiding for estimated production of 164-185 MMcfe/d,
with natural gas volumes expecting to comprise 130-145 MMcf/d.
Based on current strip pricing, SilverBow is targeting FCF of
$40-50 million for the full year, or greater than 75% free cash
flow yield using the Company’s trailing 30-day weighted average
market capitalization. The revised plan provides SilverBow the
ability to pivot to gas development in late 2020 and early 2021,
with production hedged at prices above the Company’s return
threshold. This has the potential to generate a meaningful amount
of Adjusted EBITDA and FCF for SilverBow in 2021. Regardless of
commodity prices, the Company carefully balances the production
economics and the net benefit to its borrowing base and its
financial covenants before committing to a development program.
Additional details concerning SilverBow's second quarter and
full year 2020 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. With the
decrease in capital investment, SilverBow elected to tactically
unwind a series of oil derivative contracts in 2020 and 2021 above
its expected production, resulting in approximately $38 million of
cash inflow before the end of the first quarter.
As of May 4, 2020, the Company had 64% of total estimated
production volumes hedged for the remainder of 2020, using the
midpoint of production guidance. For 2020, SilverBow has 83 MMcf/d
hedged at an average price of $2.63 per MMBtu and 2,923 Bbls/d of
oil hedged at an average price of $57.40 per barrel. For 2021, the
Company has 66 MMcf/d hedged at an average price of $2.33 per MMBtu
and 2,068 Bbls/d of oil hedged at an average price of $51.85 per
barrel. As of May 4, 2020, the Company's MTM value of its hedge
position was approximately $45 million.
Please see SilverBow's Form 10-Q filing for the first quarter of
2020, which the Company expects to file on Thursday, May 7, 2020,
for a detailed summary of its derivative contracts.
CAPITAL STRUCTURE AND LIQUIDITY
As of March 31, 2020, SilverBow's liquidity position was $145.6
million, consisting of $35.6 million of cash and $110.0 million of
availability under the Company’s credit facility. SilverBow’s net
debt was $454.4 million, calculated as total long-term debt of
$490.0 million less $35.6 million of cash, a 5% decrease from
December 31, 2019. As of May 1, 2020, SilverBow had 11.9 million
total common shares outstanding. Based on informed discussions with
certain of the lenders under SilverBow's Credit Facility, we
anticipate a borrowing base reduction of approximately 15% to 20%
from the current $400 million borrowing base in connection with the
May redetermination.
CONFERENCE CALL AND UPDATED INVESTOR PRESENTATION
SilverBow will host a conference call for investors on Thursday,
May 7, 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 First Quarter 2020 Earnings Conference Call
or by visiting the Company's website.
A simultaneous webcast of the call may be accessed over the
internet by visiting SilverBow's website at www.sbow.com, clicking
on “Investor Relations” and “Events and Presentations” and then
clicking on the “First Quarter 2020 Earnings Conference Call” link.
The webcast will be archived for replay on the Company's website
for 14 days. Additionally, an updated Corporate Presentation will
be uploaded to the Investor Relations section of SilverBow'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: the severity and duration of world health
events, including the recent COVID-19 outbreak, related economic
repercussions and the resulting severe disruption in the oil and
gas industry and negative impact on demand for oil and gas, which
is negatively impacting our business; the current significant
surplus in the supply of crude oil and actions by the members of
the Organization of the Petroleum Exporting Countries (“OPEC”) and
Russia (together with OPEC and other allied producing countries,
“OPEC+”) with respect to oil production levels and announcements of
potential changes in such levels, including the ability of the
OPEC+ countries to agree on and comply with supply limitations;
operational challenges relating to the COVID-19 pandemic and
efforts to mitigate the spread of the virus, including logistical
challenges, protecting the health and well-being of our employees,
remote work arrangements, performance of contracts and supply chain
disruptions; shut-in of production due to decreases in available
storage capacity; 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 Securities and Exchange Commission ("SEC"),
including its Annual Report on Form 10-K for the year ended
December 31, 2019 and Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K 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)
Condensed Consolidated Balance Sheets
(Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except share amounts)
March 31, 2020
December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents
$
35,598
$
1,358
Accounts receivable, net
30,345
36,996
Fair value of commodity derivatives
38,817
12,833
Other current assets
2,846
2,121
Total Current Assets
107,606
53,308
Property and Equipment:
Property and equipment, full cost method,
including $42,249 and $41,201, respectively, of unproved property
costs not being amortized at the end of each period
1,298,453
1,247,717
Less – Accumulated depreciation,
depletion, amortization & impairment
(499,759
)
(380,728
)
Property and Equipment, Net
798,694
866,989
Right of Use Assets
7,839
9,374
Fair Value of Long-Term Commodity
Derivatives
8,867
3,854
Deferred Tax Asset
23,433
22,669
Other Long-Term Assets
2,770
3,622
Total Assets
$
949,209
$
959,816
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities
$
36,159
$
39,343
Fair value of commodity derivatives
1,265
6,644
Accrued capital costs
12,104
17,889
Accrued interest
1,186
1,397
Current lease liability
6,622
6,707
Undistributed oil and gas revenues
8,705
9,166
Total Current Liabilities
66,041
81,146
Long-Term Debt, Net
484,142
472,900
Non-Current Lease Liability
1,397
2,813
Deferred Tax Liabilities
1,281
1,582
Asset Retirement Obligations
4,170
4,055
Fair Value of Long-Term Commodity
Derivatives
1,047
1,613
Other Long-Term Liabilities
30
—
Commitments and Contingencies (Note
11)
Stockholders' Equity:
Preferred stock, $0.01 par value,
10,000,000 shares authorized, none issued
—
—
Common stock, $0.01 par value, 40,000,000
shares authorized, 12,000,140 and 11,895,032 shares issued,
respectively, and 11,885,112 and 11,806,679 shares outstanding,
respectively
120
119
Additional paid-in capital
294,250
292,916
Treasury stock, held at cost, 115,028 and
88,353 shares, respectively
(2,365
)
(2,282
)
Retained earnings
99,096
104,954
Total Stockholders’ Equity
391,101
395,707
Total Liabilities and Stockholders’
Equity
$
949,209
$
959,816
Condensed Consolidated Statements of
Operations (Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except per-share amounts)
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
Revenues:
Oil and gas sales
$
53,377
$
72,064
Operating Expenses:
General and administrative, net
5,913
6,276
Depreciation, depletion, and
amortization
23,439
21,805
Accretion of asset retirement
obligations
86
83
Lease operating costs
5,812
4,531
Workovers
—
646
Transportation and gas processing
6,643
6,406
Severance and other taxes
2,964
3,316
Write-down of oil and gas properties
95,606
—
Total Operating Expenses
140,463
43,063
Operating Income (Loss)
(87,086
)
29,001
Non-Operating Income (Expense)
Gain (loss) on commodity derivatives,
net
88,287
(4,022
)
Interest expense, net
(8,407
)
(8,759
)
Other income (expense), net
107
65
Income (Loss) Before Income Taxes
(7,099
)
16,285
Provision (Benefit) for Income Taxes
(1,241
)
232
Net Income (Loss)
$
(5,858
)
$
16,053
Per Share Amounts
Basic: Net Income (Loss)
$
(0.50
)
$
1.37
Diluted: Net Income (Loss)
$
(0.50
)
$
1.36
Weighted-Average Shares Outstanding -
Basic
11,825
11,708
Weighted-Average Shares Outstanding -
Diluted
11,825
11,788
Condensed Consolidated Statements of
Cash Flows (Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands)
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
Cash Flows from Operating Activities:
Net income (loss)
$
(5,858
)
$
16,053
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation, depletion, and
amortization
23,439
21,805
Write-down of oil and gas properties
95,606
—
Accretion of asset retirement
obligations
86
83
Deferred income taxes
(1,065
)
134
Share-based compensation expense
1,260
1,692
(Gain) Loss on derivatives, net
(88,287
)
4,022
Cash settlement (paid) received on
derivatives
47,650
1,077
Settlements of asset retirement
obligations
(2
)
(31
)
Other
1,142
564
Change in operating assets and
liabilities
(Increase) decrease in accounts receivable
and other current assets
9,436
14,401
Increase (decrease) in accounts payable
and accrued liabilities
(6,937
)
(9,105
)
Increase (decrease) in income taxes
payable
(176
)
—
Increase (decrease) in accrued
interest
(211
)
(100
)
Net Cash Provided by (Used in) Operating
Activities
76,083
50,595
Cash Flows from Investing Activities:
Additions to property and equipment
(52,618
)
(86,555
)
Proceeds from the sale of property and
equipment
—
(91
)
Payments on property sale obligations
(142
)
(1,278
)
Net Cash Provided by (Used in) Investing
Activities
(52,760
)
(87,924
)
Cash Flows from Financing Activities:
Proceeds from bank borrowings
50,000
132,000
Payments of bank borrowings
(39,000
)
(96,000
)
Purchase of treasury shares
(83
)
(260
)
Net Cash Provided by (Used in) Financing
Activities
10,917
35,740
Net Increase (Decrease) in Cash and Cash
Equivalents
34,240
(1,589
)
Cash and Cash Equivalents at Beginning of
Period
1,358
2,465
Cash and Cash Equivalents at End of
Period
$
35,598
$
876
Supplemental Disclosures of Cash Flow
Information:
Cash paid during period for interest, net
of amounts capitalized
$
8,048
$
8,303
Cash paid during period for income
taxes
—
—
Changes in capital accounts payable and
capital accruals
$
(1,989
)
$
1,487
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
compare 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.
Total cash operating expenses: Total cash operating
expenses is calculated as lease operating expenses plus
transportation and processing expenses plus production taxes plus
cash general and administrative expenses. Cash general and
administrative expenses is a non-GAAP measure calculated as net
general and administrative costs less share-based compensation.
Adjusted EBITDA: 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 the Company 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 also important
as it is considered among the financial covenants under SilverBow'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 the Company. Please reference the SilverBow's 2019 Form 10-K
and first quarter 2020 Form 10-Q for discussion of the Credit
Agreement and its covenants.
Adjusted EBITDA margin: Adjusted EBITDA margin is
calculated as Adjusted EBITDA (defined above) divided by oil and
gas sales plus amounts collected (paid) for commodity derivative
contracts held to settlement.
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.
Free cash flow yield: Free cash flow yield calculated as
free cash flow (defined above) divided by the Company's trailing
30-day weighted average market capitalization.
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.
Net debt-to-Adjusted EBITDA: Net debt-to-Adjusted EBITDA
is calculated as Net debt (defined above) divided by the last
twelve months of Adjusted EBITDA (defined above). A variation of
this calculation is a financial covenant under SilverBow's Credit
Agreement.
Reconciliation of Net Income (GAAP) to Adjusted EBITDA to
Free Cash Flow (Non-GAAP) (Unaudited)
SilverBow presents Adjusted EBITDA attributable to common
stockholders and Adjusted EBITDA Margin in addition to reported net
income (loss) in accordance with GAAP. Both metrics are non-GAAP
measures that are used by SilverBow's management and by external
users of the Company's financial statements, such as investors,
commercial banks and others, to assess SilverBow'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 the Company's ability to incur and
service debt and fund capital expenditures.
SilverBow defines 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
SilverBow defines Free Cash Flow as Adjusted EBITDA:
Plus (Less):
- Monetized derivative contracts
- Cash interest expense, net;
- Capital expenditures; and
- Current income tax (expense) benefit
SilverBow defines Adjusted EBITDA Margin as Adjusted EBITDA
divided by the sum of oil and gas sales and derivative cash
settlements collected or paid. The Company's 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 GAAP.
SilverBow's 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, Free
Cash Flow and Adjusted EBITDA Margin (Unaudited)
SilverBow Resources, Inc. and Subsidiaries
(in thousands, except share amounts)
The below tables provide the calculation
of Adjusted EBITDA, Free Cash Flow and Adjusted EBITDA Margin for
the following periods (in thousands).
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
Net Income (Loss)
$
(5,858
)
$
16,053
Plus:
Depreciation, depletion and
amortization
23,439
21,805
Accretion of asset retirement
obligations
86
83
Interest expense
8,407
8,759
Impairment of oil and gas properties
95,606
—
Derivative (gain)/loss
(88,287
)
4,022
Derivative cash settlements
collected/(paid) (1)
12,613
1,047
Income tax expense/(benefit)
(1,241
)
232
Share-based compensation expense
1,260
1,692
Adjusted EBITDA
$
46,025
$
53,693
Plus:
Monetized derivative contracts
38,310
—
Cash interest expense, net
(8,048
)
(8,303
)
Capital expenditures
(50,962
)
(88,246
)
Current income tax (expense)/benefit
176
(97
)
Free Cash Flow
25,501
(42,953
)
Adjusted EBITDA Margin (2)
70
%
73
%
(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.
Production Volumes & Pricing
(Unaudited)
SilverBow Resources, Inc. and
Subsidiaries
Three Months Ended March 31,
2020
Three Months Ended March 31,
2019
Production volumes:
Oil (MBbl) (1)
401
257
Natural gas (MMcf)
16,498
15,907
Natural gas liquids (MBbl) (1)
312
319
Total (MMcfe)
20,775
19,359
Oil, natural gas and natural gas liquids
sales (in thousands):
Oil
$
18,050
$
14,607
Natural gas
31,472
51,304
Natural gas liquids
3,855
6,154
Total
$
53,377
$
72,064
Average realized price:
Oil (per Bbl)
$
45.05
$
56.94
Natural gas (per Mcf)
1.91
3.22
Natural gas liquids (per Bbl)
12.35
19.30
Average per Mcfe
$
2.57
$
3.72
(1) Oil and NGLs are converted at the rate
of one barrel to six Mcfe
Second Quarter 2020 & Full
Year 2020 Guidance
Guidance
2Q 2020
FY 2020
Production Volumes:
Oil (Bbls/d)
1,000 - 2,200
3,400 - 4,200
Natural Gas (MMcf/d)
105 - 120
130 - 145
NGLs (Bbls/d)
700 - 1,200
2,300 - 2,500
Total Reported Production (MMcfe/d)
115 - 140
164 - 185
% Gas
88%
79%
Product Pricing:
Crude Oil NYMEX Differential ($/Bbl)
($8.00) - ($2.00)
N/A
Natural Gas NYMEX Differential ($/Mcf)
($0.06) - ($0.02)
N/A
Natural Gas Liquids (% of WTI)
30% - 38%
N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200506005928/en/
Jeff Magids Director of Finance & Investor Relations (281)
874-2700, (888) 991-SBOW
SilverBow Resources (NYSE:SBOW)
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