SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the
Company”) today provided an operational and financial update
including the successful extension of its senior secured revolving
credit facility (the “Credit Facility”).
Operational Update:
- SilverBow’s first Webb County Austin Chalk well, which came
online in February, continues to outperform expectations. This
successful test further delineates the extent of the Dorado Austin
Chalk play. The initial well produced an average of 12.9 million
cubic feet of natural gas per day (“MMcf/d”) in the first 30 days
of production, with a lateral length of 8,300 feet and an all-in
well cost1 of approximately $6 million. SilverBow plans to further
appraise its Austin Chalk potential across its acreage position
during 2021;
- The Company’s second six-well, co-developed Upper and Lower
Eagle Ford La Mesa pad came online in March and achieved a peak pad
production rate of 90 MMcf/d. Performance is in-line with
expectations as well as prior pad results. Drilling cycle times
decreased by 10% compared to the first La Mesa pad, which came
online in late 2019. Total capital expenditures of approximately
$5.5 million per well for the second La Mesa pad were 13% below AFE
amounts and 15% below the first pad; and
- Expects first quarter 2021 production to be approximately 180
million cubic feet of natural gas equivalent per day (“MMcfe/d”),
above the high end of guidance.
Financial Update:
- Extended the maturity of SilverBow’s $600 million Credit
Facility, governed by a borrowing base of $300 million, to April
2024;
- Realized oil price for first quarter of 2021 of $42.74 per
barrel and realized gas price for first quarter of 2021 of $4.97
per million British thermal units (“MMBtu”), including hedge
settlements;
- Expects positive first quarter 2021 free cash flow (“FCF”)2 and
full year 2021 FCF towards the high end of its $20-$40 million
guidance range;
- Anticipates leverage ratio3 improving to 2.0x or below by
year-end 2021; and
- Reduced credit facility borrowings to $200 million at March 31,
2021, a $30 million (13%) reduction quarter-over-quarter and a $90
million (30%) reduction year-over-year.
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
“During the first quarter, we paid down an additional $30 million
of debt by continuing to prioritize our free cash flow towards debt
reduction, and expect our full year 2021 free cash flow towards the
high end of our $20-$40 million guidance range. By the end of this
year, we are targeting a debt-to-Adjusted EBITDA ratio at or below
2.0x. Our strong operating results generated free cash flow for the
quarter, marking six out of the last seven quarters with positive
free cash flow. Furthermore, early results from our first Austin
Chalk well are very encouraging, setting up the potential to add
more locations to our high rate of return drilling inventory. We
see a path to $5.5 million or less from multi-well pad development
and lessons-learned. Going forward, we expect to remain flexible
and continue lowering costs, reducing cycle times, increasing well
productivity and driving efficiencies. We look forward to
publishing our first quarter 2021 results in the coming weeks.”
Mr. Woolverton stated further, “I am pleased to announce that we
successfully renegotiated the terms of our Credit Facility, which
extends our debt maturity profile to 2024 and provides us with
ample liquidity to execute our business plan. The borrowing base
has been set at $300 million, which provides over $100 million in
liquidity based on our borrowings and cash as of quarter end. We
are very appreciative to have the support of our bank syndicate and
look forward to continuing our partnership with them. We remain
steadfast in managing our financial position as we prudently grow
our production base and create value for all of our
stakeholders.”
For further information, please see SilverBow’s current report
on Form 8-K filed with the Securities and Exchange Commission
(“SEC”) on April 19, 2021. A banking syndicate arranged by JPMorgan
Chase Bank will finance the Credit Facility. Other agent titled
roles include JPMorgan Chase Bank as Administrative Agent, Truist
Securities, Inc., Fifth Third Bank, CIBC, and Key Bank as
Co-Syndication Agent and Bank of Oklahoma as Co-Documentation
Agent. The Credit Agreement matures on April 19, 2024.
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.
DEFINITIONS AND EXPLANATIONS
1 Inclusive of all surface facilities and sales connections.
2 Free cash flow (a non-GAAP measure) is defined as Adjusted
EBITDA plus (less) monetized derivative contracts, cash interest
expense, capital expenditures and current income tax (expense)
benefit. 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. A forward-looking estimate of net
income (loss) is not provided with the forward-looking estimate of
free cash flow (a non-GAAP measure) because the items necessary to
estimate net income (loss) are not accessible or estimable at this
time without unreasonable efforts.
3 Leverage ratio is defined as total long-term debt, before
unamortized discounts, divided by Adjusted EBITDA for Leverage
Ratio (a non-GAAP measure) for the trailing twelve-month period.
Adjusted EBITDA for Leverage Ratio is calculated as Adjusted EBITDA
plus amortization of derivative contracts, in accordance with the
covenant compliance calculations under SilverBow's credit
agreement.
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 historical facts included in this press
release, including those regarding our strategy, future operations,
financial position, reservoir and well performance, future free
cash flow, capital expenditures, budget, projected costs,
prospects, plans and objectives are forward-looking statements.
When used in this report, the words “could,” “believe,”
“anticipate,” “intend,” “estimate,” “guidance,” “budgeted,”
“expect,” “may,” “continue,” “predict,” “potential,” “project” 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 risks and uncertainties 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, 2020. Estimated results for the completed period
provided herein are preliminary and subject to change until
issuance of the final results.
All forward-looking statements speak only as of the date of this
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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20210419005183/en/
Jeff Magids Director of Finance & Investor Relations (281)
874-2700, (888) 991-SBOW
SilverBow Resources (NYSE:SBOW)
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