SilverBow Resources Announces Oil-Weighted Acquisition
October 11 2021 - 8:00AM
Business Wire
SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the
Company”) announced today it has entered into a definitive
agreement to acquire oil and gas assets in the Eagle Ford from two
sellers.
Acquisition Highlights:
- Total purchase price of approximately $75 million, consisting
of $45 million in cash and approximately $30 million in equity
- Expected to be accretive on all key financial metrics
- 17,000 total net acres in the oil-window of La Salle, McMullen,
DeWitt and Lavaca counties
- May 2021 net production of approximately 2,500 barrels of oil
equivalent per day, 71% liquids / 46% oil from 111 PDP wells
- Acquired oil production represents a 30% increase to
SilverBow’s current full year 2021 oil production guidance
- 2021E Adjusted EBITDA of approximately $28 million(1)
- Over 100 net drilling locations, adding approximately three
years of inventory at SilverBow’s current 1 rig drilling pace
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
“This acquisition meaningfully increases SilverBow’s oil production
and furthers our Eagle Ford and Austin Chalk consolidation efforts
while maintaining a balanced oil and gas portfolio. This represents
our third acquisition since the beginning of August and the largest
to date for SilverBow. This transaction bolsters our inventory with
high rate of return locations and provides us with development
optionality as we plan for 2022 and beyond. The acquisition is
accretive to Adjusted EBITDA and further reduces our pro forma
leverage ratio(2) given the incremental cash flow. As we have shown
over time, we expect to continue driving our peer-leading capital
efficiency and cost structure as these assets are combined with our
existing portfolio.”
Mr. Woolverton commented further, “Today’s announcement is a
testament to the extensive work we have done evaluating
opportunities and executing our in-basin consolidation plan.
Furthermore, SilverBow once again utilized a mix of both cash and
stock to fund the purchase price. The use of equity has allowed us
to access a larger opportunity set for strategic growth while
aligning our interests with surrounding peer companies and other
key stakeholders for accretive, long-term value creation. Including
the pro forma contribution of our recent acquisitions, SilverBow is
targeting a leverage ratio of 1.25x at year-end 2021. We plan to
share additional details as part of our third quarter 2021
reporting in November.”
TRANSACTION DETAILS
The acquisition has an effective date of August 1, 2021 and is
expected to close before year-end, subject to customary closing
conditions. The total purchase price is approximately $75 million,
consisting of $45 million in cash and the greater of (i)
approximately 1.35 million shares of SilverBow common stock based
on its 30-day volume weighted average price as of October 4, 2021
and (ii) the number of shares equal to $25 million divided by the
30-day volume weighted average price as of the first trading day
preceding the closing date. SilverBow intends to fund the cash
component and fees and expenses with cash on hand and borrowings
under its revolving credit facility.
ABOUT SILVERBOW RESOURCES, INC.
SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy
company actively engaged in the exploration, development, and
production of oil and gas in the Eagle Ford Shale and Austin Chalk
in South Texas. With over 30 years of history operating in South
Texas, the Company possesses a significant understanding of
regional reservoirs which it leverages to assemble high quality
drilling inventory while continuously enhancing its operations to
maximize returns on capital invested. For more information, please
visit www.sbow.com. Information on the Company’s website is not
part of this release.
FORWARD-LOOKING STATEMENTS
This release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements represent management's
expectations or beliefs concerning future events, and it is
possible that the results described in this release will not be
achieved. These forward-looking statements are based on current
expectations and assumptions and are subject to a number of risks
and uncertainties, many of which are beyond our control. Important
factors that could cause actual results to differ materially from
our expectations include, but are not limited to, risks and
uncertainties discussed in the Company’s reports filed with the
Securities and Exchange Commission. 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.
(Footnotes)
1 2021E Adjusted EBITDA based on SilverBow management estimates
utilizing NYMEX strip pricing as of September 30, 2021. As used in
this news release 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 Adjusted EBITDA (a non-GAAP
measure) because the items necessary to estimate net income (loss)
are not accessible or estimable at this time without unreasonable
efforts. Such items could have a significant impact on the
Company's net income (loss).
2 Accretion is based on Adjusted EBITDA for Leverage Ratio for
fiscal year 2021. 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. Neither Adjusted EBITDA nor Adjusted
EBITDA for Leverage Ratio should be considered a replacement for
the comparable GAAP measure.
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version on businesswire.com: https://www.businesswire.com/news/home/20211011005143/en/
Jeff Magids Director of Finance & Investor Relations (281)
874-2700, (888) 991-SBOW
SilverBow Resources (NYSE:SBOW)
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