First quarter production increased 35%
year-over-year
Two-rig oil development program accelerates oil
growth through year-end
Continued cycle time improvements driving
greater capital efficiencies
SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the
“Company”) today announced operating and financial results for the
first quarter of 2023. Highlights include:
- Reported net production of 304 million cubic feet of natural
gas equivalent per day (“MMcfe/d”) (66% natural gas) for the first
quarter of 2023, at the midpoint of guidance
- First quarter net oil production of 11.4 thousand barrels of
oil per day, above the midpoint of guidance and an increase of 138%
year-over-year
- Reported net income of $94 million, which includes a net
unrealized gain on the value of the Company's derivative contracts
of $72 million, and Adjusted EBITDA of $111 million for the first
quarter of 2023. Adjusted EBITDA is a non-GAAP measure defined and
reconciled in the tables below
- Drilling and completion (“D&C”) spend below planned costs
during first quarter of 2023; higher pumping efficiencies and lower
non-productive time driving costs down compared to 2022 levels
- Full year 2023 estimated production of 325-345 MMcfe/d
unchanged, a 24% increase year-over-year and compound annual growth
rate of more than 20% since full year 2020
- Reiterated full year 2023 capital budget guidance range;
two-rig program dedicated to oil development expected to deliver
2023 oil production growth of ~100% year-over-year. Optionality to
complete up to eight previously drilled but uncompleted Fasken gas
wells by year-end, contingent upon commodity prices and takeaway
capacity
- As of April 28, 2023, gas production is 91% hedged for
remainder of 2023 using midpoint of guidance
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented,
“Our team continues to execute our 2023 business plan and drive
greater operational efficiencies. We achieved strong initial
results from oil wells brought online this year reflecting the
value of our recent acquisitions and our consolidated acreage
blocks. With the relative strength in oil prices since our last
update, our development plans are largely unchanged as we expect to
double our 2023 oil production year-over-year by continuing with
two drilling rigs focused on our oil assets. We expect this oil
growth will drive increasing revenue and EBITDA for the remainder
of the year and establish a well-balanced PDP production base by
year end, providing us optionality in our future development
program.”
Mr. Woolverton continued, “SilverBow's differentiated growth
strategy and commitment to spending within cash flow sets up
compelling returns over our multi-year outlook. Our 2023 gas
production is over 90% hedged, mitigating downside exposure to
lower pricing, and we can elect to complete several Webb County Gas
wells by year end should pricing improve. Our strategy emphasizes
operational flexibility and real-time capital allocation to our
highest returns on investment. The ability to pivot between oil and
gas development has been, and will continue to be, a competitive
advantage for SilverBow.”
OPERATIONS HIGHLIGHTS
During the first quarter of 2023, SilverBow drilled 13 net
wells, completed 11 net wells and brought online 13 net wells. The
Company operated two drilling rigs during the quarter, primarily on
its Central Oil and Western Condensate areas, which reflect its
ongoing focus on oil development in the near term. SilverBow's
operations team set a new Company record in pumping efficiency
during the quarter, completing 25% more stages per day as compared
to similar jobs for full year 2022. Drilling and completion costs
year to date have trended below levels experienced in 2022,
including drilling dayrates, horsepower, sand and chemicals.
In its Central Oil area, the Company completed and brought
online two three-well pads which produced 30-day averages of 2,000
Boe/d (93% oil) with average lateral lengths of 7,550 feet. In its
Western Condensate area, SilverBow completed and brought online a
three-well pad which produced a 30-day average of 2,700 Boe/d (26%
oil) with an average lateral length of 7,200 feet. Strong initial
performance from these pads are in-line with expectations and
support consistent results across the Company's oil development
program. As expected, net gas production in SilverBow's Webb County
Gas area was limited to contracted firm capacity levels during the
quarter. The Company continues to plan for limited interruptible
takeaway capacity until late 2023 as new pipelines come into
service.
PRODUCTION VOLUMES, OPERATING COSTS AND REALIZED
PRICES
SilverBow's total net production for the first quarter of 2023
averaged 304 MMcfe/d, within the Company's guidance range.
Production mix for the first quarter consisted of 66% natural gas,
22% oil and 12% natural gas liquids (“NGLs”). Natural gas comprised
38% of total oil and gas sales for the first quarter, compared to
60% in the first quarter of 2022. Net oil production for the first
quarter averaged 11,362 Bbls/d, an increase of 138% compared to the
first quarter of 2022.
For the first quarter, lease operating expenses (“LOE”) were
$0.78 per thousand cubic feet of natural gas equivalent (“Mcfe”),
transportation and processing expenses (“T&P”) were $0.42 per
Mcfe and production and ad valorem taxes were 6.7% of oil and gas
sales. Total production expenses, which include LOE, T&P and
production taxes, were $1.54 per Mcfe for the first quarter. Net
general and administrative (“net G&A”) expenses for the first
quarter were $7.7 million, or $0.28 per Mcfe. After deducting $1.1
million of non-cash compensation expense, cash general and
administrative (“cash G&A”) (a non-GAAP measure) expenses were
$6.5 million for the first quarter, or $0.24 per Mcfe.
Crude oil and natural gas realizations in the first quarter were
96% of WTI and 86% of Henry Hub, respectively, excluding hedging.
The average realized natural gas price, excluding hedging, was
$2.94 per thousand cubic feet of natural gas (“Mcf”) in the first
quarter compared to $4.96 per Mcf in the first quarter of 2022. The
average realized crude oil selling price, excluding hedging, was
$73.01 per barrel in the first quarter compared to $92.59 per
barrel in the first quarter of 2022. The average realized NGL
selling price, excluding hedging, was $22.95 per barrel (30% of WTI
benchmark) in the first quarter compared to $34.89 per barrel (37%
of WTI benchmark) in the first quarter of 2022. Please refer to the
tables included in this news release for production volumes and
pricing information.
FINANCIAL RESULTS
SilverBow reported total oil and gas sales of $140.0 million for
the first quarter of 2023. The Company reported net income of $94.5
million, which includes a net unrealized gain on the value of the
SilverBow's derivative contracts and WTI contingency payouts of $72
million.
For the first quarter of 2023, the Company generated Adjusted
EBITDA (a non-GAAP measure) of $111.0 million. For the twelve
months ended March 31, 2023, SilverBow reported net income of
$499.2 million and Adjusted EBITDA for Leverage Ratio (a non-GAAP
measure) of $492.8 million, which, in accordance with the Leverage
Ratio calculation in the Company's Credit Agreement (as defined
below), includes contributions from acquired assets prior to their
closing dates totaling $62.7 million.
Capital expenditures incurred during the first quarter of 2023
totaled $108.0 million on an accrual basis.
GUIDANCE UPDATE
SilverBow continues to operate two drilling rigs on its oil
acreage, consistent with its original budget plans detailed in
March. The Company also re-affirmed its full year 2023 capex
guidance range of $450-$475 million. During the second quarter of
2023, SilverBow will shift its drilling rig from its Western
Condensate area to its Eastern Extension area, where early results
are showing strong well performance and potential inventory upside
from both the Eagle Ford and Austin Chalk formations. Additionally,
included in the 2023 capital budget is the completion of a
four-well pad in the Webb County Gas area at year-end, which will
be subject to commodity prices and timing of regional midstream
expansion projects coming online.
For the second quarter of 2023, SilverBow is guiding to
estimated production of 317-332 MMcfe/d, with expected oil volumes
of 11,900-12,300 Bbls/d. For the full year 2023, the Company's
guidance is unchanged with a production range of 325-345 MMcfe/d,
and with expected oil volumes of 13,750-15,000 Bbls/d. Based on
guidance, SilverBow's full year 2023 oil production is expected to
increase roughly 100% year-over-year and comprise 40%-50% of total
production mix by the fourth quarter. The Company's production
guidance assumes that gas production from Webb County is limited to
contracted firm pipeline capacity for the full year 2023.
Additional detail concerning the Company's second quarter and
full year 2023 guidance can be found in the table included with
today's new release and the Corporate Presentation in the Investor
Relations section of the SilverBow's website.
HEDGING UPDATE
Hedging continues to be an important element of SilverBow's
strategy to protect cash flow. The Company's hedging program is
structured to provide exposure to higher commodity prices while
also protecting against periods of low prices.
As of April 28, 2023, SilverBow had 72% of total production
hedged for the remainder of 2023, using the midpoint of guidance.
SilverBow has 181 MMcf/d (91% of guidance) of natural gas
production hedged at an average price of $3.79 per million British
thermal units, 7,399 Bbls/d (48% of guidance) of oil hedged at an
average price of $74.55 per barrel and 3,750 Bbls/d (42% of
guidance) of NGLs hedged at an average price of $32.98 per barrel
for the remainder of 2023. For 2024, the Company has 118 MMcf/d of
natural gas production hedged and 3,273 Bbls/d of oil hedged. The
hedged amounts are inclusive of both swaps and collars with the
average price factoring in the floor price of the collars.
Please see SilverBow's Corporate Presentation and Form 10-Q
filing for the first quarter of 2023, which the Company expects to
file on Thursday, May 4, 2023, for a detailed summary of its
derivative contracts.
CAPITAL STRUCTURE AND LIQUIDITY
As of March 31, 2023, SilverBow had $2.2 million of cash and
$559.0 million of outstanding borrowings under its Credit Facility.
The Company's liquidity position was $218.2 million consisting of
$2.2 million of cash and $216.0 million of availability under the
Credit Facility. SilverBow's net debt as of March 31, 2023 was
$706.8 million, calculated as total long-term debt of $709.0
million less $2.2 million of cash.
As of April 28, 2023, SilverBow had 22.6 million total common
shares outstanding.
CONFERENCE CALL AND UPDATED INVESTOR PRESENTATION
SilverBow will host a conference call for investors on Thursday,
May 4, 2023, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time).
Investors and participants can listen to the call by dialing
1-888-415-4465 (U.S.) or 1-646-960-0140 (International) and
requesting SilverBow Resource's First Quarter 2023 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 2023 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 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 our 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. All
statements, other than statements of historical fact included in
this press release, including those regarding our strategy, the
benefits of the acquisitions, future operations, guidance and
outlook, financial position, well expectations and drilling plans,
estimated production levels, expected oil and natural gas pricing,
estimated oil and natural gas reserves or the present value
thereof, reserve increases, service costs, impacts of inflation,
future free cash flow and expected leverage ratio, capital
expenditures, budget, projected costs, prospects, plans and
objectives of management are forward-looking statements. When used
in this report, the words “will,” “could,” “believe,” “anticipate,”
“intend,” “estimate,” “budgeted,” “guidance,” “expect,” “may,”
“continue,” “predict,” “potential,” “plan,” “project,” “should” 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 following risks and uncertainties: further
actions by the members of the Organization of the Petroleum
Exporting Countries, Russia and other allied producing countries
with respect to oil production levels and announcements of
potential changes in such levels; risk related to recently
completed acquisitions and integrations of these acquisitions;
volatility in natural gas, oil and NGL prices; ability to obtain
permits and government approvals; our borrowing capacity, future
covenant compliance, cash flows and liquidity, including our
ability to satisfy our short- or long-term liquidity needs; asset
disposition efforts or the timing or outcome thereof; ongoing and
prospective joint ventures, their structures and substance, and the
likelihood of their finalization or the timing thereof; the amount,
nature and timing of capital expenditures, including future
development costs; timing, cost and amount of future production of
oil and natural gas; availability of drilling and production
equipment or availability of oil field labor; availability, cost
and terms of capital; timing and successful drilling and completion
of wells; availability and cost for transportation and storage of
oil and natural gas; costs of exploiting and developing our
properties and conducting other operations; competition in the oil
and natural gas industry; general economic and political
conditions, including inflationary pressures, further increases in
interest rates, a general economic slowdown or recession,
instability in financial institutions, political tensions and war
(including future developments in the ongoing Russia-Ukraine
conflict); the severity and duration of world health events,
including health crises and pandemics, related economic
repercussions, including disruptions in the oil and gas industry,
supply chain disruptions, and operational challenges including
remote work arrangements and protecting the health and well being
of our employees; opportunities to monetize assets; our ability to
execute on strategic initiatives; effectiveness of our risk
management activities, including hedging strategy; counterparty and
credit market risk; pending legal and environmental matters,
including potential impacts on our business related to climate
change and related regulations; actions by third parties, including
customers, service providers and shareholders; current and future
governmental regulation and taxation of the oil and natural gas
industry; developments in world oil and natural gas markets and in
oil and natural gas-producing countries; uncertainty regarding our
future operating results; and other risks and uncertainties
discussed in the Company’s reports filed with the SEC, including
its annual report on Form 10-K for the year ended December 31,
2022, and subsequent quarterly reports on Form 10-Q and current
reports on Form 8-K.
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. The Company’s capital budget, operating
plan, service cost outlook and development plans are subject to
change at any time. 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, except as required by law.
(Financial Highlights to Follow)
Condensed Consolidated Balance Sheets
(Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except share amounts)
March 31, 2023
December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents
$
2,167
$
792
Accounts receivable, net
63,940
89,714
Fair value of commodity derivatives
79,979
52,549
Other current assets
2,672
2,671
Total Current Assets
148,758
145,726
Property and Equipment:
Property and equipment, full cost method,
including $18,196 and $16,272, respectively, of unproved property
costs not being amortized at the end of each period
2,638,716
2,529,223
Less – Accumulated depreciation,
depletion, amortization & impairment
(1,048,062
)
(1,004,044
)
Property and Equipment, Net
1,590,654
1,525,179
Right of use assets
10,229
12,077
Fair value of long-term commodity
derivatives
26,645
24,172
Other long-term assets
8,646
9,208
Total Assets
$
1,784,932
$
1,716,362
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities
$
51,599
$
60,200
Fair value of commodity derivatives
13,450
40,796
Accrued capital costs
45,264
56,465
Accrued interest
2,225
2,665
Current lease liability
7,165
8,553
Undistributed oil and gas revenues
16,743
27,160
Total Current Liabilities
136,446
195,839
Long-term debt, net
705,715
688,531
Non-current lease liability
3,303
3,775
Deferred tax liabilities
42,753
16,141
Asset retirement obligations
9,451
9,171
Fair value of long-term commodity
derivatives
2,394
7,738
Other long-term liabilities
565
3,588
Commitments and Contingencies
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, 22,081,653 and 22,663,135 shares issued,
respectively, and 22,602,018 and 22,309,740 shares outstanding,
respectively
231
227
Additional paid-in capital
577,293
576,118
Treasury stock, held at cost, 479,635 and
353,395 shares, respectively
(10,479
)
(7,534
)
Retained earnings
317,260
222,768
Total Stockholders’ Equity
884,305
791,579
Total Liabilities and Stockholders’
Equity
$
1,784,932
$
1,716,362
Condensed Consolidated Statements of
Operations (Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except per-share amounts)
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Revenues:
Oil and gas sales
$
139,954
$
129,656
Operating Expenses:
General and administrative, net
7,664
4,786
Depreciation, depletion, and
amortization
43,998
21,154
Accretion of asset retirement
obligations
224
99
Lease operating expenses
20,560
9,125
Workovers
779
647
Transportation and gas processing
11,520
6,352
Severance and other taxes
9,385
7,764
Total Operating Expenses
94,130
49,927
Operating Income
45,824
79,729
Non-Operating Income (Expense)
Gain (loss) on commodity derivatives,
net
92,249
(140,242
)
Interest expense, net
(16,745
)
(6,557
)
Other income (expense), net
(24
)
61
Income (Loss) Before Income Taxes
121,304
(67,009
)
Provision (Benefit) for Income Taxes
26,812
(2,754
)
Net Income (Loss)
$
94,492
$
(64,255
)
Per Share Amounts:
Basic Earnings (Loss) Per Share
$
4.21
$
(3.84
)
Diluted Earnings (Loss) Per Share
$
4.17
$
(3.84
)
Weighted-Average Shares Outstanding -
Basic
22,440
16,719
Weighted-Average Shares Outstanding -
Diluted
22,634
16,719
Condensed Consolidated Statements of
Cash Flows (Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands)
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Cash Flows from Operating Activities:
Net income (loss)
$
94,492
$
(64,255
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation, depletion, and
amortization
43,998
21,154
Accretion of asset retirement
obligations
224
99
Deferred income taxes
26,612
(2,902
)
Share-based compensation
1,124
1,047
(Gain) Loss on derivatives, net
(92,249
)
140,242
Cash settlement (paid) received on
derivatives
18,699
(24,554
)
Settlements of asset retirement
obligations
(3
)
(38
)
Other
756
1,138
Change in operating assets and
liabilities:
(Increase) decrease in accounts receivable
and other current assets
30,687
2,794
Increase (decrease) in accounts payable
and accrued liabilities
(24,504
)
(10,144
)
Increase (decrease) in income taxes
payable
300
149
Increase (decrease) in accrued
interest
(441
)
165
Net Cash Provided by (Used in) Operating
Activities
99,695
64,895
Cash Flows from Investing Activities:
Additions to property and equipment
(111,285
)
(35,228
)
Acquisition of oil and gas properties, net
of purchase price adjustments
(1,090
)
436
Net Cash Provided by (Used in) Investing
Activities
(112,375
)
(34,792
)
Cash Flows from Financing Activities:
Proceeds from bank borrowings
121,000
122,000
Payments of bank borrowings
(104,000
)
(149,000
)
Purchase of treasury shares
(2,945
)
(2,462
)
Payments of debt issuance costs
—
(117
)
Net Cash Provided by (Used in) Financing
Activities
14,055
(29,579
)
Net Increase (Decrease) in Cash and Cash
Equivalents
1,375
524
Cash and Cash Equivalents at Beginning of
Period
792
1,121
Cash and Cash Equivalents at End of
Period
$
2,167
$
1,645
Supplemental Disclosures of Cash Flow
Information:
Cash paid during period for interest, net
of amounts capitalized
$
16,434
$
5,816
Non-cash Investing and Financing
Activities:
Changes in capital accounts payable and
capital accruals
$
(3,097
)
$
5,037
Non-cash equity consideration for
acquisitions
$
—
$
1,134
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
useful in comparing 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.
Adjusted EBITDA: The Company presents Adjusted EBITDA
attributable to common stockholders in addition to reported net
income (loss) in accordance with GAAP. Adjusted EBITDA is
calculated as net income (loss) plus (less) depreciation, depletion
and amortization, accretion of asset retirement obligations,
interest expense, 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 SilverBow 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 used by the Company's management and by external
users of SilverBow's financial statements, such as investors,
commercial banks and others, to assess the Company'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 SilverBow's ability to incur and service
debt and fund capital expenditures. 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 GAAP. Adjusted EBITDA is important as it is
considered among the financial covenants under the Company'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” and the borrowing facility provided thereby, the “Credit
Facility”), a material source of liquidity for SilverBow. Please
reference the Annual Report and subsequent 8-Ks for discussion of
the Credit Agreement and its covenants.
Adjusted EBITDA for Leverage Ratio: In accordance with
the Leverage Ratio calculation for the Credit Facility, the Company
makes certain adjustments to its calculation of Adjusted EBITDA.
Adjusted EBITDA for Leverage Ratio is calculated as Adjusted EBITDA
(defined above) plus pro forma EBITDA contributions related to
closed acquisitions. The Company believes that Adjusted EBITDA for
Leverage Ratio is useful to investors because it reflects the last
twelve months EBITDA used by the administrative agent for the
Credit Facility in the calculation of its leverage ratio
covenant.
Cash General and Administrative Expenses: Cash G&A
expenses is a non-GAAP measure calculated as net general and
administrative costs less share-based compensation. The Company
reports cash G&A expenses because it believes this measure is
commonly used by management, analysts and investors as an indicator
of cost management and operating efficiency on a comparable basis
from period to period. In addition, SilverBow believes cash G&A
expenses are used by analysts and others in valuation, comparison
and investment recommendations of companies in the oil and gas
industry to allow for analysis of G&A spend without regard to
stock-based compensation which can vary substantially from company
to company. Cash G&A expenses should not be considered as an
alternative to, or more meaningful than, total G&A expenses.
The Company has provided forward-looking Cash G&A expenses
estimates; however, SilverBow is unable to provide a quantitative
reconciliation of these forward-looking non-GAAP measures to the
most directly comparable forward-looking GAAP measure because the
items necessary to estimate such forward-looking GAAP measure are
not accessible or estimable at this time without unreasonable
efforts. The reconciling items in future periods could be
significant.
Free Cash Flow: Free cash flow is calculated as Adjusted
EBITDA (defined above) plus (less) cash interest expense and bank
fees, capital expenditures and current income tax (expense)
benefit. The Company believes that free cash flow is useful to
investors and analysts because it assists in evaluating SilverBow's
operating performance, and the valuation, comparison, rating and
investment recommendations of companies within the oil and gas
industry. SilverBow uses this information as one of the bases for
comparing its operating performance with other companies within the
oil and gas industry. Free cash flow 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 GAAP. From time to time the Company provides
forward-looking free cash flow and free cash flow yield estimates
or targets; however, SilverBow is unable to provide a quantitative
reconciliation of these forward-looking non-GAAP measures to the
most directly comparable forward-looking GAAP measure because the
items necessary to estimate such forward-looking GAAP measure are
not accessible or estimable at this time without unreasonable
efforts. The reconciling items in future periods could be
significant.
Total Debt to Adjusted EBITDA (Leverage Ratio): Leverage
Ratio is calculated as total debt, defined as long-term debt
excluding unamortized discount and debt issuance costs, divided by
Adjusted EBITDA (defined above) for the most recently completed
12-month period.
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.
Calculation of Adjusted EBITDA and Free
Cash Flow (Unaudited)
SilverBow Resources, Inc. and Subsidiary
(in thousands, except share amounts)
The below tables provide the calculation
of Adjusted EBITDA and Free Cash Flow for the following periods (in
thousands).
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Net Income (Loss)
$
94,492
$
(64,255
)
Plus:
Depreciation, depletion and
amortization
43,998
21,154
Accretion of asset retirement
obligations
224
99
Interest expense
16,745
6,557
Loss (gain) on commodity derivatives,
net
(92,249
)
140,242
Derivative cash settlements
collected/(paid) (1)
19,868
(28,201
)
Income tax expense/(benefit)
26,812
(2,754
)
Share-based compensation expense
1,124
1,047
Adjusted EBITDA
$
111,014
$
73,889
Plus:
Cash interest expense and bank fees,
net
(16,434
)
(5,816
)
Capital expenditures(2)
(108,033
)
(40,358
)
Current income tax (expense)/benefit
(200
)
(149
)
Free Cash Flow
$
(13,653
)
$
27,566
(1) Amounts relate to settled contracts
covering the production months during the period.
(2) Excludes proceeds/(payments) related
to the divestiture/(acquisition) of oil and gas properties and
equipment, outside of regular way land and leasing costs.
Last Twelve Months Ended March
31, 2023
Last Twelve Months Ended March
31, 2022
Net Income (Loss)
$
499,183
$
(5,875
)
Plus:
Depreciation, depletion and
amortization
156,826
76,391
Accretion of asset retirement
obligations
660
330
Interest expense
52,136
28,667
Loss (gain) on commodity derivatives,
net
(158,607
)
245,001
Derivative cash settlements
collected/(paid) (1)
(164,348
)
(96,675
)
Income tax expense/(benefit)
39,166
3,644
Share-based compensation expense
5,164
4,622
Adjusted EBITDA
$
430,180
$
256,105
Plus:
Cash interest expense and bank fees,
net
(54,656
)
(30,317
)
Capital expenditures(2)
(395,179
)
(137,900
)
Current income tax (expense)/benefit
(25
)
(335
)
Free Cash Flow
$
(19,680
)
$
87,553
Adjusted EBITDA
$
430,180
$
256,105
Pro forma contribution from closed
acquisitions
62,654
25,343
Adjusted EBITDA for Leverage Ratio
(3)
$
492,834
$
281,448
(1) Amounts relate to settled contracts
covering the production months during the period.
(2) Excludes proceeds/(payments) related
to the divestiture/(acquisition) of oil and gas properties and
equipment, outside of regular way land and leasing costs.
(3) Adjusted EBITDA for Leverage Ratio,
which is calculated in accordance with SilverBow's Credit Facility,
includes pro forma EBITDA contributions reflecting the results of
acquired assets' operations for referenced time periods preceding
the acquired assets' close date. Leverage Ratio is calculated as
total debt, defined as Credit Facility borrowings plus Second Lien
notes, divided by Adjusted EBITDA for Leverage Ratio for the most
recently completed twelve month period. The below table provides
the calculation for Leverage Ratio for the following periods:
March 31, 2023
March 31, 2022
Credit Facility Borrowings due 2026
$
559,000
$
200,000
Second Lien Notes due 2026
150,000
150,000
Total debt
$
709,000
$
350,000
Adjusted EBITDA for Leverage Ratio (3)
492,834
281,448
Leverage Ratio
1.44x
1.24x
Production Volumes & Pricing
(Unaudited)
SilverBow Resources, Inc. and
Subsidiary
Three Months Ended March 31,
2023
Three Months Ended March 31,
2022
Production volumes:
Oil (MBbl) (1)
1,023
429
Natural gas (MMcf)
17,974
15,587
Natural gas liquids (MBbl) (1)
539
359
Total (MMcfe)
27,345
20,319
Oil, natural gas and natural gas liquids
sales (in thousands):
Oil
$
74,655
$
39,741
Natural gas
52,922
77,372
Natural gas liquids
12,377
12,543
Total
$
139,954
$
129,656
Average realized price before impact of
cash-settled derivatives:
Oil (per Bbl)
$
73.01
$
92.59
Natural gas (per Mcf)
2.94
4.96
Natural gas liquids (per Bbl)
22.95
34.89
Average per Mcfe
$
5.12
$
6.38
Price impact of cash-settled
derivatives:
Oil (per Bbl)
$
0.92
$
(30.04
)
Natural gas (per Mcf)
0.94
(0.84
)
Natural gas liquids (per Bbl)
3.61
(6.11
)
Average per Mcfe
$
0.73
$
(1.39
)
Average realized price including impact of
cash-settled derivatives:
Oil (per Bbl)
$
73.93
$
62.55
Natural gas (per Mcf)
3.89
4.12
Natural gas liquids (per Bbl)
26.56
28.78
Average per Mcfe
$
5.85
$
4.99
(1) Oil and NGLs are converted at the rate
of one barrel to six Mcfe. Bbl refers to barrels, and MBbl refers
to one thousand barrels. MMcf refers to one million cubic feet.
Second Quarter 2023 & Full
Year 2023 Guidance
Guidance
2Q 2023
FY 2023
Production Volumes:
Oil (Bbls/d)
11,900 - 12,300
13,750 - 15,000
Natural Gas (MMcf/d)
205 - 215
195 - 205
NGLs (Bbls/d)
6,800 - 7,200
7,900 - 8,400
Total Reported Production (MMcfe/d)
317 - 332
325 - 345
Product Pricing:
Crude Oil NYMEX Differential ($/Bbl)
($4.50) - ($2.50)
N/A
Natural Gas NYMEX Differential ($/Mcf)
($0.80) - $0.00
N/A
Natural Gas Liquids (% of WTI)
26% - 30%
N/A
Operating Costs & Expenses:
Lease Operating Expenses ($/Mcfe)
$0.70 - $0.74
$0.73 - $0.77
Transportation & Processing
($/Mcfe)
$0.39 - $0.43
$0.39 - $0.43
Production Taxes (% of Revenue)
7.0% - 8.0%
6.5% - 7.5%
Cash G&A, net ($MM)
$4.5 - $5.0
$19.0 - $20.0
A forward-looking estimate of net G&A
expenses is not provided with the forward-looking estimate of cash
G&A (a non-GAAP measure) because the items necessary to
estimate net G&A expenses are not accessible or estimable at
this time without unreasonable efforts. Such items could have a
significant impact on net G&A expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005707/en/
Jeff Magids Vice President of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW
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