SilverBow Resources Announces Fourth Quarter and Full Year 2023 Results and 2024 Outlook
- None.
- None.
Insights
The reported net income of $298 million and Adjusted EBITDA of $536 million for SilverBow Resources in 2023 indicates a robust financial performance, particularly noting the $56 million in free cash flow. The company's ability to generate strong free cash flow is a critical metric for investors as it reflects the company's operational efficiency and its capacity to self-fund growth, reduce debt, or return capital to shareholders. SilverBow's strategic acquisition, which added significant high-return locations and the efficient capital investments that were below guidance, have positioned the company favorably in terms of future growth prospects.
With a reported return on capital employed (ROCE) of 16% for the year and a three-year average ROCE of 21%, SilverBow demonstrates above-average efficiency in using its capital to generate profits, a positive sign for investors evaluating the company's profitability relative to its capital base. The lowered capital investments for 2024 in response to commodity prices show management's adaptability to market conditions, aiming to preserve value and focus on high-margin oil and liquids projects. This strategic shift could be beneficial in the current volatile commodity price environment.
From a market perspective, SilverBow's significant increase in production, particularly in oil, by more than doubling year-over-year to 14.6 thousand barrels per day, aligns with the industry's pivot towards more lucrative oil and liquids amid fluctuating natural gas prices. The company's revised 2024 outlook, with a focus on oil and liquids while reducing natural gas volume expectations by 13%, reflects an industry trend where operators are optimizing their portfolios for higher-margin products in response to market dynamics.
The strategic acquisition in South Texas not only expands SilverBow's operational footprint but also diversifies its product mix, which can mitigate risks associated with price volatility in any single commodity. The anticipated 50% year-over-year increase in production for 2024, with oil production expected to rise by 70%, positions SilverBow to potentially capitalize on current market trends favoring oil and liquid-rich plays.
Examining SilverBow's operational strategy within the broader economic context, the company's emphasis on capital efficiency and free cash flow generation is particularly prudent given the potential for economic headwinds and commodity price volatility. The company's proactive management of its capital structure, with a leverage ratio of 1.56x, indicates a strong balance sheet that provides flexibility for future growth or weathering economic downturns. Furthermore, the focus on debt reduction as the primary use of free cash flow in the near-term is a conservative approach that may appeal to risk-averse investors, especially in an environment where interest rates are rising and debt servicing costs could increase.
The reported increases in proved reserves and the strategic reductions in capital expenditures reflect a disciplined approach to growth, ensuring that SilverBow is not overextending financially while still pursuing opportunities to enhance shareholder value. The company's hedging strategy, with approximately 60% of total production hedged for 2024, provides a layer of protection against price swings, which is particularly relevant in the current uncertain economic climate.
2023 performance advances business strategy with strong free cash flow generation, efficient production growth and lower than expected capital investments
2024 outlook to benefit from recent transformational acquisition that brings efficient, high-margin production, product diversification, additional capital efficiencies, free cash flow generation and balance sheet flexibility
Full Year 2023 Highlights:
-
Generated net income of
$298 million $12.63 $536 million $56 million -
Created additional scale and commodity optionality through transformational acquisition of
South Texas assets, adding more than 300 high-return locations and 32 thousand barrels of oil equivalent per day (“MBoe/d”); SilverBow has more than 1,000 high-value locations, or more than a decade of inventory at its current development pace -
Reported average net production of 59.4 MBoe/d (
39% oil/liquids), in the upper half of guidance; more than doubled year-over-year net oil production to 14.6 thousand barrels of oil per day (“MBbls/d”) -
Invested
$409 million -
Achieved full year 2023 return on capital employed (“ROCE”) of
16% ; three-year average ROCE (2021-23) of21% 1 - Advanced key elements of its corporate strategy, including expanding its portfolio of high-return opportunities, profitably growing production, creating capital efficiencies to enhance margins, delivering FCF and strengthening the balance sheet
Fourth Quarter 2023 Highlights:
-
Generated net income of
$183 million $7.12 $172 million $74 million -
Reported average net production of 72.1 MBoe/d (
43% oil/liquids), in the upper half of guidance; grew year-over-year net oil production to 19.3 MBbls/d, an increase of nearly75% -
Invested
$79 million
2024 Outlook:
-
In response to commodity prices, the Company lowered its previously planned capital investments in dry gas-focused areas by approximately
$75 million $470 $510 million -
At current commodity prices, the Company expects to generate
$125 $150 million -
The Company is maintaining planned investment in oil and liquids projects while keeping oil and liquids production guidance at previously announced levels. Revised capital investments reduce expected natural gas volumes by
13% -
Production is expected to increase approximately
50% year-over-year to 85.2 - 93.5 MBoe/d, post-recent acquisition, oil production is expected to increase70% year-over-year and comprise25% -30% of 2024 production mix
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, said, “We performed exceptionally well in 2023, advancing our strategy to create value and dramatically strengthen SilverBow with the recent high-value
FOURTH QUARTER FINANCIAL AND OPERATING SUMMARY
For the fourth quarter of 2023, SilverBow reported net income of
Strong production in the quarter was related to performance from the Central Oil area, where the Company recently brought online a four-well pad with a 30-day pad average of 4,605 Boe/d (
Stated without the impact of hedging, crude oil and natural gas realizations for the quarter were
Total production expenses in the quarter, which include lease operating expenses, transportation and processing expenses and production taxes, were
Capital investments during the quarter were in the lower half of guidance and totaled
FULL YEAR 2023 FINANCIAL AND OPERATING SUMMARY
For full year 2023, SilverBow reported net income of
Stated without the impact of hedging, crude oil and natural gas realizations in the year were
SilverBow posted significant year-over-year operational efficiency gains in 2023, completing
Capital investments for the year, excluding acquisitions, totaled
PROVED RESERVES
SilverBow increased its proved reserves by
The table below reconciles 2022 proved reserves to 2023 proved reserves:
|
Total (MBoe) |
|
Proved reserves as of December 31, 2022 |
372,437 |
|
Extensions, discoveries, and other additions |
43,687 |
|
Revisions of prior reserve estimates |
(91,346 |
) |
Purchases of minerals in place |
142,738 |
|
Production |
(21,667 |
) |
Proved reserves as of December 31, 2023 |
445,850 |
|
SEC prices used in the 2023 calculation were
2024 OUTLOOK
Mr. Woolverton commented, “Our outlook for 2024 reflects the positive impacts of our recent transaction and ability to exercise flexibility in our operating plan in response to commodity prices. Given low natural gas prices, we reduced our planned investments in our Webb County Gas area to preserve valuable inventory for the future, while our development activity in our expanded oil opportunities continues. This flexibility is a result of our acquisition strategy and allows us to capitalize on our competitive advantage in the Eagle Ford. Our current 2024 plan high-grades our large, high-return portfolio of opportunities to create a plan that maximizes free cash flow and allows for debt reduction. We are positioned to benefit from the significant and sustainable capital efficiencies we have created over the past year, and expect to continue optimizing our development program in real-time as dictated by our returns-focused mindset.”
SilverBow’s current planned capital investments are
The Company plans to operate three drilling rigs through the first half of 2024, and operate two drilling rigs in the second half of the year. The Company is directing the majority of its investments to liquids development, including approximately
For the first quarter of 2024, the Company expects to produce 86.5 - 93.3 MBoe/d, with expected oil volumes of 22.5 - 25.0 MBbls/d. Additional detail on SilverBow's guidance can be found in the table included in this release.
RISK MANAGEMENT
SilverBow consistently uses the derivatives market to mitigate commodity price risks and ensure cash flow to fund its annual capital program. As of February 23, 2024, SilverBow had approximately
CAPITAL STRUCTURE
Due to the underlying strength of SilverBow's business and increasing scale, the Company’s liquidity more than doubled year-over-year. At year-end 2023, SilverBow had approximately
For full year 2023, SilverBow reported year-end debt of
CONFERENCE CALL DETAILS
SilverBow plans to host a conference call for investors at 9 a.m CT (10 a.m. ET), on Thursday, February 29, 2024. Investors and participants can listen to the call by dialing 1-888-415-4465 (
ABOUT SILVERBOW RESOURCES, INC.
SilverBow Resources, Inc. (NYSE: SBOW) is a
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, long-term inventory estimates, estimated oil and natural gas reserves or the present value thereof, reserve increases, service costs, impact of inflation, future free cash flow and expected leverage ratio, value and development of locations, 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,” “potential,” “plan,” “project,” "positioned," "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,
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.
(Footnotes)
1 Adjusted EBITDA, FCF and ROCE are non-GAAP measures defined and reconciled in the tables included in this news release.
2 Leverage ratio is defined as total long-term debt, before unamortized discounts, divided by Adjusted EBITDA for Leverage Ratio (a non-GAAP measure defined and reconciled in the tables included in this news release) for the trailing twelve-month period.
(Financial Highlights to Follow)
Consolidated Balance Sheets (Unaudited) |
|||||||
SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current Assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
969 |
|
|
$ |
792 |
|
Accounts receivable, net |
|
138,343 |
|
|
|
89,714 |
|
Fair value of commodity derivatives |
|
116,549 |
|
|
|
52,549 |
|
Other current assets |
|
5,590 |
|
|
|
2,671 |
|
Total Current Assets |
|
261,451 |
|
|
|
145,726 |
|
Property and Equipment: |
|
|
|
||||
Property and Equipment, Full-Cost Method, including |
|
3,597,160 |
|
|
|
2,529,223 |
|
Less – Accumulated depreciation, depletion, amortization and impairment |
|
(1,223,241 |
) |
|
|
(1,004,044 |
) |
Property and Equipment, Net |
|
2,373,919 |
|
|
|
1,525,179 |
|
Right of use assets |
|
12,888 |
|
|
|
12,077 |
|
Fair value of long-term commodity derivatives |
|
55,114 |
|
|
|
24,172 |
|
Other long-term assets |
|
31,090 |
|
|
|
9,208 |
|
Total Assets |
$ |
2,734,462 |
|
|
$ |
1,716,362 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current Liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
98,816 |
|
|
$ |
60,200 |
|
Deferred acquisition liability |
|
50,000 |
|
|
|
— |
|
Fair value of commodity derivatives |
|
5,509 |
|
|
|
40,796 |
|
Accrued capital costs |
|
31,900 |
|
|
|
56,465 |
|
Current portion of long-term debt |
|
28,125 |
|
|
|
— |
|
Accrued interest |
|
9,668 |
|
|
|
2,665 |
|
Current lease liability |
|
4,001 |
|
|
|
8,553 |
|
Undistributed oil and gas revenues |
|
20,425 |
|
|
|
27,160 |
|
Total Current Liabilities |
|
248,444 |
|
|
|
195,839 |
|
Long-term debt, net of current portion |
|
1,173,766 |
|
|
|
688,531 |
|
Non-current lease liability |
|
8,899 |
|
|
|
3,775 |
|
Deferred tax liabilities, net |
|
99,227 |
|
|
|
16,141 |
|
Asset retirement obligations |
|
11,584 |
|
|
|
9,171 |
|
Fair value of long-term commodity derivatives |
|
2,504 |
|
|
|
7,738 |
|
Other long-term liabilities |
|
710 |
|
|
|
3,588 |
|
Commitments and Contingencies |
|
|
|
||||
Stockholders' Equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
259 |
|
|
|
227 |
|
Additional paid-in capital |
|
679,202 |
|
|
|
576,118 |
|
Treasury stock held, at cost, 485,346 and 353,395 shares |
|
(10,617 |
) |
|
|
(7,534 |
) |
Retained earnings |
|
520,484 |
|
|
|
222,768 |
|
Total Stockholders’ Equity |
|
1,189,328 |
|
|
|
791,579 |
|
Total Liabilities and Stockholders’ Equity |
$ |
2,734,462 |
|
|
$ |
1,716,362 |
|
|
|||||||
Consolidated Statements of Operations (Unaudited) |
|||||||
SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts) |
|||||||
|
|||||||
|
Year Ended
|
|
Year Ended
|
||||
Revenues: |
|
|
|
||||
Oil and gas sales |
$ |
652,358 |
|
|
$ |
753,420 |
|
|
|
|
|
||||
Operating Expenses: |
|
|
|
||||
General and administrative, net |
|
24,520 |
|
|
|
21,395 |
|
Depreciation, depletion, and amortization |
|
219,116 |
|
|
|
133,982 |
|
Accretion of asset retirement obligations |
|
985 |
|
|
|
534 |
|
Lease operating expense |
|
87,368 |
|
|
|
55,329 |
|
Workovers |
|
2,694 |
|
|
|
1,655 |
|
Transportation and gas processing |
|
59,032 |
|
|
|
32,989 |
|
Severance and other taxes |
|
38,701 |
|
|
|
41,761 |
|
Total Operating Expenses |
|
432,416 |
|
|
|
287,645 |
|
|
|
|
|
||||
Operating Income (Loss) |
|
219,942 |
|
|
|
465,775 |
|
|
|
|
|
||||
Non-Operating Income (Expense) |
|
|
|
||||
Net gain (loss) on commodity derivatives |
|
241,309 |
|
|
|
(73,885 |
) |
Interest expense |
|
(80,119 |
) |
|
|
(41,948 |
) |
Other income (expense), net |
|
197 |
|
|
|
95 |
|
|
|
|
|
||||
Income (Loss) Before Income Taxes |
|
381,329 |
|
|
|
350,037 |
|
|
|
|
|
||||
Provision (Benefit) for Income Taxes |
|
83,613 |
|
|
|
9,600 |
|
|
|
|
|
||||
Net Income (Loss) |
$ |
297,716 |
|
|
$ |
340,437 |
|
|
|
|
|
||||
Per Share Amounts: |
|
|
|
||||
|
|
|
|
||||
Basic: Net Income (Loss) |
$ |
12.74 |
|
|
$ |
17.24 |
|
|
|
|
|
||||
Diluted: Net Income (Loss) |
$ |
12.63 |
|
|
$ |
16.94 |
|
|
|
|
|
||||
Weighted Average Shares Outstanding - Basic |
|
23,371 |
|
|
|
19,748 |
|
|
|
|
|
||||
Weighted Average Shares Outstanding - Diluted |
|
23,571 |
|
|
|
20,097 |
|
|
|
|
|
||||
Consolidated Statements of Operations (Unaudited) |
|||||||
SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts) |
|||||||
|
|||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||
Revenues: |
|
|
|
||||
Oil and gas sales |
$ |
212,041 |
|
|
$ |
198,978 |
|
|
|
|
|
||||
Operating Expenses: |
|
|
|
||||
General and administrative, net |
|
7,100 |
|
|
|
6,555 |
|
Depreciation, depletion, and amortization |
|
72,080 |
|
|
|
44,886 |
|
Accretion of asset retirement obligations |
|
266 |
|
|
|
169 |
|
Lease operating expense |
|
24,950 |
|
|
|
18,233 |
|
Workovers |
|
431 |
|
|
|
722 |
|
Transportation and gas processing |
|
22,030 |
|
|
|
10,206 |
|
Severance and other taxes |
|
10,137 |
|
|
|
11,578 |
|
Total Operating Expenses |
|
136,994 |
|
|
|
92,349 |
|
|
|
|
|
||||
Operating Income (Loss) |
|
75,047 |
|
|
|
106,629 |
|
|
|
|
|
||||
Non-Operating Income (Expense) |
|
|
|
||||
Net gain (loss) on commodity derivatives |
|
183,706 |
|
|
|
83,932 |
|
Interest expense, net |
|
(25,373 |
) |
|
|
(15,316 |
) |
Other income (expense), net |
|
76 |
|
|
|
37 |
|
|
|
|
|
||||
Income (Loss) Before Income Taxes |
|
233,456 |
|
|
|
175,282 |
|
|
|
|
|
||||
Provision (Benefit) for Income Taxes |
|
50,398 |
|
|
|
1,922 |
|
|
|
|
|
||||
Net Income (Loss) |
$ |
183,058 |
|
|
$ |
173,360 |
|
|
|
|
|
||||
Per Share Amounts: |
|
|
|
||||
|
|
|
|
||||
Basic: Net Income (Loss) |
$ |
7.20 |
|
|
$ |
7.77 |
|
|
|
|
|
||||
Diluted: Net Income (Loss) |
$ |
7.12 |
|
|
$ |
7.65 |
|
|
|
|
|
||||
Weighted Average Shares Outstanding - Basic |
|
25,430 |
|
|
|
22,310 |
|
|
|
|
|
||||
Weighted Average Shares Outstanding - Diluted |
|
25,703 |
|
|
|
22,650 |
|
|
|
|
|
||||
Consolidated Statements of Cash Flows (Unaudited) |
|||||||
SilverBow Resources, Inc. and Subsidiary (in thousands) |
|||||||
|
Year Ended
|
|
Year Ended
|
||||
Cash Flows from Operating Activities: |
|
|
|
||||
Net income |
$ |
297,716 |
|
|
$ |
340,437 |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities- |
|
|
|
||||
Depreciation, depletion, and amortization |
|
219,116 |
|
|
|
133,982 |
|
Accretion of asset retirement obligations |
|
985 |
|
|
|
534 |
|
Deferred income tax expense (benefit) |
|
83,086 |
|
|
|
9,625 |
|
Share-based compensation expense |
|
5,526 |
|
|
|
5,086 |
|
(Gain) Loss on commodity derivatives, net |
|
(241,309 |
) |
|
|
73,885 |
|
Cash settlements received (paid) on derivatives |
|
88,679 |
|
|
|
(219,626 |
) |
Settlements of asset retirement obligations |
|
(716 |
) |
|
|
(48 |
) |
Write-down of debt issuance cost |
|
1,239 |
|
|
|
350 |
|
Other |
|
3,528 |
|
|
|
3,010 |
|
Change in operating assets and liabilities- |
|
|
|
||||
(Increase) decrease in accounts receivable and other assets |
|
(25,439 |
) |
|
|
(29,522 |
) |
Increase (decrease) in accounts payable and accrued liabilities |
|
7,172 |
|
|
|
11,788 |
|
Increase (decrease) in income taxes payable |
|
525 |
|
|
|
(229 |
) |
Increase (decrease) in accrued interest |
|
7,003 |
|
|
|
1,969 |
|
Net Cash Provided by (Used in) Operating Activities |
|
447,111 |
|
|
|
331,241 |
|
Cash Flows from Investing Activities: |
|
|
|
||||
Additions to property and equipment |
|
(421,273 |
) |
|
|
(272,443 |
) |
Acquisition of oil and gas properties |
|
(604,955 |
) |
|
|
(367,024 |
) |
Proceeds from the sale of property and equipment |
|
713 |
|
|
|
4,347 |
|
Payments on property sale obligations |
|
— |
|
|
|
(750 |
) |
Net Cash Provided by (Used in) Investing Activities |
|
(1,025,515 |
) |
|
|
(635,870 |
) |
Cash Flows from Financing Activities: |
|
|
|
||||
Proceeds from long-term debt |
|
356,965 |
|
|
|
— |
|
Payments of long-term debt |
|
(14,250 |
) |
|
|
— |
|
Proceeds from bank borrowings |
|
672,000 |
|
|
|
841,000 |
|
Payments of bank borrowings |
|
(492,000 |
) |
|
|
(526,000 |
) |
Net proceeds from issuances of common stock |
|
97,309 |
|
|
|
— |
|
Net proceeds from stock options exercised |
|
— |
|
|
|
39 |
|
Purchase of treasury shares |
|
(3,083 |
) |
|
|
(3,397 |
) |
Payments of debt issuance costs |
|
(30,600 |
) |
|
|
(7,342 |
) |
Net Cash Provided by (Used in) Financing Activities |
|
586,341 |
|
|
|
304,300 |
|
|
|
|
|
||||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash |
|
7,937 |
|
|
|
(329 |
) |
Cash, Cash Equivalents and Restricted Cash at Beginning of Year |
|
792 |
|
|
|
1,121 |
|
Cash, Cash Equivalents and Restricted Cash at End of Year |
$ |
8,729 |
|
|
$ |
792 |
|
|
|
|
|
||||
Supplemental Disclosures of Cash Flows Information: |
|
|
|
||||
Cash paid during period for interest |
$ |
68,116 |
|
|
$ |
36,994 |
|
Changes in capital accounts payable and capital accruals |
$ |
(13,679 |
) |
|
$ |
54,372 |
|
Non-cash equity consideration for acquisitions |
$ |
— |
|
|
$ |
(156,252 |
) |
Non-cash deferred consideration for acquisitions |
$ |
(50,000 |
) |
|
$ |
— |
|
Non-cash contingent consideration for acquisitions |
$ |
(16,933 |
) |
|
$ |
— |
|
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, 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 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”), a material source of liquidity for SilverBow. Please reference the Company's 2023 Form 10-K for discussion of the Credit Agreement and its covenants.
Adjusted EBITDA for Leverage Ratio: In accordance with the Leverage Ratio calculation for SilverBow's 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 (less) 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 SilverBow's 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.
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. 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 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.
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.
Return on Capital Employed (“ROCE”): ROCE is defined as (A) Adjusted EBITDA less DD&A expense, divided by (B) the average of Capital Employed - Beginning of Year (Total Debt plus Shareholders Equity) and Capital Employed - Year-End. SilverBow believes ROCE presents a comparable metric across multiple business sectors and sizes and is a meaningful measure because it quantifies how well the Company generates Adjusted EBITDA relative to the capital it has employed in its business and illustrates the profitability of a business or project taking into account the capital employed. SilverBow uses ROCE to assist in capital resource allocation decisions and in evaluating business performance. Additionally, the Company also evaluates average ROCE over a trailing three-year period to adjust for short term (one year) fluctuations and illustrate profitability over a longer time period. Although ROCE is commonly used as a measure of capital efficiency, definitions of ROCE differ, and SilverBow's computation of ROCE may not be comparable to other similarly titled measures of other companies.
Reconciliation of Net Income (Loss) to 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, Free Cash Flow and Adjusted EBITDA for Leverage Ratio for the following periods (in thousands).
|
Three Months Ended
|
Three Months Ended
|
||||
Net Income (Loss) |
$ |
183,058 |
|
$ |
173,360 |
|
Plus: |
|
|
||||
Depreciation, depletion and amortization |
$ |
72,080 |
|
$ |
44,886 |
|
Accretion of asset retirement obligations |
|
266 |
|
|
169 |
|
Interest expense |
|
25,373 |
|
|
15,316 |
|
Loss (gain) on commodity derivatives, net |
|
(183,706 |
) |
|
(83,932 |
) |
Derivative cash settlements collected/(paid) (1) |
|
23,053 |
|
|
(33,856 |
) |
Income tax expense/(benefit) |
|
50,398 |
|
|
1,922 |
|
Share-based compensation expense |
|
1,483 |
|
|
1,185 |
|
Adjusted EBITDA |
$ |
172,005 |
|
$ |
119,050 |
|
Plus: |
|
|
||||
Cash interest and bank fees, net |
|
(18,683 |
) |
|
(14,293 |
) |
Capital expenditures (2) |
|
(78,685 |
) |
|
(102,702 |
) |
Current income tax (expense)/benefit |
|
(204 |
) |
|
207 |
|
Free Cash Flow |
$ |
74,433 |
|
$ |
2,262 |
|
(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 |
||||||
|
Year Ended
|
Year Ended
|
||||
Net Income (Loss) |
$ |
297,716 |
|
$ |
340,437 |
|
Plus: |
|
|
||||
Depreciation, depletion and amortization |
|
219,116 |
|
|
133,982 |
|
Accretion of asset retirement obligations |
|
985 |
|
|
534 |
|
Interest expense |
|
80,119 |
|
|
41,948 |
|
Derivative (gain)/loss |
|
(241,309 |
) |
|
73,885 |
|
Derivative cash settlements collected/(paid) (1) |
|
90,395 |
|
|
(212,416 |
) |
Income tax expense/(benefit) |
|
83,613 |
|
|
9,600 |
|
Share-based compensation expense |
|
5,526 |
|
|
5,086 |
|
Adjusted EBITDA |
$ |
536,161 |
|
$ |
393,056 |
|
Plus: |
|
|
||||
Cash interest and bank fees, net |
|
(70,853 |
) |
|
(44,038 |
) |
Capital expenditures (2) |
|
(408,591 |
) |
|
(327,504 |
) |
Current income tax (expense)/benefit |
|
(526 |
) |
|
26 |
|
Free Cash Flow |
$ |
56,191 |
|
$ |
21,540 |
|
|
|
|
||||
Adjusted EBITDA |
$ |
536,161 |
|
$ |
393,056 |
|
Plus: |
|
|
||||
Pro forma contribution from closed acquisitions |
|
245,488 |
|
|
118,329 |
|
Adjusted EBITDA for Leverage Ratio (3) |
$ |
781,649 |
|
$ |
511,385 |
|
(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: |
||||||
|
Year Ended
|
Year Ended
|
||
Credit Facility Borrowings |
$ |
722,000 |
$ |
542,000 |
Second Lien Notes |
|
500,000 |
|
150,000 |
Total debt |
$ |
1,222,000 |
$ |
692,000 |
Adjusted EBITDA for Leverage Ratio (3) |
|
781,649 |
|
511,385 |
Leverage Ratio |
1.56x |
1.35x |
||
Reconciliation of General & Administrative Expenses to Cash General & Administrative Expenses (Unaudited)
SilverBow Resources, Inc. and Subsidiary (in thousands, except per unit amounts)
The below tables provide the calculation of cash G&A for the following periods (in thousands).
|
Three Months Ended
|
Three Months Ended
|
||
General and administrative, net |
$ |
7,100 |
$ |
6,555 |
Less: Share-based compensation expense |
|
1,483 |
|
1,185 |
Cash general and administrative, net |
$ |
5,617 |
$ |
5,370 |
|
|
|
||
General and administrative, net (per Boe) |
$ |
1.07 |
$ |
1.36 |
Less: Share-based compensation expense (per Boe) |
|
0.22 |
|
0.25 |
Cash general and administrative, net (per Boe) |
$ |
0.85 |
$ |
1.11 |
|
Year Ended
|
Year Ended
|
||
General and administrative, net |
$ |
24,520 |
$ |
21,395 |
Less: Share-based compensation expense |
|
5,526 |
|
5,086 |
Cash general and administrative, net |
$ |
18,994 |
$ |
16,309 |
|
|
|
||
General and administrative, net (per Boe) |
$ |
1.13 |
$ |
1.30 |
Less: Share-based compensation expense (per Boe) |
|
0.25 |
|
0.31 |
Cash general and administrative, net (per Boe) |
$ |
0.88 |
$ |
0.99 |
Reconciliation of Net Income (Loss) to Return on Capital Employed (Unaudited)
SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)
The below tables provide the calculation of Return on Capital Employed for the following periods (in thousands).
|
Year Ended
|
Year Ended
|
Year Ended
|
||||||
Net Income (Loss) |
$ |
297,716 |
|
$ |
340,437 |
|
$ |
86,759 |
|
Plus: |
|
|
|
||||||
Depreciation, depletion and amortization |
|
219,116 |
|
|
133,982 |
|
|
68,629 |
|
Accretion of asset retirement obligations |
|
985 |
|
|
534 |
|
|
306 |
|
Interest expense |
|
80,119 |
|
|
41,948 |
|
|
29,129 |
|
Derivative (gain)/loss |
|
(241,309 |
) |
|
73,885 |
|
|
123,018 |
|
Derivative cash settlements collected/(paid) (1) |
|
90,395 |
|
|
(212,416 |
) |
|
(73,256 |
) |
Income tax expense/(benefit) |
|
83,613 |
|
|
9,600 |
|
|
6,398 |
|
Share-based compensation expense |
|
5,526 |
|
|
5,086 |
|
|
4,645 |
|
Adjusted EBITDA |
$ |
536,161 |
|
$ |
393,056 |
|
$ |
245,628 |
|
|
|
|
|
||||||
Less: Depreciation, depletion and amortization |
|
(219,116 |
) |
|
(133,982 |
) |
|
(68,629 |
) |
Adjusted EBIT (A) |
$ |
317,045 |
|
$ |
259,074 |
|
$ |
176,999 |
|
|
|
|
|
||||||
Total Debt |
$ |
692,000 |
|
$ |
377,000 |
|
$ |
430,000 |
|
Shareholders Equity (2) |
|
791,579 |
|
|
292,532 |
|
|
446,981 |
|
Capital Employed - Beginning of Year |
$ |
1,483,579 |
|
$ |
669,532 |
|
$ |
876,981 |
|
|
|
|
|
||||||
Total Debt |
$ |
1,222,000 |
|
$ |
692,000 |
|
$ |
377,000 |
|
Shareholders Equity |
|
1,189,328 |
|
|
791,579 |
|
|
292,532 |
|
Capital Employed - Year-End |
$ |
2,411,328 |
|
$ |
1,483,579 |
|
$ |
669,532 |
|
|
|
|
|
||||||
Average Capital Employed (B) (3) |
$ |
1,947,454 |
|
$ |
1,076,556 |
|
$ |
773,257 |
|
|
|
|
|
||||||
Return on Capital Employed (ROCE) (A / B) |
|
16 |
% |
|
24 |
% |
|
23 |
% |
|
|
|
|
||||||
(1) Includes accruals for settled contracts covering commodity deliveries during the period where the actual cash settlements occur outside of the period. |
|||||||||
(2) Shareholder's Equity at Beginning of Year 2021 excludes the impact of write-down of oil and gas properties during 2020 |
|||||||||
(3) 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
|
As of December 31, |
|||||||
(in millions) |
2023 |
|
2022 |
|
2021 |
|||
Standardized Measure of Discounted Future Net Cash Flows |
$ |
2,319 |
|
$ |
4,040 |
|
$ |
1,558 |
Adjusted for: Future income taxes (discounted at |
|
345 |
|
|
924 |
|
|
259 |
SEC PV-10 Value |
$ |
2,664 |
|
$ |
4,964 |
|
$ |
1,817 |
Production Volumes & Pricing (Unaudited) |
|||||||
SilverBow Resources, Inc. and Subsidiary |
|||||||
|
|
Year Ended
|
Year Ended
|
||||
Production volumes: |
|
|
|
||||
Oil (MBbl) |
|
|
5,347 |
|
|
2,634 |
|
Natural gas (MMcf) (1) |
|
|
79,900 |
|
|
70,958 |
|
Natural gas liquids (MBbl) |
|
|
3,003 |
|
|
1,950 |
|
Total (MBoe) |
|
|
21,667 |
|
|
16,410 |
|
|
|
|
|
||||
Oil, natural gas and natural gas liquids sales: |
|
|
|
||||
Oil |
|
$ |
402,728 |
|
$ |
239,247 |
|
Natural gas |
|
|
187,340 |
|
|
451,863 |
|
Natural gas liquids |
|
|
62,291 |
|
|
62,310 |
|
Total |
|
$ |
652,358 |
|
$ |
753,420 |
|
|
|
|
|
||||
Average realized price: |
|
|
|
||||
Oil (per Bbl) |
|
$ |
75.32 |
|
$ |
90.84 |
|
Natural gas (per Mcf) |
|
|
2.34 |
|
|
6.37 |
|
Natural gas liquids (per Bbl) |
|
|
20.74 |
|
|
31.96 |
|
Average per Boe |
|
$ |
30.11 |
|
$ |
45.91 |
|
|
|
|
|
||||
Price impact of cash-settled derivatives: |
|
|
|
||||
Oil (per Bbl) (2) |
|
$ |
(0.68 |
) |
$ |
(19.78 |
) |
Natural gas (per Mcf) |
|
|
1.03 |
|
|
(2.21 |
) |
Natural gas liquids (per Bbl) |
|
|
3.79 |
|
|
(1.88 |
) |
Average per Boe |
|
$ |
4.17 |
|
$ |
(12.94 |
) |
|
|
|
|
||||
Average realized price including impact of cash-settled derivatives: |
|
|
|
||||
Oil (per Bbl) (2) |
|
$ |
74.64 |
|
$ |
71.05 |
|
Natural gas (per Mcf) |
|
|
3.38 |
|
|
4.16 |
|
Natural gas liquids (per Bbl) |
|
|
24.54 |
|
|
30.08 |
|
Average per Boe |
|
$ |
34.28 |
|
$ |
32.97 |
|
|
|
|
|
||||
(1) Natural gas converted at the rate of six Mcf to one barrel |
|||||||
(2) Excludes approximately |
|||||||
|
|
Three Months Ended
|
Three Months Ended
|
||||
Production volumes: |
|
|
|
||||
Oil (MBbl) |
|
|
1,778 |
|
|
1,023 |
|
Natural gas (MMcf) (1) |
|
|
22,791 |
|
|
19,129 |
|
Natural gas liquids (MBbl) |
|
|
1,058 |
|
|
621 |
|
Total (MBoe) |
|
|
6,634 |
|
|
4,832 |
|
|
|
|
|
||||
Oil, Natural gas and Natural gas liquids sales: |
|
|
|
||||
Oil |
|
$ |
135,465 |
|
$ |
83,681 |
|
Natural gas |
|
|
54,538 |
|
|
100,237 |
|
Natural gas liquids |
|
|
22,039 |
|
|
15,059 |
|
Total |
|
$ |
212,041 |
|
$ |
198,978 |
|
|
|
|
|
||||
Average realized price: |
|
|
|
||||
Oil (per Bbl) |
|
$ |
76.21 |
|
$ |
81.80 |
|
Natural gas (per Mcf) |
|
|
2.39 |
|
|
5.24 |
|
Natural gas liquids (per Bbl) |
|
|
20.83 |
|
|
24.25 |
|
Average per Boe |
|
$ |
31.96 |
|
$ |
41.18 |
|
|
|
|
|
||||
Price impact of cash-settled derivatives: |
|
|
|
||||
Oil (per Bbl) |
|
$ |
(0.85 |
) |
$ |
(5.89 |
) |
Natural gas (per Mcf) |
|
|
0.95 |
|
|
(1.58 |
) |
Natural gas liquids (per Bbl) |
|
|
2.90 |
|
|
3.36 |
|
Average per Boe |
|
$ |
3.48 |
|
$ |
(7.01 |
) |
|
|
|
|
||||
Average realized price including impact of cash-settled derivatives: |
|
|
|
||||
Oil (per Bbl) |
|
$ |
75.36 |
|
$ |
75.91 |
|
Natural gas (per Mcf) |
|
|
3.34 |
|
|
3.66 |
|
Natural gas liquids (per Bbl) |
|
|
23.73 |
|
|
27.61 |
|
Average per Boe |
|
$ |
35.44 |
|
$ |
34.17 |
|
|
|
|
|
||||
(1) Natural gas converted at the rate of six Mcf to one barrel |
|||||||
Reserve Replacement Ratio Calculation (Unaudited):
Reserve replacement ratio is calculated by dividing the sum of extensions, discoveries, and other additions, purchases and sales of minerals in place, and total revisions for the year by production:
Reserve Replacement |
|
|
(in MBoe) |
Year Ended
|
|
Proved reserves as of December 31, 2022 |
372,437 |
|
Extensions, discoveries, and other additions |
43,687 |
|
Revisions of previous estimates |
(91,346 |
) |
Purchases of minerals in place |
142,738 |
|
Production |
(21,667 |
) |
Proved reserves as of December 31, 2023 |
445,850 |
|
|
|
|
Reserve replacement ratio |
439 |
% |
First Quarter 2024 & Full Year 2024 Guidance |
||||
|
|
Guidance |
||
|
|
1Q 2024 |
|
FY 2024 |
Production Volumes: |
|
|
|
|
Oil (MBbls/d) |
|
22.5 - 25.0 |
|
23.5 - 26.5 |
Natural Gas (MMcf/d) |
|
285 - 305 |
|
280 - 300 |
NGLs (MBbls/d) |
|
16.5 - 17.5 |
|
15.0 - 17.0 |
Total Reported Production (MBoe/d) |
|
86.5 - 93.3 |
|
85.2 - 93.5 |
% Oil/Liquids |
|
|
|
|
|
|
|
|
|
Product Pricing: |
|
|
|
|
Crude Oil NYMEX Differential ($/Bbl) |
|
( |
|
N/A |
Natural Gas NYMEX Differential ($/Mcf) |
|
( |
|
N/A |
Natural Gas Liquids (% of WTI) |
|
|
|
N/A |
|
|
|
|
|
Operating Costs & Expenses: |
|
|
|
|
Lease Operating Expenses ($/Boe) |
|
|
|
|
Transportation & Processing ($/Boe) |
|
|
|
|
Production Taxes (% of Revenue) |
|
|
|
|
Cash G&A, net ($MM) |
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228740525/en/
Jeff Magids
Vice President of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW
Source: SilverBow Resources, Inc.
FAQ
What was SilverBow Resources' net income for 2023?
What is the ticker symbol for SilverBow Resources?
What was the non-GAAP Adjusted EBITDA for SilverBow Resources in 2023?
What is SilverBow Resources' 2024 outlook?
How much is SilverBow Resources' estimated free cash flow for 2024?
