SilverBow Resources Confirms Receipt of Proposal from Kimmeridge

Rhea-AI Summary

SilverBow Resources, Inc. (SBOW) has received a proposal from Kimmeridge Energy Management regarding a potential transaction with Kimmeridge Texas Gas. Kimmeridge proposes to contribute KTG's assets and $500 million cash for shares in the combined entity. The SilverBow Board of Directors will review the proposal to determine the best course of action. Shareholders are not required to take any action at this time.

Insights

Financial Analyst

The proposal by Kimmeridge Energy Management to SilverBow Resources represents a significant strategic move that could reshape the company's financial and ownership structure. The offer to contribute assets and substantial cash in exchange for a controlling interest raises questions about valuation and the potential for dilution of existing shareholders' equity. Analyzing the transaction's terms, one must assess the fair market value of the contributed assets and the cash component relative to SilverBow's current market capitalization and outstanding shares.

Furthermore, the creation of a supermajority ownership position by Kimmeridge could lead to a shift in corporate strategy and governance. Investors should monitor the response of the SilverBow Board of Directors, as their decision will have material implications for the company's future direction and shareholder value. The market's reaction to this news will likely reflect the perceived benefits or risks associated with the proposed transaction, including the prospects of enhanced operational capabilities or concerns over governance and independence.

Legal Expert

From a legal perspective, the proposal by Kimmeridge to SilverBow Resources entails a complex transaction that will require thorough due diligence and regulatory compliance. The fact that the SilverBow Board is in consultation with financial and legal advisors indicates that they are scrutinizing the proposal for any legal implications that could arise from such a significant change in control. The board's fiduciary duty to act in the best interest of all shareholders means they must carefully consider issues such as minority shareholder rights, potential conflicts of interest and adherence to SEC regulations.

Moreover, the disclosure of the engagement history with Kimmeridge on Form 8-K highlights the board's commitment to transparency and regulatory disclosure requirements. This move is crucial for maintaining shareholder trust and avoiding potential legal pitfalls that could arise from a lack of disclosure or perceived inadequacies in the board's decision-making process.

Market Research Analyst

Examining the industry context, the proposed transaction between Kimmeridge and SilverBow Resources could signal a trend towards consolidation in the energy sector, particularly within oil and gas. Companies are seeking to bolster their asset portfolios and enhance their market position in a competitive landscape. The infusion of $500 million of cash and additional assets could provide SilverBow with the capital and resources needed to expand operations and increase production efficiency.

However, the impact on the company's market performance will depend on the strategic fit of KTG's assets with SilverBow's existing operations and the market's confidence in Kimmeridge's ability to manage the combined entity effectively. The transaction could also alter the competitive dynamics within the industry, affecting not only SilverBow's market share but also the broader sector's operational and financial benchmarks.

No Shareholder Action Required at this Time

HOUSTON--(BUSINESS WIRE)-- SilverBow Resources, Inc. (NYSE: SBOW) today confirmed that it has received a proposal from Kimmeridge Energy Management (“Kimmeridge”) with respect to a potential transaction between the Company and Kimmeridge Texas Gas (“KTG”). Kimmeridge proposes to contribute the assets of KTG and $500 million of cash in exchange for shares issued by the combined entity. Following the proposed transaction, Kimmeridge would control a supermajority of the combined company (including the shares currently held by Kimmeridge), with the remaining shares held by public shareholders.

Consistent with its fiduciary duties and in consultation with its financial and legal advisors, the SilverBow Board of Directors will carefully review and consider the proposal to determine the course of action that it believes is in the best interest of the Company and all of its shareholders. SilverBow shareholders do not need to take any action at this time.

SilverBow notes that it has engaged extensively with Kimmeridge, consistent with its goal of maximizing value for shareholders, beginning in August 2022. On March 1, 2024, the Company disclosed its history of engagement and negotiation with Kimmeridge on Form 8-K filed with the Securities and Exchange Commission.

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 that it leverages to assemble high quality drilling inventory while continuously enhancing its operations to maximize returns on capital invested.

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

The Company, its directors and certain of its executive officers and employees may be deemed to be participants in the solicitation of proxies from shareholders in connection with the 2024 Annual Meeting. The Company plans to file a proxy statement with the SEC in connection with the solicitation of proxies for the 2024 Annual Meeting (the “2024 Proxy Statement”), together with a WHITE proxy card. SHAREHOLDERS ARE URGED TO READ THE 2024 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Additional information regarding the identity of these potential participants and their direct or indirect interests, by security holdings or otherwise, will be set forth in the 2024 Proxy Statement and other materials to be filed with the SEC in connection with the 2024 Annual Meeting. Information relating to direct and indirect interests, by security holdings or otherwise, of the directors and executive officers of the Company is contained in the Company’s definitive proxy statement for its 2023 Annual Meeting of Shareholders (the “2023 Proxy Statement”), filed with the SEC on April 3, 2023. To the extent holdings of the Company’s securities by the Company’s directors or executive officers have changed since the information printed in the 2023 Proxy Statement, such information has been or will be reflected on Statements of Change in Ownership on Forms 3 and 4 filed with the SEC. Shareholders will be able to obtain, free of charge, copies of the 2024 Proxy Statement, any amendments or supplements thereto and any other documents (including the proxy card) when filed by the Company with the SEC in connection with the 2024 Annual Meeting at the SEC’s website (http://www.sec.gov) or at the Company’s website (https://www.sbow.com/investor-relations).

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313967317/en/

Jeff Magids

Vice President of Finance & Investor Relations

(281) 874-2700, (888) 991-SBOW

Source: SilverBow Resources, Inc.

FAQ

What proposal did SilverBow Resources, Inc. receive from Kimmeridge Energy Management?

SilverBow received a proposal for a potential transaction with Kimmeridge Texas Gas. Kimmeridge plans to contribute KTG's assets and $500 million cash for shares in the combined entity.

What will Kimmeridge Energy Management contribute in the proposed transaction?

Kimmeridge Energy Management will contribute the assets of Kimmeridge Texas Gas and $500 million cash in exchange for shares in the combined entity.

When did SilverBow Resources disclose its engagement and negotiation with Kimmeridge Energy Management?

SilverBow disclosed its history of engagement and negotiation with Kimmeridge on March 1, 2024, in a Form 8-K filed with the Securities and Exchange Commission.

Do SilverBow shareholders need to take any action at this time?

No, SilverBow shareholders do not need to take any action at this time.