SilverBow Resources (SBOW) Update - Sept 15

[dan_s]

We will be sending out an updated profile on SilverBow Resources (SBOW) this afternoon. It is one of the "Gassers" in our Small-Cap Growth Portfolio.
SBOW is trading at $22.10 at the time of this post. My valuation has increased to $48.00.

> Their balance sheet is in decent shape and free cash flow over the next few quarters should be very good. Plenty of liquidity.
> About 2/3rds of their natural gas is hedged for 2H 2021. The amount hedged drops below 50% after December.
> They will be completing some gas wells in Q4 that should ramp up their ngas production to over 180,000 mcfpd in December.
> Hirer ngas and NGL prices will probable cause them to beat my Q4 forecast of $3.06 EPS and $4.30 operating cash flow per share.
> The Company has a very low amount of common stock outstanding.
> They expect to close an all-stock funded acquisition in Q4 that will give them more tradable shares. This is good because some fund managers won't by stock if the company has low trading volume. A stock split in 2022 might be wise.
> SBOW is trading today at less than 1.5 X my operating cash flow per share forecast for 2021, which is only slightly higher than TipRanks CFPS forecast of $15.40.
> On September 8 (when ngas prices were lower) Truist Financial rated SBOW a BUY with a price target of $30.

My updated forecast/valuation model has been posted to the EPG website home page. Take a hard look at row 45, operating cash flow per share.

[dan_s]

DJ SilverBow Set For Output Growth Amid Solid Gas Prices -- Market Talk
2:12 PM ET 9/8/21 | Dow Jones

1411 ET - Truist Securities upgrades SilverBow Resources to buy from hold, saying the company is set to participate in the latest commodity move. "SilverBow has set itself up organically and through recent acquisitions to deliver strong upcoming production growth to coincide with solid prices," Truist says. "We think SBOW stock has likely underperformed most other gassy names due to its limited coverage and the market not recognizing the upside potential from the recent acquisitions and organic operating efficiencies." Truist says that while SilverBow's longer term goal is still a diversified production mix, it sees the company in the coming quarters taking advantage of natural gas price appreciation as the product mix remains nearly 80% dry gas with limited future hedges. The firm boosted its price target on the stock to $30 from $22. Shares up 14% to $22.21. (michael.dabaie@wsj.com)