SilverBow Resources (SBOW) Valuation Update - Feb 28

[dan_s]

I have updated my forecast/valuation model for SilverBow and it has been posted to the EPG website.

Their Q4 2023 results beat my forecast and they have provided detailed guidance for 2024. Year-over-year production was up 32% in 2023 and guidance is for it to increase another 50% in 2024.

SBOW closed at $28.45 on Feb 28. < Just 1.2 X my 2024 operating cash flow per share forecast.

My current valuation increases by $1 to $58/share based on just 2.5 X annualized operating cash flow. If the Company's actual results match my forecast a 4X multiple is appropriate.
> This year's drilling program is focused 100% on oil prone areas.
> SilverBow's ability to switch from gas to oil is a big plus for this small-cap. It has a lot of "Running Room" in different areas of South Texas.
> Q1 2024 production will be ~90,000 Boepd (up from 72,161 Boepd in Q4) because it will be the first full quarter since they closed the Chesapeake South Texas Acquisition on November 30th.
> On a BOE basis, production will be flat in 2024, but oil production will be up from 19,321 bopd in Q4 to a 2024 exit rate of over 27,000 bopd. They will allow natural gas production to decline with zero wells drilled for Ngas this year.
> More than half of their 2024 natural gas production is hedged at prices from $3.50 to $4.00.
> Higher NGL prices will also help them generate close to $1.2 billion of revenues in 2024.

I expect several energy sector analysts to upgrade this stock on Thursday.

[marc.wolin@yahoo.com]

Kimmeridge Energy and SLBO

Who is this entity trying to buy SLBO? They apparently have been after SLBO for sometime, but do not present a good buying opportunity for shareholders.

Marc Wolin

[dan_s]

If you are talking about this, Kimmeridge Energy Management is large shareholder that is trying to gain some control over the BOD. SilverBow is not interested.

March 1 (Reuters) - Energy producer SilverBow Resources Inc said on Friday that top shareholder Kimmeridge Energy Management has nominated three candidates to its board, following a failed attempt to take the company private.

SilverBow said Kimmeridge made an all-cash takeover offer last February to take the company private, although its proposal fell through as the investor was unable to secure funding for the deal.

SilverBow shares were up 2.6% at $29.13 at the market open on Friday, giving the company a market value of $740.7 million.

The company's board will review the nominations, it said in a regulatory filing, adding that some of the nominations "appear to have close ties with Kimmeridge"

The company also said the nominations were part of Kimmeridge's nearly two-year effort to force a merger with Kimmeridge Texas Gas on terms unfavorable to SilverBow and its shareholders.

SilverBow said it had engaged with Kimmeridge several times over a possible deal, including last week, but had not received any "actionable proposal".

Kimmeridge and hedge fund Riposte Capital, two of SilverBow's largest investors, have been pushing the U.S. oil and gas producer to revamp its board to address governance concerns and boost its lagging performance.

Kimmeridge declined to comment on SilverBow's disclosure. (Reporting by Mrinalika Roy and Arunima Kumar in Bengaluru; Editing by Anil D'Silva)

[marc.wolin@yahoo.com]

Kimmeridge -Silverbow

Thank you.

Marc Wolin

[marc.wolin@yahoo.com]

Kimbridge and SLBO

I had read this article but what bothered me was the royalty interests, warrants, etc. they have against SLBO and what they amount to? How badly will this hurt SLBO to remove them? Did we know this in the beginning or did it come to light along the way? Is it a major obstacle or not?
Regards,

Marc Wolin