SilverBow Resources (SBOW) Update - Mar 21

[dan_s]

Bloomberg 3-21-2024

Riposte Capital says it finds proposal from Kimmeridge Texas Gas to combine with SilverBow Resources “highly
compelling,” and supports the offer.
* Riposte owns ~9.9% of SilverBow stock
* Says combined entity could lead further consolidation in region, be instantly attractive to the public markets
** “This is in stark contrast to SilverBow today, which trades at a significant discount to peers and is too levered to pursue
growth or return cash to shareholders”
* NOTE: SilverBow Deal Would Position Company to Supply LNG:
-------------------------------
Also on Bloomberg this morning: The Seasonal Spike in demand for transportation fuels is just beginning.

US gasoline demand looks to be making a
comeback as the peak summer travel months approach. Implied
demand, based on the four-week average of product supplied,
finally rose above 2022 and 2023 seasonal levels, based on data
from the US Energy Information Administration. The surge in
demand is adding pressure to stockpiles for the fuel, which have
fallen for a seventh consecutive week. If the trend continues,
demand may inch back above pre-pandemic levels in the coming
weeks.

[Fraser921]

How can SBOW sell a ton of stock at $ 34 when it's currently trading at 34.75? And some well know analysts have a target price twice 34, 68 or higher.

Sounds like Riposte is in ca-hoots with Kimmeridge.

[ChuckGeb]

Or worse, it’s not $34 cash it’s $34 per share of their gas assets contributed. Did you ever wonder about the price of the new car when they gave you such a nice price on your trade-in. Of course it will be supported by a friendly appraisal I’m sure.

[marc.wolin@yahoo.com]

SLBO Update

Kimmeridge and Riposte are in this together as the et al. Will a viable acquirer be able to take them out also? What kind of deal would they have to strike? Are these two combined big enough to hold up the deal and use their ownership leverage to blackmail SLBO?

Marc Wolin

[dan_s]

They are not buying SBOW for cash and they are not taking it private. They are contributing cash and producing assets to SilverBow. MY TAKE is that SilverBow's BOD will only approve the deal if SilverBow's management team keeps running the company. They may change the companies name, but it will remain public and current SilverBow shareholders will have the largest percentage.

With $500 million of cash they could accelerate the drilling program, making SilverBow a more valuable company.

[ChuckGeb]

I feel if it was such a sweet deal, management of SBOW would be communicating with its shareholders, not Kimmeridge soliciting direct support from SBOW shareholders. I like SBOW management and think they have made all the right moves to date. I am suspicious of a private equity promoter trying to get value for its gas portfolio at a time of oversupply in the market. Company management does not need a new set of variables to manage. focus, focus, focus!!

From SBOW announcement of Kimmeridge proposal:
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.

How does a "supermajority" not constitute control of SBOW by Kimmeridge?

[Lbark]

still frustrating that none of these deals, cash or stock deals have a premium. Understand that value could be added with bigger footprint on some of these but still would like deals at nice premiums, wish they would look at Dans valuations and make deals at those prices.

[Fraser921]

The whole proposal smells to high heavens. Just because its good, doesn't mean it's the best course of action. How about if the deal was for 10? Does price matter/ What makes 34 the magic number when some feel its worth 75

[dan_s]

This process will take time. SilverBow has no need to accept the offer. SilverBow holds the upper hand in this negotiation process.