Read this if you own SilverBow Resources (SBOW) - May 11

[dan_s]

The article at the link below is a good summary of what's going on at SilverBow.
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"It is an election year, and the battle is on. SilverBow Resources, a publicly traded oil and gas company operating in South Texas’ Eagle Ford shale, is wrapped up in a big conflict with some of its own shareholders. Kimmeridge Energy Management, both a large shareholder and a rival operator in the Eagle Ford, has proposed a merger (which it, at least temporarily, withdrew last month), and now is proposing several new board members in a proxy battle. The primary question centers on the direction of SilverBow’s value enhancement strategy. However, it appears this strategy hinges, in part, on its debt position, and dividend policy. Management has one idea on how this should go; Kimmeridge clearly has another."

Read more: https://mercercapital.com/energyvaluationinsights/silverbows-shareholder-brawl/

MY TAKE: SilverBow's BOD rejected the Kimmeridge initial offer, which was a feeble attempt by Kimmeridge to take control of the Company at a low-ball price. Kimmeridge's current attempt to get three of their buddies on the BOD is also highly likely to fail. However, anything can happen. If a merger is eventually successful, it will need to be done at a fair price (much higher than where SBOW trades today) or the BOD faces lawsuits.

SilverBow is profitable and is generating free cash flow. This year's drilling program is focused on increasing oil production. Rising natural gas prices should also give them a FCF boost in 2H 2024.

If you own SBOW you should hang tough. There is a lot more upside potential than downside risk, primarily because their two most recent acquisitions closed at bargain prices, which is pointed out in the article.