SilverBow Resources (SBOW) Valuation Update - Jan 8

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dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

SilverBow Resources (SBOW) Valuation Update - Jan 8

Post by dan_s »

SBOW closed at $26.17 on January 6.

I have updated my valuation, assuming HH natural gas price averages $4.00 in 2023.
My valuation declines by $5 to $84/share. < First Call's current price target is $58.50.

SilverBow is yet to get the Wall Street coverage it deserves.
> It is an Aggressive Growth company that has closed 7 strategic acquisitions over the last 18 months.
> Production has grown from 30,421 Boepd in 2020 to a 2022 exit rate over 55,000 Boepd.
> The midpoint of their production guidance for 2023 is 68,350 Boepd, which would be ~50% year-over-year production growth.
> Current production mix is approximately 70% natural gas, 19% crude oil and 11% NGLs. About 55% of Q4 2022 revenues are from natural gas sales.
> Their 2022 D&C capex was fully funded by operating cash flow and I expect them to start generating significant free cash flow in 2023.
> Q4 2022 has been the best financial results in the company's history with operating cash flow over $118 million, beating the previous record of $87.3 million that was set in Q3 2022.
> Operating cash flow should increase from $356 million in 2022 to over $540 million in 2023. < Even if HH ngas prices average $4.00 this year.

SilverBow has a lot of "running room" within their existing Eagle Ford / Austin Chalk leasehold in South Texas. A lot of its leasehold is held-by-production and they have the flexibility to shift development drilling from gas to oil, if the gas price goes below their expectations.
Dan Steffens
Energy Prospectus Group
willvanam
Posts: 28
Joined: Thu Feb 28, 2013 1:56 pm

Re: SilverBow Resources (SBOW) Valuation Update - Jan 8

Post by willvanam »

Trading below book again probably worth a starter position
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: SilverBow Resources (SBOW) Valuation Update - Jan 8

Post by dan_s »

SilverBow will be reporting STRONG Q4 results.
Dan Steffens
Energy Prospectus Group
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