SilverBow Resources (SBOW) Valuation Update - Mar 2
Posted: Thu Mar 02, 2023 11:10 am
At the time of this post SBOW was trading at $27.67.
I listened to their Q4 results conference call this morning and I have updated my forecast/valuation model for SilverBow based on the Q4 actual results and their detailed guidance. My valuation stays at $79/share, but I definitely can justify a valuation multiple higher than 3.5X annualized operating cash flow because this company has lots of "running room" with a multi-year strategy of increasing production by more than 20% year-over-year for several years.
> 2022 Results: $15.82 operating CFPS
> 2023 Forecast: $20.90 operating CFPS
> 2024 Forecast: $32.67 operating CFPS
> Big shift in the production mix in 2023 as natural gas production will be up just ~3% YOY, but oil production is expected to double YOY.
> SilverBow's flexibility to move their operated rigs quickly to more oil-prone areas is a big part of my bullish outlook.
> SBOW's PV10 Net Asset Value based only on proved reserves at current strip prices is over $100/share. Based on their year-end 12-31-2022 reserve report using SEC pricing guidelines, their PV10 NAV is close to $190/share. < If you believe oil prices are going back to $100/bbl, this stock has a lot of upside for us.
My updated forecast model will be posted to the EPG website this afternoon.
I listened to their Q4 results conference call this morning and I have updated my forecast/valuation model for SilverBow based on the Q4 actual results and their detailed guidance. My valuation stays at $79/share, but I definitely can justify a valuation multiple higher than 3.5X annualized operating cash flow because this company has lots of "running room" with a multi-year strategy of increasing production by more than 20% year-over-year for several years.
> 2022 Results: $15.82 operating CFPS
> 2023 Forecast: $20.90 operating CFPS
> 2024 Forecast: $32.67 operating CFPS
> Big shift in the production mix in 2023 as natural gas production will be up just ~3% YOY, but oil production is expected to double YOY.
> SilverBow's flexibility to move their operated rigs quickly to more oil-prone areas is a big part of my bullish outlook.
> SBOW's PV10 Net Asset Value based only on proved reserves at current strip prices is over $100/share. Based on their year-end 12-31-2022 reserve report using SEC pricing guidelines, their PV10 NAV is close to $190/share. < If you believe oil prices are going back to $100/bbl, this stock has a lot of upside for us.
My updated forecast model will be posted to the EPG website this afternoon.