SilverBow Resources (SBOW) Q4 Results - Feb 28

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Fourth Quarter 2023 Highlights:

Generated net income of $183 million, or $7.12 per share, non-GAAP Adjusted EBITDA of $172 million and non-GAAP FCF of $74 million, the highest quarterly amount in SilverBow's history < Beat my Q4 EBITDA forecast of $140.7 million

Reported average net production of 72.1 MBoe/d (43% oil/liquids), in the upper half of guidance; grew year-over-year net oil production to 19.3 MBbls/d, an increase of nearly 75% < Beat my forecast of 70,500 Boepd and 19,000 bbls of oil per day.

Invested $79 million in capital (below midpoint of guidance), excluding acquisitions

Full Year 2023 Highlights:

Generated net income of $298 million, or $12.63 per diluted share (all per share amounts stated on a diluted basis), non-GAAP Adjusted EBITDA of $536 million1 and non-GAAP free cash flow ("FCF") of $56 million < Very good year.

Created additional scale and commodity optionality through transformational acquisition of South Texas assets, adding more than 300 high-return locations and 32 thousand barrels of oil equivalent per day ("MBoe/d"); SilverBow has more than 1,000 high-value locations, or more than a decade of inventory at its current development pace < This high-quality "Running Room" deserves a higher valuation multiple.

Reported average net production of 59.4 MBoe/d (39% oil/liquids), in the upper half of guidance; more than doubled year-over-year net oil production to 14.6 thousand barrels of oil per day ("MBbls/d")

Invested $409 million in capital (below guidance midpoint), excluding acquisitions

Achieved full year 2023 return on capital employed ("ROCE") of 16%; three-year average ROCE (2021-23) of 21%

Advanced key elements of its corporate strategy, including expanding its portfolio of high-return opportunities, profitably growing production, creating capital efficiencies to enhance margins, delivering FCF and strengthening the balance sheet.

2024 Outlook:

In response to commodity prices, the Company lowered its previously planned capital investments in dry gas-focused areas by approximately $75 million, resulting in a revised 2024 capital program budget of $470 - $510 million

At current commodity prices, the Company expects to generate $125 - $150 million of estimated FCF, which is currently earmarked for significant debt reduction

The Company is maintaining planned investment in oil and liquids projects while keeping oil and liquids production guidance at previously announced levels. Revised capital investments reduce expected natural gas volumes by 13%

Production is expected to increase approximately 50% year-over-year to 85.2 - 93.5 MBoe/d, post-recent acquisition, oil production is expected to increase 70% year-over-year and comprise 25% - 30% of 2024 production mix

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, said, "We performed exceptionally well in 2023, advancing our strategy to create value and dramatically strengthen SilverBow with the recent high-value South Texas acquisition. Our team has a track record of successfully integrating acquisitions and will apply our proven operating practices and low-cost platform to generate synergies and to extract value from this transaction. As we enter 2024, SilverBow has a more durable asset base, flexibility to shift investments between oil and gas, and a longer runway of high-quality drilling opportunities. Our recent South Texas acquisition was a game changer and significantly improves the trajectory of our business. We are confident in our ability to unlock capital efficiencies, improve well productivity and returns, and continue to create value for our shareholders."