SilverBow Resources (SBOW) Valuation Update - Feb 28
Posted: Wed Feb 28, 2024 9:37 pm
I have updated my forecast/valuation model for SilverBow and it has been posted to the EPG website.
Their Q4 2023 results beat my forecast and they have provided detailed guidance for 2024. Year-over-year production was up 32% in 2023 and guidance is for it to increase another 50% in 2024.
SBOW closed at $28.45 on Feb 28. < Just 1.2 X my 2024 operating cash flow per share forecast.
My current valuation increases by $1 to $58/share based on just 2.5 X annualized operating cash flow. If the Company's actual results match my forecast a 4X multiple is appropriate.
> This year's drilling program is focused 100% on oil prone areas.
> SilverBow's ability to switch from gas to oil is a big plus for this small-cap. It has a lot of "Running Room" in different areas of South Texas.
> Q1 2024 production will be ~90,000 Boepd (up from 72,161 Boepd in Q4) because it will be the first full quarter since they closed the Chesapeake South Texas Acquisition on November 30th.
> On a BOE basis, production will be flat in 2024, but oil production will be up from 19,321 bopd in Q4 to a 2024 exit rate of over 27,000 bopd. They will allow natural gas production to decline with zero wells drilled for Ngas this year.
> More than half of their 2024 natural gas production is hedged at prices from $3.50 to $4.00.
> Higher NGL prices will also help them generate close to $1.2 billion of revenues in 2024.
I expect several energy sector analysts to upgrade this stock on Thursday.
Their Q4 2023 results beat my forecast and they have provided detailed guidance for 2024. Year-over-year production was up 32% in 2023 and guidance is for it to increase another 50% in 2024.
SBOW closed at $28.45 on Feb 28. < Just 1.2 X my 2024 operating cash flow per share forecast.
My current valuation increases by $1 to $58/share based on just 2.5 X annualized operating cash flow. If the Company's actual results match my forecast a 4X multiple is appropriate.
> This year's drilling program is focused 100% on oil prone areas.
> SilverBow's ability to switch from gas to oil is a big plus for this small-cap. It has a lot of "Running Room" in different areas of South Texas.
> Q1 2024 production will be ~90,000 Boepd (up from 72,161 Boepd in Q4) because it will be the first full quarter since they closed the Chesapeake South Texas Acquisition on November 30th.
> On a BOE basis, production will be flat in 2024, but oil production will be up from 19,321 bopd in Q4 to a 2024 exit rate of over 27,000 bopd. They will allow natural gas production to decline with zero wells drilled for Ngas this year.
> More than half of their 2024 natural gas production is hedged at prices from $3.50 to $4.00.
> Higher NGL prices will also help them generate close to $1.2 billion of revenues in 2024.
I expect several energy sector analysts to upgrade this stock on Thursday.