SilverBow Resources Inc (SBOW) Reports Record Quarterly Free Cash Flow and Strong Full Year ...
Net Income: $298 million for FY 2023; $183 million for Q4 2023.
Adjusted EBITDA: $536 million for FY 2023; $172 million for Q4 2023.
Free Cash Flow: $56 million for FY 2023; $74 million for Q4 2023.
Production: Average net production of 59.4 MBoe/d for FY 2023; 72.1 MBoe/d for Q4 2023.
Capital Investments: $409 million for FY 2023, excluding acquisitions.
2024 Outlook: Revised capital program budget of $470 - $510 million with expected FCF of $125 - $150 million.
Proved Reserves: Increased by 20% year-over-year to 446 MMBoe.
On February 28, 2024, SilverBow Resources Inc (NYSE:SBOW) released its 8-K filing, announcing its financial and operational results for the fourth quarter and full year of 2023. The company, an independent oil and gas entity focused on assets in the Eagle Ford Shale and Austin Chalk in South Texas, reported a net income of $298 million for the full year, translating to $12.63 per diluted share. The company's Adjusted EBITDA stood at $536 million, with a notable non-GAAP free cash flow (FCF) of $56 million.
Operational Highlights and Financial Performance
For the full year 2023, SilverBow's operational efficiency and strategic acquisitions led to a significant increase in production and reserves. The company's average net production was 59.4 MBoe/d, with oil production doubling year-over-year to 14.6 MBbls/d. Capital investments were reported at $409 million, below the guidance midpoint, excluding acquisitions. The company's return on capital employed (ROCE) was 16%, with a three-year average ROCE of 21%.
The fourth quarter of 2023 was particularly strong, with SilverBow achieving its highest quarterly free cash flow in history at $74 million. Net income for the quarter was $183 million, or $7.12 per share, with an Adjusted EBITDA of $172 million. The company's average net production for the quarter was 72.1 MBoe/d, with oil production increasing by nearly 75% to 19.3 MBbls/d.
Strategic Acquisitions and 2024 Outlook
During 2023, SilverBow made a transformational acquisition of South Texas assets, adding over 300 high-return locations and 32 MBoe/d to its portfolio. This acquisition is expected to bring product diversification, additional capital efficiencies, and further free cash flow generation.
Looking ahead to 2024, SilverBow has adjusted its capital investments in response to commodity prices, reducing its planned capital investments in dry gas-focused areas by approximately $75 million. The revised 2024 capital program budget is set between $470 - $510 million. At current commodity prices, the company expects to generate an estimated FCF of $125 - $150 million, which is earmarked for significant debt reduction.
Production for 2024 is expected to increase by approximately 50% year-over-year, with oil production anticipated to rise by 70%. The company plans to maintain its investment in oil and liquids projects while reducing expected natural gas volumes by 13%.
"We performed exceptionally well in 2023, advancing our strategy to create value and dramatically strengthen SilverBow with the recent high-value South Texas acquisition," said Sean Woolverton, SilverBows Chief Executive Officer. "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."
Financial Stability and Risk Management
As of the end of 2023, SilverBow's liquidity more than doubled year-over-year to approximately $479 million. The company's leverage ratio was 1.56x, and it had 25.4 million total common shares outstanding as of February 23, 2024. SilverBow has consistently used the derivatives market to mitigate commodity price risks, with approximately 60% of total production hedged for the full year 2024.
For investors and stakeholders, SilverBow Resources Inc (NYSE:SBOW) presents a robust financial and operational profile, with strategic acquisitions and operational efficiencies driving strong performance. The company's focus on creating value and strengthening its balance sheet positions it well for continued success in the dynamic oil and gas industry.
Explore the complete 8-K earnings release (here) from SilverBow Resources Inc for further details.
This article first appeared on GuruFocus.
