SilverBow Resources Inc (SBOW) Reports Q3 2023 Earnings, Announces Asset Acquisition
Net production for Q3 2023 was 357 MMcfe/d, surpassing the high-end guidance.
Net oil production increased by 81% YoY, reaching 15.3 thousand barrels per day.
Net loss of $5 million reported, including a net unrealized loss on derivative contracts of $72 million.
Announced agreement to acquire certain South Texas assets from Chesapeake for $700 million.
On November 1, 2023, SilverBow Resources Inc (NYSE:SBOW) announced its financial and operational results for the third quarter of 2023. The company reported a net production of 357 million cubic feet of natural gas equivalent per day (MMcfe/d), exceeding the high end of its guidance. Net oil production increased by 81% year-over-year, reaching 15.3 thousand barrels of oil per day. However, the company reported a net loss of $5 million, which includes a net unrealized loss on the value of the company's derivative contracts of $72 million.
Financial Highlights
SilverBow Resources Inc (NYSE:SBOW) reported a net loss of $5 million for Q3 2023, which includes a net unrealized loss on the value of the company's derivative contracts of $72 million. The company generated an Adjusted EBITDA of $141 million and free cash flow (FCF) of $18 million for the third quarter of 2023. The company also reduced its total debt by $78 million quarter-over-quarter, which includes a $50 million deposit for the Chesapeake Transaction. The leverage ratio decreased to 1.34x at quarter-end compared to 1.56x as of the second quarter.
Operational Highlights
During the third quarter of 2023, SilverBow drilled 10 net wells, completed 9 net wells, and brought online 9 net wells. The company operated an average of two drilling rigs during the quarter, primarily on its Central Oil and Eastern Extension areas, reflecting its oil-focused development program year-to-date. SilverBow's team continues to increase operational efficiencies, completing 10% more stages per day year-to-date in 2023 compared to similar jobs for the full year 2022.
Acquisition Announcement
SilverBow Resources Inc (NYSE:SBOW) announced an agreement to acquire certain oil and gas assets in South Texas from Chesapeake Energy Corporation for a purchase price of $700 million. The transaction is expected to enhance SilverBow's production, Adjusted EBITDA, and FCF while allowing the company to achieve a leverage ratio of 1.0x by year-end 2024. The Chesapeake Transaction is expected to close in the fourth quarter of 2023.
Outlook
For the full year 2023, SilverBow estimates production of 336-342 MMcfe/d, a 26% increase year-over-year. The full-year 2023 capital budget range of $400-$425 million remains unchanged. The company also increased its free cash flow guidance for the full year 2023 to a range of $20-$40 million.
Explore the complete 8-K earnings release (here) from SilverBow Resources Inc for further details.
This article first appeared on GuruFocus.
