On November 1, 2023, SilverBow Resources Inc (SBOW, Financial) 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 (SBOW, Financial) 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 (SBOW, Financial) 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.
