SilverBow Resources, Inc. (SBOW) Misses Q4 EPS by $1.09, Revenues Miss

SilverBow Resources, Inc. (NYSE: SBOW) reported Q4 EPS of $0.53, $1.09 worse than the analyst estimate of $1.62. Revenue for the quarter came in at $69.85 million versus the consensus estimate of $70.68 million.

• Net production averaged 231 MMcfe/d, a 25% increase year-over-year, and net oil production averaged 4,397 Bbls/d, a 133% increase year-over-year. Overall net liquids production comprised 24% of total net production, up from 16% in 2018
• Oil and gas sales of $288.6 million (excluding hedge impact), net income of $114.7 million and Adjusted EBITDA1 (a non-GAAP measure) of $232.6 million, a 38% increase year-over-year. Liquids sales comprised 41% of total sales, an increase from 29% in 2018
• Average realized prices for crude oil and natural gas were each 101% of West Texas Intermediate ("WTI") and Henry Hub, respectively, excluding hedging, as a result of favorable basis pricing in the Eagle Ford Shale
• Lease operating expenses ("LOE") of $0.25 per million cubic feet of gas equivalent ("Mcfe") were down from $0.26/Mcfe, a 3% decrease from the prior year
• Year-end 2019 estimated proved reserves of 1.4 trillion cubic feet of gas equivalent ("Tcfe") (41% proved developed), a Standardized Measure of $868 million and a pre-tax present value of future net cash flows discounted at 10% (“PV-10 Value," a non-GAAP measure)1 of $976 million at Securities and Exchange Commission ("SEC") pricing. Proved oil reserves grew by 4.3 million barrels, an increase of 34% from year-end 2018. Liquids comprised 32% of PV-10 value for year-end 2019
• Return on Capital Employed ("ROCE", a non-GAAP measure) of 18% and trailing three-year average of 19%

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, "I am proud to report that 2019 showcased the efforts of our pivot-to-liquids strategy and operational shift to a balanced commodity portfolio across the Eagle Ford. SilverBow’s liquids production doubled year-over-year, to approximately 25% of our fourth quarter 2019 production, and in 2020, we will continue to focus on liquids-rich opportunities with a goal of reaching 10,000 Bbls/d of net oil production. This would be a significant milestone for SilverBow, demonstrating both the oil growth potential of our Eagle Ford asset base and our ability to successfully execute on our objectives. Our dedicated team continued to set operational efficiency records across the Company, and saw significant year-over-year progress. In 2019, we achieved a 32% increase in lateral feet drilled per day and an 111% increase in the number of stages completed per day, all while realizing year-over-year cost reductions of approximately 25% across our drilling and completions business. Our La Mesa project, offsetting our prolific Fasken field in Webb County, has been a prime example of SilverBow’s efficiency and execution. Our team transformed this asset from lease to first production in just over six months, and from initial spud to first production safely and without incident in less than 100 days. This exceeded almost every historical operating metric in the Company’s history.”

Mr. Woolverton commented further, “Operationally and financially, SilverBow outperformed our expectations this year. We doubled our oil production, reduced our all-in cash operating expenses to below our target of $1.00/Mcfe and achieved our stated goal of delivering free cash flow neutrality in the second half of 2019. Our focus on execution resulted in a full year Adjusted EBITDA margin of 74%, up from 71% in 2018, while reducing our capital expenditures by 15% year-over-year. Our track record of execution combined with the resilience of a balanced portfolio and access to premium markets is a key competitive differentiator. We look forward to the coming year with optimism as we expect our capital program to double oil production for another consecutive year."

For earnings history and earnings-related data on SilverBow Resources, Inc. (SBOW) click here.

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