SilverBow Resources, Inc. (SBOW) Misses Q4 EPS by 30c, Revenues Beat

SilverBow Resources, Inc. (NYSE: SBOW) reported Q4 EPS of $0.77, $0.30 worse than the analyst estimate of $1.07. Revenue for the quarter came in at $53.47 million versus the consensus estimate of $53.35 million.

Highlights for the fourth quarter include:

• Net production averaged 178 million cubic feet of natural gas equivalent per day (“MMcfe/d”), at the high end of guidance; oil and gas sales up 17% quarter-over-quarter driven by improving commodity prices
• Reported net income of $9 million, Adjusted EBITDA of $38 million and free cash flow ("FCF") of $12 million1, representing five out of the last six quarters with positive FCF. Adjusted EBITDA and FCF are non-GAAP measures defined and reconciled in the tables below
• Drilled nine wells and brought online three wells in its prolific Webb County Gas area
• Reduced net debt by $24 million from the third quarter of 2020

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, "We demonstrated resilience and resolve during a pivotal year for our industry. The Company took immediate actions early in 2020 to accelerate our free cash flow generation and pay down debt. These actions included production curtailments, capex reductions and unwinding excess oil derivative contracts. Combined with our relentless focus on cost management and production optimization, we generated over $60 million of free cash flow and reduced total debt by roughly $50 million in 2020. In the second quarter of 2020, we closed on the acquisition of producing assets in the Southern gas window of our acreage position and divested non-core interests in Wyoming to supplement our cash balance. Amidst all the disruptions of 2020, we were able to execute on our operational plan while maintaining a high level of safety. To this end, we achieved a milestone, zero recordable incidents for the year, while setting new efficiency records for the Company in both drilling and completions ("D&C"). This time last year, we had just finished our first six-well La Mesa pad which at the time set many Company records from an execution standpoint. I am proud to say that our second six-well La Mesa pad, which we recently brought online, set new Company records in D&C costs and cycle times.”

Mr. Woolverton stated further, “Our outlook is increasingly optimistic as we progress into 2021. Our capital program supports prudent growth with the bulk of our production coming from natural gas. During the first quarter, we expect to realize a significant increase in production as we bring on our second six-well La Mesa pad and our first Austin Chalk test well in our Webb County Gas area. The increase in gas volume aligns with tightening gas markets and strengthening gas prices, with the prompt month up roughly 30% from a year ago. At current prices, we expect full year 2021 free cash flow of $20 to $40 million. Our gas forecast is approximately 40% unhedged, preserving further upside on our gas volumes. We ended 2020 with a leverage ratio4 of 2.5x as we focused on free cash flow generation and absolute debt reduction. Going forward, our priorities remain focused on top line growth, further debt paydown and deleveraging our balance sheet, all while living within cash flow."

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

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