SilverBow Resources (SBOW) 29 Feb 242023 Q4 Earnings call transcript

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the SilverBow Resources Fourth Quarter and Year-End 2023 Earnings Conference Call. [Operator Instructions]

With that, I will turn the conference over to Jeff Magids, Vice President, Finance and Investor Relations. ahead. go Please

prepared morning, our Sean Good materials will team. morning. joined by posted chance website our today we you our I Thank had to release have and everyone. to and other refer this CEO, the brief following questions Woolverton address go management we By members our these now, will hope through you. to your I'm remarks. earnings of as Together, slides our the

make to earnings GAAP certain may measures, we are reconciled closest financial that their which measure note Please references news non-GAAP to the in release.

today our of which will are which documents over the SEC, on discussion described also risks subject many our include call to beyond Sean. are uncertainties, These file on Instructions] I control. with and Our [Operator forward-looking are our website. are and now which may in to available the fully statements, turn uncertainties risks more

morning, interest time good your everyone. appreciate SilverBow and the Jeff, in Thanks, We your and today story.

next Over things. few about X to talk the I want minutes,

to progress remarkable. First, is to value a steps year build over how understand positioned last shareholders. strategy the company recent have us made that for and is stronger our important It we you create the

be XXXX All our highlight will I Next, our the found details materials. results. can in

Our I solid this will execution enter provides lastly, strong momentum cover And outlook. year. as we our XXXX

and enhanced strong asset gas to and maximize gains, sheet. entered natural flow maintain this we are base electing -- flexibility. year weakness and benefits a balance capital plan cut efficiency Our scale, more recent a to we operational durable efficiencies from With cash prices, with gas-directed in capital near-term

value. and Let's clear get proven has started. strategy to create SilverBow a

in key this strategy the elements Our XXXX action. show X accomplishments of

operating South our operator us pure-play value. scaled date. acquisition. and synergies Last low-cost First, established Texas platform It to expanded unlock Ford and regional This as our through durable and increased public Eagle the portfolio. we in Ford our to was deal the drive have largest Eagle scale our we year, a largest

across our decade SilverBow more a has acres. now net than XXX,XXX return opportunities drilling of high

We optionality, in proximity cost X today's yields premium peer-leading This commodity peer the efficiencies, deck margins EBITDA due group. low and markets. Gulf infrastructure combination Slide cost are Coast and to our in highest to the advantaged one highlights margin operational structure, structure our of existing profile.

our element generating second The and margins. of strategy enhancing efficiencies is corporate

margins we commitment and peer-leading to unwavering have our them. We improve in are on

returns increased to stages you faster As see we through in include more can are our pump efficiencies. times. depth, today's and day per days These deck, enhancing operational pumped

these and platform. to our per with accomplished importantly, in are that in assets demonstrate better hands cost we lower foot gains are drilling our proven sustainable. due gains continues More completions. SilverBow These to operating

structure create Eagle low-cost and remains most to to looks of The more migrate efficient and the basins fragmented culture for one a ways efficiencies. a SilverBow have safe that positioned today. We to is assets well innovative constantly and Ford continue operators. will

The is strong third to a of strategy maintain balance sheet. our pillar

our high-return through and to cash in fund $X.X year-end X full transacted leverage on program. also leverage that development that flow We reducing free accretive turn. by we have liquidity and our have use scale built while Since reduce we increasing acquisitions XXXX, to acquisitions, generate billion

testament leverage generate we to base of a margins maintain ability Our as to low a and asset high is operator. the the our quality low-cost

alone XXXX and seen path acquisition, million doubt the now in Texas our X to months closing challenging natural we clear than debt. XXXX a since on reduce that debt. gas have have $XX more eliminated South remain a No market. We In

address taking low capital once responsive allocation to As and we the did flexibility last actions our year, we showcasing prices. again gas are are in

move XX% to towards longer-term reducing our directed year shortly. flow and gas outlook are capital about turn. more of by free gas investments this we this target constructive, I'll our for leverage below nearly X While cash very talk is maximize

The of profitable growth. is our strategy fourth pillar

can quality an an discipline, shown We that company efficiencies have assets profitably to combine E&P on capital and grow. focus unrelenting

have of our X long-term return XX%, Over on an years, success generated of employed the capital we reflecting average strategy. the last

quarter Let year year at today's the me of quickly results. guidance and fourth products. We doubled cover in extremely our and in all all materials. production are and XXXX. posted We across half upper the fourth quarter details volumes full Again, executed oil well full our

guidance. in acquisitions. the More excluding year importantly, $XXX accomplished this totaled with we of investments capital Full lower investments million, capital half approximately

day, per well the XXXX, Production XX% foot results fleet, cost from year. we by per drilled declined cost of per gains our rig Well were benefited decreased quarter costs a Comparing and throughout XX% cost throughout Completion year-over-year per stages highlighting completed magnitude foot XX%. as average decreased impressive year-over-year, times. X%. were and more more X% faster total deflation we times 'XX cost improved foot cost cycle efficiency efficiency day XXXX feet as and per XXXX, high-graded the Fourth XX% decreased to gains. D&C pump

Taken costs. XX% below together, XXXX wells delivered we planned our

our million. set expectations. coming record, in a generated EBITDA flow record at $XXX Adjusted quarter, We cash the also For results fourth million. free exceeded of $XX

was Our net $XX.XX income per or million share. $XXX

to MBoe XX% was day total to XX% barrels increased Our up day. XX and production production nearly year-over-year XX,XXX per per approximately oil

of with $X.XX our of were million expenses came $XX our and BOE guide at guidance. low per operating in and investments end Capital the in line

this performance Our we enter XXXX as created in year. momentum strong

through is on flow XXXX strategy on our cash builds Our focused free and maximizing disciplined developments. program

have we in desired our flexibility our we achieve how more Today, capital allocate to outcomes.

gas near-term to proactive We weakness have natural been in in prices. response

benefits which optionality structure, provides to respond Our Gulf margins a to peer-leading premium and today's advantaged Coast to markets market. proximity low cost portfolio, from

some gas to reduce projects. investments dry took natural steps decisive recently in We

the second XX% of year $XXX half a million. operated We in me the X Let actions. gas outline We on year-over-year dry X of to million solely and investments. the plan investments reductions to by in these reduced revised midpoint Activity were or focused rigs run first $XX half.

at average day to per full expect year the now We midpoint. our XX MBoe production

liquids prior will production oil are expected from to and be about when increase XX% gas per up and XX,XXX unchanged about volumes oil Total previous be guidance will day. guidance. to volumes compared year-over-year XX% nearly with XX% lower Importantly, barrels to

year, prices, net $XXX the At to expect net plan of and free will generate XX flow. million our to strip drill recent XX estimated wells. million online wells we bring For an cash $XXX

our at We have certainty hedged estimates of XX% our budget in high prices. cash with about flow attractive XXXX

at In fact, price hedged an $X.XX. above gas our XX% average of is

reduce our leverage flow toward Prioritizing us allow Xx. cash and will debt to than of less move target

to production. sacrifice not sheet unprofitable gas balance pursue We will our

Longer our on and bullish industry gas energy preserve will term, the the LNG needs market remain expanding valuable We inventory we an meeting evolving within future. for landscape.

to significantly We gains Gulf where several have over into along achieved. next grow the the are to today, the we increase are There years. showcasing uniquely some emerging market deck case tremendous are Coast expected studies impressive our exports positioned in this

focus Our unit maintaining a assets our peer-leading costs. on deck, drives including we highlight margins, In compared and performance on margin well margin our and our low-cost operators. including per prior EBITDA -- G&A structure EBITDA peer to acquired

in XXXX, area, XXXX, cumulative year first show and XX% the On average operator. we our production. to acquisitions which seeing Teal/Conoco put production we our first early through cumulative acquired an year XX% are results a XXXX prior together Sundance compared in improvement uplift In of assets in in

our future. valuable inventory free summarize, maximizes XXXX cash balance the strengthens for our sheet and preserves gas flow, To plan

We ongoing will across continued gains also efficiency our capital from benefit discipline and portfolio.

today's recap me takeaways. Let

and First, is proven value our shareholders. strategy it's for clear, it's creating

flexibility optionality We created have for us assets and today. provides quality have and the scale we

of record sustainable track creating a have we Second, efficiencies. operating

tell you Our teams are have to on focused costs. their are I they Texas excited to today, hands our constantly South on assets. innovating execution safely new can reduce

your to balance dry our We areas our investment sheet. Finally, plan and that, XXXX take investments strong levels gas our operator, cash in we flow company. as $XX a maximize your by optimized oil are and and time today And ready questions. we free in well production. We our to liquids as with million to reduced maintained maintain appreciate commitment

come the Our Truist. Neal line Instructions] Dingmann from will first [Operator with question of

The highlight I use. first just to cash your free want question, flow

you you're to on free clear flow acquisitions. -- outlook for but making I divert pretty of it like still XQ, would you're most debt the you're did in I to that looks lookout even assume think cash repayment. also It going the some

priorities. it doesn't that to sense? trying a check acquisition a just get so a could right make the Or temperature the an maybe Does leverage? need on So impact component to PDP package inventory have

thanks for a balance for question. -- core foremost, and us No protecting the is strategy sheet. Yes, our first

goal stated getting long-term target than Xx. a of leverage We of a to have less

So opportunities. tell paydown. I debt flow active towards M&A market we that cash is the for dedicated will our you free remain looking for accretive now in will

capital to acquisitions durable year, checklist and shareholders immediately our scaled from for logic includes for and must the continue to make in our have it. sheet add balance and accretive we and we We must we'll though, Focus of look bringing our this it is and compete in use the and and finance demonstrating has of of in an standard on debt what terms it the protecting of inventory to be our for down quality our how portfolio. it quality sense our standpoint, industrial to past, that

apply ones those makes stand completion on out? wondering the to lot was impressive XX, techniques the on Or -- that pretty Slide Chesapeake And the on operators to you versus And I items, then a outlined follow-up the is acreage. want if is That you not you the sense. prior of a can drilling applicable? my uplift assets? maybe which then just or

question. efficiency No, towards the we our dedicated enhancing driving I very returns. appreciate are And and

demonstrate greatly our enhanced designs around our to improved as acquire, our and we over operating a believe examples properties really lay focused operations. completion operators performance zone. team, wells in drilling focus well And are in designs. key very improving We that. optimized so as able that over that That's we've historical completion prior for the Where that out we we're achieve much

lay we drilling in expertise apply Chesapeake our on properties. a to So that that. the out record. track And we to pointed demonstrated excited very those recently that The efficiencies we're show you to have rig just We yes, onto our yes, and assets. a examples moved

So we're of asset. gate out the on that quick

operator. The improved from the drilled, TD-ed of we significantly ahead first we well schedule cycle on prior and times

more So forward the we're quarters. some in on that results sharing to coming looking property

MKM. Leo Your next line with from question ROTH comes of the Mariani

or on of stay at maybe belt, I just the your in wanted the took Chesapeake of months just of of base know point to comment since early, you out there lower can get the this company LOE been the you only a as that to to know production. asset? like it's good some handful of asset I time maybe but performance a I this on if on internal I overall time. I versus improvements, the production to wanted under kind see How here able forecast? And kind but it's chunk has anything and know trended have Obviously, such or it's your improve been make pretty that. kind trying you run operational of

So for production and obviously, just but you about drilling you minute the can talked 'XX. around give base we here a ago kind us roll comments of being into the early, any plans as that

the appreciate I question. Leo,

I $XX down approximately on where debt and highlight think since timeframe. we that the December is acquisition closing paid from I'll million X, of start have

the So it strong asset our performance that the in And exited we've that the performing of seeing We're some of from flow. came free line during year the year with -- modeled came base into is underwrite what the a in coming asset. generating on acquisition. lot and cash

enhance we hands production. including exited property on number rigs We a workovers identified having were onto really the be a completed. days the where of to and with had So expecting with some for in that our lot ideas, XX asset getting workover to year come the to base try of we

the no but on a to what to is for knowledge, They I that been bring asset a results that working now like SilverBow. far. on So know prior. an seeing excited worked we thus asset employees and be of the very We've speak they're excited lot to core today, we're bring to

have forward look in days. the early see really we to of on performance, program we but our performing how far, still capital XX% coming dedicated This well. like details So asset. we'll giving as is base thus not more to quarters, just the the capital year, what that about We and

of and a point, big this your we're our to So property. excited business, own is part to it

just this Board color. that recent wanted to some you just appreciate I I of elections. general sort And I had And also of of if but thinking the out something of kind Okay. know Director of see point. you will guys the fleshed to at And that's response any at more situation about that annual the get just are fully how kind meeting,

today performance want and we But SilverBow's value. on that our is you our say exhibited just I Yes. shareholder of XXXX in management what strong for call our I'll all committed that we working Board deliver to outlook XXXX. and the that will are for shareholders focus to tell team our to really

So we're call stay that's this excited I and on XXXX. all what really want to has what focused the want comment and on going for on company about to

question the from will of Meade line Johnson Rice. next come Charles with Our

it still So I move or guys be, of the -- But for much is activity. maintenance think gas the in think on operators. lease for plan? it's might testing. that what a I whether could concept cut I'm back you the how other And if natural positive wondering natural had characterize, well you it's rationale activity that's And worked gas the

have Just dedicated you tell do kind gas to what natural of 'XX? that's us in

would appreciate to I this the our started year Yes. investment I tell that really the years assets. strategy employ really to much ago. strategy Yes. company's gas think is the you, we it enacted demonstrates right, several this into No, defer it. second We

we'd to it. but reacting we like higher much as So gas as see prices, -- appropriately to are

terms is last into those come our prices our for so wells, plan higher, XX% year year, did capital completed part this late the were of this of several we when gas. early to and dry approximately County year. Webb In drilled year of having We dedicated

gas. late on second the the producing online one of be on prices So we those to is year, to there's in wells into that have dedicated some in gas are anticipate and XXXX. we then the then lease wells drilled, is And number early now. slated are meet drill stronger a really to capital what twofold, Those wells, commitments and to

Got it.

gas half activity So natural the really year back of of the then the message if... is

the the completions exception with done of is, It early.

just of a for going picked indications it. for of And Right. I ] first guesses And just just CapEx. [ some mentioned kind think maybe look I in is I and think or to Got second, half then some simple the X million QX at number a you pick the a running let's If one. rigs -- a around be middle-of-the-road you're year. you the up rig. year, $XXX

million, reasonable? So $XXX we should ]. be Is [ that thinking million maybe maybe for $XXX XQ,

Yes.

[ of little I reasonable, X the to X, pretty up close less rig We $XXX did think have bit the year. ]. that million the being February third first pick is so a maybe won't half for than the the we rigs for full

the So January, some operator the that's anticipated on We've problems bringing it rig. probably on had difference. a but prior Xst the of

guide we're half So a in guidance, spend later of -- half. more XX% bit and for we give little of a XX% than it probably anticipated. year, the the first the year To got little anticipating half first the second the a in our of

KeyBanc. next Your Tim will from line of come with the Rezvan question

I to Tim. early state on but year, your Webb the your speak could this takeaway acreage natural you for Mardini team in Jon gas today. County on is just know focused of This is

little but just just an a ] warrant about the increased if to whether capital you're gas if spoke there's enough to confident You allocation gas. bit capacity wondering it, really [ your flow area prices

grew appreciate during capacity. I significantly recall, activity question. really in takeaway strong that Webb you under gas remind No, listeners, Yes. prices, XXXX as the outpaced And and

of with our an that us, in our For issue needs was meets than November provider capacity. area resolved bringing XXXX that starting pipe the expanded on more midstream our and

longer of Webb SilverBow, takeaway issue. is for out no an County So capacity

Great. Okay.

eastern on extension you mentioned another Austin acreage. or Just Chalk past, one. results your mixed the In

there? development pursuing be year going you're XXXX, into is or to Or delineation a looking purely more over any there of just drilling? is it spacing Just initiatives

as drilled I Yes. thanks assess of we wells we're in were well. as XXXX. additional IPs Chalk anticipating X the there, than for No, seeing Austin we're in decline. 'XX we the first half wells eastern the least that what eastern extension we decline defer that profiles. flat you very long-term to going question for lower at but tell The extension chalk came probably in area, drilling would there

Ford the assets that X to expectations. those laterals. for Putting has we to about the light in And together, really area assess a we So are give those has really different like were is time our decline of little a Eagle anticipating. What more want the economics allowed Ford expectations. us much look what than Eagle what profile excited wells kind to longer exceeded we it exceeding of is drill

In fact, into eastern rigs and there that's pad year rig drilled we coming the that as X-well coming extension shifted speak. drilling were be Webb in to We with X we onto a planned gas. X the actually County on properties the of

So over Austin point. us of Ford Eagle for Chalk, we love it's there. this wait-and-see the at a kind

comes Diamond question next with of the Your from Paul Citi. line

to life. talk inventory wanted Just real quick on

the you year, the see, Since view, that gas, our affects over shifting your influences just we're commodity this how way decision-making to guidance nat longer process. like Over in inventory I of last year and wanted about guys optionality. kind towards in talk or term management

We've just defined. our there's X,XXX drilling inventory identified think locations more We around Yes. on still assets.

Lower We're Eagle the Chalk continue pay at still at an us. set. prospective obviously and Austin Our stack for Lower Ford, has teams Eagle but Ford And to Chalk the potential. having look remains still stack Upper Middle opportunity pay looking Austin with

is it's later drill We in wells kind we we think of where think at the to some Olmos year. plan So then the actually there's will uphole expand. And and potential. today locations of X,XXX probably couple a

probably of terms is So that and definitely, opportunity rich. All inventory liquids weighted basin is the the now, we're finding that gotten of that within your really as XX% question, stacked in bigger, XX% gas. oil, we've right said, is

maintain at there. We term, inventory our XX-year goal is the you rig think a year inventory aside, our of to best per So about XX wells current generating returns. focus give long is rate inventory, kind a approximately drill as we But burn pace. to the

we find development gas are the of that it if accelerate if makes that really sense. be we would to So prices willing strong, inventory

driver. lever multiple a same decision, inventory, but kind the the a it's driver But but is So at key time, secondary maintaining of that's returns it. of

Right. Understood.

Just one quick follow-up.

you the think your time? that over down book progress as maintaining will As over scale been? your you tick time, Or that hedging you guys evolving? at towards about gain do anticipate going how it's leverage and Are target forward that you high level strategy

we reduce to able to sheet, the do balance risk. as on protect think ability I little or we'd leverage, be more maintain a the take

So year I probably our we strategy. very systematic commodity program, year strongly we'll that Typically, hedging and think lower in in next than time a leverage evolves, strategy. We've us. very point, it. as to successful think well program that's find to revisit prior Xx. prices our hedging worked out your a to been something the consider. ourselves leverage is profile around that late We lower with we're lower We're for But with I exposure the position,

the Capital. Northland will with question come next line Your Schafer of Donovan from

for is Kailash [ Donovan. This ]

wanted to a bit know just So about ratio. leverage

deck, leverage in we you than QX Texas that Slide end presentation But that noticed can say you So of on lesser so the the to in on Xx ratio XX August get you XXXX. say just that South I the think that acquisition, just X XXXX. February Slide your noticed by we year X.Xx about for it's

matter just it So some of can we're lower prices? that gas seeing natural not are understand changed? a there you strictly Or just what's there? help drivers us Is

that the I And think, the set, Yes. upside company question. opportunity it No, good has. the demonstrates,

was but listeners, If prices, back just higher August, higher also to prices. early remind it was gas you go it natural oil not

$XX. XXXX $X. -- at the think And time oil were over over was gas WTI prices was approximately I

driven commodity running So rigs that back prices. full of then, a for change shift definitely the did is year But also, we by X envision XXXX.

the So down prudent thing which little prices, is, the slows the activity hey, pay demonstrating bit, but react asset it's back a to to flexibility we in think that right, we're dial that do. lower base,

Tuohy our the question of will Parks Brothers. Noel come with Instructions] And [Operator next line from

that second just gassy from things. in industry your I had you wondering for land years Webb of create we With a for a activity, issues? just and a of if take Or year County, the yourselves couple there. away some of leasing could HBP just might your about, have bit of wondered, overall, CapEx it little out any sort of state the for of competitors? and opportunistically directing issues the So I of couple like being a I'm areas lower talk have that does

Yes. Yes.

Our position to We're over speak that. -- HBP. XX% I'll

majority held. of acreage is So our the

still the primary where County since term not with is really and is it evolving in However, Webb that in necessarily XXXX. area

capital have that. be dedicate So yes, there to some to we maintain leases. those we'll We'll in that need do how we'll strategic

We are long-term still bullish on gas.

safe do want we but outlay and others capital our minimize term. Knowing situation near So keep think same face definitely that say to as that in the optionality I well. place, the to situation, something in it's that's the

we'll the will ton watch. have ground in We've of with play be of part relationships operations great that and prudent their successful this of very it been on out definitely built reputation safe leasing. and owners on We've So mineral properties. something implementing the a the a

we're due due to companies well any their expire positioned lands does low think that become I available letting prices. to take advantage acreage other to of So

exciting And I make just there characterize particular, thing out would be you you in of like area, potential your to that's look shake just it wondering from to bolt-ons somebody, could could thoughts at it? little the on -- other in general would list if if bit wish if have was a you whether acquisitions mean, and terms. current maybe loose I what's think that any I additions as any And Great. and you, wondering you your in on you is, updated footprint the other

M&A to occurred you the scale in basins. not consolidation has of much quite near bit months, the has a but Yes. last Yes. where there's the that at been and activity in XX Eagle over look the of the other When occurred basins Ford,

There really amount realized play. tremendous be know Ford. Where we of the M&A western on been part we've a have of a activity in area can there's hey, -- remains that unlock has focused a value. the That assets the a the efficient putting our of bringing operating over think record we opportunity we've demonstrated, to the And in proven in. that and of that sets really years into ton is still Eagle we that, still area. track like, we So well number platform, right,

So not would in any the ones that just specific consolidation strong I occur you remains but that to, a to of speak inventory there tell basin.

And with that, I'll turn the call closing back to Sean remarks. Woolverton for any

joining appreciate and talking Well, everyone, interest Thank to thank you you, your and for the our your forward in SilverBow today. in call We investments look you. company, to soon.

will you conclude joining. We that all for call for today. Everyone, thank our

lines. You may your disconnect now