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SILVERBOW RESOURCES, INC. (SBOW)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 was operationally strong: revenue rose to $256.7M, Adjusted EBITDA hit a record $200.1M, and free cash flow reached $56.2M; GAAP diluted EPS was ($0.61) due to a $90M unrealized hedge loss and ~$5M advisory fees .
  • Management raised FY24 production to 90.0–97.3 MBoe/d (48% liquids) and FY24 free cash flow to $175–$200M; capex unchanged at $470–$510M; year-end leverage target was lowered to ~1.25x, with <1.0x targeted in 2025 .
  • Q1 production averaged 91.4 MBoe/d with oil at 24.5 MBbl/d; lower-than-planned capex ($109.5M) aided FCF and debt reduction; total debt was $1.096B, leverage ratio 1.35x (pro forma as defined) .
  • Catalyst: “beat and guide-up” messaging in the press release and call (record EBITDA, FCF raise, debt paydown) plus visible capital efficiency gains (refracs, horseshoe wells) should support sentiment; however, GAAP loss and hedge mark-to-market may temper optics near-term .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly Adjusted EBITDA ($200.1M) on stronger production and lower capex; free cash flow of $56.2M enabled accelerated debt reduction and lowered leverage .
  • Liquids growth and operational execution: oil production up ~116% YoY to 24.5 MBbl/d; average production 91.4 MBoe/d in the upper half of guidance .
  • Strategic/technical wins: initial refracs with >100% IRR and <10-month payout; first Austin Chalk horseshoe well reduced D&C costs ~25% and cycle times ~15%; identified >30 horseshoe and >100 refrac opportunities .
  • Management quote: “Our first quarter results were outstanding… we are staying disciplined on returns and demonstrating accelerated debt paydown… increase to our full year 2024 outlook for production and free cash flow” — CEO Sean Woolverton .

What Went Wrong

  • GAAP optics: net loss of $15.5M (diluted EPS -$0.61) driven by a $90.1M unrealized derivative loss and ~$5M advisory fees, despite strong fundamentals .
  • Interest burden remains notable with $36.0M interest expense in the quarter; leverage at 1.35x, albeit trending lower .
  • Hedge marks pressure reported earnings; commodity realization for gas at $1.96/Mcf (pre-hedge) reflects weak spot pricing environment, though hedges lift realized to $3.27/Mcf .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$173.963 $212.041 $256.680
Diluted EPS ($USD)$(0.21) $7.12 $(0.61)
Adjusted EBITDA ($USD Millions)$141.443 $172.005 $200.085
Free Cash Flow ($USD Millions)$18.077 $74.433 $56.158
Capital Expenditure ($USD Millions)$104.445 $78.685 $109.491
Avg Production357 MMcfe/d 72.1 MBoe/d 91.4 MBoe/d
Oil Production15.3 MBbl/d 19.3 MBbl/d 24.5 MBbl/d

Product mix and realizations

MetricQ1 2023Q1 2024
Total volumes (MBoe)4,558 8,313
Oil (MBbl)1,023 2,233
Gas (MMcf)17,974 27,093
NGL (MBbl)539 1,565
Mix (% gas / oil / NGL)—54% / 27% / 19%
Avg realized price (pre-hedge): Oil ($/Bbl)$73.01 $74.65
Avg realized price (pre-hedge): Gas ($/Mcf)$2.94 $1.96
Avg realized price (pre-hedge): NGL ($/Bbl)$22.95 $23.15

Balance sheet and risk management

MetricQ4 2023Q1 2024
Total Debt ($USD Millions)$1,222.0 $1,096.0
Liquidity ($USD Millions)$510 (Jan 31, 2024) $630 (Apr 30, 2024)
Leverage Ratio (as defined)1.56x YE23 1.35x Mar 31, 2024
Hedged % of 2024 production~60% (Feb 23, 2024) 63% (Apr 26, 2024)

Estimates comparison (S&P Global consensus)

MetricQ1 2024 ConsensusQ1 2024 Actual
Revenue ($USD Millions)N/A (S&P Global consensus unavailable due to data mapping)$256.680
Diluted EPS ($USD)N/A (S&P Global consensus unavailable due to data mapping)$(0.61)

Note: Consensus values could not be retrieved from S&P Global due to missing CIQ mapping at the time of request.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Production (MBoe/d)FY 202485.2 – 93.5 90.0 – 97.3 Raised
% Oil/LiquidsFY 202446% 48% Raised
Oil (MBbl/d)FY 202423.5 – 26.5 24.5 – 26.5 Slightly raised midpoint
Gas (MMcf/d)FY 2024280 – 300 285 – 305 Raised
NGL (MBbl/d)FY 202415.0 – 17.0 18.0 – 20.0 Raised
LOE ($/Boe)FY 2024$3.70 – $4.10 $3.90 – $4.10 Slightly higher low end
T&P ($/Boe)FY 2024$4.60 – $5.00 $4.25 – $4.75 Lowered
Prod Taxes (% of Rev)FY 20246% – 7% 6% – 7% Maintained
Cash G&A ($MM)FY 2024$21 – $22 $24 – $25 Raised
Capex ($MM)FY 2024$470 – $510 $470 – $510 Maintained
Free Cash Flow ($MM)FY 2024$125 – $150 $175 – $200 Raised
Leverage Ratio TargetYE 2024~1.56x at YE23 baseline ~1.25x YE24; <1.0x in 2025 Lowered

2Q 2024 quarterly guidance: 90.8–95.4 MBoe/d; oil 23.5–25.0 MBbl/d .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023 and Q4 2023)Current Period (Q1 2024)Trend
Capital efficiency and cycle timeEfficiency gains; capex below plan; pumping efficiencies at 84% in Q4 2023 Lower capex than consensus; sustainable capital efficiencies; record EBITDA Improving
Liquids focus and production mixOil growth; Q4 avg 19.3 MBbl/d; portfolio flexibility Oil 24.5 MBbl/d; liquids 48% of FY24; increased liquids guidance Increasing liquids
Refracs / Horseshoe wellsNot highlighted in prior press releases>100 refrac opportunities (>100% IRR); first horseshoe well with ~25% D&C cost reduction and ~15% faster cycles; >30 horseshoe locations New initiatives gaining traction
Acquisition integration (South Texas)Chesapeake assets accretive; increased scale; borrowing base expansion 10‑well pad across stacked zones; drilling performance >30% vs prior operator; pad TIL timing shapes 2Q profile Integration delivering
Debt reduction / leverage$78M QoQ debt reduction in Q3; YE23 leverage 1.56x $178M reduction since late 2023 close; 1.35x leverage at 3/31; YE24 ~1.25x; <1.0x in 2025 Deleveraging
Hedging strategy~60% 2024 production hedged (Feb) 63% remainder of 2024 hedged (midpoints); prices: gas $3.78, oil $74.87, NGL $25.92 Stable risk mgmt
Governance / proxy context—Poison pill context and proxy contest referenced in call Q&A Ongoing

Management Commentary

  • “Our first quarter results were outstanding… staying disciplined on returns and demonstrating accelerated debt paydown… supports an increase to our full year 2024 outlook for production and free cash flow.” — CEO Sean Woolverton .
  • “Through multiple transactions… SilverBow has assembled a contiguous 25,000 gross acre position in the liquids-rich window… well results and returns exceeding expectations… 150-plus high-return development locations.” .
  • “We think that people should… look at our peers and see the upside here.” — CEO Sean Woolverton (Q&A tone on valuation gap) .

Q&A Highlights

  • Activity cadence: management noted two rigs moved to a 10‑well pad on the Chesapeake asset in February; 2Q TILs anticipated at seven, making 2Q the low, with long laterals being completed, shaping near-term oil trajectory .
  • Balance sheet path: reiterated raising FY24 FCF and lowering YE leverage to ~1.25x, with “line of sight” to <1.0x leverage in 2025 .
  • Governance context: poison pill rationale discussed to provide clarity amid proxy contest questions; management emphasized focus on operating execution and value creation .
  • Capital allocation: continued pivot to higher-return liquids while preserving dry gas inventory until price recovery; pad timing and stacked horizon development underpin H2 ramp .

Estimates Context

  • Company stated Q1 2024 “Results top consensus expectations” (driven by higher production and lower capex), consistent with “beat and guide-up” commentary in investor materials .
  • S&P Global consensus revenue and EPS data for Q1 2024 were unavailable at time of query due to a CIQ mapping issue; as a result, numeric beat/miss vs Wall Street cannot be precisely quantified in this recap (S&P Global consensus unavailable).

Key Takeaways for Investors

  • Execution is translating to cash: record Adjusted EBITDA and stronger FCF despite GAAP hedge mark-to-market; deleveraging remains a central pillar with YE24 leverage guided to ~1.25x and <1x in 2025 .
  • Liquids-led growth and technical innovation (refracs, horseshoe laterals) are improving returns and cycle times, with >150 liquids-rich locations and >100 refrac candidates providing visible runway .
  • Guidance was broadly raised (production, liquids mix, FCF) with capex held flat, implying embedded efficiency; T&P guidance lowered, supporting margin trajectory .
  • Near-term oil trajectory may dip with 2Q TIL timing (seven wells) before re-acceleration as the 10‑well pad comes online; traders should watch 2Q volumes and pad ramp into H2 .
  • Hedge profile provides downside protection (63% of 2024 production hedged), smoothing cash flows amidst gas price volatility; realized gas uplift from hedges is meaningful .
  • Governance backdrop remains active; management messaging focuses on operational delivery and closing the equity valuation gap through deleveraging and consistent FCF .
  • Medium-term thesis: liquids optionality plus technical programs and inventory depth in Eagle Ford/Austin Chalk underpin durable FCF, enabling further balance sheet strengthening and strategic flexibility .