sbow-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024

Commission File Number 1-8754

SILVERBOW RESOURCES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware			20-3940661
(State of Incorporation)			(I.R.S. Employer Identification No.)

920 Memorial City Way, Suite 850

Houston, Texas 77024

(281) 874-2700

(Address and telephone number of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	SBOW	New York Stock Exchange
Preferred Stock Purchase Rights	None	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes			þ			No			o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Yes			þ			No			o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes			o			No			þ

Indicate the number of shares outstanding of each of the issuer’s classes

of common stock, as of the latest practicable date.


Common Stock ($.01 Par Value) (Class of Stock)			25,538,487 Shares outstanding at April 26, 2024

SILVERBOW RESOURCES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

INDEX


		Page
Part I	FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets	6

	Condensed Consolidated Statements of Operations	7

	Condensed Consolidated Statements of Stockholders’ Equity	8

	Condensed Consolidated Statements of Cash Flows	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	37

Part II	OTHER INFORMATION

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39

SIGNATURES		40

Forward-Looking Statements

This report includes forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this report, including those regarding our strategy, future operations, financial position, well expectations and drilling plans, estimated production levels, expected oil and natural gas pricing, estimated oil and natural gas reserves or the present value thereof, reserve increases, service costs, impact of inflation, capital expenditures, budget, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “will,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “budgeted,” “guidance,” “expect,” “may,” “continue,” “predict,” “potential,” “plan,” “project,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following risks and uncertainties:

•further actions by the members of the Organization of the Petroleum Exporting Countries (“OPEC”), Russia and other allied producing countries (together with OPEC, “OPEC+”) with respect to oil production levels and announcements of potential changes in such levels;

•risks related to recently completed acquisitions and integration of these acquisitions, including the acquisition (the “South Texas Acquisition”) of oil and gas assets in South Texas;

•volatility in oil, natural gas and natural gas liquids prices;

•ability to obtain permits and government approvals;

•our borrowing capacity, future covenant compliance, cash flow and liquidity, including our ability to satisfy our short or long-term liquidity needs;

•asset disposition efforts or the timing or outcome thereof;

•ongoing and prospective joint ventures, their structures and substance, and the likelihood of their finalization or the timing thereof;

•the amount, nature and timing of capital expenditures, including future development costs;

•timing, cost and amount of future production of oil and natural gas;

•availability of drilling and production equipment or availability of oil field labor;

•availability, cost and terms of capital;

•timing and successful drilling and completion of wells;

•availability and cost for transportation and storage capacity of oil and natural gas;

•costs of exploiting and developing our properties and conducting other operations;

•competition in the oil and natural gas industry;

•general economic and political conditions, including inflationary pressures, further increases in interest rates, a general economic slowdown or recession, instability in financial institutions, political tensions and war (including future developments in the ongoing conflicts in Ukraine and the Middle East);

•the severity and duration of world health events, including health crises and pandemics, related economic repercussions, including disruptions in the oil and gas industry, supply chain disruptions, and operational challenges;

•opportunities to monetize assets;

•our ability to execute on strategic initiatives, including acquisitions;

•effectiveness of our risk management activities, including hedging strategy;

•counterparty and credit market risk;

•pending legal and environmental matters, including potential impacts on our business related to climate change and related regulations;

•the impact of shareholder activism and any changes in composition of our Board of Directors (the “Board”);

•actions by third parties, including customers, service providers and shareholders;

•current and future governmental regulation and taxation of the oil and natural gas industry, including changes in connection with U.S. elections in 2024;

•developments in world oil and natural gas markets and in oil and natural gas-producing countries;

•uncertainty regarding our future operating results; and

•other risks and uncertainties described in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2023 and our other filings with the Securities and Exchange Commission (“SEC”).

Many of the foregoing risks and uncertainties, as well as risks and uncertainties that are currently unknown to us, are, and may be, exacerbated by geopolitical events and wars, increasing economic uncertainty, recessionary and inflationary pressures and any consequent worsening of the global business and economic environment. New factors emerge from time to time, and it is not possible for us to predict all such factors. Should one or more of the risks or uncertainties described in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q, or other SEC filings occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements speak only as of the date they are made. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and in other disclosures in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2023 and in subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our other filings with the SEC. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law.

Table of Contents

PART I. FINANCIAL INFORMATION

Condensed Consolidated Balance Sheets (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)


	March 31, 2024		December 31, 2023

ASSETS
Current Assets:
Cash and cash equivalents	$	1,446	$	969
Accounts receivable, net	125,459		138,343
Fair value of commodity derivatives	89,535		116,549

Other current assets	5,652		5,590
Total Current Assets	222,092		261,451
Property and Equipment:
Property and equipment, full cost method, including $30,899 and $28,375, respectively, of unproved property costs not being amortized at the end of each period	3,709,469		3,597,160
Less – Accumulated depreciation, depletion, amortization & impairment	(1,315,364)		(1,223,241)
Property and Equipment, Net	2,394,105		2,373,919
Right of use assets	20,658		12,888
Fair value of long-term commodity derivatives	29,432		55,114


Other long-term assets	28,876		31,090
Total Assets	$	2,695,163	$	2,734,462
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	143,684	$	98,816
Deferred acquisition liability	50,000		50,000
Fair value of commodity derivatives	26,333		5,509
Accrued capital costs	42,114		31,900
Current portion of long-term debt	37,500		28,125
Accrued interest	8,325		9,668
Current lease liability	7,765		4,001
Undistributed oil and gas revenues	37,754		20,425
Total Current Liabilities	353,475		248,444
Long-term debt, net of current portion	1,039,469		1,173,766
Non-current lease liability	12,955		8,899
Deferred tax liabilities	94,077		99,227
Asset retirement obligations	11,913		11,584
Fair value of long-term commodity derivatives	8,110		2,504
Other long-term liabilities	—		710
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued	—		—
Common stock, $0.01 par value, 40,000,000 shares authorized, 26,027,103 and 25,914,956 shares issued, respectively, and 25,523,808 and 25,429,610 shares outstanding, respectively	260		259
Additional paid-in capital	681,099		679,202
Treasury stock, held at cost, 503,295 and 485,346 shares, respectively	(11,151)		(10,617)
Retained earnings	504,956		520,484
Total Stockholders’ Equity	1,175,164		1,189,328
Total Liabilities and Stockholders’ Equity	$	2,695,163	$	2,734,462
See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Condensed Consolidated Statements of Operations (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except per-share amounts)


	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023
Revenues	$	256,680	$	139,954

Operating Expenses:
General and administrative, net	8,791		7,664
Depreciation, depletion, and amortization	92,103		43,998
Accretion of asset retirement obligations	316		224
Lease operating expenses	31,825		20,560
Workovers	610		779
Transportation and gas processing	35,199		11,520
Severance and other taxes	16,212		9,385

Total Operating Expenses	185,056		94,130

Operating Income	71,624		45,824

Non-Operating Income (Expense)
Gain (loss) on commodity derivatives, net	(56,078)		92,249
Interest expense, net	(36,017)		(16,745)
Other income (expense), net	156		(24)

Income (Loss) Before Income Taxes	(20,315)		121,304

Provision (Benefit) for Income Taxes	(4,787)		26,812

Net Income (Loss)	$	(15,528)	$	94,492

Per Share Amounts:

Basic Earnings (Loss) Per Share	$	(0.61)	$	4.21

Diluted Earnings (Loss) Per Share	$	(0.61)	$	4.17

Weighted-Average Shares Outstanding - Basic	25,445		22,440

Weighted-Average Shares Outstanding - Diluted	25,445		22,634

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)


	Common Stock		Additional Paid-In Capital		Treasury Stock		Retained Earnings (Accumulated Deficit)		Total
Balance, December 31, 2022	$	227	$	576,118	$	(7,534)	$	222,768	$	791,579

Purchase of treasury shares (126,240 shares)	—		—		(2,945)		—		(2,945)

Vesting of share-based compensation (418,518 shares)	4		(4)		—		—		—

Share-based compensation	—		1,179		—		—		1,179
Net Income	—		—		—		94,492		94,492
Balance, March 31, 2023	$	231	$	577,293	$	(10,479)	$	317,260	$	884,305














Balance, December 31, 2023	$	259	$	679,202	$	(10,617)	$	520,484	$	1,189,328

Purchase of treasury shares (17,949 shares)	—		—		(534)		—		(534)

Vesting of share-based compensation (112,147 shares)	1		(1)		—

SEC Form 10-Q filed by SilverBow Resorces Inc.