SilverBow Resources, Inc. (NYSE:SBOW) Q3 2023 Earnings Call Transcript

Steve Adam: Yes. Thank you, Charles, for the question. Yes, we’re looking for Q4. We’re looking for one of the 4-well pads, oil pads that we’re currently completing right now to come online. And then, additive to that we’re looking to at our discretion to accelerate maybe another three well pad and other oil well pad over in the eastern extension to come online along with if we have some optionality for some additional gas in Webb County. So that’s kind of how it sets up right now today forward to the end of the year. And then with that, we’re looking at Q3 in terms of our oil production per day, we are looking at about, oh, say better than, like we were guiding to you before, we’re looking at it better than 15,000 per day. And in about probably better than 16, 5 or so roughly in that range for the fourth quarter.

Sean Woolverton: Yes. Charles, so the way it’s lining up, right is we expect we’ll see the strong oil growth, like we mentioned in the call about 10% growth, 3Q to 4Q on oil. And anticipate with the acceleration of that 3-well oil pad that will have strong exit rates. Then the gas starts to kick in, and so we’ll have continued growth on an equivalence basis, from fourth quarter to first quarter with much of the growth in the first quarter being driven by the high gas rate wells that are coming on. So yes, I think on the base assets, continued strong organic growth, really driving the growth on oil through end of year and then starting to see the ramp of gas into the first quarter.

Operator: And our next caller is going to be Donovan Schafer from Northland Capital Markets. Donovan, please go ahead.

Donovan Schafer: Hey, guys, congratulations on the quarter. And thanks for taking the questions. I want to start, kind of dovetailing with the prior questions. Of course, you don’t have 2024 guidance and that’s not something we’re really here to talk about in any sort of formal or official way today. But what I want to — the way I try to think about things or frame things is, when you announced the Chesapeake transaction, in middle of August, based on the slide deck, you shared at the time, it looks like you must have gone through a pretty thorough, internal set of projections around everything given you showed your path to getting down to 1x leverage ratio in ’24. You kind of put out some numbers and the relative percent increase that you’d get in ’24, free cash flow per share, and some other things like that.

So my question is, between — in the last sort of two and a half months between putting that deck together or going through that exercise, and where we stand today, your own kind of internal sense for ’24, has that directional, is it fair to say that that’s directionally improved with the capital budget, you’ve been able to pull forward some of that into this quarter and get some wells done more quickly. Like, it seems like there’s — the takeaway capacity improving, it seems like there have been more positive developments. So, would you expect things to come out more favorably today, if you reran that exercise for the whole company in comparing before and after the acquisition?

Sean Woolverton: Yes, I would tell you that the base assets for SilverBow are performing well came in slightly ahead for third quarter, kind of in line for 4Q guide in full year. So the base assets are performing well, probably a little less CapEx, with the cost reductions that Steve outlined. And then, had mentioned earlier, the Chesapeake assets are kind of performing in line with what we can see on a read through with the information we’re receiving from a production standpoint. So I think what we disclosed at the time of the transaction, kind of laying out that the over the next 12 months, we see EBITDA in that 825 million to 925 million range, and production in the mid 93,000 to 95,000 Mboe a day. Those numbers we still think are at — kind of where we’re at. And think that we’ll be able to deliver those once we take control of the asset and get into next year.