SilverBow Resources, Inc. (NYSE:SBOW) Q4 2022 Earnings Call Transcript

Donovan Schafer: Sure. Sure. Okay. And then just one last question. For the 8 DUCs that you added in Webb County, could you tell us what the capital spending was to drill those and then what incremental CapEx would be needed to complete them? I’m just — what — I’m asking because I’m trying to get the sense or the idea of — I call this embedded growth in some other context. But it’s the idea of like where you’ve already spent the money, so the CapEx and impact in cash flow and other stuff that’s already been there, but we’re not going to really see any benefit from that until 2024 or 2025. So just how much of that capital has been laid out already that won’t need to be incurred later? And then what would be required later?

Sean Woolverton: Yes. No. We’re seeing wells down in the Fasken area. As they’re low back in late 2021, we had pushed them down below 5 million. More recently — that’s all in, drill and complete. More recently, that’s pushed upwards of 7.5. So drilling mix of probably 40% — 35%, 40% of the spend. So across those 8 wells, total investment would be close to $60 million, $65 million. We’ve already probably sunk about $25 million to $30 million in those wells. So definitely, that’s a little bit of a stranded capital for us right now. But again, we think economics and the contango on the gas curve just makes sense to kind of hold ground on those. But going forward, we’ve got another $35 million, $40 million to spend to bring that all online, and we can bring it on quickly being that they’re drilled.

Operator: Your next question is from the line of Noel Parks with Tuohy Brothers.

Noel Parks: Just had a couple of things. I was wondering, with the shift towards the oilier areas in your holdings, between sort of the budget you were envisioning when you were probably going to leaning — be leaning gas here and the current budget, any significant delta in the infrastructure or facility spending that you’re looking at now that you’re going to be back in the oilier areas versus the original gassier budget?

Sean Woolverton: No. Probably as a whole, both when we were thinking 1 rig gas, 1 rig oil, our overall CapEx to go to 2 is the same, but our percentage of what we spend on facilities and land always runs in that 10% to 12% range regardless if it’s 2 rigs oil, 2 rigs gas or a split. So pretty consistent. 90% of the spend goes to D&C. Of that 10 broken between facilities and land, it’s probably 2/3 facilities, 1/3 land. And then we always reserve the right that if there’s opportunistic leasing to do, we’ll maybe put more dollars to work on land.

Noel Parks: Sure. Sure. Right. And just wondering, with your — now hanging on to those DUCs instead of completing them right away, can you just talk a little bit about the frac pace you’re looking at? And I was just wondering if in making the changes you’ve made to the plan, any issues with frac crew access operating in a different end of the play?

Sean Woolverton: Yes. Why don’t I let Steve address that?