Well Cost | Well Lateral Length | Drilling / Well Results | Top Story | Debt | Key Wells | IP Rates-30-Day | Initial Production Rates | Capital Markets | Credit Facility Change

Silverbow Touts First Webb County Austin Chalk IP; 12.9 Mmcfe/d

Share Print Bookmark    |    Tuesday,April 20,2021

SilverBow Resources Inc. provided an operational and financial update including the successful extension of its senior secured revolving credit facility.

Operational Update

• SilverBow's first Webb County Austin Chalk well, which came online in February, continues to outperform expectations. This successful test further delineates the extent of the Dorado Austin Chalk play. The initial well produced an average of 12.9 MMcf/d in the first 30 days of production, with a lateral length of 8,300 feet and an all-in well cost¹ of approximately $6 million. SilverBow plans to further appraise its Austin Chalk potential across its acreage position during 2021

• The Company's second six-well, co-developed Upper and Lower Eagle Ford La Mesa pad came online in March and achieved a peak pad production rate of 90 MMcf/d. Performance is in-line with expectations as well as prior pad results. Drilling cycle times decreased by 10% compared to the first La Mesa pad, which came online in late 2019. Total capital expenditures of approximately $5.5 million per well for the second La Mesa pad were 13% below AFE amounts and 15% below the first pad

• Expects first quarter 2021 production to be approximately 180 MMcfe/d, above the high end of guidance.

Financial Update:

• Extended the maturity of SilverBow's $600 million Credit Facility, governed by a borrowing base of $300 million, to April 2024

• Realized oil price for first quarter of 2021 of $42.74 per barrel and realized gas price for first quarter of 2021 of $4.97 per million British thermal units ("MMBtu"), including hedge settlements

• Expects positive first quarter 2021 free cash flow ("FCF")² and full year 2021 FCF towards the high end of its $20-$40 million guidance range

• Anticipates leverage ratio³ improving to 2.0x or below by year-end 2021

• Reduced credit facility borrowings to $200 million at March 31, 2021, a $30 million (13%) reduction quarter-over-quarter and a $90 million (30%) reduction year-over-year.

Sean Woolverton, SilverBow's Chief Executive Officer, commented, "During the first quarter, we paid down an additional $30 million of debt by continuing to prioritize our free cash flow towards debt reduction, and expect our full year 2021 free cash flow towards the high end of our $20-$40 million guidance range. By the end of this year, we are targeting a debt-to-Adjusted EBITDA ratio at or below 2.0x. Our strong operating results generated free cash flow for the quarter, marking six out of the last seven quarters with positive free cash flow. Furthermore, early results from our first Austin Chalk well are very encouraging, setting up the potential to add more locations to our high rate of return drilling inventory. We see a path to $5.5 million or less from multi-well pad development and lessons-learned. Going forward, we expect to remain flexible and continue lowering costs, reducing cycle times, increasing well productivity and driving efficiencies. We look forward to publishing our first quarter 2021 results in the coming weeks."

Mr. Woolverton stated further, "I am pleased to announce that we successfully renegotiated the terms of our Credit Facility, which extends our debt maturity profile to 2024 and provides us with ample liquidity to execute our business plan. The borrowing base has been set at $300 million, which provides over $100 million in liquidity based on our borrowings and cash as of quarter end. We are very appreciative to have the support of our bank syndicate and look forward to continuing our partnership with them. We remain steadfast in managing our financial position as we prudently grow our production base and create value for all of our stakeholders."