SilverBow poised to bring wells online for double-digit growth y-o-y

SilverBow Resources Inc., Houston, excluding assets from Eagle Ford and Olmos zone acquisitions set to close in this year’s second half, estimates second-quarter 2022 production of 219-232 MMcfed, with natural gas volumes expected to comprise 175-185 MMcfd or 80% of total production at the midpoint (OGJ Online, Apr. 15, 2022).

The company said it maintains flexibility in its drilling schedule as it monitors commodity prices and the service cost environment and will release updated 2022 guidance when its pending Sundance transaction closes.

Net production for first-quarter 2022 was 226 MMcfed (77% natural gas, 13% oil, 10% NGLs). During the quarter, SilverBow drilled nine net wells, completed one well, and brought one well online. Activity focused primarily on the La Mesa area, where one Austin Chalk well drilled to a lateral length of about 9,800 ft was brought online. The company also drilled an eight-well La Mesa pad. The eight wells were co-developed using a wine-rack configuration, of which three targeted the Lower Eagle Ford, three targeted the Upper Eagle Ford, and two targeted the Austin Chalk. First production from the pad is expected towards the end of this year’s second quarter.

SilverBow's drilling rig will shift focus from Webb County gas and Austin Chalk assets to La Salle and McMullen oil assets in the second quarter. In the back half of the year, the company anticipates drilling a mix of Webb County gas wells and locations acquired in 2021. A second rig is expected to be added upon closing of the Sundance acquisition.

“In June, we will see a significant ramp in production as we bring online 11 new wells leading to double-digit growth year-over-year on the existing assets with a reinvestment rate less than 70%. Strong commodity prices combined with a full rig line of efficiencies have helped drive financial performance above expectations and offset inflation in the service market,” said Sean Woolverton, chief executive officer, in the May 4 release.

For first-quarter 2022, the company reported a net loss of $64 million, which includes a net unrealized loss on the value of the company's derivative contracts of $112 million. Adjusted EBITDA of $74 million was recorded and free cash flow was $28 million for the quarter.

The company reduced total debt by $27 million quarter-over-quarter.