SilverBow Resources Announces Oil-Weighted Acquisition

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HOUSTON – (COMMERCIAL THREAD) – SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) today announced that it has entered into a definitive agreement to acquire the oil and gas assets of Eagle Ford from two vendors.

Highlights of the acquisition:

  • Total purchase price of approximately $ 75 million, consisting of $ 45 million in cash and approximately $ 30 million in equity

  • Should be accretive on all key financial indicators

  • 17,000 total net acres in the oil window of La Salle, McMullen, DeWitt and Lavaca counties

  • May 2021 net production of approximately 2,500 barrels of oil equivalent per day, 71% liquids / 46% oil from 111 PDP wells

  • Acquired oil production represents a 30% increase over SilverBow’s current oil production forecast for the year 2021

  • 2021E Adjusted EBITDA of approximately $ 28 million(1)

  • Over 100 net drill locations, adding approximately three years of inventory to SilverBow’s current 1 rig drilling rate

MANAGEMENT’S COMMENTS

Sean Woolverton, CEO of SilverBow, said: “This acquisition significantly increases SilverBow’s oil production and strengthens our efforts to consolidate Eagle Ford and Austin Chalk while maintaining a balanced oil and gas portfolio. This is our third acquisition since early August and the largest to date for SilverBow. This transaction strengthens our inventory with high return rate locations and gives us an option to expand as we plan for 2022 and beyond. Acquisition contributes to Adjusted EBITDA and further reduces our pro forma leverage ratio(2) taking into account the additional cash flow. As we have shown over time, we plan to continue driving our capital efficiency and leading cost structure as these assets are combined with our existing portfolio. ”

Mr Woolverton added, “Today’s announcement is a testament to the tremendous work we have done to assess the opportunities and execute our plan to consolidate in the basin. Additionally, SilverBow again used a mix of cash and stocks to fund the purchase price. The use of equity has allowed us to access a greater set of strategic growth opportunities while aligning our interests with those of surrounding comparable companies and other key stakeholders for accretive and long-term value creation. term. Including the pro forma contribution from our recent acquisitions, SilverBow is targeting a leverage ratio of 1.25x at the end of 2021. We plan to share additional details as part of our third quarter 2021 report in November.

DETAILS OF THE TRANSACTION

The acquisition has an effective date of August 1, 2021 and is expected to be finalized before the end of the year, subject to customary closing conditions. The total purchase price is approximately $ 75 million, consisting of $ 45 million in cash and the greater of (i) approximately 1.35 million common shares of SilverBow based on its price. 30-day volume-weighted average as of October 4, 2021 and (ii) the number of shares equal to $ 25 million divided by the 30-day volume-weighted average price on the first trading day preceding the trading date. fencing. SilverBow intends to fund the cash component and the fees and expenses with cash on hand and borrowings under its revolving credit facility.

ABOUT SILVERBOW RESSOURCES, INC.

SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy company actively engaged in the exploration, development and production of oil and gas in the Eagle Ford and Austin Chalk shales in South Texas. With over 30 years of experience in South Texas, the company has extensive knowledge of the regional reservoirs it operates to assemble a high quality drilling inventory while continually improving its operations to maximize return on investment. . For more information, please visit www.sbow.com. Information on the Company’s website is not part of this release.

FORWARD-LOOKING STATEMENTS

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent the expectations or beliefs of management regarding future events, and it is possible that the results described in this press release will not be achieved. 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. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, risks and uncertainties discussed in the Company’s reports filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements.

(Footnotes)

1 2021E Adjusted EBITDA based on SilverBow management estimates using the NYMEX strip coupon price as of September 30, 2021. As used in this press release, Adjusted EBITDA is calculated as net income (loss) plus (less) depreciation, depletion and amortization, increased asset retirement obligations, interest expense, depreciation of oil and gas properties, net losses (gains) on contracts commodity derivatives, amounts received (paid) for commodity derivative contracts held until settlement, tax expense (benefit) and stock-based compensation expense. A prospective estimate of net income (loss) is not provided with the prospective estimate of Adjusted EBITDA (a non-GAAP measure) because the elements necessary to estimate net income (loss) are not provided. accessible or estimable at the present time without unreasonable effort. Such items could have a material impact on the net income (loss) of the Company.

2 The increase is based on the adjusted EBITDA for the financial leverage ratio for fiscal 2021. The financial leverage ratio is defined as the total long-term debt, before unamortized discounts, divided by the adjusted EBITDA for the ratio. leverage (a non-GAAP measure) for the twelve month period. . Adjusted EBITDA for leverage ratio is calculated as Adjusted EBITDA plus amortization of derivative contracts, in accordance with SilverBow’s debt covenant compliance calculations. Neither Adjusted EBITDA nor Adjusted EBITDA for leverage ratio should be considered a replacement for the comparable GAAP measure.

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