SilverBow Resources Announces Actions Taken in Response to Current Market Conditions

SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) today provided an update on actions taken in response to the unprecedented global health and safety events impacting the oil and gas market.

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, “The safety of our employees, contractors, and partners in the communities in which we operate remains our top priority. We have and will continue to take all necessary actions to ensure the well-being of our stakeholders.”

Mr. Woolverton continued, “In light of this unforeseeable abrupt decline in commodity prices, as well as the heightened uncertainty with respect to the duration of depressed prices, we are taking prudent steps to protect our balance sheet while also adjusting capital spend to ensure return thresholds continue to be met. We continue to preserve optionality in order to respond efficiently once market conditions show signs of recovery. SilverBow’s long-term strategy of building a diversified commodity portfolio in a single basin with a peer-leading cost structure provides us with many opportunities to quickly adapt to market conditions. Furthermore, our proactive risk management strategy to hedge commodity prices in advance of development programs has positioned us to persevere through a protracted period of low prices.”

Mr. Woolverton concluded, “I want to acknowledge and express how proud I am of our employees’ dedication and continued optimism during the challenging time that we find ourselves in.”

The actions announced include:

CAPITAL INVESTMENT

• SilverBow suspended drilling and completions activity until commodity prices warrant further investment. As such the Company is now guiding to a 2020 capital program of $80-$95 million, a 55% reduction at the midpoint from the previous guidance.
• The Company deferred completing and bringing online eight oil wells until at least the second half of 2020.
• SilverBow is contemplating a pivot to gas development late in 2020 if prices support return thresholds.

PRODUCTION MANAGEMENT

• SilverBow expects first quarter total net production to average approximately 230 MMcfe/d, with a commodity mix of 79% natural gas, 12% oil, and 9% natural gas liquids.
• During the second half of March, the Company elected to curtail approximately 35 MMcf/d of net gas production. In April, SilverBow has elected to curtail a total of 50 MMcf/d of net gas production and approximately 2,000 Bbls/d of net oil production.
• In light of extremely low commodity prices, SilverBow is currently assessing the economic merits of curtailing additional production.

RISK MANAGEMENT

• With the decrease in capital investment, SilverBow elected to tactically unwind a series of oil derivative contracts in 2020 and 2021 above its expected production, resulting in approximately $38 million of cash inflow in the month of March.
• For the balance of 2020, from April through December, the Company’s hedge position covers 100% of its existing 2020 oil volumes at an average price of $53.27 per barrel and 61% of its existing 2020 gas volumes at an average price of $2.63 per MMBtu.
• The Company recently added derivative positions, for the period of January 2021 through March 2021, of 45 MMcf/d at an average price of $2.68 per MMBtu.
• As of April 9, 2020 and pro forma for the recent hedge activity, SilverBow’s mark-to-market value of its hedge position was approximately $41 million.

ACQUISITION & DIVESTITURE UDPATE

• SilverBow recently acquired a private entity with Eagle Ford assets and entered into a definitive agreement to divest certain assets located in the Powder River Basin.
• The strategic acquisition adds 10 MMcf/d of net natural gas production directly offsetting the Company’s existing assets, bringing SilverBow’s combined acreage to more than 200,000 net acres in the western portion of the Eagle Ford. The Company has the opportunity to recognize synergistic upside if natural gas prices improve in the future.
• The divesture includes an overriding royalty interest in 188 net acres across Campbell, Converse and Niobrara Counties, Wyoming. The transaction is expected to close during the second quarter.

FINANCIAL UDPATE

• As of March 31, 2020, SilverBow’s liquidity was $145.6 million, consisting of $35.6 million of cash and $110.0 million of availability under the Company’s revolving credit facility.
• SilverBow’s net debt was $454.4 million, calculated as total long-term debt of $490.0 million less $35.6 million of cash, a 5% decrease from December 31, 2019.
• The Company expects to generate free cash flow at current strip pricing for the balance of 2020.

Given the prudent measures currently undertaken and under consideration to protect SilverBow’s balance sheet and maximize free cash flow, the Company’s previously issued 2020 guidance should no longer be relied upon. SilverBow continues to assess a wide range of further measures to maximize value in the prevailing commodity price environment, including further curtailments of certain oil and gas production until prices improve to required return thresholds. The Company expects to update its detailed financial and operational guidance in conjunction with its first quarter earnings release next month.

ABOUT SILVERBOW RESOURCES, 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 Shale in South Texas. With over 30 years of history operating in South Texas, the Company possesses a significant understanding of regional reservoirs which it leverages to assemble high quality drilling inventory while continuously enhancing its operations to maximize returns on capital invested. For more information, please visit www.sbow.com.

FORWARD-LOOKING STATEMENTS

This 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 management's expectations or beliefs concerning future events, and it is possible that the results described in this release will not be achieved. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from the results discussed in the forward-looking statements, including among other things: oil and natural gas price levels and volatility; our ability to satisfy our short- or long-term liquidity needs; our ability to execute our business strategy, including the success of our drilling and development efforts; timing, cost and amount of future production of oil and natural gas; expectations regarding future free cash flow; and other factors discussed in the Company’s reports filed with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q filed thereafter. All statements, other than statements of historical fact included in this press release, regarding our strategy, future operations, financial position, future cash flows, estimated production levels, expected oil and natural gas pricing, estimated oil and natural gas reserves or the present value thereof, reserve increases, capital expenditures, budget, projected costs, prospects, plans and objectives of management are forward-looking statements.

All forward-looking statements speak only as of the date of this news release. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this release are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. The risk factors and other factors noted herein and in the Company's SEC filings could cause its actual results to differ materially from those contained in any forward-looking statement. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to publicly release the results of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all such factors.

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