DUG Eagle Ford: SilverBow Rebranded, Diversifying

Hart Energy: Give us a brief history of SilverBow Resources.

Steve Adam: The company was recently rebranded here within the last three years, and it has developed a sizable acreage position in the western Eagle Ford having now amassed well over a net 100,000 acres. It's been a Fasken gas company. It's also had southern Eagle Ford asset gas properties that are more and more derisked over time. It's also added more liquids-rich inventory to the acreage position. Some of that was acres that we already had that had a bias against them for whatever reason as well as some new nearby bolt-on acreage that came through that same study. As a result, we've been able to change the mix both of commodity mix and the production mix of our acreage position. If you looked at the organization in Q1 or Q2 of 2018, we would have been at around 86 or so percent gas and as a composition right now in Q2 2019 we're about 77% gas. So, we blended in quite a strong performance as it relates to being liquids-rich and more oil-to-product mix and the balance sheet of the company. 

Hart Energy: This is a difficult time for E&Ps. How does SilverBow stay relevant, find success and move forward?

Steve Adam: A lot of it has to do with attitude and effort, and we at SilverBow have put together a cultural change. The cultural change is what we call “SilverBow way,” and it has various core that we work through in terms of a value system both at different times of the year as focus items as well as programs that are in place not only month after month but year after year. Given that, it’s taken the opportunity for the petrotechnical team to take a deep dive on various rock characterization opportunities that we had both and gas and liquids-rich opportunities. It’s also had an opportunity for our petrotechnical team along with our commercial skills team to work on more margin-oriented, high-return type projects. Both from a mentality as well as developing them in practice so that we can be a much stronger organization based on high return margins.

Hart Energy: Talk to us about diversifying.

Steve Adam: The diversification or the blend to more oil is not necessarily a pivot, it’s just basically been a blended shift to more oil. One of our goals in the organization is to have a better balance between oil and gas. Kind of look at it as a teeter-totter if you will. When the gas markets are good we can exploit that. When the oil markets are good or the liquids-rich markets are good we can exploit that. Sometimes, like right now, both markets aren’t very good. That's unfortunate, but yet, the liquid market whether it's a relatively good market or even if the liquid market is relatively a bad market is still 20-to-1 better market than being all gas. That's one of the drivers for the diversification, and it also gives us kind of a fairway or a bridge to win some of these other alternatives for gas may come into play in terms of pricing in the out years.
 

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