SilverBow Resources Reports Results of First Austin Chalk Well

SilverBow Resources Inc. provided an update on April 19 including results from the Houston-based independent E&P company’s first Austin Chalk well, which it said continues to outperform expectations.

In a company release, SilverBow said its first Austin Chalk well, which came online in February, initially produced an average of 12.9 MMcf/d of natural gas in the 30 days of production. The well, located in Webb County, Texas, had a lateral length of 8,300 ft and an all-in well cost of approximately $6 million.

“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” SilverBow CEO Sean Woolverton noted in a statement.

The successful test delineates the extent of the Dorado Austin Chalk play on SilverBow’s South Texas acreage. SilverBow plans to further appraise its Austin Chalk potential across its acreage position during 2021, according to the company release.

 SilverBow holds approximately 155,000 net acres in the Eagle Ford Shale located in South Texas across Dimmit, La Salle, Live Oak, McMullen and Webb counties.

Additionally, SilverBow announced on April 19 that its 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, which the company said was in-line with expectations as well as prior pad results.

For instance, SilverBow said drilling cycle times decreased by 10% compared to the first La Mesa pad, which came online in late 2019. Additionally, total capex of approximately $5.5 million per well for the second La Mesa pad were 13% below AFE amounts and 15% below the first pad.

“Our strong operating results generated free cash flow for the quarter, marking six out of the last seven quarters with positive free cash flow,” Woolverton said.

Bolstered by production from its latest six-well La Mesa pad, SilverBow estimates first-quarter production averaged 180 MMcfe/d, 2% above consensus estimates, according to a research note by Enverus.

“We see a path to $5.5 million or less from multiwell pad development and lessons-learned,” Woolverton continued. “Going forward, we expect to remain flexible and continue lowering costs, reducing cycle times, increasing well productivity and driving efficiencies.”

In the company release on April 19, SilverBow also reiterated its commitment to debt reduction with expectations that its leverage ratio will improve to 2.0 x or below by year end. The company also announced that it successfully extended the maturity of its $600 million credit facility to 2024.