SilverBow Snaps Up More Eagle Ford Acreage with $75 Million Acquisition

SilverBow Resources Inc. continued to add to its position in the Eagle Ford Shale on Oct. 11 with the acquisition of oil-weighted properties for $75 million.

The transaction, with two undisclosed sellers, represents SilverBow’s third acquisition since the beginning of August and the largest to date for the company, according to SilverBow CEO Sean Woolverton.

“Today’s announcement is a testament to the extensive work we have done evaluating opportunities and executing our in-basin consolidation plan,” Woolverton commented in a company release on Oct. 11.

The total purchase price for the acquisition consists of $45 million in cash and approximately $30 million in equity. The transaction follows an all-stock acquisition SilverBow closed on Oct. 4 that the company said both bolstered its gas position and added new oil positions in the Eagle Ford.

“The use of equity has allowed us to access a larger opportunity set for strategic growth while aligning our interests with surrounding peer companies and other key stakeholders for accretive, long-term value creation,” Woolverton said of SilverBow’s latest acquisition.

SilverBow also closed an acquisition in August of nonop working interest in its operated La Mesa property in Webb County, Texas, in a cash-and-stock transaction worth $24 million.

SilverBow Resources is an independent E&P company based in Houston that is actively engaged in the exploration, development and production of both oil and gas in the Eagle Ford Shale and Austin Chalk in South Texas. 

In its latest acquisition, SilverBow will add 17,000 total net acres in the oil window of the Eagle Ford shale play in La Salle, McMullen, DeWitt and Lavaca counties, Texas. Net production in May was approximately 2,500 boe/d (71% liquids / 46% oil) from 111 PDP wells.

The acquired oil production represents a 30% increase to SilverBow’s current full-year 2021 oil production guidance, according to the company release.

“This acquisition meaningfully increases SilverBow’s oil production and furthers our Eagle Ford and Austin Chalk consolidation efforts while maintaining a balanced oil and gas portfolio,” Woolverton added.

SilverBow is also acquiring over 100 net drilling locations, which Woolverton described as “high rate of return locations.” In total, SilverBow estimates the acquisition adds approximately three years of inventory at the current’s current drilling pace of one rig.

“As we have shown over time, we expect to continue driving our peer-leading capital efficiency and cost structure as these assets are combined with our existing portfolio,” Woolverton said.

Including the pro forma contribution of the company’s recent acquisitions, he noted SilverBow is targeting a leverage ratio of 1.25x at year-end 2021.

SilverBow intends to fund the cash component and fees and expenses of its latest acquisition with cash on hand and borrowings under its revolving credit facility. Wolverton said SilverBow plans to share additional details as part of the company’s third-quarter 2021 reporting in November.