2023 performance advances business strategy with strong free cash flow generation, efficient production growth and lower than expected capital investments

2024 outlook to benefit from recent transformational acquisition that brings efficient, high-margin production, product diversification, additional capital efficiencies, free cash flow generation and balance sheet flexibility

SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) today announced operating and financial results for the fourth quarter and full year 2023. Supplemental slides have been posted to SilverBow’s website and can be accessed at www.sbow.com. The Company plans to host a conference call at 9 a.m. CT (10 a.m. ET) on Thursday, February 29, 2024. Participation details can be found within this release.

Full Year 2023 Highlights:

• Generated net income of $298 million, or $12.63 per diluted share (all per share amounts stated on a diluted basis), non-GAAP Adjusted EBITDA of $536 million¹ and non-GAAP free cash flow (“FCF”) of $56 million¹
• Created additional scale and commodity optionality through transformational acquisition of South Texas assets, adding more than 300 high-return locations and 32 thousand barrels of oil equivalent per day (“MBoe/d”); SilverBow has more than 1,000 high-value locations, or more than a decade of inventory at its current development pace
• Reported average net production of 59.4 MBoe/d (39% oil/liquids), in the upper half of guidance; more than doubled year-over-year net oil production to 14.6 thousand barrels of oil per day (“MBbls/d”)
• Invested $409 million in capital (below guidance midpoint), excluding acquisitions
• Achieved full year 2023 return on capital employed (“ROCE”) of 16%; three-year average ROCE (2021-23) of 21%¹
• Advanced key elements of its corporate strategy, including expanding its portfolio of high-return opportunities, profitably growing production, creating capital efficiencies to enhance margins, delivering FCF and strengthening the balance sheet

Fourth Quarter 2023 Highlights:

• Generated net income of $183 million, or $7.12 per share, non-GAAP Adjusted EBITDA of $172 million¹ and non-GAAP FCF of $74 million¹, the highest quarterly amount in SilverBow's history
• Reported average net production of 72.1 MBoe/d (43% oil/liquids), in the upper half of guidance; grew year-over-year net oil production to 19.3 MBbls/d, an increase of nearly 75%
• Invested $79 million in capital (below midpoint of guidance), excluding acquisitions

2024 Outlook:

• In response to commodity prices, the Company lowered its previously planned capital investments in dry gas-focused areas by approximately $75 million, resulting in a revised 2024 capital program budget of $470 - $510 million
• At current commodity prices, the Company expects to generate $125 - $150 million of estimated FCF, which is currently earmarked for significant debt reduction
• The Company is maintaining planned investment in oil and liquids projects while keeping oil and liquids production guidance at previously announced levels. Revised capital investments reduce expected natural gas volumes by 13%
• Production is expected to increase approximately 50% year-over-year to 85.2 - 93.5 MBoe/d, post-recent acquisition, oil production is expected to increase 70% year-over-year and comprise 25% - 30% of 2024 production mix

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, said, “We performed exceptionally well in 2023, advancing our strategy to create value and dramatically strengthen SilverBow with the recent high-value South Texas acquisition. Our team has a track record of successfully integrating acquisitions and will apply our proven operating practices and low-cost platform to generate synergies and to extract value from this transaction. As we enter 2024, SilverBow has a more durable asset base, flexibility to shift investments between oil and gas, and a longer runway of high-quality drilling opportunities. Our recent South Texas acquisition was a game changer and significantly improves the trajectory of our business. We are confident in our ability to unlock capital efficiencies, improve well productivity and returns, and continue to create value for our shareholders.”

FOURTH QUARTER FINANCIAL AND OPERATING SUMMARY

For the fourth quarter of 2023, SilverBow reported net income of $183 million, or $7.12 per share, which included a net unrealized gain on the value of the Company's derivative contracts of $161 million. Non-GAAP Adjusted EBITDA was $172 million and non-GAAP FCF was $74 million¹. Financial results in the period were driven by production results in the upper half of SilverBow's guidance. Quarterly average net production increased 37% over the prior year to 72.1 MBoe/d. Oil production averaged 19.3 MBbls/d, up nearly 75% over the comparable period. Production mix for the fourth quarter consisted of 57% natural gas, 27% crude oil and 16% natural gas liquids ("NGLs").

Strong production in the quarter was related to performance from the Central Oil area, where the Company recently brought online a four-well pad with a 30-day pad average of 4,605 Boe/d (83% oil, 8,280’ average lateral length). In its Eastern Extension area, SilverBow brought online a three-well pad with a 30-day pad average of 4,279 Boe/d (71% oil, 9,240' average lateral length).

Stated without the impact of hedging, crude oil and natural gas realizations for the quarter were 97% and 83% of West Texas Intermediate (“WTI”) and Henry Hub, respectively. Average realized prices by product were $76.21 per barrel of oil, $2.39 per thousand cubic feet of natural gas (“Mcf”) and $20.83 per barrel of NGLs (27% of WTI benchmark). Please refer to the tables included in this release for complete production volumes and pricing information.

Total production expenses in the quarter, which include lease operating expenses, transportation and processing expenses and production taxes, were $8.67 per barrel of oil equivalent (“Boe”), in-line with expectations.

Capital investments during the quarter were in the lower half of guidance and totaled $79 million on an accrual basis. In the quarter, the Company operated two rigs and brought online 12 net wells.

FULL YEAR 2023 FINANCIAL AND OPERATING SUMMARY

For full year 2023, SilverBow reported net income of $298 million, or $12.63 per share, which includes a net unrealized gain on the value of the Company's derivative contracts of $151 million. Non-GAAP Adjusted EBITDA was $536 million and non-GAAP FCF was $56 million¹. Financial results in the period were driven by average production results in the upper half of SilverBow's guidance. Average net production was above the midpoint of guidance and increased 32% over the prior year to 59.4 MBoe/d. Oil production averaged 14.6 MBbls/d, up 100% over the comparable period. Production mix for the full year consisted of 61% natural gas, 25% crude oil and 14% NGLs.

Stated without the impact of hedging, crude oil and natural gas realizations in the year were 97% and 85% of WTI and Henry Hub, respectively. Average realized prices by product were $75.32 per barrel of oil, $2.34 per Mcf of natural gas and $20.74 per barrel of NGLs (27% of WTI benchmark). Please refer to the tables included in this release for complete production volumes and pricing information.

SilverBow posted significant year-over-year operational efficiency gains in 2023, completing 16% more stimulation stages per day, with average pumping efficiencies up 13%. Fourth quarter pumping efficiencies were 84%, the highest quarterly rate achieved during the year. Performance reflected less downtime with an average of 14.3 completed stages per day. Drilling costs decreased throughout 2023 due to efficiencies from high-graded rigs and ongoing cost deflation, particularly in rig rates and tubular products. As a result, 2023 total well costs per lateral foot decreased 3% year-over-year, and highlighting the magnitude of cost improvement throughout the year, fourth quarter well costs per lateral foot decreased 20% year-over-year. For the year, drilling and completion (“D&C”) costs were 10% below planned costs.

Capital investments for the year, excluding acquisitions, totaled $409 million on an accrual basis, which was below the midpoint of the Company's $400 - $425 million guidance. Including cash acquisition cost of $605 million, SilverBow invested approximately $1.0 billion in 2023. The Company brought online 49 net wells during the year.

PROVED RESERVES

SilverBow increased its proved reserves by 20% year-over-year. SEC proved reserves at year-end 2023 were 446 million barrels of oil equivalent (“MMBoe”), of which 37% were oil/liquids and 45% were proved developed. The increase in proved reserves was primarily related to acquisitions and an increase in oil reserves through extensions due to successful drilling on existing leases, as well as new leases acquired in 2023. Excluding the impact of acquisitions and commodity prices, proved reserve replacement was more than 200% of 2023 production. The Standardized Measure was $2.3 billion and the pre-tax present value of future net cash flows discounted at 10% was $2.7 billion utilizing SEC prices (“SEC PV-10 Value,” a non-GAAP measure).

The table below reconciles 2022 proved reserves to 2023 proved reserves:

SEC prices used in the 2023 calculation were $76.79 per barrel of oil, $2.30 per Mcf of natural gas and $25.43 per barrel of NGLs, as compared to $94.36 per barrel of oil, $6.14 per Mcf of natural gas and $34.76 per barrel of NGLs used in 2022.

2024 OUTLOOK

Mr. Woolverton commented, “Our outlook for 2024 reflects the positive impacts of our recent transaction and ability to exercise flexibility in our operating plan in response to commodity prices. Given low natural gas prices, we reduced our planned investments in our Webb County Gas area to preserve valuable inventory for the future, while our development activity in our expanded oil opportunities continues. This flexibility is a result of our acquisition strategy and allows us to capitalize on our competitive advantage in the Eagle Ford. Our current 2024 plan high-grades our large, high-return portfolio of opportunities to create a plan that maximizes free cash flow and allows for debt reduction. We are positioned to benefit from the significant and sustainable capital efficiencies we have created over the past year, and expect to continue optimizing our development program in real-time as dictated by our returns-focused mindset.”

SilverBow’s current planned capital investments are $470 - $510 million, with approximately 90% allocated to D&C activity. This represents a $75 million, or 13%, reduction when compared to the midpoint of the Company's preliminary 2024 outlook. The plan is expected to generate $125 - $150 million of FCF at current prices. Annual production is expected to average 85.2 - 93.5 MBoe/d, a 50% increase over the prior year. Oil volumes are expected to average 23.5 - 26.5 MBbls/d, a 71% increase over the prior year. SilverBow's full year gas volumes are expected to be 13% lower at the midpoint compared to its prior guidance range.

The Company plans to operate three drilling rigs through the first half of 2024, and operate two drilling rigs in the second half of the year. The Company is directing the majority of its investments to liquids development, including approximately 50% of its full year D&C activity directed toward its Western Condensate area and approximately 30% of its D&C activity directed toward its Central Oil and Eastern Extension areas. SilverBow expects to drill 62 gross (49 net) operated wells drilled, compared to 46 gross (45 net) operated wells drilled in 2023.

For the first quarter of 2024, the Company expects to produce 86.5 - 93.3 MBoe/d, with expected oil volumes of 22.5 - 25.0 MBbls/d. Additional detail on SilverBow's guidance can be found in the table included in this release.

RISK MANAGEMENT

SilverBow consistently uses the derivatives market to mitigate commodity price risks and ensure cash flow to fund its annual capital program. As of February 23, 2024, SilverBow had approximately 60% of total production hedged for full year 2024, using the midpoint of guidance; approximately 75% of full year 2024 gas production is hedged at a weighted average price of $3.83 per Mcf, using the floor price of collars. For complete disclosure on the Company’s hedging program, please see the most recent presentation posted to the Investor Relations section of the Company's website.

CAPITAL STRUCTURE

Due to the underlying strength of SilverBow's business and increasing scale, the Company’s liquidity more than doubled year-over-year. At year-end 2023, SilverBow had approximately $479 million of liquidity, consisting of $1 million of cash and $478 million of availability under its senior secured revolving credit facility (“Credit Facility”). As of January 31, 2024, the Company had $509 million of undrawn capacity and $1 million of cash resulting in $510 million of liquidity. This represents $60 million of total debt reduction in the two months since closing the South Texas acquisition; debt reduction remains the primary use of FCF in the near-term.

For full year 2023, SilverBow reported year-end debt of $1.2 billion and non-GAAP Adjusted EBITDA for Leverage Ratio of $782 million², which, in accordance with the leverage ratio calculation in its Credit Facility, includes pro forma contributions from acquired assets prior to their closing dates totaling $245 million. At year-end 2023, the Company had a leverage ratio of 1.56x² and 25.4 million total common shares outstanding as of February 23, 2024.

CONFERENCE CALL DETAILS

SilverBow plans to host a conference call for investors at 9 a.m CT (10 a.m. ET), on Thursday, February 29, 2024. Investors and participants can listen to the call by dialing 1-888-415-4465 (U.S.) or 1-646-960-0140 (International) and requesting SilverBow Resources' Fourth Quarter and Full Year 2023 Earnings Conference Call (Conference ID: 5410161) or by visiting the Company's website. A simultaneous webcast of the call may be found at www.sbow.com/investor-relations/Investor-Relations-Events-Presentations/event-calendar/default.aspx. The webcast will be archived for replay on the Company's website for 14 days.

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 and Austin Chalk 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. Information on our website is not part of this release.

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 based on current expectations and assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this press release, including those regarding our strategy, the benefits of the acquisitions, future operations, guidance and outlook, financial position, well expectations and drilling plans, estimated production levels, expected oil and natural gas pricing, long-term inventory estimates, estimated oil and natural gas reserves or the present value thereof, reserve increases, service costs, impact of inflation, future free cash flow and expected leverage ratio, value and development of locations, capital expenditures, budget, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “will,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “budgeted,” “guidance,” “expect,” “may,” “continue,” “potential,” “plan,” “project,” "positioned," "should" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the following risks and uncertainties: further actions by the members of the Organization of the Petroleum Exporting Countries, Russia and other allied producing countries with respect to oil production levels and announcements of potential changes in such levels; risk related to recently completed acquisitions and integrations of these acquisitions; volatility in natural gas, oil and NGL prices; ability to obtain permits and government approvals; our borrowing capacity, future covenant compliance, cash flow and liquidity, including our ability to satisfy our short- or long-term liquidity needs; asset disposition efforts or the timing or outcome thereof; ongoing and prospective joint ventures, their structures and substance, and the likelihood of their finalization or the timing thereof; the amount, nature and timing of capital expenditures, including future development costs; timing, cost and amount of future production of oil and natural gas; availability of drilling and production equipment or availability of oil field labor; availability, cost and terms of capital; timing and successful drilling and completion of wells; availability and cost for transportation and storage capacity of oil and natural gas; costs of exploiting and developing our properties and conducting other operations; competition in the oil and natural gas industry; general economic and political conditions, including inflationary pressures, further increases in interest rates, a general economic slowdown or recession, instability in financial institutions, political tensions and war (including future developments in the ongoing conflicts in Ukraine and the Gaza Strip); the severity and duration of world health events, including health crises, and related economic repercussions, including disruptions in the oil and gas industry, supply chain disruptions, and operational challenges; opportunities to monetize assets; our ability to execute on strategic initiatives, including acquisitions; effectiveness of our risk management activities, including hedging strategy; counterparty and credit market risk; pending legal and environmental matters, including potential impacts on our business related to climate change and related regulations; actions by third parties, including customers, service providers and shareholders; current and future governmental regulation and taxation of the oil and natural gas industry; developments in world oil and natural gas markets and in oil and natural gas-producing countries; uncertainty regarding our future operating results; and other risks and uncertainties discussed in the Company’s reports filed with the SEC, including its annual report on Form 10-K for the year ended December 31, 2023.

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. The Company’s capital budget, operating plan, service cost outlook and development plans are subject to change at any time. 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, except as required by law.

(Footnotes)

¹ Adjusted EBITDA, FCF and ROCE are non-GAAP measures defined and reconciled in the tables included in this news release.

² Leverage ratio is defined as total long-term debt, before unamortized discounts, divided by Adjusted EBITDA for Leverage Ratio (a non-GAAP measure defined and reconciled in the tables included in this news release) for the trailing twelve-month period.

(Financial Highlights to Follow)

Definition of Non-GAAP Measures as Calculated by the Company (Unaudited)

The following non-GAAP measures are presented in addition to financial statements as SilverBow believes these metrics and performance measures are widely used by the investment community, including investors, research analysts and others, to evaluate and useful in comparing investments among upstream oil and gas companies in making investment decisions or recommendations. These measures, as presented, may have differing calculations among companies and investment professionals and may not be directly comparable to the same measures provided by others. A non-GAAP measure should not be considered in isolation or as a substitute for the related GAAP measure or any other measure of a company's financial or operating performance presented in accordance with GAAP. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measure or measures is presented below. These measures may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA: The Company presents Adjusted EBITDA attributable to common stockholders in addition to reported net income (loss) in accordance with GAAP. Adjusted EBITDA is calculated as net income (loss) plus (less) depreciation, depletion and amortization, accretion of asset retirement obligations, interest expense, impairment of oil and natural gas properties, net losses (gains) on commodity derivative contracts, amounts collected (paid) for commodity derivative contracts held to settlement, income tax expense (benefit); and share-based compensation expense. Adjusted EBITDA excludes certain items that SilverBow believes affect the comparability of operating results, including items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDA is used by the Company's management and by external users of SilverBow's financial statements, such as investors, commercial banks and others, to assess the Company's operating performance as compared to that of other companies, without regard to financing methods, capital structure or historical cost basis. It is also used to assess SilverBow's ability to incur and service debt and fund capital expenditures. Adjusted EBITDA should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA is important as it is considered among the financial covenants under the Company's First Amended and Restated Senior Secured Revolving Credit Agreement with JPMorgan Chase Bank, National Association, as administrative agent, and certain lenders party thereto (as amended, the “Credit Agreement”), a material source of liquidity for SilverBow. Please reference the Company's 2023 Form 10-K for discussion of the Credit Agreement and its covenants.

Adjusted EBITDA for Leverage Ratio: In accordance with the Leverage Ratio calculation for SilverBow's Credit Facility, the Company makes certain adjustments to its calculation of Adjusted EBITDA. Adjusted EBITDA for Leverage Ratio is calculated as Adjusted EBITDA (defined above) plus (less) pro forma EBITDA contributions related to closed acquisitions. The Company believes that Adjusted EBITDA for Leverage Ratio is useful to investors because it reflects the last twelve months EBITDA used by the administrative agent for SilverBow's Credit Facility in the calculation of its leverage ratio covenant.

Cash General and Administrative Expenses: Cash G&A expenses is a non-GAAP measure calculated as net general and administrative costs less share-based compensation. The Company reports cash G&A expenses because it believes this measure is commonly used by management, analysts and investors as an indicator of cost management and operating efficiency on a comparable basis from period to period. In addition, SilverBow believes cash G&A expenses are used by analysts and others in valuation, comparison and investment recommendations of companies in the oil and gas industry to allow for analysis of G&A spend without regard to stock-based compensation which can vary substantially from company to company. Cash G&A expenses should not be considered as an alternative to, or more meaningful than, total G&A expenses.

Free Cash Flow: Free cash flow is calculated as Adjusted EBITDA (defined above) plus (less) monetized derivative contracts, cash interest expense, capital expenditures and current income tax (expense) benefit. The Company believes that free cash flow is useful to investors and analysts because it assists in evaluating SilverBow's operating performance, and the valuation, comparison, rating and investment recommendations of companies within the oil and gas industry. SilverBow uses this information as one of the bases for comparing its operating performance with other companies within the oil and gas industry. Free cash flow should not be considered an alternative to net income (loss), operating income (loss), cash flows provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. From time to time the Company provides forward-looking free cash flow estimates or targets; however, SilverBow is unable to provide a quantitative reconciliation of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measure because the items necessary to estimate such forward-looking GAAP measure are not accessible or estimable at this time without unreasonable efforts. The reconciling items in future periods could be significant.

Net Debt: Net debt is calculated as the total principal amount of second lien notes plus borrowings on the Company's Credit Facility less cash and cash equivalents.

Return on Capital Employed (“ROCE”): ROCE is defined as (A) Adjusted EBITDA less DD&A expense, divided by (B) the average of Capital Employed - Beginning of Year (Total Debt plus Shareholders Equity) and Capital Employed - Year-End. SilverBow believes ROCE presents a comparable metric across multiple business sectors and sizes and is a meaningful measure because it quantifies how well the Company generates Adjusted EBITDA relative to the capital it has employed in its business and illustrates the profitability of a business or project taking into account the capital employed. SilverBow uses ROCE to assist in capital resource allocation decisions and in evaluating business performance. Additionally, the Company also evaluates average ROCE over a trailing three-year period to adjust for short term (one year) fluctuations and illustrate profitability over a longer time period. Although ROCE is commonly used as a measure of capital efficiency, definitions of ROCE differ, and SilverBow's computation of ROCE may not be comparable to other similarly titled measures of other companies.

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Free Cash Flow (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)

The below tables provide the calculation of Adjusted EBITDA, Free Cash Flow and Adjusted EBITDA for Leverage Ratio for the following periods (in thousands).

Reconciliation of General & Administrative Expenses to Cash General & Administrative Expenses (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except per unit amounts)

The below tables provide the calculation of cash G&A for the following periods (in thousands).

Reconciliation of Net Income (Loss) to Return on Capital Employed (Unaudited)

SilverBow Resources, Inc. and Subsidiary (in thousands, except share amounts)

The below tables provide the calculation of Return on Capital Employed for the following periods (in thousands).

Calculation of Standardized Measure of Discounted Future Net Cash Flows

The following table provides a reconciliation between the Standardized Measure (the most directly comparable financial measure calculated in accordance with U.S. GAAP) and SEC PV-10 Value of the Company's proved reserves:

Reserve Replacement Ratio Calculation (Unaudited):

Reserve replacement ratio is calculated by dividing the sum of extensions, discoveries, and other additions, purchases and sales of minerals in place, and total revisions for the year by production:

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