SilverBow Resources Announces First Quarter 2021 Results

SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or the “Company”) today announced operating and financial results for the first quarter of 2021. Highlights include:

• Net production averaged approximately 180 million cubic feet of natural gas equivalent per day (“MMcfe/d”), above the high end of guidance
• Reported net income of $28 million, Adjusted EBITDA of $63 million and free cash flow ("FCF") of $24 million. Adjusted EBITDA and FCF are non-GAAP measures defined and reconciled in the tables below
• Increased full year 2021 FCF guidance range by $10 million at the midpoint to a range of $30-$50 million¹
• Reduced total debt by $30 million quarter-over-quarter and by $90 million year-over-year; leverage ratio of 2.1x² and liquidity of $113 million at quarter-end. Anticipated year-end 2021 leverage ratio below 2.0x²
• Success of first Austin Chalk well supports further delineation across SilverBow's acreage in 2021; potential to expand existing inventory with additional high-return locations
• The Company's second La Mesa pad, as pre-released, achieved a peak pad production rate of 90 million cubic feet of natural gas per day ("MMcf/d"), further reduced drilling times by 10%, and capital costs were 13% below authorization for expenditure (“AFE”)
• Extended the maturity of SilverBow’s $600 million senior secured revolving credit facility (the “Credit Facility”), governed by a borrowing base of $300 million, to April 2024; provides ample liquidity to execute business strategy
• Expanded and accelerated mid-year liquids-focused drilling program beginning in April with incremental oil locations added; corresponding production uplift expected in the third quarter of 2021
• Full year 2021 total production guidance range unchanged at 180-200 MMcfe/d; expected full year 2021 oil production increased by 12% at the midpoint reflecting the shift in mid-year development
• Full year 2021 capital guidance unchanged at $100-$110 million, inclusive of expanded oil drill schedule

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, "In April, we provided a preview of our stellar results for the quarter. We paid down $30 million of debt, or 13% of our revolver borrowings, and reduced our leverage ratio to 2.1x. We successfully renegotiated and extended our Credit Facility, which provides us the runway to expand our development program and pursue our strategic objectives. We generated free cash flow for the fifth consecutive quarter and raised the midpoint of our 2021 free cash flow guidance to $40 million, a $10 million increase from our prior guidance. Operationally, we continue to see strong performance from our first Webb County Austin Chalk well and plan to drill additional appraisal wells this year, with the goal of increasing our inventory with incremental, high-return locations. The continued capital efficiency gains we demonstrated on our second La Mesa pad should support further upside potential to our stakeholder returns as we apply those learnings and efficiencies across our balanced portfolio."

Mr. Woolverton commented further, "Our plan entering 2021 intentionally included breaks in our drilling program to allow us to assess market conditions and optimize our development plan real-time. With the significant improvement in oil prices over the first quarter, we have allocated capital to drill more oil locations this year than initially planned. This shift in capital will drive improved cash flows. We recently picked up a drilling rig, ahead of our planned summer schedule. Our capital budget remains at $105 million at the midpoint while factoring in our expanded oil development. This is made possible by the improved efficiencies and strong returns we have delivered to-date, and the application of those efficiency learnings going forward. By year-end, we anticipate our leverage ratio to be below 2.0x. As always, our strategy is based on the flexibility to quickly adapt our development toward the highest rate of return opportunities. SilverBow has positioned itself as an in-basin leader generating sustainable free cash flow and strengthening its balance sheet in the pursuit of accretive deals, both large and small."

OPERATIONS HIGHLIGHTS

During the first quarter of 2021, the Company drilled one well and completed seven wells in its Webb County Gas area. Six of these completed wells comprised SilverBow's second La Mesa pad, which was drilled in fourth quarter of 2020. The pad’s total drilling and completion ("D&C") costs came in 13%, or $5 million, below AFE and 15% below the Company’s first La Mesa pad. The cost efficiency gains were a result of further applied learnings from the first pad. The wells were brought online approximately 15 days ahead of schedule and achieved an average pad production rate of 84 MMcf/d over the first 30 days of production (“IP30”). Importantly, both La Mesa pads co-developed the upper and lower Eagle Ford, which supports SilverBow's understanding of constructive interference and minimal-to-no impact from offset well interference and parent-child well performance degradation. The efficiency gains from 2020 carried into the first quarter of 2021 with the faster cycle times on the La Mesa pad and lower AFE costs. These efficiencies ultimately provided SilverBow with both the time and capital to add the Webb County Austin Chalk test during the first quarter of 2021. The Company's Austin Chalk well achieved an IP30 of 13 MMcf/d, exceeding initial expectations and commercial criteria. Given the strong performance and competitive economics exhibited to date, SilverBow plans to drill additional Austin Chalk wells this year.

The extreme cold weather during February 2021 temporarily impacted first quarter production by approximately 2 MMcfe/d. SilverBow was able to mitigate the effect of the storm through numerous pre-planning procedures and existing storm response procedures in place. Per normal practice, the Company maintains a portion of its natural gas sales tied to daily gas indexes. Therefore, the Company did have some natural gas sales exposed to the unprecedented volatility in daily spot prices during the cold weather event in February 2021, resulting in unusually high realized natural gas prices in the first quarter of 2021. The impact of these factors on SilverBow's financial results for the first quarter of 2021 is not expected to recur at this magnitude in future quarters. Notably, the Company continu