Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
SBOW
|
New York Stock Exchange
|
Yes
|
þ
|
No
|
o
|
Yes
|
þ
|
No
|
o
|
Large Accelerated Filer
|
o
|
|
Accelerated Filer
|
þ
|
|
Non-Accelerated Filer
|
o
|
|
Smaller Reporting Company
|
þ
|
Emerging Growth Company
|
o
|
|
|
|
|
|
|
|
|
|
o
|
Yes
|
o
|
No
|
þ
|
Yes
|
þ
|
No
|
o
|
Common Stock ($.01 Par Value) (Class of Stock)
|
11,758,317 Shares outstanding at August 1, 2019
|
|
|
Page
|
Part I
|
FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
Condensed Consolidated Financial Statements
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Part II
|
OTHER INFORMATION
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Retained Earnings (Accumulated Deficit)
|
|
Total
|
||||||||||
Balance, December 31, 2017
|
$
|
116
|
|
|
$
|
279,111
|
|
|
$
|
(1,452
|
)
|
|
$
|
(84,317
|
)
|
|
$
|
193,458
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares issued from option exercise (29,199 shares)
|
—
|
|
|
708
|
|
|
—
|
|
|
—
|
|
|
708
|
|
|||||
Purchase of treasury shares (10,458 shares)
|
—
|
|
|
—
|
|
|
(290
|
)
|
|
—
|
|
|
(290
|
)
|
|||||
Issuance of restricted stock (63,275 shares)
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
1,485
|
|
|
—
|
|
|
—
|
|
|
1,485
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
8,466
|
|
|
8,466
|
|
|||||
Balance, March 31, 2018
|
$
|
117
|
|
|
$
|
281,303
|
|
|
$
|
(1,742
|
)
|
|
$
|
(75,851
|
)
|
|
$
|
203,827
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of treasury shares (4,649 shares)
|
—
|
|
|
—
|
|
|
(128
|
)
|
|
—
|
|
|
(128
|
)
|
|||||
Issuance of restricted stock (19,177 shares)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
1,423
|
|
|
—
|
|
|
—
|
|
|
1,423
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
2,319
|
|
|
2,319
|
|
|||||
Balance, June 30, 2018
|
$
|
117
|
|
|
$
|
282,726
|
|
|
$
|
(1,870
|
)
|
|
$
|
(73,532
|
)
|
|
$
|
207,441
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, December 31, 2018
|
$
|
118
|
|
|
$
|
286,281
|
|
|
$
|
(1,870
|
)
|
|
$
|
(9,702
|
)
|
|
$
|
274,827
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of treasury shares (11,076 shares)
|
—
|
|
|
—
|
|
|
(260
|
)
|
|
—
|
|
|
(260
|
)
|
|||||
Issuance of restricted stock (61,263 shares)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
1,849
|
|
|
—
|
|
|
—
|
|
|
1,849
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
16,053
|
|
|
16,053
|
|
|||||
Balance, March 31, 2019
|
$
|
118
|
|
|
$
|
288,130
|
|
|
$
|
(2,130
|
)
|
|
$
|
6,351
|
|
|
$
|
292,469
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of treasury shares (3,877 shares)
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|
(58
|
)
|
|||||
Issuance of restricted stock (19,162 shares)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
1,769
|
|
|
—
|
|
|
—
|
|
|
1,769
|
|
|||||
Net Income
|
—
|
|
|
—
|
|
|
—
|
|
|
64,704
|
|
|
64,704
|
|
|||||
Balance, June 30, 2019
|
$
|
118
|
|
|
$
|
289,899
|
|
|
$
|
(2,188
|
)
|
|
$
|
71,055
|
|
|
$
|
358,884
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
80,757
|
|
|
$
|
10,787
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
|
|
|
|
||||
Depreciation, depletion, and amortization
|
45,834
|
|
|
26,228
|
|
||
Accretion of asset retirement obligations
|
168
|
|
|
243
|
|
||
Deferred income taxes
|
(20,732
|
)
|
|
328
|
|
||
Share-based compensation expense
|
3,339
|
|
|
2,675
|
|
||
(Gain) Loss on derivatives, net
|
(20,903
|
)
|
|
17,107
|
|
||
Cash settlement (paid) received on derivatives
|
4,381
|
|
|
(1,935
|
)
|
||
Settlements of asset retirement obligations
|
(47
|
)
|
|
(144
|
)
|
||
Other
|
1,160
|
|
|
3,374
|
|
||
Change in operating assets and liabilities
|
|
|
|
|
|
||
(Increase) decrease in accounts receivable and other current assets
|
13,411
|
|
|
2,332
|
|
||
Increase (decrease) in accounts payable and accrued liabilities
|
(6,928
|
)
|
|
(8,439
|
)
|
||
Increase (decrease) in accrued interest
|
(180
|
)
|
|
491
|
|
||
Net Cash Provided by (Used in) Operating Activities
|
100,260
|
|
|
53,047
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Additions to property and equipment
|
(174,138
|
)
|
|
(84,097
|
)
|
||
Proceeds from the sale of property and equipment
|
(96
|
)
|
|
26,924
|
|
||
Payments on property sale obligations
|
(2,840
|
)
|
|
(6,042
|
)
|
||
Net Cash Provided by (Used in) Investing Activities
|
(177,074
|
)
|
|
(63,215
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from bank borrowings
|
227,000
|
|
|
122,300
|
|
||
Payments of bank borrowings
|
(149,000
|
)
|
|
(113,300
|
)
|
||
Net proceeds from issuances of common stock
|
—
|
|
|
708
|
|
||
Purchase of treasury shares
|
(318
|
)
|
|
(418
|
)
|
||
Payments of debt issuance costs
|
—
|
|
|
(317
|
)
|
||
Net Cash Provided by (Used in) Financing Activities
|
77,682
|
|
|
8,973
|
|
||
|
|
|
|
||||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
|
868
|
|
|
(1,195
|
)
|
||
Cash, Cash Equivalents and Restricted Cash, at Beginning of Period
|
2,465
|
|
|
8,026
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
3,333
|
|
|
$
|
6,831
|
|
|
|
|
|
|
|
||
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
||
Cash paid during period for interest, net of amounts capitalized
|
$
|
17,128
|
|
|
$
|
10,926
|
|
Changes in capital accounts payable and capital accruals
|
$
|
(16,521
|
)
|
|
$
|
35,299
|
|
Changes in other long-term liabilities for capital expenditures
|
$
|
—
|
|
|
$
|
(2,500
|
)
|
See accompanying Notes to Condensed Consolidated Financial Statements.
|
|
|
|
•
|
the estimated quantities of proved oil and natural gas reserves used to compute depletion of oil and natural gas properties, the related present value of estimated future net cash flows there-from, and the Ceiling Test impairment calculation,
|
•
|
estimates related to the collectability of accounts receivable and the credit worthiness of our customers,
|
•
|
estimates of the counterparty bank risk related to letters of credit that our customers may have issued on our behalf,
|
•
|
estimates of future costs to develop and produce reserves,
|
•
|
accruals related to oil and gas sales, capital expenditures and lease operating expenses,
|
•
|
estimates in the calculation of share-based compensation expense,
|
•
|
estimates of our ownership in properties prior to final division of interest determination,
|
•
|
the estimated future cost and timing of asset retirement obligations,
|
•
|
estimates made in our income tax calculations,
|
•
|
estimates in the calculation of the fair value of commodity derivative assets and liabilities,
|
•
|
estimates in the assessment of current litigation claims against the Company,
|
•
|
estimates in amounts due with respect to open state regulatory audits, and
|
•
|
estimates on future lease obligations.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Property and Equipment
|
|
|
|
||||
Proved oil and gas properties
|
$
|
1,090,496
|
|
|
$
|
925,865
|
|
Unproved oil and gas properties
|
49,866
|
|
|
56,715
|
|
||
Furniture, fixtures and other equipment
|
3,855
|
|
|
3,520
|
|
||
Less – Accumulated depreciation, depletion, amortization & impairment
|
(330,638
|
)
|
|
(284,804
|
)
|
||
Property and Equipment, Net
|
$
|
813,579
|
|
|
$
|
701,296
|
|
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||
Oil, natural gas and NGLs sales:
|
|
|
|
|
|
|
|
|
||||||||
Oil
|
|
$
|
24,940
|
|
|
$
|
9,638
|
|
|
$
|
39,547
|
|
|
$
|
21,078
|
|
Natural gas
|
|
43,587
|
|
|
36,369
|
|
|
94,874
|
|
|
72,136
|
|
||||
NGLs
|
|
6,166
|
|
|
5,339
|
|
|
12,319
|
|
|
10,900
|
|
||||
Other
|
|
10
|
|
|
—
|
|
|
28
|
|
|
(14
|
)
|
||||
Total
|
|
$
|
74,703
|
|
|
$
|
51,347
|
|
|
$
|
146,768
|
|
|
$
|
104,099
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Trade accounts payable
|
$
|
18,560
|
|
|
$
|
32,683
|
|
Accrued operating expenses
|
3,410
|
|
|
3,549
|
|
||
Accrued compensation costs
|
3,175
|
|
|
4,785
|
|
||
Asset retirement obligations – current portion
|
270
|
|
|
302
|
|
||
Accrued non-income based taxes
|
4,279
|
|
|
3,583
|
|
||
Accrued corporate and legal fees
|
239
|
|
|
534
|
|
||
Other payables
|
3,387
|
|
|
3,485
|
|
||
Total accounts payable and accrued liabilities
|
$
|
33,320
|
|
|
$
|
48,921
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Lease Costs Included in the Asset Additions in the Condensed Consolidated Balance Sheets
|
|
|
|
||||
Property, plant and equipment acquisitions - short-term leases
|
$
|
2,184
|
|
|
$
|
6,168
|
|
Property, plant and equipment acquisitions - operating leases
|
11
|
|
|
18
|
|
||
Total lease costs in property, plant and equipment additions
|
$
|
2,195
|
|
|
$
|
6,186
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Lease Costs Included in the Condensed Consolidated Statement of Operations
|
|
|
|
||||
Lease operating costs - short-term leases
|
$
|
329
|
|
|
$
|
1,664
|
|
Lease operating costs - operating leases
|
1,084
|
|
|
1,138
|
|
||
General and administrative, net - operating leases
|
175
|
|
|
331
|
|
||
Total lease cost expensed
|
$
|
1,588
|
|
|
$
|
3,133
|
|
|
As of June 30, 2019
|
|
Weighted-average remaining lease term (in years)
|
2.1
|
|
Weighted-average discount rate
|
5.0
|
%
|
|
June 30, 2019
|
||
2019 (remaining after June 30, 2019)
|
$
|
3,503
|
|
2020
|
7,091
|
|
|
2021
|
2,344
|
|
|
2022
|
40
|
|
|
2023
|
40
|
|
|
Thereafter
|
348
|
|
|
Total undiscounted lease payments
|
$
|
13,366
|
|
Present value adjustment
|
|
||
Net operating lease liabilities
|
$
|
13,366
|
|
|
Shares
|
|
Wtd. Avg. Exer. Price
|
|||
Options outstanding, beginning of period
|
644,575
|
|
|
$
|
28.28
|
|
Options forfeited
|
(4,197
|
)
|
|
$
|
27.00
|
|
Options canceled in Equity Award Exchange
|
(201,406
|
)
|
|
$
|
31.14
|
|
Options expired
|
(68,987
|
)
|
|
$
|
23.69
|
|
Options outstanding, end of period
|
369,985
|
|
|
$
|
27.59
|
|
Options exercisable, end of period
|
130,601
|
|
|
$
|
28.42
|
|
|
Shares
|
|
Grant Date Price
|
|||
Restricted stock units outstanding, beginning of period
|
340,678
|
|
|
$
|
27.64
|
|
Restricted stock units granted
|
115,957
|
|
|
$
|
20.13
|
|
Restricted stock units granted under Equity Award Exchange
|
99,500
|
|
|
$
|
16.70
|
|
Restricted stock united canceled under Equity Award Exchange
|
(24,622
|
)
|
|
$
|
31.14
|
|
Restricted stock units forfeited
|
(16,342
|
)
|
|
$
|
26.81
|
|
Restricted stock units vested
|
(80,425
|
)
|
|
$
|
26.46
|
|
Restricted stock units outstanding, end of period
|
434,746
|
|
|
$
|
23.14
|
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Share Amounts
|
$
|
64,704
|
|
|
11,746
|
|
|
$
|
5.51
|
|
|
$
|
2,319
|
|
|
11,655
|
|
|
$
|
0.20
|
|
Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restricted Stock Awards
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
||||||||
Restricted Stock Unit Awards
|
|
|
34
|
|
|
|
|
|
|
16
|
|
|
|
||||||||
Stock Option Awards
|
|
|
—
|
|
|
|
|
|
|
86
|
|
|
|
||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Assumed Share Conversions
|
$
|
64,704
|
|
|
11,780
|
|
|
$
|
5.49
|
|
|
$
|
2,319
|
|
|
11,757
|
|
|
$
|
0.20
|
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
|
Net Income (Loss)
|
|
Shares
|
|
Per Share
Amount |
||||||||||
Basic EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Share Amounts
|
$
|
80,757
|
|
|
11,727
|
|
|
$
|
6.89
|
|
|
$
|
10,787
|
|
|
11,629
|
|
|
$
|
0.93
|
|
Dilutive Securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Restricted Stock Awards
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
||||||||
Restricted Stock Unit Awards
|
|
|
59
|
|
|
|
|
|
|
17
|
|
|
|
||||||||
Stock Option Awards
|
|
|
—
|
|
|
|
|
|
|
96
|
|
|
|
||||||||
Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income (Loss) and Assumed Share Conversions
|
$
|
80,757
|
|
|
11,786
|
|
|
$
|
6.85
|
|
|
$
|
10,787
|
|
|
11,742
|
|
|
$
|
0.92
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Credit Facility Borrowings
(1)
|
$
|
273,000
|
|
|
$
|
195,000
|
|
Second Lien Notes due 2024
|
200,000
|
|
|
200,000
|
|
||
|
473,000
|
|
|
395,000
|
|
||
Unamortized discount on Second Lien Notes due 2024
|
(1,668
|
)
|
|
(1,782
|
)
|
||
Unamortized debt issuance cost on Second Lien Notes due 2024
|
(4,899
|
)
|
|
(5,230
|
)
|
||
Long-Term Debt, net
|
$
|
466,433
|
|
|
$
|
387,988
|
|
•
|
a ratio of total debt to earnings before interest, tax, depreciation and amortization (“EBITDA”), as defined in the Credit Agreement, for the most recently completed four fiscal quarters, not to exceed
4.0
to 1.0 as of the last day of each fiscal quarter; and
|
•
|
a current ratio, as defined in the Credit Agreement, which includes in the numerator available borrowings undrawn under the borrowing base, of not less than
1.0
to 1.0 as of the last day of each fiscal quarter.
|
Oil Derivative Swaps
(New York Mercantile Exchange (“NYMEX”) West Texas Intermediate (“WTI”) Settlements)
|
Total Volumes
(Bbls)
|
|
Weighted-Average Price
|
|||
2019 Contracts
|
|
|
|
|||
3Q19
|
314,500
|
|
|
$
|
60.41
|
|
4Q19
|
249,000
|
|
|
$
|
59.52
|
|
|
|
|
|
|||
2020 Contracts
|
|
|
|
|||
1Q20
|
194,800
|
|
|
$
|
58.16
|
|
2Q20
|
191,350
|
|
|
$
|
58.32
|
|
3Q20
|
189,200
|
|
|
$
|
58.43
|
|
4Q20
|
118,000
|
|
|
$
|
55.65
|
|
|
|
|
|
|||
2021 Contracts
|
|
|
|
|||
1Q21
|
56,175
|
|
|
$
|
55.23
|
|
2Q21
|
52,325
|
|
|
$
|
57.00
|
|
Natural Gas Derivative Contracts
(NYMEX Henry Hub Settlements)
|
Total Volumes
(MMBtu) |
|
Weighted-Average Price
|
|
Weighted-Average Collar Floor Price
|
|
Weighted-Average Collar Call Price
|
|||||||
2019 Contracts
|
|
|
|
|
|
|
|
|||||||
3Q19
|
12,680,000
|
|
|
$
|
2.81
|
|
|
|
|
|
||||
4Q19
|
11,486,000
|
|
|
$
|
2.89
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
2020 Contracts
|
|
|
|
|
|
|
|
|||||||
1Q20
|
6,280,000
|
|
|
$
|
2.87
|
|
|
|
|
|
||||
2Q20
|
3,688,000
|
|
|
$
|
2.76
|
|
|
|
|
|
||||
3Q20
|
3,585,000
|
|
|
$
|
2.76
|
|
|
|
|
|
||||
4Q20
|
3,362,000
|
|
|
$
|
2.77
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|||||||
Collar Contracts
|
|
|
|
|
|
|
|
|||||||
2021 Contracts
|
|
|
|
|
|
|
|
|||||||
1Q21
|
4,354,800
|
|
|
|
|
$
|
2.50
|
|
|
$
|
3.52
|
|
||
2Q21
|
3,791,000
|
|
|
|
|
$
|
2.20
|
|
|
$
|
2.75
|
|
NGL Contracts
|
Total Volumes (Bbls)
|
|
Weighted-Average Price
|
|||
2019 Contracts
|
|
|
|
|||
3Q19
|
180,000
|
|
|
$
|
27.93
|
|
4Q19
|
180,000
|
|
|
$
|
27.93
|
|
Natural Gas Basis Derivative Swap
(East Texas Houston Ship Channel vs. NYMEX Settlements)
|
Total Volumes
(MMBtu) |
|
Weighted-Average Price
|
|||
2019 Contracts
|
|
|
|
|||
3Q19
|
14,625,000
|
|
|
$
|
0.04
|
|
4Q19
|
14,625,000
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|||
2020 Contracts
|
|
|
|
|||
1Q20
|
11,739,000
|
|
|
$
|
(0.03
|
)
|
2Q20
|
11,739,000
|
|
|
$
|
(0.04
|
)
|
3Q20
|
11,868,000
|
|
|
$
|
(0.03
|
)
|
4Q20
|
11,868,000
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|||
2021 Contracts
|
|
|
|
|||
1Q21
|
7,200,000
|
|
|
$
|
(0.003
|
)
|
2Q21
|
7,280,000
|
|
|
$
|
(0.003
|
)
|
3Q21
|
7,360,000
|
|
|
$
|
(0.003
|
)
|
4Q21
|
7,360,000
|
|
|
$
|
(0.003
|
)
|
Oil Basis Contracts
(Argus Cushing (WTI) and Louisiana Light Sweet Settlements)
|
Total Volumes (Bbls)
|
|
Weighted-Average Price
|
|||
2019 Contracts
|
|
|
|
|||
3Q19
|
75,000
|
|
|
$
|
3.73
|
|
4Q19
|
75,000
|
|
|
$
|
3.73
|
|
|
Fair Value Measurements at
|
||||||||||||||
(in millions)
|
Total
|
|
Quoted Prices in
Active markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
June 30, 2019
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
13.9
|
|
|
$
|
—
|
|
|
$
|
13.9
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
5.8
|
|
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
—
|
|
Oil Derivatives
|
$
|
4.4
|
|
|
$
|
—
|
|
|
$
|
4.4
|
|
|
$
|
—
|
|
Oil Basis Derivatives
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
3.4
|
|
|
$
|
—
|
|
|
$
|
3.4
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
Oil Derivatives
|
$
|
2.1
|
|
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
—
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
7.5
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
Oil Derivatives
|
$
|
6.9
|
|
|
$
|
—
|
|
|
$
|
6.9
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
4.7
|
|
|
$
|
—
|
|
|
$
|
4.7
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Natural Gas Derivatives
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
Natural Gas Basis Derivatives
|
$
|
5.3
|
|
|
$
|
—
|
|
|
$
|
5.3
|
|
|
$
|
—
|
|
NGL Derivatives
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Asset Retirement Obligations as of December 31, 2017
|
$
|
10,787
|
|
Accretion expense
|
419
|
|
|
Liabilities incurred for new wells and facilities construction
|
93
|
|
|
Reductions due to sold wells and facilities
|
(6,298
|
)
|
|
Reductions due to plugged wells and facilities
|
(180
|
)
|
|
Revisions in estimates
|
(562
|
)
|
|
Asset Retirement Obligations as of December 31, 2018
|
$
|
4,259
|
|
Accretion expense
|
168
|
|
|
Liabilities incurred for new wells and facilities construction
|
102
|
|
|
Reductions due to sold wells and facilities
|
—
|
|
|
Reductions due to plugged wells and facilities
|
(47
|
)
|
|
Revisions in estimates
|
7
|
|
|
Asset Retirement Obligations as of June 30, 2019
|
$
|
4,489
|
|
|
December 31, 2018
|
||
2019
|
$
|
4,470
|
|
2020
|
838
|
|
|
2021
|
332
|
|
|
Thereafter
|
—
|
|
|
Total undiscounted lease payments
|
$
|
5,640
|
|
•
|
Revenues and net income (loss):
The Company's oil and gas revenues were
$146.8 million
for the
six months ended June 30, 2019
, compared to
$104.1 million
for the
six months ended June 30, 2018
. Revenues were higher primarily due to overall increased production, partially offset by lower commodity pricing. The Company's net income was
$80.8 million
for the
six months ended June 30, 2019
, compared to
$10.8 million
for the
six months ended June 30, 2018
. The increase was primarily due to overall increased production during the current period compared to the prior period and gains on commodity derivatives and a benefit recorded for income tax expense for reversal of a valuation allowance for the company's deferred tax assets.
|
•
|
Capital expenditures:
The Company's capital expenditures on an accrual basis were
$158 million
for the
six months ended June 30, 2019
compared to
$117.1 million
for the
six months ended June 30, 2018
. The expenditures for the
six months ended June 30, 2019 and 2018
were attributable to drilling and completion activity.
|
•
|
Working capital:
The Company had a working capital deficit of
$20.5 million
at
June 30, 2019
and a deficit of
$39.7 million
at
December 31, 2018
. The working capital computation does not include available liquidity through our Credit Facility.
|
•
|
Cash Flows:
For the
six months ended June 30, 2019
, the Company generated cash from operating activities of
$100.3 million
, of which
$6.3 million
was attributable to changes in working capital. Cash used for property additions was
$174.1 million
. This
included
$16.5 million
attributable to a net
decrease
of capital-related payables and accrued costs. Additionally,
$2.8 million
was paid during the
six months ended June 30, 2019
, for property sale obligations related to the sale of our former Bay De Chene field. The Company’s net borrowings on the revolving Credit Facility were
$78.0 million
during the
six months ended June 30, 2019
.
|
Fields
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||
|
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
||||||
Artesia Wells
|
|
$
|
19.9
|
|
4,829
|
|
|
$
|
11.6
|
|
2,290
|
|
AWP
|
|
21.4
|
|
4,107
|
|
|
8.8
|
|
1,665
|
|
||
Fasken
|
|
21.5
|
|
7,984
|
|
|
25.3
|
|
8,644
|
|
||
Other
(1)
|
|
11.9
|
|
4,465
|
|
|
5.6
|
|
1,941
|
|
||
Total
|
|
$
|
74.7
|
|
21,385
|
|
|
$
|
51.3
|
|
14,540
|
|
•
|
Price variances that had an approximately
$11.8 million
unfavorable
impact on sales due to overall lower commodity pricing; and
|
•
|
Volume variances that had an approximately
$35.2 million
favorable
impact on sales due to overall increased commodity production.
|
|
|
Three Months Ended June 30, 2019
|
Three Months Ended June 30, 2018
|
||||
Production volumes:
|
|
|
|
||||
Oil (MBbl)
(1)
|
|
405
|
|
141
|
|
||
Natural gas (MMcf)
|
|
16,409
|
|
12,433
|
|
||
Natural gas liquids (MBbl)
(1)
|
|
424
|
|
211
|
|
||
Total (MMcfe)
|
|
21,385
|
|
14,540
|
|
||
|
|
|
|
||||
Oil, natural gas and natural gas liquids sales:
|
|
|
|
||||
Oil
|
|
$
|
24,940
|
|
$
|
9,638
|
|
Natural gas
|
|
43,597
|
|
36,369
|
|
||
Natural gas liquids
|
|
6,166
|
|
5,339
|
|
||
Total
|
|
$
|
74,703
|
|
$
|
51,347
|
|
|
|
|
|
||||
Average realized price:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
61.60
|
|
$
|
68.53
|
|
Natural gas (per Mcf)
|
|
2.66
|
|
2.93
|
|
||
Natural gas liquids (per Bbl)
|
|
14.53
|
|
25.36
|
|
||
Average per Mcfe
|
|
$
|
3.49
|
|
$
|
3.53
|
|
|
|
|
|
||||
Price impact of cash-settled derivatives:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
(0.01
|
)
|
$
|
(14.76
|
)
|
Natural gas (per Mcf)
|
|
0.17
|
|
(0.06
|
)
|
||
Natural gas liquids (per Bbl)
|
|
3.78
|
|
(2.11
|
)
|
||
Average per Mcfe
|
|
$
|
0.20
|
|
$
|
(0.22
|
)
|
|
|
|
|
||||
Average realized price including impact of cash-settled derivatives:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
61.59
|
|
$
|
53.76
|
|
Natural gas (per Mcf)
|
|
2.82
|
|
2.87
|
|
||
Natural gas liquids (per Bbl)
|
|
18.31
|
|
23.25
|
|
||
Average per Mcfe
|
|
$
|
3.69
|
|
$
|
3.31
|
|
|
|
|
|
||||
|
Costs and Expenses
|
Three Months Ended June 30, 2019
|
Three Months Ended June 30, 2018
|
||||
General and administrative, net
|
$
|
6,624
|
|
$
|
5,794
|
|
Depreciation, depletion, and amortization
|
24,029
|
|
13,096
|
|
||
Accretion of asset retirement obligations
|
86
|
|
84
|
|
||
Lease operating cost
|
5,035
|
|
3,760
|
|
||
Workovers
|
(127
|
)
|
—
|
|
||
Transportation and gas processing
|
6,728
|
|
5,421
|
|
||
Severance and other taxes
|
3,950
|
|
2,662
|
|
||
Interest expense, net
|
9,306
|
|
6,585
|
|
Fields
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||
|
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
|
Oil and Gas Sales
(In Millions) |
Net Oil and Gas Production
Volumes (MMcfe) |
||||||
Artesia Wells
|
|
$
|
33.0
|
|
7,884
|
|
|
$
|
23.9
|
|
4,814
|
|
AWP
|
|
37.5
|
|
7,127
|
|
|
20.9
|
|
4,117
|
|
||
Fasken
|
|
46.9
|
|
15,817
|
|
|
49.0
|
|
16,632
|
|
||
Other
(1)
|
|
29.4
|
|
9,916
|
|
|
10.3
|
|
3,446
|
|
||
Total
|
|
$
|
146.8
|
|
40,744
|
|
|
$
|
104.1
|
|
29,009
|
|
•
|
Price variances that had an approximately
$10.5 million
unfavorable
impact on sales due to overall lower commodity pricing; and
|
•
|
Volume variances that had an approximately
$53.2 million
favorable
impact on sales due to overall increased commodity production.
|
|
|
Six Months Ended June 30, 2019
|
Six Months Ended June 30, 2018
|
||||
Production volumes:
|
|
|
|
||||
Oil (MBbl)
(1)
|
|
661
|
|
318
|
|
||
Natural gas (MMcf)
|
|
32,316
|
|
24,349
|
|
||
Natural gas liquids (MBbl)
(1)
|
|
743
|
|
459
|
|
||
Total (MMcfe)
|
|
40,744
|
|
29,009
|
|
||
|
|
|
|
||||
Oil, natural gas and natural gas liquids sales:
|
|
|
|
||||
Oil
|
|
$
|
39,547
|
|
$
|
21,078
|
|
Natural gas
|
|
94,902
|
|
72,122
|
|
||
Natural gas liquids
|
|
12,319
|
|
10,900
|
|
||
Total
|
|
$
|
146,768
|
|
$
|
104,099
|
|
|
|
|
|
||||
Average realized price:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
59.79
|
|
$
|
66.33
|
|
Natural gas (per Mcf)
|
|
2.94
|
|
2.96
|
|
||
Natural gas liquids (per Bbl)
|
|
16.58
|
|
23.75
|
|
||
Average per Mcfe
|
|
$
|
3.60
|
|
$
|
3.59
|
|
|
|
|
|
||||
Price impact of cash-settled derivatives:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
(0.19
|
)
|
$
|
(11.20
|
)
|
Natural gas (per Mcf)
|
|
0.09
|
|
0.07
|
|
||
Natural gas liquids (per Bbl)
|
|
3.33
|
|
(1.38
|
)
|
||
Average per Mcfe
|
|
$
|
0.13
|
|
$
|
(0.09
|
)
|
|
|
|
|
||||
Average realized price including impact of cash-settled derivatives:
|
|
|
|
||||
Oil (per Bbl)
|
|
$
|
59.60
|
|
$
|
55.13
|
|
Natural gas (per Mcf)
|
|
3.03
|
|
3.03
|
|
||
Natural gas liquids (per Bbl)
|
|
19.91
|
|
22.38
|
|
||
Average per Mcfe
|
|
$
|
3.73
|
|
$
|
3.50
|
|
|
|
|
|
||||
|
Costs and Expenses
|
Six Months Ended June 30, 2019
|
Six Months Ended June 30, 2018
|
||||
General and administrative, net
|
$
|
12,900
|
|
$
|
11,370
|
|
Depreciation, depletion, and amortization
|
45,834
|
|
26,228
|
|
||
Accretion of asset retirement obligations
|
168
|
|
243
|
|
||
Lease operating cost
|
9,567
|
|
8,721
|
|
||
Workovers
|
519
|
|
—
|
|
||
Transportation and gas processing
|
13,135
|
|
10,446
|
|
||
Severance and other taxes
|
7,266
|
|
5,692
|
|
||
Interest expense, net
|
18,065
|
|
12,474
|
|
•
|
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.
|
•
|
Review our income tax processes and controls and enhance the overall design and procedures performed upon the review and analysis of the allocation of intra-period adjustments to deferred income tax expense resulting from significant, unusual and infrequent transactions;
|
•
|
Re-design our management review controls and enhance the precision of review around the key income tax areas relating to the allocation of intra-period adjustments to deferred income tax expense; and
|
•
|
Evaluate the sufficiency of our income tax resources and personnel to determine whether additional resources are needed.
|
3.1
|
|
3.2
|
|
10.1+
|
|
10.2+
|
|
10.3+
|
|
10.4+
|
|
10.5+
|
|
10.6+*
|
|
10.7+*
|
|
10.8+*
|
|
31.1*
|
|
31.2*
|
|
32.1#
|
|
101.INS*
|
XBRL Instance Document
|
101.SCH*
|
XBRL Schema Document
|
101.CAL*
|
XBRL Calculation Linkbase Document
|
101.LAB*
|
XBRL Label Linkbase Document
|
101.PRE*
|
XBRL Presentation Linkbase Document
|
101.DEF*
|
XBRL Definition Linkbase Document
|
|
|
|
SILVERBOW RESOURCES, INC.
(Registrant)
|
|
Date:
|
August 9, 2019
|
|
By:
|
/s/ G. Gleeson Van Riet
|
|
|
|
|
G. Gleeson Van Riet
Executive Vice President and
Chief Financial Officer
|
|
|
|
|
|
Date:
|
August 9, 2019
|
|
By:
|
/s/ Gary G. Buchta
|
|
|
|
|
Gary G. Buchta
Controller
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
3
|
|
|
|
|
|
4
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
SILVERBOW RESOURCES, INC.
|
|
|
|
|
|
|
7
|
|
|
|
|
|
PARTICIPANT
[[SIGNATURE]]
|
|
[[FIRSTNAME]] [[MIDDLENAME]] [[LASTNAME]]
|
|
8
|
|
|
|
|
Participant:
|
[[FIRSTNAME]] [[MIDDLENAME]] [[LASTNAME]]
|
Date of Grant:
|
[[GRANTDATE]]
|
Award Type and Description:
|
Performance Award granted pursuant to Article X of the Plan. This Award represents the right to receive Shares in an amount up to 200% of the Target PSUs (defined below), subject to the terms and conditions set forth herein and in the Agreement.
Your right to receive settlement of this Award in an amount ranging from 0% to 200% of the Target PSUs shall vest and become earned and nonforfeitable upon (i) your satisfaction of the continued employment or service requirements described below under “
Service Requirement
” and (ii) the Committee’s certification of the level of achievement of the Performance Goal (defined below). The portion of the Target PSUs actually earned upon satisfaction of the foregoing requirements is referred to herein as the “
Earned PSUs
.”
|
Target Number of PSUs:
|
[[SHARESGRANTED]]
(the “
Target PSUs
”).
|
Performance Period:
|
[BEGIN DATE]
(the “
Performance Period Commencement Date
”) through
[END DATE]
(the “
Performance Period End Date
”).
|
Service Requirement:
|
Except as expressly provided in
Section 3
of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the Performance Period End Date to be eligible to receive payment of this Award, which payment is based on the level of achievement with respect to the Performance Goal (as defined below).
|
Performance Goal
:
|
The “
Performance Goal
” for the Performance Period is based on the Company’s achievement with respect to relative total stockholder return, as described in
Appendix B
attached hereto.
|
Settlement:
|
Settlement of the Earned PSUs shall be made solely in Shares, which shall be delivered to you in accordance with
Section 4
of the Agreement.
|
|
1
|
|
|
2
|
|
SILVERBOW RESOURCES, INC.
|
|
|
|
|
|
|
|
|
|
|
3
|
|
PARTICIPANT
[[SIGNATURE]]
|
[[FIRSTNAME]] [[MIDDLENAME]] [[LASTNAME]]
|
|
4
|
|
Performance Level
|
Relative TSR Performance (Percentile Rank vs. Peers)
|
Earned PSUs (% of Target)*
|
Below Threshold
|
Below 25
th
Percentile
|
0%
|
Threshold
|
≥ 25
th
Percentile
|
50%
|
Target
|
≥ 50
th
Percentile
|
100%
|
Stretch
|
≥ 90
th
Percentile
|
200%
|
[Table of ticker symbols/names of peer group]
|
|
|
|
|
|
|
|
1.
|
If an entity in the Performance Peer Group spins-off a subsidiary, such spin-off should be treated as a dividend.
|
2.
|
If two entities in the Performance Peer Group merge, the TSR of the target entity shall be measured on the effective date of the merger. The TSR of the surviving entity shall continue to be measured as if the acquisition did not occur.
|
3.
|
If an entity in the Performance Peer Group merges with another entity that is not in the Performance Peer Group, the TSR of the target entity shall be measured on the effective date of the merger.
|
4.
|
If an entity in the Performance Peer Group becomes a private company, the TSR of such entity shall be measured on the date such entity goes private.
|
5.
|
If an entity in the Performance Peer Group goes bankrupt, the TSR of such entity shall be deemed to be negative 100%.
|
|
SILVERBOW RESOURCES, INC.
|
|
|
|
|
|
|
PARTICIPANT
[[SIGNATURE]]
|
|
[[FIRSTNAME]] [[MIDDLENAME]] [[LASTNAME]]
|
|
1
|
|
1.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
2.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
3.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
4.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 9, 2019
|
|
/s/ Sean C. Woolverton
|
|
|
|
Sean C. Woolverton
Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the period ended
June 30, 2019
, of SilverBow Resources, Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 9, 2019
|
|
/s/ G. Gleeson Van Riet
|
|
|
|
G. Gleeson Van Riet
Executive Vice President and
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 9, 2019
|
|
/s/ Sean C. Woolverton
|
|
|
|
Sean C. Woolverton Chief Executive Officer
|
|
|
|
|
Date:
|
August 9, 2019
|
|
/s/ G. Gleeson Van Riet
|
|
|
|
G. Gleeson Van Riet Executive Vice President and Chief Financial Officer
|