0000351817falseOctober 8, 202100003518172020-11-042020-11-04

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (or Date of Earliest Event Reported): October 8, 2021

SilverBow Resources, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 001-8754 20-3940661
(State or other jurisdiction
of incorporation) 		(Commission File Number) (IRS Employer
Identification No.)
920 Memorial City Way, Suite 850
Houston, Texas 77024
(Address of principal executive offices)

(281) 874-2700
(Registrant’s telephone number)

(Former Name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
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
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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Item 1.01 Entry into a Material Definitive Agreement.
On October 8, 2021, SilverBow Resources, Inc. (the “Company”) and its operating subsidiary, SilverBow Resources Operating, LLC (“SilverBow Operating”), entered into a purchase and sale agreement (the “Purchase Agreement”) with Teal Natural Resources, LLC and Castlerock Production, LLC (the “Sellers”) pursuant to which the Company will acquire oil and gas assets in the Eagle Ford for consideration of approximately $75 million, $45 million to be paid as cash and the rest to be paid with the greater of (i) 1,351,961 shares of common stock of the Company (“Common Stock”) and (ii) the number of shares equal to $25 million divided by the volume weighted average share price of Common Stock for the 30 consecutive trading days ending on and including the first trading day preceding the closing date (in either case, the “Shares”), subject to customary adjustments (the “Transaction”). The Transaction is expected to close before year-end 2021 (“Closing”), subject to satisfaction or waiver of certain customary closing conditions, including the accuracy of the representations and warranties of each party and compliance by each party in all material respects with its covenants.
The Company, SilverBow Operating and the Sellers have made customary representations and warranties in the Purchase Agreement. Subject to certain limitations on liability contained in the Purchase Agreement, the Company and SilverBow Operating have agreed to indemnify the Sellers for breaches of representations and warranties, covenants and certain liabilities. The Purchase Agreement contains certain termination rights for both the Company and SilverBow Operating and the Sellers including, but not limited to, the right to terminate the Purchase Agreement in the event that the Transaction has not been consummated on or before December 20, 2021 or under certain conditions, if there has been a breach of certain representations and warranties or a failure to perform any covenant by the other party.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, which will be filed with the Company’s Annual Report on Form 10-K for the year-ended December 31, 2021.
Item 3.02 Unregistered Sales of Equity Securities
The issuance of the Shares as consideration at Closing pursuant to the Purchase Agreement described in Item 1.01 will be made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof, which exempts transactions by an issuer not involving any public offering. Upon Closing, SilverBow has agreed to use commercially reasonable efforts to prepare and file a registration statement under the Securities Act to permit the public resale of the Shares.
Item 7.01. Regulation FD Disclosure
On October 11, 2021, the Company issued a press release regarding the Transaction. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information furnished under this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or as otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01.    Financial Statements and Exhibits
(d) Exhibits
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Exhibit
Number 		Description
99.1
104
Cover Page Interactive Data File (formatted as Inline XBRL)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 11, 2021
SilverBow Resources, Inc.
By: /s/ Christopher M. Abundis
Christopher M. Abundis
Executive Vice President, Chief Financial Officer and General Counsel

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COMPANY CONTACT:                     FOR IMMEDIATE RELEASE
Jeff Magids
Director of Finance & Investor Relations
(281) 874-2700, (888) 991-SBOW

SilverBow Resources Announces Oil-Weighted Acquisition

Houston, TX – October 11, 2021 – SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) announced today it has entered into a definitive agreement to acquire oil and gas assets in the Eagle Ford from two sellers.
Acquisition Highlights:
•Total purchase price of approximately $75 million, consisting of $45 million in cash and approximately $30 million in equity
•Expected to be accretive on all key financial metrics
•17,000 total net acres in the oil-window of La Salle, McMullen, DeWitt and Lavaca counties
•May 2021 net production of approximately 2,500 barrels of oil equivalent per day, 71% liquids / 46% oil from 111 PDP wells
•Acquired oil production represents a 30% increase to SilverBow’s current full year 2021 oil production guidance
•2021E Adjusted EBITDA of approximately $28 million(1)
•Over 100 net drilling locations, adding approximately three years of inventory at SilverBow’s current 1 rig drilling pace
MANAGEMENT COMMENTS
Sean Woolverton, SilverBow’s Chief Executive Officer, commented, “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. This represents our third acquisition since the beginning of August and the largest to date for SilverBow. This transaction bolsters our inventory with high rate of return locations and provides us with development optionality as we plan for 2022 and beyond. The acquisition is accretive to Adjusted EBITDA and further reduces our pro forma leverage ratio(2) given the incremental cash flow. 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.”
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Mr. Woolverton commented further, “Today’s announcement is a testament to the extensive work we have done evaluating opportunities and executing our in-basin consolidation plan. Furthermore, SilverBow once again utilized a mix of both cash and stock to fund the purchase price. 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. Including the pro forma contribution of our recent acquisitions, SilverBow is targeting a leverage ratio of 1.25x at year-end 2021. We plan to share additional details as part of our third quarter 2021 reporting in November.”
TRANSACTION DETAILS
The acquisition has an effective date of August 1, 2021 and is expected to close before year-end, subject to customary closing conditions. The total purchase price is approximately $75 million, consisting of $45 million in cash and the greater of (i) approximately 1.35 million shares of SilverBow common stock based on its 30-day volume weighted average price as of October 4, 2021 and (ii) the number of shares equal to $25 million divided by the 30-day volume weighted average price as of the first trading day preceding the closing date. SilverBow intends to fund the cash component and fees and expenses with cash on hand and borrowings under its revolving credit facility.
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 the Company’s 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. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, risks and uncertainties discussed in the Company’s reports filed with the Securities and Exchange Commission. 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.
(Footnotes)
1 2021E Adjusted EBITDA based on SilverBow management estimates utilizing NYMEX strip pricing as of September 30, 2021. As used in this news release Adjusted EBITDA is calculated as net income (loss) plus (less) depreciation, depletion and amortization, accretion of asset retirement obligations, interest
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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. A forward-looking estimate of net income (loss) is not provided with the forward-looking estimate of Adjusted EBITDA (a non-GAAP measure) because the items necessary to estimate net income (loss) are not accessible or estimable at this time without unreasonable efforts. Such items could have a significant impact on the Company's net income (loss).
2 Accretion is based on Adjusted EBITDA for Leverage Ratio for fiscal year 2021. Leverage ratio is defined as total long-term debt, before unamortized discounts, divided by Adjusted EBITDA for Leverage Ratio (a non-GAAP measure) for the trailing twelve-month period. Adjusted EBITDA for Leverage Ratio is calculated as Adjusted EBITDA plus amortization of derivative contracts, in accordance with the covenant compliance calculations under SilverBow's Credit Agreement. Neither Adjusted EBITDA nor Adjusted EBITDA for Leverage Ratio should be considered a replacement for the comparable GAAP measure.
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