Chesapeake may also receive up to $50 million in additional contingent cash consideration based on future commodity prices

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SilverBow Resources announces closing of Chesapeake acquisition. (Credit: John R Perry from Pixabay)

SilverBow Resources, Inc. (NYSE: SBOW) (“SilverBow” or “the Company”) announced the closing of its acquisition of Chesapeake Energy Corporation’s (“Chesapeake”) oil and gas assets in South Texas for a purchase price of $700 million, comprised of a $650 million upfront cash payment paid at closing and an additional $50 million deferred cash payment due 12 months post close, subject to customary adjustments (the “Chesapeake Transaction”). Consideration for the purchase was funded with cash on hand, borrowings under the Credit Facility (as defined below) and proceeds from the sale of additional second lien notes. Chesapeake may also receive up to $50 million in additional contingent cash consideration based on future commodity prices. In addition, the Company provided updated 2023 guidance and a preliminary 2024 outlook.

MANAGEMENT COMMENTS

Sean Woolverton, SilverBow’s Chief Executive Officer, commented, “We are excited to close the Chesapeake Transaction, which materially increases our scale in South Texas and transforms SilverBow into the largest public pure-play Eagle Ford operator. Our differentiated growth and acquisition strategy has positioned us with a stronger balance sheet, a broader commodity mix and a portfolio of locations across a single, geographically advantaged basin. The acquired Chesapeake assets further enhance our optionality to continue allocating capital to our highest return projects and will immediately compete for capital.”

Mr. Woolverton commented further, “The SilverBow team looks forward to extending its proven track record of integrating and growing assets in South Texas through a combination of its existing team and the new employees recently hired from Chesapeake. We plan to expand our capital program to develop the high return inventory acquired, with three rigs running across our portfolio in 2024. Our current expectation is to run two rigs on our liquids properties and one rig on our dry gas properties. As always, our development plan and capital allocation remain flexible based on prevailing commodity prices. Strong production growth is expected to generate significant free cash flow which will allow us to pay down debt, reduce leverage to 1.0x and below and stay opportunistic towards our strategic objectives.”

Source: Company Press Release