SilverBow Resources to Acquire Sundance Energy and SandPoint Resources for $425 Million
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SilverBow Resources, Inc. has entered into a definitive agreement to acquire substantially all of the assets of Sundance Energy and certain affiliated entities for a total purchase price of $354 million and up to $15 million of contingent payments based on future commodity prices. The Sundance transaction, which is expected to close in the third quarter of 2022, has been unanimously approved by the boards of directors of both companies.
SilverBow has also entered into a definitive agreement to acquire certain assets from SandPoint Operating, a subsidiary of SandPoint Resources, for a total purchase price of $71 million. The oil and gas assets target the Eagle Ford and Olmos formations in La Salle and McMullen counties. The SandPoint transaction has been unanimously approved by the boards of directors of both companies and is expected to close in the second quarter of 2022, subject to customary closing conditions.
“SilverBow has a disciplined approach towards growth based on our strict investment criteria. Today’s transformative news builds on our recent series of transactions while advancing a number of our strategic objectives. We are significantly increasing SilverBow’s size, scale, and cash flow while maintaining a conservative balance sheet and a leverage ratio. SilverBow will now have even greater optionality to allocate capital between both oil and gas development, which has been a cornerstone of the company’s strategy over the last few years,” said Sean Woolverton, SilverBow’s chief executive officer.
“There is strong industrial logic for these acquisitions as the acreage overlap will allow SilverBow to drive synergies and optimize development plans. We estimate we have the ability to generate approximately $450 million of incremental free cash flow through 2024, with total SilverBow pro forma free cash flow greater than a $1.0 billion. The significant production and cash flow from existing wells, coupled with a conservative balance sheet and ample liquidity, positions SilverBow to self-fund high rate of return projects and simultaneously further our consolidation efforts,” added Woolverton.
SUNDANCE TRANSACTION DETAILS
The Sundance transaction has an effective date of May 1, 2022 and is expected to close in the third quarter of 2022. The aggregate purchase price of approximately $354 million consists of $225 million in cash, subject to customary closing adjustments, and 4.1 million shares of SilverBow common stock valued at $129. Up to an additional $15 million dollars of contingent payments may be payable to Sundance based upon future commodity prices. In addition to customary closing adjustments, SilverBow will benefit from a $16.5 million downward adjustment to cash consideration at close related to the assumption of Sundance’s existing hedge book.
SANDPOINT TRANSACTION DETAILS
The SandPoint acquisition also has an effective date of May 1, 2022 and is expected to close in the second quarter of 2022. The aggregate purchase price of approximately $71 million consists of $31 million in cash, subject to customary closing adjustments, and 1.3 million shares of SilverBow common stock valued at $40 million based on its 30-day volume weighted average price as of April 8, 2022.
About SilverBow Resources
SilverBow Resources, Inc. 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.
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