0000351817true8-K/A00003518172023-12-052023-12-05

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

FORM 8-K/A

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): November 30, 2023

SilverBow Resources, Inc.
(Exact name of Registrant as specified in its charter)
Delaware001-875420-3940661
(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)

Not Applicable
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareSBOWNew York Stock Exchange
Preferred Stock Purchase RightsNoneNew 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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EXPLANATORY NOTE
This Current Report on Form 8-K/A of SilverBow Resources, Inc. (the “Company”), amends and supplements the Current Report on Form 8-K of the Company, dated November 30, 2023 and filed with the Securities and Exchange Commission on December 1, 2023 (the “Initial Form 8-K”), which reported under Item 2.01 that on November 30, 2023, the Company and its operating subsidiary, SilverBow Resources Operating, LLC, closed the previously announced acquisition of Chesapeake Energy Corporation's oil and gas assets in South Texas (the “South Texas Rich Properties”), pursuant to that certain Purchase and Sale Agreement, dated August 11, 2023 with Chesapeake Exploration, L.L.C., Chesapeake Operating, L.L.C., Chesapeake Energy Marketing, L.L.C. and Chesapeake Royalty, L.L.C (the “Transaction”). This amendment is filed to provide the financial statements of a business acquired by the Company and the pro forma financial information of the Company for the Transaction as required by Item 9.01 of Form 8-K. Except as set forth below, the Initial Form 8-K is unchanged.

Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.

    The unaudited statements of revenues and direct operating expenses of the Chesapeake South Texas Rich Properties for the nine months ended September 30, 2023 and 2022, including the related notes thereto, are filed herewith as Exhibit 99.1.

The audited statements of revenues and direct operating expenses of the Chesapeake South Texas Rich Properties for the years ended December 31, 2022 and 2021, including the related notes
thereto, are filed herewith as Exhibit 99.2.

(b) Pro forma financial information.

    The unaudited pro forma condensed combined balance sheet of the Company as of September 30, 2023, and the unaudited pro forma condensed combined statements of operations of the Company for the nine months ended September 30, 2023 and the year ended December 31, 2022, including the related notes thereto, giving effect to the Transaction are filed herewith as Exhibit 99.3. The unaudited pro forma financial information gives effect to the Transaction on the basis, and subject to the assumptions, set forth in accordance with Article 11 of Regulation S-X.

(d) Exhibits.

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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: December 5, 2023
SilverBow Resources, Inc.
By:/s/ Christopher M. Abundis
Christopher M. Abundis
Executive Vice President, Chief Financial Officer and General Counsel
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EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-259122, 333- 260142, 333-261346, 333-264936, 333-266032 and 333-271821 ) and Form S-8 (Nos. 333-210936, 333- 215235, 333-218246, 333-233163 and 333-266584) of SilverBow Resources, Inc. of our report dated September 10, 2023 relating to the statements of revenues and direct operating expenses of the South Texas Rich Properties of Chesapeake Energy Corporation, which appears in this Current Report on Form 8-K/A.
/s/ PricewaterhouseCoopers LLP
Oklahoma City, Oklahoma
December 4, 2023




EXHIBIT 99.1

SOUTH TEXAS RICH PROPERTIES

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES and

NOTES TO STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(UNAUDITED)

Nine Months Ended September 30, 2023 and 2022

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SOUTH TEXAS RICH PROPERTIES

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(UNAUDITED)

Nine Months Ended September 30, 2023 and 2022

Table of Contents
 Page
Statements of Revenues and Direct Operating Expenses
Notes to the Statements of Revenues and Direct Operating Expenses

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SOUTH TEXAS RICH PROPERTIES

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (UNAUDITED)

 Nine Months Ended
$ in thousandsSeptember 30, 2023September 30, 2022
Revenues$291,807 $380,916 
Direct operating expenses122,371 138,510 
Excess of revenues over direct operating expenses$169,436 $242,406 


See accompanying Notes to the Statements of Revenues and Direct Operating Expenses
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SOUTH TEXAS RICH PROPERTIES

NOTES TO THE STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (UNAUDITED)

1.    Basis of Presentation

On August 11, 2023, Chesapeake Energy Corporation (“Chesapeake”), through its wholly owned subsidiaries Chesapeake Exploration, L.L.C., Chesapeake Operating, L.L.C., Chesapeake Energy Marketing, L.L.C. and Chesapeake Royalty, L.L.C., entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with SilverBow Resources Operating, LLC, a subsidiary of SilverBow Resources, Inc. (“Buyer”), to sell a portion of its Eagle Ford assets (the “Transaction”). Under the terms of the Purchase Agreement, Chesapeake has agreed to sell approximately 42,000 net acres and approximately 540 wells, along with related property, plant and equipment (collectively, the “South Texas Rich Properties” or the “Properties”).

Under the terms and conditions of the Purchase Agreement, which has an economic effective date of February 1, 2023, the aggregate consideration to be paid to Chesapeake in the Transaction will consist of $700,000,000, comprised of (i) cash in the amount of $650,000,000, due at the closing of the Transaction, subject to certain purchase price adjustments and (ii) cash in the amount of $50,000,000 due on the first anniversary of the closing of the Transaction. Subject to satisfaction of certain commodity price triggers, Chesapeake may also receive additional cash consideration in an amount up to $50,000,000 shortly following the first anniversary of closing of the Transaction. Pursuant to the Purchase Agreement, upon the execution of the Purchase Agreement, the Buyer deposited $50,000,000 into escrow, which will be credited toward the cash consideration payable at the closing of the Transaction.

The accompanying Statements of Revenues and Direct Operating Expenses (the “Statements”) represent the direct undivided interests in the revenues and direct operating expenses associated with the producing wells in the Properties. The Statements of Revenues and Direct Operating Expenses have been derived from the historical financial records of Chesapeake. For purposes of these statements, all properties identified in the purchase and sale agreement are included herein. During the periods presented, the Properties were not accounted for or operated as a separate entity, subsidiary, segment or division by Chesapeake. Accordingly, a complete set of financial statements required by the Securities and Exchange Commission’s Regulation S-X, including a balance sheet and statement of cash flows, prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) is not available or practicable to prepare for the Properties. The accompanying Statements of Revenues and Direct Operating Expenses vary from a complete income statement in accordance with U.S. GAAP in that they do not reflect certain expenses incurred in connection with the ownership and operation of the Properties, including but not limited to depreciation, depletion and amortization, impairments, accretion of asset retirement obligations, general and administrative expenses, interest expense and federal and state income taxes. These costs were not separately allocated to the working interests of the Properties in Chesapeake’s accounting records. In addition, these Statements of Revenues and Direct Operating Expenses are not indicative of the results of operations for the Properties on a go forward basis.

The accompanying Statements for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited interim Statements have been prepared on the same basis as the annual Statements. In the opinion of management, such unaudited interim Statements reflect all normal recurring adjustments necessary for a fair statement of the revenues and direct operating expenses of the Properties.
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2.    Summary of Significant Accounting Policies

Revenue Recognition

Revenue from the sale of oil, natural gas and NGL is recognized upon the transfer of control of the products, which is typically when the products are delivered to customers. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration Chesapeake expects to receive in exchange for those products.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers.

Direct Operating Expenses

Direct operating expenses are recognized when incurred and consist of the direct expenses of operating the Properties. Direct operating expenses include lease operating expenses, production taxes and gathering, processing and transportation costs. Lease operating expenses include well repair expenses, saltwater disposal costs, facility maintenance expenses, and other field-related expenses. Lease operating expenses also include expenses directly associated with support personnel, support services, equipment and facilities directly related to oil and natural gas production activities.

Use of Estimates

The Statements of Revenues and Direct Operating Expenses are derived from the historical operating statements of Chesapeake. Accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the amounts reported in the Statements of Revenues and Direct Operating Expenses. Actual results could differ from those estimates. Revenues and direct operating expenses relate to the historical net revenue interest and net working interest, respectively, in the Properties.

3.    Subsequent Events

The Transaction closed on November 30, 2023, pursuant to the terms of the Purchase Agreement.

Chesapeake has evaluated subsequent events through December 4, 2023, the date the Statements of Revenues and Direct Operating Expenses were available to be issued, and has concluded that no other events need to be reported.

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EXHIBIT 99.2

SOUTH TEXAS RICH PROPERTIES

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES

Years Ended December 31, 2022 and 2021
with Report of Independent Auditors

Table of Contents
 Page
Report of Independent Auditors
Statements of Revenues and Direct Operating Expenses
Notes to Statements of Revenues and Direct Operating Expenses
Supplemental Oil and Gas Reserve Information (unaudited)

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Report of Independent Auditors

To the Management of Chesapeake Energy Corporation

Opinion

We have audited the accompanying statements of revenues and direct operating expenses of the South Texas Rich Properties (the “South Texas Rich Properties”) of Chesapeake Energy Corporation (the “Company”), for the years ended December 31, 2022 and 2021, including the related notes (collectively referred to as the “statements of revenues and direct operating expenses”).

In our opinion, the accompanying statements of revenues and direct operating expenses present fairly, in all material respects, the revenues and direct operating expenses described in Note 1 of the South Texas Rich Properties for the years ended December 31, 2022 and 2021, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Statements of Revenues and Direct Operating Expenses section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

The accompanying statements of revenues and direct operating expenses were prepared in connection with the Company’s divestiture of the South Texas Rich Properties and, as described in Note 1, were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. The statements of revenues and direct operating expenses are not intended to be a complete presentation of the financial position, results of operations or cash flows of the South Texas Rich Properties. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Statements of Revenues and Direct Operating Expenses

Management is responsible for the preparation and fair presentation of the statements of revenues and direct operating expenses in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statements of revenues and direct operating expenses that are free from material misstatement, whether due to fraud or error.

In preparing the statements of revenues and direct operating expenses, management is responsible for the evaluation of whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the South Texas Rich Properties’ ability to continue as a going concern for one year after the date the statements of revenues and direct operating expenses are available to be issued.

Auditors’ Responsibilities for the Audit of the Statements of Revenues and Direct Operating Expenses

Our objectives are to obtain reasonable assurance about whether the statements of revenues and direct operating expenses as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for
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one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the statements of revenues and direct operating expenses.

In performing an audit in accordance with US GAAS, we:

Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the statements of revenues and direct operating expenses, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the statements of revenues and direct operating expenses.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the South Texas Rich Properties' internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the statements of revenues and direct operating expenses.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the South Texas Rich Properties’ ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.



/s/PricewaterhouseCoopers LLP

Oklahoma City, Oklahoma
September 10, 2023

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SOUTH TEXAS RICH PROPERTIES

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES

 Year Ended
$ in thousandsDecember 31, 2022December 31, 2021
Revenues$483,383 $347,489 
Direct operating expenses189,018 146,379 
Excess of revenues over direct operating expenses$294,365 $201,110 

See accompanying Notes to the Statements of Revenues and Direct Operating Expenses
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SOUTH TEXAS RICH PROPERTIES

NOTES TO THE STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES

1.    Basis of Presentation

On August 11, 2023, Chesapeake Energy Corporation (“Chesapeake”), through its wholly owned subsidiaries Chesapeake Exploration, L.L.C., Chesapeake Operating, L.L.C., Chesapeake Energy Marketing, L.L.C. and Chesapeake Royalty, L.L.C., entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with SilverBow Resources Operating, LLC, a subsidiary of SilverBow Resources, Inc. (“Buyer”) to sell a portion of its Eagle Ford assets (the “Transaction”). Under the terms of the Purchase Agreement, Chesapeake has agreed to sell approximately 42,000 net acres and approximately 540 wells, along with related property, plant and equipment (collectively, the “South Texas Rich Properties” or “the Properties”).

Under the terms and conditions of the Purchase Agreement, which has an economic effective date of February 1, 2023, the aggregate consideration to be paid to Chesapeake in the Transaction will consist of $700,000,000, comprised of (i) cash in the amount of $650,000,000, due at the closing of the Transaction, subject to certain purchase price adjustments and (ii) cash in the amount of $50,000,000 due on the first anniversary of the closing of the Transaction. Subject to satisfaction of certain commodity price triggers, Chesapeake may also receive additional cash consideration in an amount up to $50,000,000 shortly following the first anniversary of closing of the Transaction. Pursuant to the Purchase Agreement, upon the execution of the Purchase Agreement, the Buyer deposited $50,000,000 into escrow, which will be credited toward the cash consideration payable at the closing of the Transaction.

The accompanying Statements of Revenues and Direct Operating Expenses represent the direct undivided interests in the revenues and direct operating expenses associated with the producing wells in the Properties. The Statements of Revenues and Direct Operating Expenses have been derived from the historical financial records of Chesapeake. For purposes of these statements, all properties identified in the purchase and sale agreement are included herein. During the periods presented, the Properties were not accounted for or operated as a separate entity, subsidiary, segment or division by Chesapeake. Accordingly, a complete set of financial statements required by the Securities and Exchange Commission’s Regulation S-X, including a balance sheet and statement of cash flows, prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) is not available or practicable to prepare for the Properties. The accompanying Statements of Revenues and Direct Operating Expenses vary from a complete income statement in accordance with U.S. GAAP in that they do not reflect certain expenses incurred in connection with the ownership and operation of the Properties, including but not limited to depreciation, depletion and amortization, impairments, accretion of asset retirement obligations, general and administrative expenses, interest expense and federal and state income taxes. These costs were not separately allocated to the working interests of the Properties in Chesapeake’s accounting records. In addition, these Statements of Revenues and Direct Operating Expenses are not indicative of the results of operations for the Properties on a go forward basis.
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2.    Summary of Significant Accounting Policies

Revenue Recognition

Revenue from the sale of natural gas, oil and NGL is recognized upon the transfer of control of the products, which is typically when the products are delivered to customers. Revenue is recognized net of royalties due to third parties in an amount that reflects the consideration Chesapeake expects to receive in exchange for those products.

Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 days. There are no significant judgments that significantly affect the amount or timing of revenue from contracts with customers.

Direct Operating Expenses

Direct operating expenses are recognized when incurred and consist of the direct expenses of operating the Properties. Direct operating expenses include lease operating expenses, production taxes and gathering, processing and transportation costs. Lease operating expenses include well repair expenses, saltwater disposal costs, facility maintenance expenses, and other field-related expenses. Lease operating expenses also include expenses directly associated with support personnel, support services, equipment and facilities directly related to natural gas and oil production activities.

Use of Estimates

The Statements of Revenues and Direct Operating Expenses are derived from the historical operating statements of Chesapeake. Accounting principles generally accepted in the United States of America require management to make estimates and assumptions that affect the amounts reported in the Statements of Revenues and Direct Operating Expenses. Actual results could differ from those estimates. Revenues and direct operating expenses relate to the historical net revenue interest and net working interest, respectively, in the Properties.

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3.    Subsequent Events

Chesapeake has evaluated subsequent events through September 10, 2023, the date the Statements of Revenues and Direct Operating Expenses were available to be issued, and has concluded that no events, except as described in Note 1, need to be reported.

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SOUTH TEXAS RICH PROPERTIES

Supplementary Oil and Gas Information (Unaudited)

Natural Gas, Oil and NGL Reserve Quantities

Chesapeake’s petroleum engineers and independent petroleum engineering firms estimated all of Chesapeake's proved reserves as of December 31, 2022.

Proved natural gas, oil, and NGL reserves are those quantities of natural gas, oil, and NGL which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. Based on reserve reporting rules, the price is calculated using the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within the period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. A project to extract hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. The area of the reservoir considered as proved includes: (i) the area identified by drilling and limited by fluid contacts, if any, and (ii) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible natural gas or oil on the basis of available geoscience and engineering data. In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establish a lower contact with reasonable certainty. Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated natural gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (i) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (ii) the project has been approved for development by all necessary parties and entities, including governmental entities.

Developed natural gas, oil, and NGL reserves are reserves of any category that can be expected to be recovered through existing wells with existing equipment and operating methods where production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
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SOUTH TEXAS RICH PROPERTIES

Supplementary Oil and Gas Information (Unaudited) – continued

Natural Gas, Oil and NGL Reserve Quantities - continued

The information provided below on the Properties' natural gas, oil, and NGL reserves is presented in accordance with regulations prescribed by the Securities and Exchange Commission. These reserve estimates are generally based upon extrapolation of historical production trends, analogy to similar properties, and volumetric calculations. Accordingly, these estimates will change as future information becomes available and as commodity prices change. These changes could be material and could occur in the near term.

Presented below is a summary of change in estimated reserves for the periods presented:
Natural Gas
Oil
NGL
Total
(mcf) 
(Bbl) 
(Bbl) 
(mcfe) 
December 31, 2022
Proved reserves, beginning of period285,251,264 28,654,405 38,955,911 690,913,165 
Extensions, discoveries and other additions11,755,384 1,984,143 1,509,852 32,719,354 
Revisions of previous estimates38,966,441 2,505,226 3,523,627 75,139,561 
Production(20,909,750)(2,637,577)(2,645,702)(52,609,426)
Proved reserves, end of period315,063,339 30,506,197 41,343,688 746,162,654 
Proved developed reserves:
Beginning of period183,596,848 20,348,596 25,086,112 456,205,097 
End of period229,553,642 22,276,526 30,178,639 544,284,628 
Proved undeveloped reserves:
Beginning of period101,654,416 8,305,809 13,869,799 234,708,068 
End of period85,509,697 8,229,671 11,165,049 201,878,026 
December 31, 2021
Proved reserves, beginning of period148,585,717 18,022,345 20,648,406 380,610,225 
Extensions, discoveries and other additions82,671,630 6,466,685 10,681,462 185,560,515 
Revisions of previous estimates74,107,492 6,720,786 10,479,354 177,308,332 
Production(20,113,575)(2,555,411)(2,853,311)(52,565,907)
Proved reserves, end of period285,251,264 28,654,405 38,955,911 690,913,165 
Proved developed reserves:
Beginning of period148,585,717 18,022,345 20,648,406 380,610,225 
End of period183,596,848 20,348,596 25,086,112 456,205,097 
Proved undeveloped reserves:
Beginning of period— — — — 
End of period(a)
101,654,416 8,305,809 13,869,799 234,708,068 
(a) As of December 31, 2022 and December 31, 2021, there were no PUDs that had remained undeveloped for five years or more.

The natural gas, oil and NGL prices used in computing the reserves as of December 31, 2022 were $6.36 per mcf, $93.67 per bbl and $43.58 per bbl, respectively, before basis differential adjustments. The natural gas, oil and NGL prices used in computing the reserves as of December 31, 2021 were $3.60 per mcf, $66.56 per bbl and $35.81 per bbl, respectively, before basis differential adjustments.
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SOUTH TEXAS RICH PROPERTIES

Supplementary Oil and Gas Information (Unaudited) – continued

Standardized Measure of Discounted Cash Flows

The following summary sets forth the Properties' future net cash flows relating to proved natural gas, oil, and NGL reserves based on the standardized measure as of and for the years ended December 31, 2022 and 2021:
$ in thousands20222021
Future cash inflows(a)
$5,120,415 $3,321,630 
Future production costs(1,153,162)(805,328)
Future development costs(b)
(282,790)(184,595)
Future income tax provisions(743,654)(473,873)
Future net cash flows2,940,809 1,857,834 
Less effect of a 10% discount factor(1,462,980)(899,630)
Standardized Measure of discounted future net cash flows$1,477,829 $958,204 
(a) Calculated using $6.36 per mcf, $93.67 per bbl of oil and $43.58 per bbl of NGL, respectively, before basis differential adjustments in 2022. Calculated using $3.60 per mcf, $66.56 per bbl of oil and $35.81 per bbl of NGL, respectively, before basis differential adjustments in 2021.

(b) Includes future plugging and abandonment costs.

$ in thousands20222021
Standardized measure, beginning of period$958,204 $192,122 
Sales of natural gas and oil produced, net of production costs and gathering processing and transportation(a)
(294,365)(201,110)
Net changes in prices and production costs663,937 577,781 
Extensions and discoveries, net of production and development costs138,778 365,709 
Changes in estimated future development costs(86,658)(34,445)
Previously estimated development costs incurred during the period32,972 1,969 
Revisions of previous quantity estimates202,136 416,962 
Accretion of discount119,239 19,212 
Net change in income taxes(148,648)(236,188)
Changes in production rates and other(107,766)(143,808)
Standardized Measure, end of period$1,477,829 $958,204 
(a) Production costs includes severance and ad valorem taxes.
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EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Acquisition of Chesapeake's South Texas Assets

On November 30, 2023, SilverBow Resources, Inc. and its operating subsidiary, SilverBow Resources Operating, LLC (“SilverBow” or the “Company”), closed the previously announced Purchase and Sale Agreement (the “Purchase Agreement”) with Chesapeake Energy Corporation, through its wholly owned subsidiaries Chesapeake Exploration, L.L.C., Chesapeake Operating, L.L.C., Chesapeake Energy Marketing, L.L.C. and Chesapeake Royalty, L.L.C. (collectively “Chesapeake”), to buy Chesapeake's South Texas assets (the “South Texas Rich Properties”, the transaction collectively, the “ Chesapeake Transaction”). Under the terms and conditions of the Purchase Agreement, which has an economic effective date of February 1, 2023, the aggregate consideration for the Chesapeake Transaction consists of $700,000,000, comprised of cash in the amount of $650,000,000, paid at the closing of the Chesapeake Transaction, subject to certain purchase price adjustments and cash in the amount of $50,000,000 due on the first anniversary of the closing of the Chesapeake Transaction. The Chesapeake Transaction also includes a contingent earn-out payment contingent upon the average monthly settlement price of NYMEX West Texas Intermediate (“WTI”) crude oil for the 12 month period beginning on the first trading day of the next full calendar month following the closing date of the Chesapeake Transaction. If the average monthly settlement price of WTI during the 12 month period (a) exceeds $80 per barrel, SilverBow shall pay Chesapeake an amount equal to $50 million or (b) is between $75 per barrel and $80 per barrel, SilverBow shall pay Chesapeake an amount equal to $25 million. If the average monthly settlement price of WTI during the 12 month period is below $75 per barrel, SilverBow shall not owe Chesapeake a contingent earn-out payment.

The Chesapeake Transaction was funded with borrowings under the Company's First Amended and Restated Senior Secured Revolving Credit Agreement, dated as of April 19, 2017, and amended as of November 30, 2023 (the “Credit Facility”), among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders, and proceeds from the issuance of additional second lien notes (“Second Lien Notes”) pursuant to the Company's Note Purchase Agreement, dated as of December 15, 2017 and amended as of November 30, 2023, among the Company, as issuer, U.S. Bank Trust Company, National Association (as successor-in-interest to U.S. Bank National Association), as agent and collateral agent, and the other parties thereto, and cash on hand. In conjunction with the Chesapeake Transaction, the Company has secured $425 million of incremental commitments under its Credit Facility from existing and new lenders, which increased lender commitments under the Credit Facility to $1.2 billion, and the Company’s Second Lien Notes were upsized by $350 million, which increased lender commitments under the Company’s Second Lien Notes to $500 million and extend the maturity date for the Second Lien Notes to December 15, 2028 (together, the “Related Financing”).

Acquisition of Sundance Assets

On June 30, 2022, SilverBow and its operating subsidiary, SilverBow Operating, closed the previously announced purchase and sale agreement dated April 13, 2022 with Sundance Energy, Inc. and certain affiliated entities (collectively, “Sundance”), thereby acquiring oil and gas assets in the Eagle Ford (the “Sundance Transaction” and together with the Chesapeake Transaction, the “Transactions”). After consideration of closing adjustments, total aggregate consideration was approximately $344.9 million, consisting primarily of $220.9 million in cash, 4,148,472 shares of our common stock valued at approximately $117.7 million based on the Company's share price on the closing date and contingent consideration with an estimated fair value of $7.4 million. The contingent consideration consisted of up to two earn-out payments of $7.5 million each, contingent upon the average monthly settlement price of NYMEX West Texas Intermediate crude oil exceeding $95 per barrel for the period from April 13, 2022 through December 31, 2022 which would trigger a payment of $7.5 million in 2023 and $85 per barrel for 2023 which would trigger a payment of $7.5 million in 2024 (the “2022 WTI Contingency Payout”). The contingent payout for the period of April 13, 2022 through December 31, 2022 did not materialize. As part of our post-close settlement, we settled the 2022 WTI Contingency during the second quarter of 2023. As such, we are no longer required to make a contingency payment related to the 2022 WTI Contingency Payout. We incurred approximately $6.8 million in transaction costs during the year ended December 31, 2022 related to the Sundance Transaction.

Unaudited Pro Forma Condensed Combined Financial Statements

The following unaudited pro forma condensed combined financial statements are derived from the historical consolidated financial statements of SilverBow, historical South Texas Rich Properties Statements of Revenues and Direct Operating Expenses related to the Chesapeake Transaction and from the historical financial activity of Sundance through June 30, 2022, the closing date of the Sundance Transaction.


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The Company expects to account for the Chesapeake Transaction as an asset acquisition under accounting principles generally accepted in the United States of America, as the assets and operations acquired in the Chesapeake Transaction do not meet the definition of a business under the Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations (referred to as “ASC 805”), since substantially all of the fair value of the assets acquired are concentrated in a single asset group.

Certain historical amounts of Sundance and Chesapeake's South Texas Rich Properties have been reclassified to conform to SilverBow’s financial statement presentation. The unaudited pro forma condensed combined balance sheet as of September 30, 2023 presented below was prepared as if the Chesapeake Transaction and related financing had occurred on September 30, 2023. The Sundance Transaction closed on June 30, 2022. Therefore, the Sundance Transaction is already included in SilverBow's condensed consolidated balance sheet as of September 30, 2023. The unaudited pro forma condensed combined statements of operations for the nine-month period ended September 30, 2023 and the year ended December 31, 2022 presented below were prepared as if the Transactions and Related Financing had occurred on January 1, 2022.

The unaudited pro forma condensed combined financial statements reflect the following pro forma adjustments related to the Transactions, based on available information and certain assumptions that SilverBow believes are reasonable:

the Transactions, accounted for as asset acquisitions and the Related Financing;
SilverBow’s related borrowing on its Credit Facility and issuance of Second Lien Notes, as applicable, to fund the cash portion of the Transactions;
adjustments to conform the classification of expenses in Chesapeake’s South Texas Rich Properties historical statement of Revenues and Direct Operating Expenses to SilverBow’s classification for similar expenses;
adjustments to conform the classification of revenues and expenses in Sundance’s historical statements of operations to SilverBow’s classification for similar revenues and expenses; and
the recognition of estimated tax impacts of the pro forma adjustments.

Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statement. In SilverBow’s opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to the Transactions and the Related Financing.

The Company expects to account for the Chesapeake Transaction as an asset acquisition under accounting principles generally accepted in the United States of America. The acquisition method of accounting as it relates to the Chesapeake Transaction is dependent upon certain valuations and other studies that, as of the date hereof, have yet to commence or progress to a stage where there is sufficient information for a definitive measure. SilverBow has performed a preliminary valuation analysis of the relative fair value of Chesapeake’s assets to be acquired and liabilities to be assumed and has made certain adjustments to the historical book values of the assets and liabilities of Chesapeake to reflect preliminary estimates of the relative fair value necessary to prepare the unaudited pro forma condensed combined financial statements. A final determination of the relative fair value of Chesapeake’s assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of Chesapeake that exist as of the closing date of the Chesapeake Transaction and, therefore, could not be made prior to the completion of the Chesapeake Transaction. As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analysis is performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed combined financial statements presented below. SilverBow estimated the fair value of Chesapeake’s assets and liabilities based on discussions with Chesapeake’s management, preliminary valuation studies, due diligence, and information presented in Chesapeake’s historical financial statements. Any increases or decreases in the relative fair value of assets acquired and liabilities assumed upon completion of the final valuations will result in adjustments to the unaudited pro forma condensed combined balance sheet and/or statement of operations. The final purchase price allocation may be materially different than that reflected in the pro forma purchase price allocation presented herein.

The unaudited pro forma condensed combined financial information is not intended to represent what SilverBow’s financial position or results of operations would have been had the Transactions and Related Financing actually been consummated on the assumed dates nor does it purport to project the future operating results of the combined company following the Chesapeake Transaction. The unaudited pro forma condensed combined financial information does not reflect future events that may occur after the Chesapeake Transaction, including, but not limited to, the anticipated realization of ongoing savings from potential operating efficiencies, asset dispositions, cost savings, or economies of scale that the combined company may achieve with respect to the combined operations. Specifically, the unaudited pro forma condensed combined statement of operations does not include projected synergies expected to be achieved as a result of the Transactions and any associated costs that may be required to be incurred to

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achieve the identified synergies. The unaudited pro forma condensed combined statements of operations also exclude the effects of costs of integration activities and asset dispositions that may result from the Transactions.

The unaudited pro forma condensed combined financial statement should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in SilverBow’s Annual Report on Form 10-K for the year ended December 31, 2022, the historical consolidated financial statements and accompanying notes thereto of Sundance filed as Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on June 6, 2022, and Quarterly Report on Form 10-Q for the nine months ended September 30, 2023 and historical South Texas Rich Properties Statement of Revenues and Direct Operating Expenses and accompanying notes thereto filed as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K/A of which this Exhibit 99.3 is a part.

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SilverBow Resources, Inc. and Subsidiary Pro Forma Condensed Combined Balance Sheet
As of September 30, 2023 (Unaudited)
 (in thousands, except per share amounts)SilverBow HistoricalChesapeake Transaction Adjustments (Note 2)Pro Forma Combined
ASSETS  
Current Assets:  
Cash and cash equivalents$1,697 $— $1,697 
Accounts receivable, net80,202 — 80,202 
Fair value of commodity derivatives50,189 — 50,189 
Other current assets3,825 — 3,825 
Total Current Assets135,913 — 135,913 
Property and Equipment:  
Property and equipment, full cost method, including $27,821 of unproved property costs not being amortized at the end of the period2,861,267 673,018 (a)3,534,285 
Less – Accumulated depreciation, depletion, amortization & impairment(1,151,141)— (1,151,141)
Property and Equipment, Net1,710,126 673,018 2,383,144 
Right of Use Assets10,085 200 (a)10,285 
Deposit and Other Fees for Oil and Gas Properties52,564 (52,564)(b)— 
Fair Value of Long-Term Commodity Derivatives14,180 — 14,180 
Other Long-Term Assets7,581 — 7,581 
Total Assets$1,930,449 $620,654 $2,551,103 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities:  
Accounts payable and accrued liabilities$74,731 $— $74,731 
Fair value of commodity derivatives32,752 — 32,752 
Accrued capital costs56,424 — 56,424 
Accrued interest2,976 — 2,976 
Current lease liability5,507 59 (a)5,566 
Undistributed oil and gas revenues22,462 — 22,462 
Deferred acquisition payment— 50,000 (a)50,000 
Total Current Liabilities194,852 50,059 244,911 
Long-Term Debt, Net645,096 547,241 (c)1,192,337 
Non-Current Lease Liability4,604 141 (a)4,745 
Deferred Tax Liabilities49,033 — 49,033 
Asset Retirement Obligations9,840 634 (a)10,474 
Fair Value of Long-Term Commodity Derivatives21,560 22,579 (a)44,139 
Other Long-Term Liabilities922 — 922 
Stockholders' Equity:  
Preferred stock— — — 
Common stock259 — 259 
Additional paid-in capital677,473 — 677,473 
Treasury stock, held at cost(10,616)— (10,616)
Retained earnings337,426 — 337,426 
Total Stockholders’ Equity1,004,542 — 1,004,542 
Total Liabilities and Stockholders’ Equity$1,930,449 $620,654 $2,551,103 
See accompanying notes to unaudited pro forma condensed combined financial information.

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SilverBow Resources, Inc. and Subsidiary Pro Forma Condensed Combined Statement of Operations For Nine Months Ended September 30, 2023 (Unaudited)
 (in thousands, except per share amounts)SilverBow Historical
Chesapeake Historical
Chesapeake Reclassification Adjustments (Note 2)
Transaction Accounting Adjustments (Note 2)
Pro Forma Combined
Revenues: 
Oil and gas sales$440,317 $291,807 $— $— $732,124 
Operating Expenses:
Direct Operating Expenses— 122,371 (122,371)(d)— — 
General and administrative, net17,421 — — — 17,421 
Depreciation, depletion, and amortization147,037 — — 64,548 (f)211,585 
Accretion of asset retirement obligations718 — — — 718 
Lease operating expenses62,417 — 26,537 (d)— 88,954 
Workovers2,263 — 908 (d)— 3,171 
Transportation and gas processing37,001 — 76,151 (d)— 113,152 
Severance and other taxes28,563 — 18,775 (d)— 47,338 
Total Operating Expenses295,420 122,371 — 64,548 482,339 
Operating Income (Loss)144,897 169,436 — (64,548)249,785 
Non-Operating Income (Expense)
Gain (loss) on commodity derivatives, net57,604 — — — 57,604 
Interest expense, net(54,746)— — (47,369)(g)(102,115)
Other income (expense), net117 — — — 117 
Income (Loss) Before Income Taxes147,872 169,436 — (111,917)205,391 
Provision (Benefit) for Income Taxes33,214 — — 12,798 (h)46,012 
Net Income (Loss)$114,658 $169,436 $— $(124,715)$159,379 
Per Share Amounts: 
Basic: Loss Per Share$5.06 $— $— $— $7.03 
Diluted: Loss Per Share$5.02 $— $— $— $6.97 
Weighted-Average Shares Outstanding - Basic22,677 — — — 22,677 
Weighted-Average Shares Outstanding - Diluted22,852 — — — 22,852 
See accompanying notes to unaudited pro forma condensed combined financial information.


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SilverBow Resources, Inc. and Subsidiary Pro Forma Condensed Combined Statement of Operations For the Year Ended December 31, 2022 (Unaudited)
Sundance Historical

(in thousands, except per share amounts)SilverBow Historical
January 1, 2022 Through March 31, 2022
Sundance Historical April 1, 2022 through June 30, 2022Chesapeake Historical
 Sundance Reclassification Adjustments (Note 2)
Chesapeake Reclassification Adjustments (Note 2)
Sundance Transaction Adjustments (Note 2)
Chesapeake Transaction Adjustments (Note 2)Pro Forma Combined
Revenues:
Oil and gas sales$753,420 $— $— $483,383 $102,282 (e)$— $— $— $1,339,085 
Oil sales45,023 38,499 — (83,522)(e)— — — — 
Natural gas sales3,298 4,249 — (7,547)(e)— — — — 
Natural gas liquid sales6,384 4,829 — (11,213)(e)— — — — 
Operating Expenses: 
Direct Operating Expenses— — — 189,018 — (189,018)(d)— — — 
General and administrative, net21,395 1,727 — — — — — — 23,122 
Depreciation, depletion, and amortization133,982 273 — — (137)(e)— 26,016 (f)65,756 (f)225,890 
Accretion of asset retirement obligations534 — — — 137 (e)— — — 671 
Lease operating expense55,329 9,510 8,746 (2,016)(e)27,318 (d)— — 98,887 
Workovers1,655 — — 2,016 (e)2,050 (d)— — 5,721 
Transportation and gas processing32,989 3,624 3,621 — 133,376 (d)— — 173,610 
Severance and other taxes41,761 3,807 3,856 — 26,274 (d)— — 75,698 
Exploration expense— — — — — — — — — 
Loss (gain) on commodity derivative financial instruments— 29,818 — — (29,818)(e)— — — — 
Other expense, net— 208 — — — — — — 208 
Total Operating Expenses287,645 48,967 16,223 189,018 (29,818)— 26,016 65,756 603,807 
Operating Income (Loss)465,775 5,738 31,354 294,365 29,818 — (26,016)(65,756)735,278 
Non-Operating Income (Expense)
Net gain (loss) on commodity derivatives(73,885)— — — (29,818)(e)— — — (103,703)
Interest expense, net(41,948)(2,289)— — — — (2,720)(g)(67,982)(g)(114,939)
Other income (expense), net95 — — — — — — — 95 
Income (Loss) Before Income Taxes350,037 3,449 31,354 294,365 — — (28,736)(133,738)516,731 
Provision (Benefit) for Income Taxes9,600 — — — — — 1,350 (h)35,739 (h)46,689 
Net Income (Loss)$340,437 $3,449 $31,354 $294,365 $— $— $(30,086)$(169,477)$470,042 
Per Share Amounts: 
Basic:  Net Loss$17.24 $— $— $— $— $— $— $— $23.80 
Diluted:  Net Income Loss$16.94 $— $— $— $— $— $— $— $23.39 
Weighted Average Shares Outstanding - Basic19,748 — — — — — — — 19,748 
Weighted Average Shares Outstanding - Diluted20,097 — — — — — — — 20,097 
See accompanying notes to unaudited pro forma condensed combined financial information.



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Notes to Unaudited Pro Forma Condensed Combined Financial Information

(1) Basis of Pro Forma Presentation

The accompanying unaudited pro forma condensed combined financial information was prepared based on the historical consolidated financial statements of the Company, the historical South Texas Rich Properties Statement of Revenues and Direct Operating Expenses related to the Chesapeake Transaction, and from the historical financial activity of Sundance through June 30, 2022, the closing date of the Sundance Transaction. The Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2023 and the year ended December 31, 2022 were prepared assuming the Transactions and Related Financing occurred on January 1, 2022. The Unaudited Pro Forma Condensed Combined Balance Sheet at September 30, 2023 was prepared as if the Chesapeake Transaction and related financing had occurred on September 30, 2023. The Sundance Transaction closed on June 30, 2022. Therefore, the Sundance Transaction is already included in SilverBow's condensed consolidated balance sheet as of September 30, 2023.

The unaudited pro forma condensed combined financial statement reflects pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions that SilverBow believes are reasonable, however, actual results may differ from those reflected in this statement. In SilverBow’s opinion, all adjustments that are necessary to present fairly the pro forma information have been made. The unaudited pro forma condensed combined financial statement does not purport to represent what SilverBow’s financial position or results of operations would have been if the Transactions had actually occurred on the dates indicated above, nor is it indicative of SilverBow’s future financial position or results of operations. The unaudited pro forma condensed combined financial statement should be read in conjunction with the historical consolidated financial statements and related notes of SilverBow and Chesapeake, as applicable, for the period presented.

(2) Pro Forma Adjustments

The Company expects to account for the Chesapeake Transaction as an asset acquisition under accounting principles generally accepted in the United States of America, as the assets and operations acquired in the Chesapeake Transaction do not meet the definition of a business under the Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations (referred to as “ASC 805”), since substantially all of the fair value of the assets acquired are concentrated in a single asset group. The allocation of the preliminary estimated purchase price is based upon management’s estimates of and assumptions related to the relative fair value of assets to be acquired and liabilities to be assumed as of September 30, 2023 using currently available information. Due to the fact that the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final purchase price allocation and the resulting effect on financial position and results of operations may differ significantly from the pro forma amounts included herein. SilverBow expects to finalize its allocation of the purchase consideration as soon as practicable after completion of the Chesapeake Transaction.

The preliminary purchase price allocation is subject to change due to several factors, including but not limited to:
changes in the estimated fair value of Chesapeake’s assets acquired and liabilities assumed as of the date of the closing of the Chesapeake Transaction, resulting from the finalization of SilverBow’s detailed valuation analysis, including changes in future oil and gas commodity prices, reserve estimates, interest rates and other factors;
valuation of ASC 842 Leases as it relates to Chesapeake’s lease obligations and right of use assets expected to be recorded as part of purchase accounting upon the closing of the Chesapeake Transaction; and
changes in the estimated fair value of the Contingent Consideration as of the date of the closing of the Chesapeake Transaction.

The following adjustments have been made to the accompanying unaudited pro forma condensed combined financial statements:

(a)    Consideration for the Chesapeake Transaction was approximately $700.0 million, (i) cash in the amount of $650.0 million due at the closing of the transaction, subject to certain purchase price adjustments (estimated $58.0 million reduction in cash consideration below) and (ii) cash in the amount of $50.0 million due on the first anniversary of the closing of the transaction. The table below represents the preliminary allocation of the total cost of the Chesapeake Transaction to the assets acquired and liabilities assumed, as follows:

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(in thousands)
Total Cost
Cash consideration$592,000 
Deferred acquisition payment50,000 
Fair value of contingent consideration 22,579 
Total Consideration$664,579 
Transaction costs7,805 
Total Cost of Transaction$672,384 
Allocation of Total Cost of Transaction
Assets
Oil and gas properties$673,018 
Right of use assets200 
Total Assets673,218 
Liabilities
Asset retirement obligations634 
Current lease liability59 
Non-current lease liability141 
Total liabilities assumed$834 
Net Assets Acquired and Liabilities Assumed$672,384 

(b)    Reflects reclassification of the deposit and other acquisition related fees associated with the Chesapeake Transaction.
(c)    Reflects incremental long-term debt calculated as the aggregate of the cash consideration and transaction costs less the deposit and other acquisition related fees (noted above).

(d)    Chesapeake Reclassification and Conforming Adjustments:
Reflects reclassification of approximately $122.4 million from Direct Operating Expenses to the respective operating expenses by category ($26.5 million to Lease operating expenses, $0.9 million to Workovers, $76.2 million to Transportation and gas processing and $18.8 million to Severance and other taxes) on the Pro Forma Condensed Combined Statement of Operations for the nine months ended September 30, 2023.
Reflects reclassification of approximately $189.0 million from Direct Operating Expenses to the respective operating expenses by category ($27.3 million to Lease operating expenses, $2.1 million to Workovers, $133.4 million to Transportation and gas processing and $26.3 million to Severance and other taxes) on the Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2022.

(e)    Sundance Reclassification and Conforming Adjustments:
Reflects reclassification of approximately $102.3 million to oil and gas sales from the respective sales revenues by product ($83.6 million for oil sales, $7.5 million for gas sales and $11.2 million for NGL sales);
Reflects reclassification of approximately $0.1 million from depreciation, depletion and amortization to accretion of asset retirement obligation;
Reflects reclassification of approximately $2.0 million from lease operating expenses to workovers; and
Reflects the reclassification of approximately $29.8 million of loss on commodity derivatives financial instruments from Operating Expenses to Non-Operating Income (Expense).

(f)    Depreciation, depletion and amortization (“DD&A”) related to the Chesapeake Transaction for the nine months ended September 30, 2023 and for the year ended December 31, 2022 and Sundance Transaction for the year ended December 31, 2022 was calculated using the unit-of-production method under the full cost method of accounting, and adjusts DD&A for (i) the increase in DD&A reflecting the relative fair values and production volumes attributable to the Transactions and (ii) the revision to the Company’s DD&A rate reflecting the reserve volumes acquired in the Transactions.

(g)    Interest expense associated with borrowings under the Company's Second Lien Notes and Credit Facility utilizing current interest rates, as applicable, for each Transaction.

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(h)    Adjustments to Income tax provision reflects the historical and adjusted Income (Loss) Before Income Taxes for each Transaction, as applicable, multiplied by 22.25% effective tax rate for the periods presented.

(3) Supplemental Oil and Gas Reserve Information

Estimated Quantities of Proved Oil and Natural Gas Reserves

The following tables present information regarding net proved oil and natural gas reserves attributable to the Company's interests in proved properties as of December 31, 2022 and 2021. The information set forth in the tables regarding historical reserves of the Company is based on proved reserves reports prepared in accordance with Securities and Exchange Commission’s (“SEC”) rules. H.J. Gruy and Associates, Inc. (“Gruy”), independent petroleum engineers, prepared the Company's proved reserves reports as of December 31, 2022 and 2021.

In addition, the following tables also set forth information as of December 31, 2022 and 2021 about the estimated net proved oil and natural gas reserves attributable to the Chesapeake Transaction, and the pro forma estimated net proved oil and natural gas reserves as if the Chesapeake Transaction had occurred on January 1, 2021. The reserve estimates attributable to the Chesapeake Transaction at December 31, 2022 and 2021 presented in the table below were prepared based upon information provided by Chesapeake and was prepared in accordance with the authoritative guidance of the FASB and the SEC on oil and natural gas reserve estimation and disclosures.

In addition, the following tables also set forth information as of December 31, 2021 about the estimated net proved oil and natural gas reserves attributable to the Sundance Transaction, and the pro forma estimated net proved oil and natural gas reserves as if the Sundance Transaction had occurred on January 1, 2021. The Sundance Transaction closed on June 30, 2022. Therefore, the net proved oil and natural gas reserves attributable to the Sundance Transaction are reflected in SilverBow's historical reserves as of December 31, 2022. The reserve estimates attributable to the Sundance Transaction at December 31, 2021 presented in the table below were prepared based upon information provided by Sundance and was prepared in accordance with the authoritative guidance of the FASB and the SEC on oil and natural gas reserve estimation and disclosures.

Reserve estimates are inherently imprecise and are generally based upon extrapolation of historical production trends, analogy to similar properties and volumetric calculations. Accordingly, reserve estimates are expected to change, and such changes could be material and occur in the near term as future information becomes available.


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 Natural Gas (Mcf)
 SilverBow Historical
Chesapeake Transaction
Sundance TransactionSundance Transaction Adjustments Pro Forma Combined
Estimates of Proved Reserves    
December 31, 2020948,094,943 148,585,717 50,144,876 — 1,146,825,536 
Revisions(199,625,710)74,107,492 (7,691,299)— (133,209,517)
Extensions, discoveries and other additions324,625,474 82,671,630 19,805,640 — 427,102,744 
Purchases of minerals in place142,794,045 — — — 142,794,045 
Production(60,509,606)(20,113,575)(2,463,333)— (83,086,514)
December 31, 20211,155,379,146 285,251,264 59,795,884 — 1,500,426,294 
Revisions561,425 38,966,441 — — 39,527,866 
Extensions, discoveries and other additions514,492,260 11,755,384 — — 526,247,644 
Purchases of minerals in place126,849,989 — — (59,795,884)(a)67,054,105 
Sales of minerals in place(772,177)— (59,795,884)(a)59,795,884 (a)(772,177)
Production(70,958,470)(20,909,750)— — (91,868,220)
December 31, 20221,725,552,173 315,063,339 — — 2,040,615,512 
Proved Developed Reserves
December 31, 2020415,390,459 148,585,717 22,666,672 — 586,642,848 
December 31, 2021525,736,580 183,596,848 15,499,234 — 724,832,662 
December 31, 2022695,481,580 229,553,642 — — 925,035,222 
Proved Undeveloped Reserves
December 31, 2020532,704,484 — 27,478,205 — 560,182,689 
December 31, 2021629,642,566 101,654,416 44,296,646 — 775,593,628 
December 31, 20221,030,070,593 85,509,697 — — 1,115,580,290 

 Oil (Bbl)
 SilverBow HistoricalChesapeake TransactionSundance TransactionSundance Transaction AdjustmentsPro Forma Combined
Estimates of Proved Reserves   
December 31, 202012,531,501 18,022,345 28,897,502 — 59,451,348 
Revisions(1,644,367)6,720,786 (5,250,851)— (174,432)
Extensions, discoveries and other additions3,930,631 6,466,685 5,501,816 — 15,899,132 
Purchases of minerals in place10,942,051 — — — 10,942,051 
Production(1,461,657)(2,555,411)(1,554,079)— (5,571,147)
December 31, 202124,298,159 28,654,405 27,594,388 — 80,546,952 
Revisions(1,097,823)2,505,226 — — 1,407,403 
Extensions, discoveries and other additions5,423,639 1,984,143 — — 7,407,782 
Purchases of minerals in place26,393,737 — — (27,594,388)(a)(1,200,651)
Sales of minerals in place(194,839)— (27,594,388)(a)27,594,388 (a)(194,839)
Production(2,633,679)(2,637,577)— (5,271,256)
December 31, 202252,189,194 30,506,197 — — 82,695,391 
Proved Developed Reserves
December 31, 20206,962,826 18,022,345 12,156,565 — 37,141,736 
December 31, 20219,692,076 20,348,596 9,676,355 — 39,717,027 
December 31, 202223,360,025 22,276,526 — — 45,636,551 
Proved Undeveloped Reserves
December 31, 20205,568,676 — 16,740,936 — 22,309,612 
December 31, 202114,606,082 8,305,809 17,918,029 — 40,829,920 
December 31, 202228,829,169 8,229,671 — — 37,058,840 


10


 Natural Gas Liquids (Bbl)
 SilverBow HistoricalChesapeake TransactionSundance TransactionSundance Transaction AdjustmentsPro Forma Combined
Estimates of Proved Reserves   
December 31, 202013,855,188 20,648,406 8,171,134 — 42,674,728 
Revisions1,836,746 10,479,354 (855,428)— 11,460,672 
Extensions, discoveries and other additions1,860,900 10,681,462 2,940,777 — 15,483,139 
Purchases of minerals in place3,019,773 — — — 3,019,773 
Production(1,472,222)(2,853,311)(424,929)— (4,750,462)
December 31, 202119,100,385 38,955,911 9,831,554 — 67,887,850 
Revisions548,238 3,523,627 — 4,071,865 
Extensions, discoveries and other additions3,366,839 1,509,852 — 4,876,691 
Purchases of minerals in place11,709,713 — — (9,831,554)(a)1,878,159 
Sales of minerals in place(119,211)— (9,831,554)(a)9,831,554 (a)(119,211)
Production(1,949,894)(2,645,702)— (4,595,596)
December 31, 202232,656,070 41,343,688 — — 73,999,758 
Proved Developed Reserves
December 31, 20208,163,666 20,648,406 3,401,266 — 32,213,338 
December 31, 202112,390,263 25,086,112 2,525,000 — 40,001,375 
December 31, 202219,522,859 30,178,639 — — 49,701,498 
Proved Undeveloped Reserves
December 31, 20205,691,522 — 4,769,867 — 10,461,389 
December 31, 20216,710,122 13,869,799 7,306,553 — 27,886,474 
December 31, 202213,133,211 11,165,049 — — 24,298,260 
(a) Amounts and adjustments reflect the purchase and sale of minerals in place associated with the Sundance Transaction, which closed on June 30, 2022.

11


Changes in commodity prices may significantly impact the Company’s estimates of oil and natural gas reserves. Sustained lower commodity prices can reduce the quantity of the Company’s reserves by causing the economic limit of the proved developed and proved undeveloped wells (the point at which the costs to operate exceed the value of estimated future production, assuming constant prices and costs under SEC rules) to occur earlier in their productive lives than would be the case with higher prices. The undeveloped reserves may also be reduced by the elimination of wells because they would not meet the investment criteria to be economically producible at such prices and costs. The proved undeveloped reserves may also be eliminated by the deferral of drilling of otherwise economic wells beyond the five year proved reserve development horizon as a result of revisions to the Company’s development plan adopted in response to lower prices or otherwise.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

The following table presents the Standardized Measure of Discounted Future Net Cash Flows relating to the proved oil and natural gas reserves of the Company, Chesapeake and Sundance on a pro forma combined basis as of December 31, 2022 and 2021. The Standardized Measure shown below represents estimates only and should not be construed as the current market value of the Company’s estimated oil and natural gas reserves or those acquired estimated oil and natural gas reserves attributable to the Chesapeake Transaction.
 
December 31, 2022
 SilverBow HistoricalChesapeake TransactionPro Forma Combined
(In thousands)
Future gross revenues$16,660,470 $5,120,415 $21,780,885 
Future production costs(4,039,248)(1,153,162)(5,192,410)
Future development costs(2,063,508)(282,790)(2,346,298)
Future income taxes(1,953,345)(743,654)(2,696,999)
Future net cash flows8,604,369 2,940,809 11,545,178 
Discount at 10% per annum(4,564,123)(1,462,980)(6,027,103)
Standardized Measure of discounted future net cash flows$4,040,246 $1,477,829 $5,518,075 

 
December 31, 2021
 SilverBow HistoricalChesapeake TransactionSundance TransactionPro Forma Combined
(In thousands)
Future gross revenues$6,370,628 $3,321,630 $2,188,156 $11,880,414 
Future production costs(1,853,856)(805,328)(858,212)(3,517,396)
Future development costs(753,046)(184,595)(533,540)(1,471,181)
Future income taxes(584,613)(473,873)(47,186)(1,105,672)
Future net cash flows3,179,113 1,857,834 749,218 5,786,165 
Discount at 10% per annum(1,620,651)(899,630)(336,350)(2,856,631)
Standardized Measure of discounted future net cash flows$1,558,462 $958,204 $412,868 $2,929,534 




12


The following table sets forth the principal changes in the Standardized Measure of discounted future net cash flows applicable to estimated net proved oil and natural gas reserves of the Company, the Chesapeake Transaction and of the Sundance Transaction on a pro forma combined basis as of December 31, 2022 and 2021:
SilverBow HistoricalChesapeake TransactionSundance TransactionSundance Transaction AdjustmentsPro Forma Combined
(In thousands)
January 1, 2022 balance$1,558,462 $958,204 $412,868 $— $2,929,534 
Net changes in prices, net of production costs1,852,439 663,937 — — 2,516,376 
Net changes in future development costs(208,188)(86,658)— — (294,846)
Net changes due to revisions in quantity estimates(4,218)202,136 — — 197,918 
Accretion of discount181,678 119,239 — — 300,917 
Other(176,112)(107,766)— — (283,878)
Total revisions1,645,599 790,888 — — 2,436,487 
New field discoveries and extensions, net of future production and development costs968,093 138,778 — — 1,106,871 
Purchase of reserves1,051,869 — — (412,868)(a)639,001 
Sales of minerals in place(5,209)— (412,868)(a)412,868 (a)(5,209)
Sales of oil and natural gas produced, net of production costs(621,686)(294,365)— — (916,051)
Previously estimated development costs108,566 32,972 — — 141,538 
Net change in income taxes(665,448)(148,648)— — (814,096)
Net change in Standardized Measure of discounted future net cash flows2,481,784 519,625 (412,868)— 2,588,541 
December 31, 2022 balance$4,040,246 $1,477,829 $— $— $5,518,075 
(a) Amounts and adjustments reflect the purchase and sale of minerals in place associated with the Sundance Transaction, which closed on June 30, 2022.
SilverBow HistoricalChesapeake TransactionSundance TransactionPro Forma Combined
(In thousands)
January 1, 2021 balance$512,952 $192,122 230,804 $935,878 
Net changes in prices, net of production costs781,786 577,781 272,732 1,632,299 
Net changes in future development costs1,569 (34,445)(42,547)(75,423)
Net changes due to revisions in quantity estimates(43,379)416,962 (19,717)353,866 
Accretion of discount52,627 19,212 23,109 94,948 
Other29,303 (143,808)(30,765)(145,270)
Total revisions821,906 835,702 202,812 1,860,420 
New field discoveries and extensions, net of future production and development costs400,008 365,709 64,454 830,171 
Purchase of reserves345,300 — — 345,300 
Sales of minerals in place— — — — 
Sales of oil and natural gas produced, net of production costs(336,028)(201,110)(83,194)(620,332)
Previously estimated development costs59,318 1,969 22,035 83,322 
Net change in income taxes(244,994)(236,188)(24,043)(505,225)
Net change in Standardized Measure of discounted future net cash flows1,045,510 766,082 182,064 1,993,656 
December 31, 2021 balance$1,558,462 $958,204 $412,868 $2,929,534 

13
v3.23.3
Document and Entity Information
Dec. 05, 2023
Cover [Abstract]  
Document Period End Date Nov. 30, 2023
Document Type 8-K/A
Entity Registrant Name SilverBow Resources, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-8754
Entity Tax Identification Number 20-3940661
Entity Address, Address Line One 920 Memorial City Way
Entity Address, Address Line Two Suite
Entity Address, City or Town Houston
Entity Address, State or Province TX
Entity Address, Postal Zip Code 77024
City Area Code 281
Local Phone Number 874-2700
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol SBOW
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag true
Amendment Description 8-K/A
Entity Central Index Key 0000351817

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