SilverBow Resorces, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Silver Bowl Resources Third Quarter 2020 Earnings Conference Call. At this time, our participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1 on your telephone. If you require any further assistance, please press Star 0. I would now like to hand the conference over to your speaker today, Mr. Jeff Maggett, Director of Finance. Thank you. Please go ahead, sir.

Thank you, Tabitha, and good morning, everyone. Thank you very much for joining us for our third quarter 2020 conference call. With me on the call today are Sean Wolverton, our CEO, Steve Adams, our COO, and Chris Abundas, our CFO. Yesterday afternoon, we posted a new corporate presentation to our website and will occasionally refer to it during this call. We encourage listeners to download the latest materials. Please note that we may make references to certain non-GAAP financial measures which are reconciled to their closest GAAP measure in the earnings press release. Our discussion today may include forward-looking statements which are subject to risks and uncertainties, many of which are beyond our control. These risks and uncertainties are described more fully in our documents on file with the SEC, which are also available on our website. With that, I will turn the call over to Sean.

Thank you, Jeff, and thank you everyone for joining our call this morning. First, we hope that everyone listening is well. I would like to thank our employees and our contractors, as well as our vendors and other key stakeholders, for their dedication and resilience. We continue to take the necessary measures to ensure the health and well-being of all employees and contractors. Safety strong is of paramount importance. Let me start by saying I'm incredibly proud of our operational and financial results for the third quarter. Silver Bow generated $9 million of free cash flow and paid down $17 million of debt. This marks our third consecutive quarter of generating positive free cash flow and brings our total debt repayment to $37 million since the end of the first quarter. Furthermore, we are on track to achieve full-year free cash flow of approximately $50 million at the high end of our previously stated guidance. This increase to our full-year 2020 free cash flow is driven by an increase to the midpoint of our full-year production guidance and a decrease to the midpoint of our full-year CapEx guidance. As noted in our press release yesterday, our gas development program is now underway and focused on our high rate of return assets in Webb County. Additionally, the duct completion activity in our McMullen Oil area came in under budget and ahead of schedule during the quarter. Silver Bow is favorably positioned going forward with upside to increasing gas prices next year within a strengthening Gulf Coast market. We believe Silver Bow is one of a few non-Appalachian public companies that offers exposure to higher gas prices. Furthermore, Silver Bowl's low-cost structure and competitively advantaged Gulf Coast differentials are driving peer-leading EBITDA margins and free cash flow yields, which we highlight on slide 24 of our corporate presentation. Looking into 2021, Silver Bowl is poised to generate meaningful free cash flow and benefit from stronger gas prices. At current strip pricing, we plan to spend at a reinvestment rate of 70% to 80%, grow production in the same single digits, and maintain similar EBITDA levels compared to 2020. Based upon our preliminary 21 budget, free cash flow is estimated to be $20 million to $40 million, with CapEx roughly flat year over year, We forecast our production growth to come from our gas assets with oil and NGLs approximately flat year over year. At our current share price, our guidance for 2020 implies 75% free cash flow yield and a greater than 50% free cash flow yield in 21. We have unhedged volume along with upside exposure to improving gas prices. through the use of callers in our hedging program. Next year's gas curve has now moved above $3, which bodes well for our future prospects. Not only do we have flat flush gas production expected to be online in early 21, but we retain optionality to further exploit certain areas within our portfolio. As oil prices have recently pulled back below the $40 mark and uncertainty persists over the near-term oil strip, we are well hedged on our oil production next year, which bolsters our cash flow outlook. As we work to formalize our 21 budget, our strategy remains the same. Having a well-balanced portfolio provides us both drilling optionality and the opportunity to pursue accretive corporate and asset-level transactions. We see oil and gas prices as inversely correlated, and thus our countercyclical bolt-on activity is a key differentiator for us. Furthermore, we are optimistic about underlying gas price fundamentals and continue to manage our balance sheet to provide us with the needed running room to execute our plan. With that, I'll turn the call over to Steve to provide an operational update.