SilverBow Resorces, Inc.

Hello, and welcome to the Silver Bowl Resources third quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Mr. Jeff Maggots. Please go ahead, sir.

Thank you, Lisa, and good morning, everyone. Thank you very much for joining us for our third quarter 2021 conference call. With me on the call today are Sean Wolverton, our CEO, Steve Adam, our COO, and Chris Abundance, 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 the 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. I am extremely proud of Silver Bow's third quarter results and the progress we have made toward our key objectives, which we show on slide six of our presentations. During the quarter, we focused on maximizing our full-year free cash flow, adding high return inventory in both the Eagleford and Austin Chalk, and executing on accretive M&A. Since the beginning of August, we have announced three acquisitions, which are accretive across key financial metrics and further our strategic objectives. Our first objective is to grow production in EBITDA while living within cash flow. Third quarter oil production increased nearly 50% sequentially as we wrapped up the remainder of our mid-year liquids development. For the full year, we increased our production guidance by 4% at the midpoint, and we now expect 16% growth year over year. Inclusive of acquisitions, our exit rate production in December should increase roughly 45% year-over-year. We also increased our free cash flow guidance for the third time this year and now expect free cash flow in the range of $80 to $90 million, a 70% increase at the midpoint from our prior range. Our updated guidance implies a reinvestment rate of 60% and a free cash flow yield greater than 20%. Our second objective is focused on expanding our inventory through Austin Chalk delineation and accretive acquisitions. Our recent acquisitions add five to six years of rig life in drilling inventory, spanning both the Eagleford and Austin Chalk. In regards to organic development, we brought our second Webb County Austin Chalk Well online during the third quarter. As Steve will detail further, the second well has produced over 12 MMCF per day on average through the first 60 days and is performing similar to the first well. In addition, we recently brought online our third Austin Chalk Well in Webb County, and we like what we are seeing from the early results. Year-to-date, we have added over 50 Austin Chalk drilling locations in Webb County through M&A in our successful appraisal and development program. Our third objective is to drive peer-leading capital efficiency and cost structure. We have continued to reduce our D&C costs per lateral foot this year, which are 14% lower in 2021 compared to 2020. In the third quarter, our efficiency gains equated to roughly $9 million of savings on our completion costs. Furthermore, we lowered our full-year G&A guidance and did not expect a material change to G&A even as we integrate the recent acquisitions. Our lean cost structure allows us to generate attractive full-cycle returns And Silver Bow is at the high end of our peers on free cash flow yield, which we highlight on slide 27 of our presentation. Last but not least, we seek to delever our balance sheet through debt reduction and accretive transactions. Year over year, we reduced our total debt by $55 million and have paid down $92 million of total debt since the end of the first quarter of 2020. At quarter end, our leverage ratio was 1.7 times, down from 2.5 times at year end 2020. We anticipate our leverage to further decrease to 1.25 times by year end. We also expect to significantly increase our liquidity as we generate free cash flow and complete our semi-annual borrowing-based redetermination in the coming weeks. We plan to resume drilling at La Mesa in December, and as we look into next year, our latest expectation is to run at a one-rig pace throughout 2022, compared to an approximately three-quarter rig run rate this year. This will drive double-digit annual production growth, inclusive of full-year contributions from recent acquisitions. At the same time, we expect to reinvest approximately 75% of our free cash flow as warranted by our return thresholds. Reinvesting at the right time in the right wells provides for increased EBITDA, sustained free cash flow, and lower leverage as we look to 22 and beyond. Our recently acquired properties and the associated Eagleford and Austin Chalk locations only add to that equation. With that, I will turn the call over to Steve to provide an operational update.