SilverBow Resources Inc., Houston, plans to operate 2 drilling rigs throughout 2023 compared with a 1.5 rig average in 2022, with a focus on oil development to accelerate the company's production mix toward a more balanced split between natural gas and liquids.
Some 90% of the full year 2023 capital budget of $450-475 million will be spent on drilling and completion activity. Of that activity, about 95% will be directed towards oil development across the central oil ($180 million), eastern extension ($100 million), and western condensate ($100 million) areas of the South Texas Eagle Ford, the company said in a release Mar. 1.
“Given the relative strength of oil prices compared to natural gas prices, we intend to operate two rigs dedicated to oil development in 2023. Our strategy of pivoting between oil and gas development has been a key differentiator for us and has allowed us to generate an average ROCE of 19% over the last 3 years during volatile pricing and operating environments,” said Sean Woolverton, chief executive officer.
The budget provides for 60 gross (52 net) operated wells drilled, compared with 47 gross (45 net) operated wells drilled in 2022, and supports production growth of about 25% year-over-year, funded by cash flows from operations, the company continued.
For first-quarter 2023, a $130-135 million capex budget is expected to yield total net production of 295-316 MMcfed, of which oil volumes of 10,500-11,500 b/d are expected. Full year total net production of 325-345 MMcfed is expected, with oil volumes of 13,750-15,000 b/d.
Under its current 2023 development program, SilverBow's full year oil production is expected to increase by 100% year-over-year. By fourth-quarter 2023, the company's liquids production is expected to comprise nearly 45% of total production.
Due to a combination of constrained takeaway capacity and lower natural gas prices, SilverBow is producing at contracted firm pipeline capacity and has elected to defer completion activity in Webb County Austin Chalk until 2024. About $25 million is allocated for the area and one net well is expected.
Both first-quarter 2023 and full year 2023 production guidance assume that gas production from Webb County is limited to contracted firm pipeline capacity.
2022
In fourth-quarter 2022, the company had net production of 315 MMcfed (66% natural gas, 21% crude oil, 13% NGLs), and net income of $173 million. Natural gas comprised 50% of total oil and gas sales for the fourth quarter of 2022, compared to 63% in the fourth quarter of 2021.
During the quarter, the company drilled 15 net wells, completed 13 net wells, and brought 11 net wells online.
For full year 2022, SilverBow drilled 45 net wells, completed 39 net wells, and brought online 37 net wells online. Net income for the year was $340 million. For the year, capital expenditures, excluding acquisitions, on an accrual basis were $327.5 million, below the midpoint of guidance.
