Texas-based energy company SilverBow Resources Inc. (SBOW) has signed an agreement to acquire oil and gas assets in the Eagle Ford for nearly $75 million. Shares of the company surged 8.3% on Monday to close at $31.90.
SilverBow is involved in the exploration, development and production of oil and gas in the Eagle Ford Shale and Austin Chalk in South Texas.
The acquisition includes 17,000 total net acres in the oil window of Lavaca, DeWitt, McMullen and La Salle counties. The assets produced approximately 2,500 barrels of oil equivalent per day from 111 PDP wells in May.
The deal will increase SilverBow’s 2021 oil production guidance by 30% and is expected to be accretive to the company’s adjusted EBITDA by around $28 million. The acquisition is expected to close by the end of the year. (See Analysts’ Top Stocks on TipRanks)
The CEO of SilverBow, Sean Woolverton, said, “This represents our third acquisition since the beginning of August and the largest to date for SilverBow. This transaction bolsters our inventory with a high rate of return locations and provides us with development optionality as we plan for 2022 and beyond.”
Last week, Truist Financial analyst Neal Dingmann maintained a Buy rating on the stock and increased the price target to $40 from $30 (25.4% upside potential).
The analyst said, “Consensus estimates continue to trend below rising spot and forward prices, creating an environment whereby free cash flows should, for the most part, be able to surprise to the upside.”
Overall, the stock has a Moderate Buy consensus rating based on 1 Buy. The average SilverBow Resources price target of $40 implies 25.4% upside potential. Shares have gained 621.7% over the past year.
According to TipRanks’ Smart Score rating system, SilverBow scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.
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