Basis of Presentation. The condensed consolidated financial statements included herein reflect necessary adjustments, all of which were of a recurring nature unless otherwise disclosed herein, and are in the opinion of our management necessary for a fair presentation.

Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of SilverBow and its wholly owned subsidiary, SilverBow Resources Operating LLC, which are engaged in the exploration, development, acquisition, and operation of oil and gas properties, with a focus on oil and natural gas reserves in the Eagle Ford trend in Texas. Our undivided interests in oil and gas properties are accounted for using the proportionate consolidation method, whereby our proportionate share of the assets, liabilities, revenues, and expenses are included in the appropriate classifications in the accompanying condensed consolidated financial statements. Intercompany balances and transactions have been eliminated in preparing the accompanying condensed consolidated financial statements.

Subsequent Events. We have evaluated subsequent events requiring potential accrual or disclosure in our condensed consolidated financial statements. Effective April 12, 2022, the Company entered into the Ninth Amendment to its First Amended and Restated Senior Secured Revolving Credit Agreement (as defined below), in conjunction with our regularly scheduled borrowing base redetermination. The Ninth Amendment increased the borrowing base of our Credit Facility (as defined below) from $460.0 million to $525.0 million. See Note 6 for more information on the Ninth Amendment to the Credit Facility.

On April 13, 2022, SilverBow entered into a definitive agreement (the “Purchase Agreement”) with Sundance Energy, Inc. and certain affiliated entities (collectively, “Sundance”), to acquire oil and gas assets in the Eagle Ford (the “Sundance Transaction”). Consideration for the Sundance Transaction includes approximately $225 million in cash and 4.1 million shares of common stock of SilverBow. As part of the Purchase Agreement, the purchase price will be reduced by $16.5 million related to SilverBow assuming Sundance's outstanding commodity derivatives positions. The Sundance Transaction also includes up to two earn-out payments of $7.5 million per year for each of 2022 and 2023, 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 and $85 per barrel for 2023. The Sundance Transaction is expected to close in June or July 2022. The closing of the transaction is subject to SilverBow shareholder approval and satisfaction or waiver of customary closing conditions.

As provided for in the Purchase Agreement, if Sundance has the right to terminate the Purchase Agreement due to SilverBow’s material breach of its representations, warranties or covenants or failure to deliver closing deliverables then Sundance may (a) seek all remedies available at law, including specific performance, or (b) terminate the Purchase Agreement and collect the deposit as liquidated damages. If SilverBow has the right to terminate the Purchase Agreement due to Sundance’s material breach of their respective representations, warranties or covenants or failure to deliver closing deliverables, then SilverBow shall have the right, as its sole and exclusive remedy, to terminate the Purchase Agreement, receive the deposit back and collect a termination fee in the amount of $3.2 million as liquidated damages. If the Purchase Agreement is terminated by Sundance prior to the special meeting and shareholder approval in the event of a Change in Recommendation (as defined in the Purchase Agreement), then Sundance shall be entitled to collect $3.2 million from the deposit as liquidated damages. The

On April 13, 2022, the Company also entered into a definitive agreement to acquire oil and gas assets in the Eagle Ford from SandPoint Operating, LLC, a subsidiary of SandPoint Resources, LLC (collectively, “SandPoint,”) for a total purchase price consisting of $31 million in cash, subject to customary closing adjustments and 1.3 million shares of SilverBow common stock. The SandPoint acquisition is expected to close in May 2022.


Oil Derivative Contracts (New York Mercantile Exchange (“NYMEX”) West Texas Intermediate (“WTI”) Settlements)	Total Volumes (Bbls)	Weighted-Average Price
Swap Contracts
2022 Contracts
3Q22	46,000	$	99.40
4Q22	76,500	$	96.62
2023 Contracts
1Q23	67,500	$	93.13
2Q23	45,500	$	90.05
3Q23	46,000	$	87.60
4Q23	92,000	$	85.73
2024 Contracts
1Q24	91,000	$	83.50
2Q24	113,750	$	81.80
3Q24	115,000	$	79.96
4Q24	115,000	$	78.36


Natural Gas Derivative Contracts (NYMEX Henry Hub Settlements)	Total Volumes (MMBtu)	Weighted-Average Price		Weighted-Average Price		Weighted-Average Collar Call Price
Swap Contracts
2022 Contracts
3Q22	920,000	$	7.19
4Q22	920,000	$	7.30
2023 Contracts
1Q23	900,000	$	7.12
2Q23	1,820,000	$	4.68
3Q23	2,760,000	$	4.67
4Q23	3,680,000	$	4.84
2024 Contracts
1Q24	546,000	$	4.95
2Q24	5,005,000	$	3.87
3Q24	5,060,000	$	3.94
4Q24	5,060,000	$	4.21
Collar Contracts
2023 Contracts
1Q23	900,000			$	6.00	$	13.85
2Q23	1,820,000			$	3.88	$	4.75
3Q23	1,840,000			$	3.88	$	4.77
4Q23	1,840,000			$	3.88	$	5.28
2024 Contracts
1Q24	1,820,000			$	4.00	$	6.00


NGL Swaps (Mont Belvieu)	Total Volumes (Bbls)	Weighted-Average Price
2022 Contracts
3Q22	76,500	$	42.92
4Q22	92,000	$	42.92
2023 Contracts
1Q23	180,000	$	34.99
2Q23	182,000	$	34.99
3Q23	184,000	$	34.99
4Q23	184,000	$	34.99
2023 Contracts
1Q24	127,400	$	29.39
2Q24	127,400	$	29.39
3Q24	128,800	$	29.39
4Q24	128,800	$	29.39

expenses during each reporting period. Such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include:

While we are not currently aware of any material revisions to any of our estimates, there will likely be future revisions to our estimates resulting from matters such as new accounting pronouncements, changes in ownership interests, payouts, joint venture audits, reallocations by purchasers or pipelines, or other corrections and adjustments common in the oil and gas industry, many of which relate to prior periods. These types of adjustments cannot be currently estimated and are expected to be recorded in the period during which the adjustments are known.

Property and Equipment. We follow the “full-cost” method of accounting for oil and natural gas property and equipment costs. Under this method of accounting, all productive and nonproductive costs incurred in the exploration, development, and acquisition of oil and natural gas reserves are capitalized. Such costs may be incurred both prior to and after the acquisition of a property and include lease acquisitions, geological and geophysical services, drilling, completion, and equipment. Internal costs incurred that are directly identified with exploration, development, and acquisition activities undertaken by us for our own account, and which are not related to production, general corporate overhead, or similar activities, are also capitalized. For the three months ended March 31, 2022 and 2021, such internal costs when capitalized totaled $1.0 million and $1.1 million, respectively. Interest costs are also capitalized to unproved oil and natural gas properties. There was no capitalized interest on our unproved properties for either the three months ended March 31, 2022 and 2021.


	March 31, 2022		December 31, 2021
Property and Equipment
Proved oil and gas properties	$	1,621,948	$	1,588,978
Unproved oil and gas properties	23,623		17,090
Furniture, fixtures and other equipment	5,926		5,885
Less – Accumulated depreciation, depletion, amortization & impairment	(891,158)		(869,985)
Property and Equipment, Net	$	760,339	$	741,968

We compute the provision for depreciation, depletion and amortization (“DD&A”) of oil and natural gas properties using the unit-of-production method. Under this method, we compute the provision by multiplying the total unamortized costs of oil and natural gas properties, including future development costs, gas processing facilities, and both capitalized asset retirement obligations and undiscounted abandonment costs of wells to be drilled, net of salvage values, but excluding costs of unproved properties, by an overall rate determined by dividing the physical units of oil and natural gas produced (which excludes natural gas consumed in operations) during the period by the total estimated units of proved oil and natural gas reserves (which excludes natural gas consumed in operations) at the beginning of the period. Future development costs are estimated on a property-by-property basis based on current economic conditions. The period over which we will amortize these properties is dependent on our production from these properties in future years. Furniture, fixtures and other equipment are recorded at cost and are depreciated by the straight-line method at rates based on the estimated useful lives of the property, which range between two and 20 years. Repairs and maintenance are charged to expense as incurred.

Geological and geophysical (“G&G”) costs incurred on developed properties are recorded in “Proved oil and gas properties” and therefore subject to amortization. G&G costs incurred that are associated with unproved properties are capitalized in “Unproved oil and gas properties” and evaluated as part of the total capitalized costs associated with a prospect. The cost of unproved properties not being amortized is assessed quarterly, on a property-by-property basis, to determine whether such properties have been impaired. In determining whether such costs should be impaired, we evaluate current drilling results, lease expiration dates, current oil and gas industry conditions, economic conditions, capital availability and available geological and geophysical information. Any impairment assessed is added to the cost of proved properties being amortized.

Full-Cost Ceiling Test. At the end of each quarterly reporting period, the unamortized cost of oil and natural gas properties (including natural gas processing facilities, capitalized asset retirement obligations, net of related salvage values and deferred income taxes) is limited to the sum of the estimated future net revenues from proved properties (excluding cash outflows from recognized asset retirement obligations, including future development and abandonment costs of wells to be drilled, using the preceding 12-months’ average price based on closing prices on the first day of each month, adjusted for price differentials, discounted at 10% and the lower of cost or fair value of unproved properties) adjusted for related income tax effects (“Ceiling Test”).

The quarterly calculations of the Ceiling Test and provision for DD&A are based on estimates of proved reserves. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production, timing and plan of development. The accuracy of any reserves estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and natural gas that are ultimately recovered. There was no impairment for the three months ended March 31, 2022 and 2021.

If future capital expenditures outpace future discounted net cash flows in our reserve calculations, if we have significant declines in our oil and natural gas reserves volumes (which also reduces our estimate of discounted future net cash flows from proved oil and natural gas reserves) or if oil or natural gas prices decline, it is possible that non-cash write-downs of our oil and natural gas properties will occur again in the future. We cannot control and cannot predict what future prices for oil and natural gas will be; therefore, we cannot estimate the amount of any potential future non-cash write-down of our oil and natural gas properties due to decreases in oil or natural gas prices. However, it is reasonably possible that we will record additional Ceiling Test write-downs in future periods.

Accounts Receivable, Net. We assess the collectability of accounts receivable, and based on our judgment, we accrue a reserve when we believe a receivable may not be collected. At both March 31, 2022 and December 31, 2021, we had an allowance for doubtful accounts of less than $0.1 million. The allowance for doubtful accounts has been deducted from the total “Accounts receivable, net” balance on the accompanying condensed consolidated balance sheets.

At March 31, 2022, our “Accounts receivable, net” balance included $43.0 million for oil and gas sales, $1.6 million due from joint interest owners, $1.0 million for severance tax credit receivables and $0.5 million for other receivables. At December 31, 2021, our “Accounts receivable, net” balance included $45.3 million for oil and gas sales, $1.9 million due from joint interest owners, $1.0 million for severance tax credit receivables and $1.5 million for other receivables.

administrative, net,” on the accompanying condensed consolidated statements of operations. The amount of supervision fees charged for each of the three months ended March 31, 2022 and 2021 did not exceed our actual costs incurred. The total amount of supervision fees charged to the wells we operated was $1.6 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively.

Income Taxes. Deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities, given the provisions of the enacted tax laws. Management has determined that it was not more likely than not that the Company would realize future cash benefits from its remaining federal carryover items and other federal deferred tax assets and, accordingly, has recorded a full valuation allowance to offset its net federal deferred tax assets in excess of deferred tax liabilities. The Company maintains a full valuation allowance against its net federal deferred tax assets in excess of deferred tax liabilities, with the exception of a $5.5 million deferred tax liability that was recorded for the year ending December 31, 2021. We recorded an income tax benefit of $2.8 million for the three months ended March 31, 2022 which was primarily attributable to a deferred federal income tax benefit and state deferred income tax benefit. The benefit for the three months ended March 31, 2022 is a product of the overall forecasted annual effective tax rate applied to the year to date loss, and thus is a reduction of the deferred tax liability at December 31, 2021. There was no income tax expense or benefit for the three months ended March 31, 2021.

Our policy is to record interest and penalties relating to uncertain tax positions in income tax expense. At March 31, 2022 and December 31, 2021, we did not have any accrued liability for uncertain tax positions and do not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side Social Security payments, net operating loss carryback periods, alternative minimum tax credit refunds and modifications to the net interest deduction limitation. The CARES Act did not have a material impact on the Company's financial condition, results of operation, or liquidity.

Revenue Recognition. Our reported oil and gas sales are comprised of revenues from oil, natural gas and natural gas liquids (“NGLs”) sales. Revenues from each product stream are recognized at the point when control of the product is transferred to the customer and collectability is reasonably assured. Prices for our products are either negotiated on a monthly basis or tied to market indices. The Company has determined that these contracts represent performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point. Natural gas revenues are recognized based on the actual volume of natural gas sold to the purchasers.


	March 31, 2022		December 31, 2021
Trade accounts payable	$	9,862	$	9,688
Accrued operating expenses	4,261		4,192
Accrued compensation costs	1,717		7,029
Asset retirement obligations – current portion	526		524
Accrued non-income based taxes	6,003		3,314
Accrued corporate and legal fees	2,275		1,972
Payable for settled derivatives	14,970		6,371
Other payables	2,295		1,944
Total accounts payable and accrued liabilities	$	41,909	$	35,034

Treasury Stock. Our treasury stock repurchases are reported at cost and are included in “Treasury stock, held at cost” on the accompanying condensed consolidated balance sheets. For the three months ended March 31, 2022, we purchased 96,012 treasury shares to satisfy withholding tax obligations arising upon the vesting of restricted shares and received 41,191 shares in conjunction with our post-closing settlement for a previously disclosed acquisition. For the three months ended March 31, 2021 we purchased 60,177 treasury shares to satisfy withholding tax obligations arising upon the vesting of restricted shares.