Acquisitions and Dispositions Acquisitions and Dispostions

3 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

(7) Acquisitions and Dispositions

2023 South Texas Acquisition

On November 30, 2023, SilverBow closed the acquisition of certain oil and gas properties from entities affiliated with Chesapeake Energy Corporation, with consideration comprised of (i) cash paid at the closing of the South Texas Acquisition, (ii) accrued purchase price adjustments receivable which were substantially collected in January 2024, (iii) a deferred acquisition liability due on the first anniversary of the closing of the South Texas Acquisition and (iv) an earn-out payment contingent upon the average monthly settlement price of NYMEX West Texas Intermediate crude oil for the 12 month period beginning December 2023 (the “2023 WTI Contingency Payout”). If the average monthly settlement price of WTI during the 12 month period (a) exceeds $80 per barrel, SilverBow shall pay Chesapeake an amount equal to $50 million or (b) is between $75 per barrel and $80 per barrel, SilverBow shall pay Chesapeake an amount equal to $25 million. If the average monthly settlement price of WTI during the 12 month period is below $75 per barrel, SilverBow shall not owe Chesapeake a contingent earn-out payment. During the three months ended March 31, 2024, the Company recorded losses of $12.8 million related to valuation changes in the 2023 WTI Contingency Payout recorded in “Net gain (loss) on commodity derivatives” on the accompanying condensed consolidated statements of operations. Management determined that substantially all the fair value of the gross assets acquired were concentrated in the proved oil and gas properties and have therefore accounted for the South Texas Acquisition as an asset acquisition and allocated the purchase price based on the relative fair value of the assets acquired and liabilities assumed. The South Texas Acquisition was funded with borrowings under the Company's Credit Facility, proceeds from the issuance of additional Second Lien Notes and cash on hand.

The following table represents the allocation of the total cost of the transaction to the assets acquired and liabilities assumed (in thousands):


Total Cost
Cash consideration	$	583,373

Fair value of contingent consideration	16,933
Deferred acquisition liability	50,000
Total Consideration	650,306

Transaction costs	10,916
Total Cost of Transaction	$	661,222

Allocation of Total Cost
Assets
Accounts receivable, net	$	1,594
Oil and gas properties	666,360
Right of use assets	187
Total assets	668,141

Liabilities
Accounts payable and accrued liabilities	5,275
Lease liability	187
Asset retirement obligations	1,457
Total Liabilities	6,919
Net Assets Acquired	$	661,222