SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant ¨
Filed by a Party other than the Registrant þ
Check the appropriate box:
| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| þ | Definitive Additional Materials |
| ¨ | Soliciting Material Under Rule 14a-12 |
SilverBow Resources, Inc.
(Name of Registrant as Specified in Its Charter)
KEF Investments, LP
KEF Fund V Investments, LP
Kimmeridge Energy Management Company, LLC
Benjamin Dell
Alexander Inkster
Neda Jafar
Denis Laloy
Noam Lockshin
Henry Makansi
Neil McMahon
Douglas E. Brooks
Carrie M. Fox
Katherine L. Minyard
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
| þ | No fee required. |
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
On May 2, 2024, Kimmeridge Energy Management, LLC issued a press release (the “Press Release”) in connection with releasing a presentation (the “Presentation”) relating to SilverBow Resources, Inc., on its website (the “Website”), www.Kimmeridge.com/sbow/. A copy of the Press Release is set forth as Exhibit 1. A copy of the Presentation is set forth as Exhibit 2. Copies of the materials posted to the Website are set forth as Exhibit 3.
Exhibit 1
Kimmeridge Releases Presentation on SilverBow’s Track Record of Value Destructive M&A
SilverBow needs experienced, independent directors who are capable and open to assessing all value enhancing alternatives to create significant long-term shareholder value
Urges shareholders to vote “FOR” all three of Kimmeridge’s highly qualified, independent nominees to SilverBow’s staggered board on the GOLD proxy card
NEW YORK and DENVER, May 2, 2024 – Kimmeridge, an alternative asset manager focused on the energy sector and the largest shareholder of SilverBow Resources ("SilverBow" or the “Company”) holding 12.9% of outstanding shares, today released an investor presentation detailing SilverBow’s consistent track record of value destructive M&A.
SilverBow has pursued a failed M&A strategy that has put its balance sheet at risk – adding debt and minimum volume commitments that now represent over 96% of the Company’s enterprise value – while consistently destroying shareholder value. As noted in the presentation:
| · | SilverBow’s TSR has underperformed the XOP following all 8 of their acquisitions, notably: |
| o | -45% since acquiring assets from Teal (October 2021) |
| o | -32% since acquiring Sundance Energy and Sandpoint Resources (April 2022) |
| o | -24% since announcing its self-proclaimed “transformational” acquisition of Chesapeake’s South Texas asset (August 2023) |
| · | Even after 8 acquisitions, SilverBow remains in the bottom 10% of the XOP in terms of market capitalization and trades at the lowest EV / EBITDA multiple in its peer set. 1 |
| · | SilverBow claims free cash flow generation is central to its M&A criteria, yet its acquisitions have been a significant drag on free cash flow since the start of 2021. |
| · | Despite SilverBow’s claims to the contrary, minimal drilling activity has taken place on acquired acreage, suggesting they rarely compete for capital. |
| · | On a debt-adjusted basis, the Company’s per-share production and proved reserves metrics have stayed relatively flat since 2017 (the year current CEO was hired). |
| · | Despite management’s consistently poor decision making and results, SilverBow’s Board rewards underperformance with above average compensation – apparently either because of an unwillingness to hold management accountable or an inability to understand what drives shareholder value. |
None of SilverBow’s nominees possess relevant M&A experience. During interviews with Kimmeridge’s nominees, the participating Board members shared their belief that the only person on the Board with transaction experience is Chairman Rowland – who is not up for election at this year’s annual meeting taking place on May 21 due to the Company’s classified board structure.
____________________________
1 Peers include: APA, AR, BTE, CHK, CHRD, CIVI, CNX, COP, CRGY, CRK, CTRA, DVN, EOG, EQT, FANG, GPOR, KOS, MGY, MNR, MRO, MTDR, MUR, NOG, OVV, OXY, PR, PXD, RRC, SM, TALO, VTLE.
The lack of M&A experience on SilverBow’s Board was most recently on display with its failed analysis of Kimmeridge’s proposal to combine SilverBow with Kimmeridge Texas Gas (“KTG”). In this instance, the Board was unable to even account for acquisitions that KTG had made, which they would have been able to do if they simply requested access to Kimmeridge’s prepopulated data room.
To advance the best interests of all SilverBow shareholders and challenge the existing Board’s status quo mindset, Kimmeridge has nominated three highly-qualified, independent director candidates – Carrie Fox, Douglas Brooks, and Katherine Minyard – for election at the 2024 annual meeting. In contrast to SilverBow’s incumbent directors, Kimmeridge’s nominees are E&P industry leaders who have the necessary skills – including transaction expertise, track records of effective capital allocation and M&A, and a proven commitment to best-in-class corporate governance – to address the long-standing historical challenges that have constrained SilverBow’s performance.
Kimmeridge urges all SilverBow shareholders to vote “FOR” all of Kimmeridge’s nominees — Carrie Fox, Douglas Books, and Katherine Minyard — and “WITHHOLD” on all of SilverBow’s directors up for election — Gabriel Ellisor, Kathleen McAllister, and Charles Wampler — on the GOLD proxy card.
Additional information
Additional information regarding Kimmeridge’s definitive proxy statement can be found at www.Kimmeridge.com/sbow/.
About Kimmeridge
Founded in 2012 by Ben Dell, Dr. Neil McMahon and Henry Makansi, Kimmeridge is an alternative asset manager focused on the energy sector. The firm is differentiated by its direct investment approach, deep technical knowledge, active portfolio management, proven sustainability track record and proprietary research and data gathering.
Media
Daniel Yunger / Anntal Silver / Emma Cloyd
Kekst CNC
Kekst-Kimmeridge@kekstcnc.com
Investors
John Ferguson
Saratoga Proxy Consulting LLC
jferguson@saratogaproxy.com
(212) 257-1311
Cautionary Statement Regarding Forward-Looking Statements
This press release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein in any state to any person. The information herein contains "forward-looking statements". Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "potential," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct or that any of the objectives, plans or goals stated herein will ultimately be undertaken or achieved. If one or more of such risks or uncertainties materialize, or if Kimmeridge underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Kimmeridge that the future plans, estimates or expectations contemplated will ever be achieved.
Important Information
Kimmeridge Energy Management Company, LLC, KEF Investments, LP, KEF Fund V Investments, LP, Benjamin Dell, Alexander Inkster, Neda Jafar, Denis Laloy, Noam Lockshin, Henry Makansi, Neil McMahon, Douglas E. Brooks, Carrie M. Fox and Katherine L. Minyard (collectively, the “Participants”) have filed a definitive proxy statement and accompanying GOLD proxy card (the “Proxy Statement”) with the Securities and Exchange Commission (the “SEC”) to be used to solicit proxies in connection with the 2024 annual meeting of shareholders of SilverBow. Shareholders of the Company are advised to read the Proxy Statement and other documents related to the solicitation of proxies with respect to the Company by the Participants because they contain important information, including additional information related to the Participants and a description of their direct or indirect interests by security holdings or otherwise. Such materials are available at no charge on the SEC’s website, https://www.sec.gov or at www.Kimmeridge.com/sbow/.
Exhibit 2
Exhibit 3
