Gas Producer SilverBow Says Kimmeridge Offer Is Far Too Low

(Bloomberg) -- SilverBow Resources Inc. says an offer by activist investor Kimmeridge Energy Management Co. to combine the Texas oil and natural gas producer with its own unit is far too low. 

The Houston-based company said in a letter to shareholders Thursday that Kimmeridge’s unsolicited offer to combine its Texas gas assets with SilverBow in exchange for 32.4 million shares priced at $34 each significantly undervalues the company. SilverBow urged shareholders to vote against candidates Kimmeridge has nominated for its board at an upcoming annual meeting.

“Kimmeridge has repeatedly informed SilverBow that its ultimate goal is to gain control of the board by the 2025 annual meeting of shareholders through successive proxy fights,” SilverBow said in its letter. “This could enable it to force a combination between SilverBow and Kimmeridge Texas Gas.” 

Kimmeridge didn’t immediately respond to a request for comment. 

Kimmeridge, among the most active and outspoken US oil and gas investors, is also offering to inject $500 million of equity capital in exchange for 14.7 million shares as part of its offer for SilverBow. Merging SilverBow with its own gas unit would value the combined company at $3.6 billion under the terms of Kimmeridge’s offer, according to the investor.

SilverBow said it has engaged with Kimmeridge over the offer, meeting with the company more than 30 times since June 2022. 

“SilverBow has been and continues to be open to exploring a transaction at an appropriate valuation,” the company said.

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