Riposte Capital pushes for board overhaul at energy producer SilverBow

SilverBow Resources

30/11/2023 11:00

By David French
       Nov 30 (Reuters) - One of SilverBow Resources Inc's
 SBOW.N  largest investors is pushing the U.S. oil and gas
producer to revamp its board to address governance concerns and
boost its lagging performance, according to a letter reviewed by
Reuters on Thursday.
    Hedge fund Riposte Capital, which currently holds a 6.7%
stake in SilverBow, has urged the company to appoint three new
directors to its board, months after Reuters reported the
investor's attempts to push the shale producer to drop
anti-takeover defenses and explore a sale. 
    In its latest letter, Riposte urged the company to appoint
new board members at the shareholder meeting due next year,
having failed to act on its earlier demands and, instead,
pursued a strategy that resulted in a further underperformance
against rivals.
    SilverBow's shares closed at $31.81 on Wednesday, giving the
company a market capitalization of about $800 million. Its
shares have gained 12.5% this year, outperforming the 5% decline
by the S&P Energy index  .SPNY , which is made up of the largest
energy companies.
    New York-based Riposte argues that, when compared with
smaller peers, SilverBow has lagged on an earnings multiple
basis this year, and may do so again in 2024 based on latest
forecasts.  
    Riposte, the fourth-largest shareholder in SilverBow and run
by Khaled Beydoun, said the company's deal to acquire assets for
$700 million from Chesapeake Energy  CHK.O  had also diluted
existing shareholders as it issued new stock to partially fund
the deal. 
    The hedge fund's dissent at SilverBow is a rare example of
shareholder activism from Riposte, which has only publicly
voiced its displeasure at a company whose shares it owns on a
couple of occasions in recent years.
    SilverBow's board is comprised of nine members, most of whom
are independent directors. Strategic Value Partners had
previously held the right to nominate two directors but one of
its nominees dropped off the board on Monday, after the
investment firm sold part of its stake. 
    SilverBow operates on around 180,000 net acres in South
Texas' Eagle Ford shale basin. The company's deal for
Chesapeake's assets, which is due to close by the end of the
year, will boost its operations by another 42,000 net acres.

 (Reporting by David French in New York; Editing by Anirban Sen
and Jacqueline Wong)
 ((davidj.french@thomsonreuters.com;))