Kimmeridge Issues Letter Calling Out SilverBow's Misstatements and Misrepresentation of Kimmeridge's Intent

$SBOW

SilverBow has sought to distract from the issues that plague the Company and that require new, qualified, independent board members: namely chronic underperformance, negative TSR, poor capital allocation and worst-in-class governance

This proxy contest was initiated prior to discussions of a KTG combination, and is solely focused on fixing the Company and creating shareholder value

Fellow Shareholders,

Throughout our engagement with SilverBow over the past two years, Kimmeridge's goal has been clear and consistent: to position the Company for a sustainable future and drive value creation for ALL shareholders.

Unfortunately, rather than engage constructively, the SilverBow Board of Directors (“Board”) has continued its long-standing pattern of prioritizing self-preservation over shareholder returns. In recent weeks, the incumbent Board has repeatedly misled shareholders about Kimmeridge's actions and intent.

False Claim 1: SilverBow asserts that Kimmeridge nominated directors to the Board solely to force a combination with Kimmeridge Texas Gas (“KTG” and the “KTG Combination”).

The Facts: Kimmeridge privately informed the Company on January 31, 2024 that it was planning to nominate directors to the Board and, on February 16, 2024, submitted its formal nomination notice to the Company.¹ Following the submission of Kimmeridge’s nomination notice, the Board met with Kimmeridge on February 21, 2024, and Kimmeridge privately outlined eight potential strategic transactions the Company could pursue to drive value, including the KTG Combination. During this meeting, the Board requested that Kimmeridge submit a proposal regarding the KTG Combination in writing.

On February 26, 2024, SilverBow CEO Sean Woolverton called Kimmeridge founder Ben Dell to request a formal proposal for the KTG Combination. At this time, Mr. Woolverton and the Board were well aware that Kimmeridge had submitted nominees for election at SilverBow’s 2024 Annual Meeting of Shareholders (the “Annual Meeting”).

On March 13, 2024, following the Board's request, Kimmeridge delivered a financed, premium proposal, which mirrored the terms previewed with the Board on February 21, 2024.

Make no mistake – the Board invited an offer from Kimmeridge with no intent of engagement or negotiation on the KTG Combination, knowing that it was facing a proxy contest, and then misstated this timeline to proxy advisors and shareholders, to misrepresent Kimmeridge’s intent.

False Claim 2: SilverBow stated that in January 2024 Kimmeridge threatened to take control of the Board through a proxy battle and did not engage in settlement discussions.

The Facts: Contrary to what SilverBow claims, in emails sent on February 9, 2024 and February 13, 2024, Kimmeridge outlined a settlement to avoid a proxy contest; SilverBow ignored these overtures. Specifically, Kimmeridge requested that SilverBow appoint one new independent director and immediately de-stagger the Board or appoint two directors, one new and one replacement, and undertake a phased de-staggering of the Board.

Additionally, Kimmeridge asked the Company to consider removing the poison pill and offered to commit itself to a standstill as a show of good faith. Kimmeridge never implied in its communications that the proxy contest would be used to take control of the Company.

False Claim 3: SilverBow stated that Kimmeridge threatened to take control of the Company through a tender offer on March 31, 2023.

The Facts: This is patently false: Kimmeridge never made such a statement or even raised the prospect of acquiring the Company through a tender offer – on March 31, 2023 or otherwise. Moreover, executing a tender offer without the Company’s consent would not even have been possible considering there was and continues to be a poison pill in place. Kimmeridge has only made proposals to SilverBow at the Board's request.

False Claim 4: The Board adopted a short duration poison pill to prevent Kimmeridge from acquiring the Company without paying any control premium.

The Facts: In 2022, Kimmeridge thought it was negotiating a zero-premium merger between SilverBow and KTG. Prior to any meaningful engagement, the Board adopted what Kimmeridge understands to be the industry's only poison pill. Kimmeridge has not acquired any shares in over 670 days, even though its ownership sits well below the poison pill's 15% trigger.

SilverBow’s poison pill has never been about protecting shareholders’ interests from a no-premium hostile takeover. It is about protecting management and the Board. SilverBow will never submit the poison pill to a shareholder vote because the Board knows shareholders won't support it. The Board unilaterally extended its long-term poison pill and has now conveniently scheduled the poison pill to expire the day after the Annual Meeting, but it will most likely be unilaterally extended – once again – by the Board.

Kimmeridge's nominees are more qualified, more knowledgeable and more independent than SilverBow's incumbent slate. After 7 years of negative total shareholder returns, the lowest EV/EBITDA multiple of its peer group and a fortress of terrible governance, shareholders deserve robust, independent oversight in the boardroom.

Kimmeridge's nominees are E&P industry leaders who can create sustained value for all SilverBow shareholders against the backdrop of a rapidly evolving landscape. They are bound to no agenda other than robustly executing their fiduciary duty and representing the best interests of the Company and all of its shareholders.

Source:

https://www.sec.gov/Archives/edgar/data/351817/000090266424003506/p24-1785dfan14a.htm