Analyst Questions Kimmeridge’s Character, Ben Dell Responds

A securities analyst questioned whether Kimmeridge Energy Management are “good actors,” during a public earnings call May 2 with SilverBow Resources, a Kimmeridge proxy target.

“This is my own view, but they don't seem to be particularly good actors with respect to sincerely having interest for the rest of shareholders beyond their own 12% ownership,” Donovan Schafer, an analyst with Northland Capital Markets, said in the call.

Ben Dell, Kimmeridge managing partner, told Hart Energy in response, “We have been very transparent and I believe our reputation is unparalleled in the energy space.”

He added, “I don’t know who Donovan [Schafer] is, but we are focused on replacing non-performing board members [at SilverBow] with highly qualified independent directors.”

Schafer said in the earnings call that SilverBow’s public filings detailing interactions with Kimmeridge and knowledge of Kimmeridge’s E&P property “seems pretty damning in my view, … at least in terms of evidence or at least, just generally, indications that these guys are not really people a lot of us would necessarily want to do business with.”

Communications by both SilverBow and Kimmeridge on the proxy contest are in Securities and Exchange Commission files.

Schafer said it would make sense to him that, if SilverBow’s reply to Kimmeridge’s proxy had been false, Kimmeridge would contest it in court.

But, he told SilverBow CEO Sean Woolverton, “they haven't come at you with a defamation lawsuit or something like that. So it doesn't appear to be the case that they can test it.”

He concluded, concerning SilverBow’s published timeline, “Is that something that you guys would stand behind hypothetically in a court of law?”

Woolverton didn’t answer the question directly. Rather, he replied, “… We're an honest and transparent company and we view that's how you do business. And it's really driven a lot of our success. 

“So our focus is we want to stay really driven around adding value and engaging with all stakeholders in good faith.”

Dell told Hart Energy, “If [SilverBow] wants to misrepresent history, we are not going to get into a ‘he said, she said’ game. We are focused on unlocking value for shareholders.”

He added that, “if [Schafer’s] question is whether we are a good actor, I would point out we have not bought or sold a [SilverBow] share for over 650 days; we have made three genuine proposals to the board—including the last one they requested and then ignored—and they have not engaged; [and] the company’s proxy includes numerous factual misstatements or admissions, however we are not focused on debating the past.”

Earlier this year, Kimmeridge initially sought SilverBow board seats. But it upped its ask to merging its Kimmeridge Texas Gas, which is a South Texas E&P, into SilverBow and gaining majority ownership of the combined company.

More recently, Kimmeridge withdrew the merger proposal. Its request for board seats is on the May 21 agenda for the SilverBow shareholders meeting.