HOUSTON, April 27, 2017 /PRNewswire/ -- Southwestern
Energy Company (NYSE: SWN) today announced its financial and
operating results for the quarter ended March 31, 2017, along with other recent
developments. Highlights include:
- Net cash provided by operating activities of $312 million and net cash flow of $318 million, compared to total capital
investments of $290 million;
- Net income attributable to common stock of $281 million, or $0.57 per diluted share, and adjusted net income
attributable to common stock of $87
million, or $0.18 per diluted
share;
- Total net production of 204 Bcfe, including 123 Bcfe from the
Appalachian Basin where the exit rate for the quarter grew 12% from
December 31, 2016;
- Proved reserves as of March 31,
2017 (unaudited) of over 10 Tcfe with approximately
$3 billion in PV10, nearly doubling
from year-end 2016 reserves;
- Susquehanna County initial EUR increase of over 25% from
historical well results driven by recent changes to completion
intensity and flowback methods;
- Enhanced economics and de-risked inventory resulting from
successful delineation results in Tioga, Wyoming and Susquehanna including:
-
- Two wells placed to sales in Tioga County with an average
30-day rate of 13 MMcf per day per well with compression to be
installed later in 2017;
- Continued strong performance from the Company's southern-most
pad in Wyoming County with the Dimmig 2H averaging over 15 MMcf per
day in its first six months of production;
- First sales from the western portion of our Susquehanna
acreage, which was acquired in 2015, with the two producing wells
currently producing at an average rate of 15 MMcf per day per well
after almost one month of initial production;
- Seven-well Moorefield pad confirmed the productivity of the
targeted zone and exceeded the Company's expectations with an
estimated EUR of 6.5 Bcf per well;
- Initial results from the first Company-drilled Utica well
indicates a top quartile well with early EUR estimates of 2.5 to
3.0 Bcf per thousand lateral feet;
- Improving guidance for full year 2017 natural gas discount to
NYMEX including transportation to $0.80 - $0.90 per Mcf due to improving basis
differentials in the Appalachian basin associated with pipeline
construction progress and expected in-service dates;
- Realized C3+ NGL prices of $30.91
per barrel, or 60% of West Texas Intermediate (WTI), and realized
total NGL prices of $13.28 per
barrel, or 26% of WTI (all net of transportation costs); and
- Today announced the call of its bonds due in 2018 utilizing
cash on hand, reducing total debt by $316
million when combined with debt retired during the first
quarter of 2017 and the expected retirement of its bonds due in the
fourth quarter of 2017 as they mature.
"We are off to a very strong start in 2017, building upon the
momentum from 2016 and continuing our practice of delivering on
commitments," said Bill Way,
President and Chief Executive Officer of Southwestern Energy.
"We invested well within cash flow during the first quarter and
delivered value-adding production growth within our guidance
range. The results achieved this quarter demonstrate our
position as a market leader, and we anticipate providing additional
highlights of our operational excellence throughout the remainder
of the year as we progress our development plan and multiple
innovative initiatives being tested throughout the
portfolio."
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First Quarter 2017
Financial Results
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Southwestern Energy
Company and Subsidiaries
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For the three months
ended
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March 31,
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2017
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2016
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(in millions, except
per share amounts)
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Operating income
(loss)
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$
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266
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$
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(1,100)
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Adjusted operating
income (loss) (non-GAAP measure)
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$
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266
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$
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(2)
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Net earnings (loss)
attributable to common stock
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$
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281
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$
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(1,159)
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Adjusted net income
(loss) attributable to common stock (non-GAAP Measure)
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$
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87
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$
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(32)
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Earnings (loss) per
diluted share
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$
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0.57
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$
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(3.03)
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Adjusted earnings
(loss) per diluted share (non-GAAP measure)
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$
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0.18
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$
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(0.08)
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Net cash provided by
operating activities
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$
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312
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$
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92
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Net cash flow
(non-GAAP measure)
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$
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318
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$
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147
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Exploration and
Production First Quarter 2017 Financial Results
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For the three months
ended
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March 31,
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2017
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2016
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Production
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Fayetteville
(Bcf)
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81
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103
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Northeast Appalachia
(Bcf)
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87
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94
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Southwest Appalachia
(Bcfe)
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36
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40
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Total
production (Bcfe)
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204
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237
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% Natural
Gas
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90%
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90%
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Average unit costs
per Mcfe
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Lease operating
expenses
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$
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0.89
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$
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0.88
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General &
administrative expenses
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$
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0.21
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$
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0.19
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Taxes, other than
income taxes
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$
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0.12
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$
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0.08
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Full cost pool
amortization
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$
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0.40
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$
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0.49
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Realized
Prices
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For the three months
ended
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March 31,
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2017
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2016
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Natural Gas
Price:
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NYMEX Henry Hub Price
($/MMBtu)(1)
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$
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3.32
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$
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2.09
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Discount to
NYMEX(2)
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$
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(0.59)
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$
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(0.65)
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Average realized gas
price per Mcf, excluding hedges
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$
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2.73
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$
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1.44
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Gain (loss) on settled
financial basis derivatives ($/Mcf)
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$
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(0.01)
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$
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0.02
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Gain (loss) on settled
commodity derivatives ($/Mcf)
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$
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(0.15)
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$
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0.02
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Average realized gas
price per Mcf, including hedges
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$
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2.57
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$
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1.48
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Oil
Price:
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WTI Oil Price
($/Bbl)
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$
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51.91
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$
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33.45
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Discount to
WTI
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$
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(8.17)
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$
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(14.80)
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Average oil price per
Bbl
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$
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43.74
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$
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18.65
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NGL
Price:
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Average net realized
NGL price per Bbl(3)
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$
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13.28
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$
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4.98
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Percentage of
WTI
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26%
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15%
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(1)
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Based on last day
settlement prices from monthly futures contracts.
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(2)
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This discount
includes a basis differential, physical basis sales, third-party
transportation charges and fuel charges and excludes financial
basis hedges.
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(3)
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Includes $0.02 per
Bbl of realized hedge gains for the first quarter of 2017 and the
impact of transportation costs
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First Quarter of 2017 Financial Results
E&P Segment – The operating income from the
Company's E&P segment improved to $225
million for the first quarter of 2017, compared to an
operating loss of $1.2 billion during
the first quarter of 2016, primarily due to a $1.0 billion impairment of natural gas and oil
properties and $61 million in
restructuring charges during this period last year. Beside
the lack of impairments or restructuring charges in the first
quarter of 2017, the increase in operating income was primarily due
to higher realized natural gas and liquids pricing and lower
operating costs partially offset by decreased production. The
average price realized for our NGL production, including the
effects of derivatives, increased 167% to $13.28 per barrel, or 26% of NYMEX WTI, for the
three months ended March 31, 2017,
compared to $4.98 per barrel, or 15%
of NYMEX WTI, for the same period in 2016. The Company
expects NGL prices to remain strong with additional ethane cracker
demand and incremental export capacity over the next three
years.
Midstream Segment – Operating income for the
Company's Midstream segment, comprised of gathering and marketing
activities, was $41 million for the
first quarter of 2017, compared to $60
million for the same period in 2016, which included
$3 million in restructuring charges.
The decrease in operating income was largely due to a
decrease in volumes gathered, resulting from lower production
volumes in the Fayetteville Shale.
Capital Structure and Investments – At
March 31, 2017, the Company had total
debt of approximately $4.6 billion
and $3.2 billion in net debt.
In the first quarter, the Company repurchased $25 million of its 7.50% Senior Notes due
February 2018. Additionally, the Company today announced its
plans to retire the remainder of the 2018 notes and also expects to
pay the $40 million outstanding of
its notes due in October 2017 when
they mature.
During the first quarter of 2017, Southwestern invested a total
of $290 million. This included
approximately $283 million invested
in its E&P business, $6 million
invested in its Midstream segment and $1
million invested for corporate and other purposes. Of
the $290 million, approximately
$28 million was associated with
capitalized interest and $25 million
was associated with capitalized expenses.
Hedging Update
As of April 25, 2017, the Company
had approximately 429 Bcf of its remaining 2017 forecasted gas
production protected at an average swap or purchased put strike
price of $3.03 per Mcf.
Including the protected volumes, the Company retained upside
exposure on approximately half of its remaining forecasted 2017
volumes. Additionally, the Company had approximately 336 Bcf
of its 2018 forecasted gas production protected at an average swap
or purchased put strike price of $2.98 per Mcf, with upside exposure on
approximately 80%, or 268 Bcf, of those protected volumes up to
$3.38 per Mcf. The Company also had
approximately 99 Bcf of its 2019 forecasted gas production
protected at an average purchased put strike price of $2.95 with upside exposure up to $3.31 per Mcf.
A detailed breakdown of the Company's natural gas derivative
financial instruments as of April 25,
2017 is shown below. Please refer to our quarterly
report on Form 10-Q filed with the Securities and Exchange
Commission for complete information on the Company's commodity,
basis and interest rate protection.
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Weighted Average
Price per MMBtu
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Volume
(Bcf)
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Swaps
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Sold
Puts
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Purchased
Puts
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Sold
Calls
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Financial
protection on production
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2017
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Fixed
price swaps
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262
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$
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3.07
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$
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–
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$
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–
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$
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–
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Two-way
costless collars
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65
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–
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–
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2.92
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3.34
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Three-way
costless collars
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102
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–
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2.29
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2.97
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3.30
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Total
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429
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2018
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Fixed
price swaps
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68
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$
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3.02
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$
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–
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$
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–
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$
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–
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Two-way
costless collars
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23
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–
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–
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2.97
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3.56
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Three-way
costless collars
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245
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–
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2.39
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2.97
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3.37
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Total
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336
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2019
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Three-way
costless collars
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99
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$
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–
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$
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2.50
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$
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2.95
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$
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3.31
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Total
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99
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Sold call
options
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2017(1)
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64
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$
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–
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$
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–
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$
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–
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$
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3.54
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2018
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63
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–
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–
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–
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3.50
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2019
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52
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–
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–
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–
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3.50
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2020
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32
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–
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–
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–
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3.75
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Total
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211
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Note: Amounts may not
sum due to rounding.
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(1)
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Excludes $5 million
in premiums paid related to certain call options recognized as a
component of derivative assets within current assets on the
unaudited condensed consolidated balance sheet. As certain
call options settle, the premium will be amortized and recognized
as a component of gain (loss) on derivatives on the unaudited
condensed consolidated statement of operations.
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As of April 25, 2017, the Company
had also taken steps to mitigate the volatility of basis
differentials by protecting basis on approximately 296 Bcf of its
2017 forecasted natural gas production at a basis differential to
NYMEX natural gas prices of approximately ($0.73) per Mcf, which includes the impact of
both physical and financial basis hedges. A detailed
breakdown of the Company's financial basis positions as of
April 25, 2017 is shown below:
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Financial basis
positions
(excludes physical
positions)
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Dominion
South
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TETCO
M3
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Total
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Volume
(Bcf)
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Basis Diff
($/MMBTU)
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Volume
(Bcf)
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Basis Diff
($/MMBTU)
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Volume
(Bcf)
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Basis Diff
($/MMBTU)
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2017
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85
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($1.13)
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53
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($0.90)
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138
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($1.04)
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2018
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18
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($1.19)
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2
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$0.79
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20
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($0.95)
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E&P Operational Review
The Company's proved reserves (unaudited) increased to over 10
Tcf in the first quarter of 2017 based on average prices from the
first day of each month from the previous 12 months for Henry Hub
natural gas of $2.73 per MMBtu for
natural gas, West Texas Intermediate oil of $44.10 per barrel of oil and $10.17 per barrel of total NGLs, adjusted for
differentials. Proved undeveloped reserves accounted for
approximately 35% of total reserves compared to 1% at December 31, 2016. Additionally,
Appalachian reserves attributed to approximately 67% of total
reserves compared to approximately 43% at year-end 2016.
Proved reserves as of March 31, 2017
had a PV10 value of approximately $3.0
billion and are projected to increase throughout the year
based on forward strip pricing.
During the first quarter of 2017, Southwestern invested a total
of approximately $283 million in our
E&P business, and participated in drilling 33 wells, completed
49 wells, and placed 49 wells to sales.
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First Quarter 2017
E&P Division Results
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Appalachia
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Fayetteville
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Northeast
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Southwest
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Shale
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Production
(Bcfe)
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87
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36
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81
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Gross operated
production as of March 31, 2017 (MMcfe/d)
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1,273
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668
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1,342
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Capital
investments ($ in millions)
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Exploratory and
development drilling, including workovers
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$
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97
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$
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73
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$
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33
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Acquisition and
leasehold
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4
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16
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−
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Seismic and
other
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1
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−
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−
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Capitalized interest
and expense
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10
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32
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6
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Total
capital investments
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$
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112
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$
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121
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$
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39
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Gross operated
well count summary
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Drilled
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17
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8
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8
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Completed
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20
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16
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13
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Wells to
sales
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24
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13
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12
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Realized
Price
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NYMEX Henry Hub Price
($/MMBtu)
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$
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3.32
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$
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3.32
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$
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3.32
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Discount to NYMEX
($/Mcf) (1)
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$
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(0.42)
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$
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(0.46)
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$
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(0.80)
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Average realized gas
price, excluding hedges ($/Mcf)
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$
|
2.90
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$
|
2.86
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$
|
2.52
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(1)
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This discount
includes a basis differential, physical basis sales, third-party
transportation charges and fuel charges and excludes financial
basis hedges.
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Northeast Appalachia – In the first quarter
of 2017, the Company placed 24 wells to sales that had an average
lateral length of 5,836 feet and an average cost of $5.6 million per well. The average rate for
the first 30 days for the 15 of these wells that were online for at
least 30 days was 14.8 MMcf per day. In Susquehanna County,
the 5-well TNT pad was placed to sales using tighter stage spacing
and, after 60 days of production, the average EUR of these wells is
expected to be approximately 40% higher than offset wells. To
date, the Company has placed 39 wells to sales using increased
completion intensity and optimized flow techniques which have
resulted in a cumulative production increase of over 200% in the
first 30 days over offset wells. In addition to the
acceleration of volumes resulting from these completion and
production method changes, the Company also believes these changes
are improving the average EUR by over 25% compared to historical
well results in Susquehanna County, creating significant
incremental value for shareholders.
In the first quarter of 2017, the Company placed 7 delineation
wells to sales in Susquehanna, Tioga, and Wyoming Counties. In
Susquehanna County, the Company placed the Webster 4H and Webster 5H to sales with an average lateral
length of 10,110 feet and combined maximum rate of 38.2 MMcf per
day. These wells are the first wells drilled on the acreage
previously acquired in 2015 and are outperforming offset production
by over 100%. Based on these results, the Company plans to
drill three additional wells which are expected to come online in
the third quarter of 2017. Additionally, the Company
continued its delineation efforts in Tioga County, where it holds
over 20,000 net acres, placing two wells to sales in the first
quarter of 2017 and drilling three additional wells. The Lepley
pad, placed to sales in January, continues to exhibit strong
results. The two Lepley wells had an average rate for the
first 30 days online of 13.3 MMcf per day and are expected to
continue to improve as compression is added later in the
year. The Company also continues to test its acreage in
Wyoming County by placing three wells to sales in first quarter of
2017, observing encouraging results on its southern-most pad in the
area. Due to the successful results in each of these
delineation areas, the Company plans to continue its delineation
efforts throughout the year.
Southwest Appalachia – In the first quarter
of 2017, Southwestern brought online 13 wells in Southwest
Appalachia with an average lateral length of 7,819 feet and an
average cost of $7.2 million per
well.
The Company continues to perform additional analysis on the O.E.
Burge 501H, but early results indicate that this well is in the top
quartile of the industry for wells targeting the deep Upper Point
Pleasant formation. Based on current assumptions, the EUR is
estimated to be in the range of 2.5 to 3.0 Bcf per thousand feet of
lateral completed. The O.E. Burge is currently flowing flat
at 17 MMcf per day with 8,531 psi of casing pressure and the
Company plans to hold the well at this rate to continue its
pressure management program.
Additionally, Southwestern placed 5 wells to sales at the end of
January that tested tighter stage spacing and increased proppant
loading. Three of these test wells were on the GW Rentals pad
with two completed at 140' stage spacing and 3,500 pounds of
proppant per foot and one completed at 100' stage spacing and 5,000
pounds of proppant per foot. The other two test wells were on
the William Ritchea pad and were tested with 140' stage spacing and
3,500 pounds of proppant per foot. Early indications show all
five wells performing better than their closest offsets completed
with a wider stage spacing and lower pounds of proppant per
foot. To date, the well results show the 140' and 100' stage
spaced wells performing similarly and the Company will continue to
monitor these wells to determine if there are long-term performance
enhancements at the tighter stage spacing. The completion
testing program and the accelerated learnings from these tests are
expected to create significant value for future development
activity.
Fayetteville Shale – During the first quarter of
2017, the Company placed 12 wells to sales, which included 7 wells
from a Moorefield pad. These seven wells had an average
lateral length of 6,442 feet and estimated average EUR of 6.5 Bcf
with an average cost of $3.8 million
per well. These wells had an average initial production rate
of 6.8 MMcf per day and an average 30th day rate of 5.1
MMcf per day. These results confirm the Company's
understanding of the play and demonstrate the Moorefield's
potential to improve economics in the play. The Company plans
to place an additional 8 Moorefield wells to sales through the
remainder of 2017.
Explanation and Reconciliation of Non-GAAP Financial
Measures
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of America ("GAAP").
However, management believes certain non-GAAP performance measures
may provide financial statement users with additional meaningful
comparisons between current results, the results of its peers and
of prior periods.
One such non-GAAP financial measure is net cash flow. Management
presents this measure because (i) it is accepted as an indicator of
an oil and gas exploration and production company's ability to
internally fund exploration and development activities and to
service or incur additional debt, (ii) changes in operating assets
and liabilities relate to the timing of cash receipts and
disbursements which the Company may not control and (iii) changes
in operating assets and liabilities may not relate to the period in
which the operating activities occurred.
Additional non-GAAP financial measures the Company may present
from time to time are net debt, adjusted net income, adjusted
diluted earnings per share, adjusted EBITDA and its E&P and
Midstream segment operating income, all which exclude certain
charges or amounts. Management presents these measures because (i)
they are consistent with the manner in which the Company's position
and performance are measured relative to the position and
performance of its peers, (ii) these measures are more comparable
to earnings estimates provided by securities analysts, and (iii)
charges or amounts excluded cannot be reasonably estimated and
guidance provided by the Company excludes information regarding
these types of items. These adjusted amounts are not a measure of
financial performance under GAAP.
See the reconciliations throughout this release of GAAP
financial measures to non-GAAP financial measures for the three
months ended March 31, 2017 and
March 31, 2016, as applicable.
Non-GAAP financial measures should not be considered in isolation
or as a substitute for the Company's reported results prepared in
accordance with GAAP.
|
|
|
|
|
|
|
3 Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Net income (loss)
attributable to common stock:
|
|
|
|
|
|
Net income (loss)
attributable to common stock
|
$
|
281
|
|
$
|
(1,159)
|
Add back:
|
|
|
|
|
|
Participating
securities – mandatory convertible preferred stock
|
|
30
|
|
|
−
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
1,034
|
Restructuring
charges
|
|
−
|
|
|
64
|
(Gain) loss on certain
derivatives
|
|
(146)
|
|
|
21
|
(Gain) loss on sale of
assets
|
|
(1)
|
|
|
−
|
Loss on early
extinguishment of debt
|
|
1
|
|
|
−
|
Adjustments due to
inventory valuation
|
|
−
|
|
|
3
|
Adjustments due to
discrete tax items(1)
|
|
(134)
|
|
|
431
|
Tax impact on
adjustments
|
|
56
|
|
|
(426)
|
Adjusted net income
(loss) attributable to common stock
|
$
|
87
|
|
$
|
(32)
|
|
|
|
|
|
|
(1)
|
Primarily relates to
the exclusion of certain discrete tax adjustments associated with
the valuation allowance against deferred tax assets. The
Company expects its 2017 income tax rate to be 38.0% before the
impacts of any valuation allowance.
|
|
|
|
|
|
|
|
3 Months Ended
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.57
|
|
$
|
(3.03)
|
Add back:
|
|
|
|
|
|
Participating
securities - mandatory convertible preferred stock
|
|
0.06
|
|
|
−
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
2.70
|
Restructuring
charges
|
|
−
|
|
|
0.17
|
(Gain) loss on certain
derivatives
|
|
(0.30)
|
|
|
0.05
|
(Gain) loss on sale of
assets
|
|
(0.00)
|
|
|
–
|
Loss on early
extinguishment of debt
|
|
0.00
|
|
|
–
|
Adjustments due to
inventory valuation
|
|
−
|
|
|
0.01
|
Adjustments due to
discrete tax items(1)
|
|
(0.27)
|
|
|
1.13
|
Tax impact on
adjustments
|
|
0.12
|
|
|
(1.11)
|
Adjusted diluted
earnings (loss) per share
|
$
|
0.18
|
|
$
|
(0.08)
|
|
|
(1)
|
Primarily relates to
the exclusion of certain discrete tax adjustments associated with
the valuation allowance against deferred tax assets. The
Company expects its 2017 income tax rate to be 38.0% before the
impacts of any valuation allowance.
|
|
|
|
|
|
|
|
3 Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Cash flow from
operating activities:
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
312
|
|
$
|
92
|
Add back:
|
|
|
|
|
|
Changes in operating
assets and liabilities
|
|
6
|
|
|
33
|
Restructuring
charges
|
|
−
|
|
|
22
|
Net Cash
Flow
|
$
|
318
|
|
$
|
147
|
|
|
|
|
|
|
|
3 Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Operating income
(loss):
|
|
|
|
|
|
Operating income
(loss)
|
$
|
266
|
|
$
|
(1,100)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
1,034
|
Restructuring
charges
|
|
–
|
|
|
64
|
Adjusted
operating income (loss)
|
$
|
266
|
|
$
|
(2)
|
|
|
|
|
|
|
|
3 Months Ended
March 31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
E&P segment
operating income (loss):
|
|
|
|
|
|
E&P segment
operating income (loss)
|
$
|
225
|
|
$
|
(1,160)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
1,034
|
Restructuring
charges
|
|
–
|
|
|
61
|
Adjusted
E&P segment operating income (loss)
|
$
|
225
|
|
$
|
(65)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Net
debt:
|
|
|
|
|
|
Total debt
|
$
|
4,630
|
|
$
|
4,653
|
Subtract:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
(1,382)
|
|
|
(1,423)
|
Net debt
|
$
|
3,248
|
|
$
|
3,230
|
Southwestern management will host a teleconference call on
Friday, April 28, 2017 at
10:00 a.m. Eastern to discuss its
first quarter 2017 results. The toll-free number to call is
877-407-8035 and the international dial-in number is 201-689-8035.
The teleconference can also be heard "live" on the Internet at
http://www.swn.com.
Southwestern Energy Company is an independent energy company
whose wholly-owned subsidiaries are engaged in natural gas and oil
exploration, development and production, natural gas gathering and
marketing. Additional information on the Company can be found on
the Internet at http://www.swn.com.
This news release contains forward-looking statements.
Forward-looking statements relate to future events and anticipated
results of operations, business strategies, and other aspects of
our operations or operating results. In many cases you can identify
forward-looking statements by terminology such as "anticipate,"
"intend," "plan," "project," "estimate," "continue," "potential,"
"should," "could," "may," "will," "objective," "guidance,"
"outlook," "effort," "expect," "believe," "predict," "budget,"
"projection," "goal," "forecast," "target" or similar words.
Statements may be forward looking even in the absence of these
particular words. Where, in any forward-looking statement, the
Company expresses an expectation or belief as to future results,
such expectation or belief is expressed in good faith and believed
to have a reasonable basis. However, there can be no assurance that
such expectation or belief will result or be achieved. The actual
results of operations can and will be affected by a variety of
risks and other matters including, but not limited to, changes in
commodity prices; changes in expected levels of natural gas and oil
reserves or production; operating hazards, drilling risks,
unsuccessful exploratory activities; limited access to capital or
significantly higher cost of capital related to illiquidity or
uncertainty in the domestic or international financial markets;
international monetary conditions; unexpected cost increases;
potential liability for remedial actions under existing or future
environmental regulations; potential liability resulting from
pending or future litigation; and general domestic and
international economic and political conditions; as well as changes
in tax, environmental and other laws applicable to our business.
Other factors that could cause actual results to differ materially
from those described in the forward-looking statements include
other economic, business, competitive and/or regulatory factors
affecting our business generally as set forth in our filings with
the Securities and Exchange Commission. Unless legally required,
Southwestern Energy Company undertakes no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Cautionary Note to U.S. Investors – The SEC permits oil and gas
companies, in their filings with the SEC, to disclose only proved,
probable and possible reserves. We use the term "EUR" in this
release that the SEC's guidelines prohibit us from including in
filings with the SEC. The quarterly reserves data included in
this release are estimates we prepared that have not been audited
by our independent reserve engineers. U.S. investors are
urged to consider closely the oil and gas disclosures in our Form
10-K and other reports and filings with the SEC. Copies are
available from the SEC and from the Southwestern Energy Company
website.
|
|
|
|
|
|
OPERATING
STATISTICS (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
March 31,
|
|
2017
|
|
2016
|
Exploration &
Production
|
|
|
|
|
|
Production
|
|
|
|
|
|
Gas production
(Bcf)
|
|
183
|
|
|
213
|
Oil production
(MBbls)
|
|
519
|
|
|
607
|
NGL production
(MBbls)
|
|
3,008
|
|
|
3,376
|
Total
production (Bcfe)
|
|
204
|
|
|
237
|
Commodity
Prices
|
|
|
|
|
|
Average realized gas
price per Mcf, including derivatives
|
$
|
2.57
|
|
$
|
1.48
|
Average realized gas
price per Mcf, excluding derivatives
|
$
|
2.73
|
|
$
|
1.44
|
Average realized oil
price per Bbl
|
$
|
43.74
|
|
$
|
18.65
|
Average realized NGL
price per Bbl
|
$
|
13.28
|
|
$
|
4.98
|
Summary of
Derivative Activity in the Statement of Operations
|
|
|
|
|
|
Settled commodity
amounts included in "Gain (Loss) on Derivatives" (in
millions)
|
$
|
(30)
|
|
$
|
8
|
Unsettled commodity
amounts included in "Gain (Loss) on Derivatives" (in
millions)
|
$
|
145
|
|
$
|
(18)
|
Average unit costs
per Mcfe
|
|
|
|
|
|
Lease operating
expenses
|
$
|
0.89
|
|
$
|
0.88
|
General &
administrative expenses (1)
|
$
|
0.21
|
|
$
|
0.19
|
Taxes, other than
income taxes (2)
|
$
|
0.12
|
|
$
|
0.08
|
Full cost pool
amortization
|
$
|
0.40
|
|
$
|
0.49
|
Midstream
|
|
|
|
|
|
Volumes marketed
(Bcfe)
|
|
245
|
|
|
279
|
Volumes gathered
(Bcf)
|
|
129
|
|
|
165
|
|
|
(1)
|
Excludes $58 million
of restructuring charges in 2016.
|
(2)
|
Excludes $3 million
of restructuring charges in 2016.
|
|
|
|
|
|
|
STATEMENTS OF
OPERATIONS (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended
|
|
March 31,
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Operating
Revenues
|
|
|
|
|
|
Gas sales
|
$
|
503
|
|
$
|
315
|
Oil sales
|
|
23
|
|
|
11
|
NGL sales
|
|
40
|
|
|
17
|
Marketing
|
|
253
|
|
|
198
|
Gas
gathering
|
|
27
|
|
|
38
|
|
|
846
|
|
|
579
|
Operating Costs
and Expenses
|
|
|
|
|
|
Marketing
purchases
|
|
251
|
|
|
196
|
Operating
expenses
|
|
147
|
|
|
165
|
General and
administrative expenses
|
|
50
|
|
|
54
|
Restructuring
charges
|
|
–
|
|
|
64
|
Depreciation, depletion
and amortization
|
|
106
|
|
|
143
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
1,034
|
Taxes, other than
income taxes
|
|
26
|
|
|
23
|
|
|
580
|
|
|
1,679
|
Operating Income
(Loss)
|
|
266
|
|
|
(1,100)
|
Interest
Expense
|
|
|
|
|
|
Interest on
debt
|
|
58
|
|
|
53
|
Other interest
charges
|
|
2
|
|
|
2
|
Interest
capitalized
|
|
(28)
|
|
|
(41)
|
|
|
32
|
|
|
14
|
|
|
|
|
|
|
Gain (Loss) on
Derivatives
|
|
116
|
|
|
(14)
|
Loss on Early
Extinguishment of Debt
|
|
(1)
|
|
|
–
|
Other Income
(Loss), Net
|
|
2
|
|
|
(3)
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
|
351
|
|
|
(1,131)
|
Provision for
Income Taxes
|
|
|
|
|
|
Deferred
|
|
–
|
|
|
1
|
|
|
–
|
|
|
1
|
Net Income
(Loss)
|
|
351
|
|
|
(1,132)
|
Mandatory
convertible preferred stock dividend
|
|
27
|
|
|
27
|
Participating
securities - mandatory convertible preferred stock
|
|
43
|
|
|
–
|
Net Income (Loss)
Attributable to Common Stock
|
$
|
281
|
|
$
|
(1,159)
|
|
|
|
|
|
|
Income (Loss) Per
Common Share
|
|
|
|
|
|
Basic
|
$
|
0.57
|
|
$
|
(3.03)
|
Diluted
|
$
|
0.57
|
|
$
|
(3.03)
|
Weighted Average
Common Shares Outstanding
|
Basic
|
|
493,068,000
|
|
|
382,870,847
|
Diluted
|
|
494,494,995
|
|
|
382,870,847
|
|
|
|
|
|
|
|
BALANCE SHEETS
(Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
December
31,
2016
|
|
|
(in
millions)
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
$
|
1,789
|
|
$
|
1,872
|
Property and
equipment
|
|
|
24,784
|
|
|
24,489
|
Less: Accumulated
depreciation, depletion and amortization
|
|
|
(19,641)
|
|
|
(19,534)
|
Total
property and equipment, net
|
|
|
5,143
|
|
|
4,955
|
Other long-term
assets
|
|
|
264
|
|
|
249
|
Total
assets
|
|
|
7,196
|
|
|
7,076
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
1,121
|
|
|
1,064
|
Long-term
debt
|
|
|
4,364
|
|
|
4,612
|
Pension and other
postretirement liabilities
|
|
|
47
|
|
|
49
|
Other long-term
liabilities
|
|
|
386
|
|
|
434
|
Total
liabilities
|
|
|
5,918
|
|
|
6,159
|
Equity:
|
|
|
|
|
|
|
Common stock, $0.01 par
value; 1,250,000,000 shares authorized; issued 502,497,469 shares
as of March 31, 2017 (does not include 3,346,865 shares issued on
April 17, 2017 on account of a dividend declared on March 21, 2017)
and 495,248,369 as of December 31, 2016
|
|
|
5
|
|
|
5
|
Preferred stock, $0.01
par value, 10,000,000 shares authorized, 6.25% Series B Mandatory
Convertible, $1,000 per share liquidation preference, 1,725,000
shares issued and outstanding as of March 31, 2017 and December 31,
2016, conversion in January 2018
|
|
|
–
|
|
|
–
|
Additional paid-in
capital
|
|
|
4,687
|
|
|
4,677
|
Accumulated
deficit
|
|
|
(3,374)
|
|
|
(3,725)
|
Accumulated other
comprehensive loss
|
|
|
(39)
|
|
|
(39)
|
Common stock in
treasury, 31,269 shares as of March 31, 2017 and December 31,
2016
|
|
|
(1)
|
|
|
(1)
|
Total
equity
|
|
|
1,278
|
|
|
917
|
Total
liabilities and equity
|
|
$
|
7,196
|
|
$
|
7,076
|
|
|
|
|
|
|
|
STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
For the three months
ended
|
|
|
March 31,
|
|
|
2017
|
|
2016
|
|
|
(in
millions)
|
Cash Flows From
Operating Activities:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
351
|
|
$
|
(1,132)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
106
|
|
|
143
|
Impairment of natural gas and oil properties
|
|
|
–
|
|
|
1,034
|
Amortization of debt issuance costs
|
|
|
2
|
|
|
2
|
Deferred
income taxes
|
|
|
–
|
|
|
1
|
(Gain)
Loss on derivatives, net of settlement
|
|
|
(146)
|
|
|
21
|
Stock-based compensation
|
|
|
6
|
|
|
9
|
Restructuring charges
|
|
|
–
|
|
|
42
|
Loss on
early extinguishment of debt
|
|
|
1
|
|
|
–
|
Other
|
|
|
(2)
|
|
|
5
|
Change in assets and
liabilities
|
|
|
(6)
|
|
|
(33)
|
Net cash provided by
operating activities
|
|
|
312
|
|
|
92
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
|
|
|
Capital
investments
|
|
|
(340)
|
|
|
(196)
|
Proceeds from sale of
property and equipment
|
|
|
2
|
|
|
–
|
Other
|
|
|
4
|
|
|
–
|
Net cash used in
investing activities
|
|
|
(334)
|
|
|
(196)
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
|
|
|
Payments on short-term
debt
|
|
|
(25)
|
|
|
–
|
Payments on revolving
credit facility
|
|
|
–
|
|
|
(864)
|
Borrowings under
revolving credit facility
|
|
|
–
|
|
|
2,600
|
Payments on commercial
paper
|
|
|
–
|
|
|
(242)
|
Borrowings under
commercial paper
|
|
|
–
|
|
|
242
|
Change in bank drafts
outstanding
|
|
|
6
|
|
|
(19)
|
Preferred stock
dividend
|
|
|
–
|
|
|
(27)
|
Other
|
|
|
–
|
|
|
(4)
|
Net cash provided by
(used in) financing activities
|
|
|
(19)
|
|
|
1,686
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
(41)
|
|
|
1,582
|
Cash and cash
equivalents at beginning of year
|
|
|
1,423
|
|
|
15
|
Cash and cash
equivalents at end of period
|
|
$
|
1,382
|
|
$
|
1,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
and
Production
|
|
Midstream
Services
|
|
Other
|
|
Eliminations
|
|
Total
|
|
|
(in
millions)
|
Three months ended
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
563
|
|
$
|
858
|
|
$
|
–
|
|
$
|
(575)
|
|
$
|
846
|
Marketing
purchases
|
|
|
–
|
|
|
765
|
|
|
–
|
|
|
(514)
|
|
|
251
|
Operating
expenses
|
|
|
181
|
|
|
27
|
|
|
–
|
|
|
(61)
|
|
|
147
|
General and
administrative expenses
|
|
|
43
|
|
|
7
|
|
|
–
|
|
|
–
|
|
|
50
|
Depreciation,
depletion and amortization
|
|
|
90
|
|
|
16
|
|
|
–
|
|
|
–
|
|
|
106
|
Taxes, other than
income taxes
|
|
|
24
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
26
|
Operating
income
|
|
|
225
|
|
|
41
|
|
|
–
|
|
|
–
|
|
|
266
|
Capital
investments (1)
|
|
|
283
|
|
|
6
|
|
|
1
|
|
|
–
|
|
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
336
|
|
$
|
621
|
|
$
|
–
|
|
$
|
(378)
|
|
$
|
579
|
Marketing
purchases
|
|
|
–
|
|
|
503
|
|
|
–
|
|
|
(307)
|
|
|
196
|
Operating
expenses
|
|
|
209
|
|
|
27
|
|
|
–
|
|
|
(71)
|
|
|
165
|
General and
administrative expenses
|
|
|
45
|
|
|
9
|
|
|
–
|
|
|
–
|
|
|
54
|
Restructuring
charges
|
|
|
61
|
|
|
3
|
|
|
–
|
|
|
–
|
|
|
64
|
Depreciation,
depletion and amortization
|
|
|
127
|
|
|
16
|
|
|
–
|
|
|
–
|
|
|
143
|
Impairment of natural
gas and oil properties
|
|
|
1,034
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
1,034
|
Taxes, other than
income taxes
|
|
|
20
|
|
|
3
|
|
|
–
|
|
|
–
|
|
|
23
|
Operating income
(loss)
|
|
|
(1,160)
|
|
|
60
|
|
|
–
|
|
|
–
|
|
|
(1,100)
|
Capital investments
(1)
|
|
|
120
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
122
|
|
|
(1)
|
Capital investments
includes decreases of $52 million and $78 million for the three
months ended March 31, 2017 and 2016, respectively, relating to the
change in accrued expenditures between periods.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/southwestern-energy-announces-first-quarter-2017-financial-and-operating-results-300447635.html
SOURCE Southwestern Energy Company