Strategically positioned to capture sustainable
value from increasing scale and responsible development
Southwestern Energy Company (NYSE: SWN) today announced
financial and operating results for the second quarter ended June
30, 2021.
- Integration planning for scale-enhancing acquisition and
Haynesville entry ahead of schedule; shareholder vote set for
August 27th;
- Implemented basin-wide project to certify and continuously
monitor potential emissions from all Appalachia unconventional
wells;
- Further reduced leverage ratio by 0.4x to 2.6x; sustainable 2x
leverage expected in late 2021;
- Generated $270 million net cash provided by operating
activities; invested $259 million consistent with our maintenance
capital plan; expect free cash flow to ramp in second half
2021;
- Captured promised $100 per foot well costs savings on first
three Ohio Utica wells;
- Reported total production of 276 Bcfe, or 3.0 Bcfe per day,
including 2.4 Bcf per day of gas and 104 MBbls per day of
liquids;
- Received weighted average realized price (excluding impact of
transportation and hedges) of $2.92 per Mcfe; and
- Approximately 90% of remaining 2021 Appalachia natural gas
basis protected; annual differential guidance range remains
unchanged.
“Southwestern Energy meaningfully advanced its strategic
value-creation objectives during the quarter. The Company announced
a significant acquisition that we believe is highly accretive
across both equity and credit metrics. The addition of Indigo
further positions SWN as a leading natural gas company; it expands
our investment opportunities across the nation’s top two natural
gas basins and enhances our margins while reducing basis
volatility. Additionally, in alignment with our ESG strategy, we
initiated the certification and continuous monitoring of all
Appalachia unconventional wells. These two strategic actions
enhance sustainable and responsible value creation for all
stakeholders,” said Bill Way, Southwestern Energy President and
Chief Executive Officer.
Financial Results
For the three months ended
For the six months ended
June 30,
June 30,
(in millions)
2021
2020
2021
2020
Net income (loss)
$
(609
)
$
(880
)
$
(529
)
$
(2,427
)
Adjusted net income (loss) (non-GAAP)
$
129
$
(1
)
$
325
$
55
Diluted earnings (loss) per share
$
(0.90
)
$
(1.63
)
$
(0.78
)
$
(4.49
)
Adjusted diluted earnings (loss) per share
(non-GAAP)
$
0.19
$
(0.00
)
$
0.48
$
0.10
Adjusted EBITDA (non-GAAP)
$
300
$
106
$
682
$
312
Net cash provided by operating
activities
$
270
$
94
$
617
$
254
Net cash flow (non-GAAP)
$
272
$
87
$
626
$
278
Total capital investments (1)
$
259
$
245
$
525
$
482
(1)
Capital investments include a decrease of
$9 million for the three months ended June 30, 2021, and increases
of $29 million and $8 million for the six months ended June 30,
2021 and 2020, respectively, relating to the change in accrued
expenditures between periods. There was no change in the capital
accrual for the three months ended June 30, 2020.
For the quarter ended June 30, 2021, Southwestern Energy
recorded net loss of $609 million, or ($0.90) per diluted share,
compared to a net loss in 2020 of $880 million, or ($1.63) per
diluted share. The quarter ended June 30, 2021 included a $772
million loss on unsettled derivatives and the same period for 2020
included a $655 million non-cash impairment and a $229 million loss
on unsettled derivatives.
Adjusted net income was $129 million, or $0.19 per diluted
share, in the second quarter of 2021, compared to a loss of $1
million, or ($0.00) per diluted share, for the prior year period.
The increase was primarily related to a 33% increase in the
weighted average realized price including derivatives and a 37%
increase in production volumes, largely due to the Montage
acquisition. Adjusted EBITDA (non-GAAP) was $300 million, net cash
provided by operating activities was $270 million and net cash flow
(non-GAAP) was $272 million.
As indicated in the table below, second quarter 2021 weighted
average realized price, including $0.37 per Mcfe of transportation
expenses, was $2.55 per Mcfe excluding the impact of derivatives.
Including derivatives, weighted average realized price (including
transportation) for the quarter was up 33% from $1.65 per Mcfe in
2020 to $2.20 per Mcfe in 2021 primarily due to higher commodity
prices including a 65% increase in NYMEX Henry Hub and a 137%
increase in WTI. Second quarter 2021 weighted average realized
price before transportation expense and excluding the impact of
derivatives was $2.92 per Mcfe.
At quarter end, the Company had hedges in place for 88% of its
remaining 2021 expected natural gas production, 71% of its 2021
expected natural gas liquids (NGLs) production and 89% of its 2021
expected oil production. The Company also has approximately 90% of
its remaining 2021 expected natural gas production protected from
the impact of widening basis differentials through transportation
capacity and basis hedges.
As of June 30, 2021, Southwestern Energy had total debt of $3.0
billion and a leverage ratio of 2.6x, an improvement of 0.4x
compared to last quarter. At quarter end, the Company had $568
million of borrowings under its revolving credit facility with $233
million in letters of credit and ample liquidity of $1.2
billion.
Realized Prices
For the three months ended
For the six months ended
(includes transportation costs)
June 30,
June 30,
2021
2020
2021
2020
Natural Gas Price:
NYMEX Henry Hub price ($/MMBtu) (1)
$
2.83
$
1.72
$
2.76
$
1.83
Discount to NYMEX (2)
(0.91
)
(0.74
)
(0.74
)
(0.57
)
Realized gas price per Mcf, excluding
derivatives
$
1.92
$
0.98
$
2.02
$
1.26
Gain (loss) on settled financial basis
derivatives ($/Mcf)
0.03
(0.05
)
0.11
0.03
Gain (loss) on settled commodity
derivatives ($/Mcf)
(0.06
)
0.57
(0.02
)
0.43
Realized gas price, including derivatives
($/Mcf)
$
1.89
$
1.50
$
2.11
$
1.72
Oil Price:
WTI oil price ($/Bbl) (3)
$
66.07
$
27.85
$
61.96
$
37.01
Discount to WTI
(8.57
)
(12.16
)
(8.92
)
(9.46
)
Realized oil price, excluding derivatives
($/Bbl)
$
57.50
$
15.69
$
53.04
$
27.55
Realized oil price, including derivatives
($/Bbl)
$
38.37
$
41.64
$
37.70
$
44.08
NGL Price:
Realized NGL price, excluding derivatives
($/Bbl)
$
23.24
$
6.43
$
23.05
$
7.29
Realized NGL price, including derivatives
($/Bbl)
$
15.87
$
8.22
$
15.99
$
9.50
Percentage of WTI, excluding
derivatives
35
%
23
%
37
%
20
%
Total Weighted Average Realized
Price:
Excluding derivatives ($/Mcfe)
$
2.55
$
1.05
$
2.58
$
1.37
Including derivatives ($/Mcfe)
$
2.20
$
1.65
$
2.36
$
1.90
(1)
Based on last day monthly futures
settlement prices.
(2)
This discount includes a basis
differential, a heating content adjustment, physical basis sales,
third-party transportation charges and fuel charges, and excludes
financial basis derivatives.
(3)
Based on the average daily settlement
price of the nearby month futures contract over the period.
Operational Results Total production for the quarter
ended June 30, 2021 was 276 Bcfe, of which 79% was natural gas, 17%
NGLs and 4% oil. Capital investments totaled $259 million for the
second quarter, with 23 wells drilled, 19 wells completed and 31
wells placed to sales.
For the three months ended
For the six months ended
June 30,
June 30,
2021
2020
2021
2020
Production
Gas production (Bcf)
219
158
433
314
Oil production (MBbls)
1,831
1,083
3,493
2,482
NGL production (MBbls)
7,666
6,111
15,244
12,239
Total production (Bcfe)
276
201
545
402
Total production (Bcfe/day)
3.0
2.2
3.0
2.2
Average unit costs per Mcfe
Lease operating expenses (1)
$
0.94
$
0.91
$
0.94
$
0.94
General & administrative expenses
(2,3)
$
0.11
$
0.14
$
0.12
$
0.13
Taxes, other than income taxes
$
0.10
$
0.05
$
0.09
$
0.06
Full cost pool amortization
$
0.34
$
0.38
$
0.34
$
0.46
(1)
Includes post-production costs such as
gathering, processing, fractionation and compression.
(2)
Excludes $3 million and $4 million in
merger-related expenses for the three and six months ended June 30,
2021, respectively, and $1 million and $7 million in restructuring
charges for the three and six months ended June 30, 2021,
respectively.
(3)
Excludes $2 million and $12 million in
restructuring charges for the three and six months ended June 30,
2020, respectively.
Southwest Appalachia – In the second quarter, total
production was 153 Bcfe, with NGL production of 84 MBbls per day
and oil production of 20 MBbls per day. The Company drilled 15
wells, completed 12 wells and placed 20 wells to sales with an
average lateral length of 15,067 feet.
Nine of the wells to sales were located in the rich acreage with
an average 30-day rate of 19 MMcfe per day, including 44% liquids,
and eight of the wells to sales were located in the super rich
acreage with an average 30-day rate of 13 MMcfe per day, including
67% liquids. The remaining three wells placed to sales this quarter
were the Company’s first dry gas Ohio Utica wells. These wells had
an average lateral length of 13,781 feet and each had an average
30-day rate of 25 MMcf per day.
Northeast Appalachia – Second quarter 2021 production was
123 Bcf. The Company drilled eight wells, completed seven wells and
placed 11 wells to sales with an average lateral length of 11,568
feet and an average 30-day rate of 14 MMcf per day.
E&P Division Results
For the three months ended
June 30, 2021
For the six months ended
June 30, 2021
Northeast
Southwest
Northeast
Southwest
Gas production (Bcf)
123
96
241
192
Liquids production
Oil (MBbls)
—
1,826
—
3,484
NGL (MBbls)
—
7,665
—
15,242
Production (Bcfe)
123
153
241
304
Gross operated production June 2021
(MMcfe/d)
1,645
2,486
Net operated production June 2021
(MMcfe/d)
1,346
1,691
Capital investments ($ in
millions)
Drilling and completions, including
workovers
$
75
$
127
$
146
$
269
Land acquisition and other
3
11
7
20
Capitalized interest and expense
7
31
12
63
Total capital investments
$
85
$
169
$
165
$
352
Gross operated well activity
summary
Drilled
8
15
19
27
Completed
7
12
19
29
Wells to sales
11
20
19
29
Average well cost on wells to sales
(millions)
$
6.1
$
10.0
$
7.2
$
9.4
Average lateral length (ft)
11,568
15,067
12,369
14,311
Total weighted average realized price
per Mcfe, excluding derivatives
$
1.87
$
3.10
$
2.05
$
3.01
Third Quarter 2021 Price Guidance Based on current market
conditions, Southwestern expects third quarter price differentials
to be within the following ranges before the impact of the Indigo
acquisition. The Company maintains its full year 2021 price
differential guidance before the impact of the Indigo
acquisition.
Natural gas discount to NYMEX including
transportation (1)
$0.90 – $1.00 per Mcf
Natural gas liquids realization as a % of
WTI including transportation
38% – 44%
(1)
Includes the impact of basis hedges.
Conference Call Southwestern Energy will host a
conference call on Friday, July 30, 2021 at 9:30 a.m. Central to
discuss second quarter 2021 results. To participate, dial US
toll-free 877-883-0383, or international 412-902-6506 and enter
access code 3889842. A live webcast will be available at
ir.swn.com.
About Southwestern Energy Southwestern Energy Company
(NYSE: SWN) is a leading U.S. producer of natural gas and natural
gas liquids focused on responsibly developing large-scale energy
assets in the nation’s most prolific shale gas basins. SWN’s
returns-driven strategy strives to create sustainable value for its
stakeholders by leveraging its scale, financial strength and
operational execution. For additional information, please visit
www.swn.com and www.swn.com/responsibility.
Forward Looking Statement Certain statements and
information in this news release may constitute “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Exchange Act, as
amended. The words “believe,” “expect,” “anticipate,” “plan,”
"predict," “intend,” "seek," “foresee,” “should,” “would,” “could,”
“attempt,” “appears,” “forecast,” “outlook,” “estimate,” “project,”
“potential,” “may,” “will,” “likely,” “guidance,” “goal,” “model,”
“target,” “budget” and other similar expressions are intended to
identify forward-looking statements, which are generally not
historical in nature. Statements may be forward looking even in the
absence of these particular words. Examples of forward-looking
statements include, but are not limited to, statements regarding
the proposed acquisition of Indigo Natural Resources LLC (the
“Proposed Transaction”), expected synergies and other benefits from
and costs in connection with the Proposed Transaction, estimated
financial metrics giving effect to the Proposed Transaction, our
financial position, business strategy, production, reserve growth
and other plans and objectives for our future operations, and
generation of free cash flow. These forward-looking statements are
based on our current expectations and beliefs concerning future
developments and their potential effect on us. The forward-looking
statements contained in this document are largely based on our
expectations for the future, which reflect certain estimates and
assumptions made by our management. These estimates and assumptions
reflect our best judgment based on currently known market
conditions, operating trends, and other factors. Although we
believe such estimates and assumptions to be reasonable, they are
inherently uncertain and involve a number of risks and
uncertainties that are beyond our control. As such, management’s
assumptions about future events may prove to be inaccurate. For a
more detailed description of the risks and uncertainties involved,
see “Risk Factors” in our most recently filed Annual Report on Form
10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and other SEC filings. We do not intend to publicly
update or revise any forward-looking statements as a result of new
information, future events, changes in circumstances, or otherwise.
These cautionary statements qualify all forward-looking statements
attributable to us, or persons acting on our behalf. Management
cautions you that the forward-looking statements contained herein
are not guarantees of future performance, and we cannot assure you
that such statements will be realized or that the events and
circumstances they describe will occur. Factors that could cause
actual results to differ materially from those anticipated or
implied in the forward-looking statements herein include, but are
not limited to: the timing and extent of changes in market
conditions and prices for natural gas, oil and natural gas liquids
(“NGLs”), including regional basis differentials and the impact of
reduced demand for our production and products in which our
production is a component due to governmental and societal actions
taken in response to COVID-19 or other public health crises and any
related company or governmental policies and actions to protect the
health and safety of individuals or governmental policies or
actions to maintain the functioning of national or global economies
and markets; our ability to fund our planned capital investments; a
change in our credit rating, an increase in interest rates and any
adverse impacts from the discontinuation of the London Interbank
Offered Rate; the extent to which lower commodity prices impact our
ability to service or refinance our existing debt; the impact of
volatility in the financial markets or other global economic
factors; difficulties in appropriately allocating capital and
resources among our strategic opportunities; the timing and extent
of our success in discovering, developing, producing and estimating
reserves; our ability to maintain leases that may expire if
production is not established or profitably maintained; our ability
to realize the expected benefits from recent acquisitions or the
Proposed Transaction; costs in connection with the Proposed
Transaction; the consummation of or failure to consummate the
Proposed Transaction and the timing thereof; costs in connection
with the Proposed Transaction; integration of operations and
results subsequent to the Proposed Transaction; our ability to
transport our production to the most favorable markets or at all;
the impact of government regulation, including changes in law, the
ability to obtain and maintain permits, any increase in severance
or similar taxes, and legislation or regulation relating to
hydraulic fracturing, climate and over-the-counter derivatives; the
impact of the adverse outcome of any material litigation against us
or judicial decisions that affect us or our industry generally; the
effects of weather; increased competition; the financial impact of
accounting regulations and critical accounting policies; the
comparative cost of alternative fuels; credit risk relating to the
risk of loss as a result of non-performance by our counterparties;
and any other factors listed in the reports we have filed and may
file with the SEC that are incorporated by reference herein. All
written and oral forward-looking statements attributable to us are
expressly qualified in their entirety by this cautionary
statement.
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
For the three months ended
For the six months ended
June 30,
June 30,
(in millions, except share/per share
amounts)
2021
2020
2021
2020
Operating Revenues:
Gas sales
$
433
$
164
$
897
$
412
Oil sales
106
19
187
71
NGL sales
179
40
352
90
Marketing
332
187
684
426
Other
—
—
2
3
1,050
410
2,122
1,002
Operating Costs and Expenses:
Marketing purchases
333
201
689
449
Operating expenses
259
182
509
375
General and administrative expenses
34
32
72
58
Merger-related expenses
3
—
4
—
Restructuring charges
1
2
7
12
Depreciation, depletion and
amortization
100
84
196
197
Impairments
—
655
—
2,134
Taxes, other than income taxes
27
10
51
23
757
1,166
1,528
3,248
Operating Income (Loss)
293
(756
)
594
(2,246
)
Interest Expense:
Interest on debt
48
40
98
80
Other interest charges
3
3
6
5
Interest capitalized
(21
)
(21
)
(43
)
(44
)
30
22
61
41
Gain (Loss) on Derivatives
(871
)
(109
)
(1,062
)
230
Gain on Early Extinguishment of
Debt
—
7
—
35
Other Income (Loss), Net
(1
)
—
—
1
Income (Loss) Before Income
Taxes
(609
)
(880
)
(529
)
(2,021
)
Provision (Benefit) for Income
Taxes:
Current
—
—
—
(2
)
Deferred
—
—
—
408
—
—
—
406
Net Income (Loss)
$
(609
)
$
(880
)
$
(529
)
$
(2,427
)
Earnings (Loss) Per Common
Share:
Basic
$
(0.90
)
$
(1.63
)
$
(0.78
)
$
(4.49
)
Diluted
$
(0.90
)
$
(1.63
)
$
(0.78
)
$
(4.49
)
Weighted Average Common Shares
Outstanding:
Basic
676,722,999
541,079,192
676,057,534
540,693,841
Diluted
676,722,999
541,079,192
676,057,534
540,693,841
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
2021
December 31,
2020
ASSETS
(in millions)
Current assets:
Cash and cash equivalents
$
2
$
13
Accounts receivable, net
408
368
Derivative assets
132
241
Other current assets
51
49
Total current assets
593
671
Natural gas and oil properties, using the
full cost method
27,796
27,261
Other
496
523
Less: Accumulated depreciation, depletion
and amortization
(23,846
)
(23,673
)
Total property and equipment, net
4,446
4,111
Operating lease assets
147
163
Deferred tax assets
—
—
Other long-term assets
208
215
Total long-term assets
355
378
TOTAL ASSETS
$
5,394
$
5,160
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
207
$
—
Accounts payable
653
573
Taxes payable
62
74
Interest payable
57
58
Derivative liabilities
901
245
Current operating lease liabilities
41
42
Other current liabilities
23
20
Total current liabilities
1,944
1,012
Long-term debt
2,814
3,150
Long-term operating lease liabilities
104
117
Long-term derivative liabilities
355
183
Pension and other postretirement
liabilities
33
45
Other long-term liabilities
162
156
Total long-term liabilities
3,468
3,651
Commitments and contingencies
Equity:
Common stock, $0.01 par value;
1,250,000,000 shares authorized; issued 721,372,443 shares as of
June 30, 2021 and 718,795,700 shares as of December 31, 2020
7
7
Additional paid-in capital
5,104
5,093
Accumulated deficit
(4,892
)
(4,363
)
Accumulated other comprehensive loss
(35
)
(38
)
Common stock in treasury, 44,353,224
shares as of June 30, 2021 and December 31, 2020
(202
)
(202
)
Total equity
(18
)
497
TOTAL LIABILITIES AND EQUITY
$
5,394
$
5,160
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
For the six months ended
June 30,
(in millions)
2021
2020
Cash Flows From Operating
Activities:
Net loss
$
(529
)
$
(2,427
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, depletion and
amortization
196
197
Amortization of debt issuance costs
4
4
Impairments
—
2,134
Deferred income taxes
—
408
(Gain) loss on derivatives, unsettled
941
(17
)
Stock-based compensation
2
2
Gain on early extinguishment of debt
—
(35
)
Other
1
—
Change in assets and liabilities
Accounts receivable
(40
)
94
Accounts payable
75
(121
)
Taxes payable
(12
)
(11
)
Interest payable
—
(1
)
Inventories
3
6
Other assets and liabilities
(24
)
21
Net cash provided by operating
activities
617
254
Cash Flows From Investing
Activities:
Capital investments
(493
)
(472
)
Proceeds from sale of property and
equipment
2
2
Other
(1
)
—
Net cash used in investing activities
(492
)
(470
)
Cash Flows From Financing
Activities:
Payments on long-term debt
—
(72
)
Payments on revolving credit facility
(1,782
)
(919
)
Borrowings under revolving credit
facility
1,650
1,221
Change in bank drafts outstanding
—
(8
)
Debt issuance/amendment costs
(1
)
—
Cash paid for tax withholding
(3
)
(1
)
Net cash provided by (used in) financing
activities
(136
)
221
Increase (decrease) in cash and cash
equivalents
(11
)
5
Cash and cash equivalents at beginning of
year
13
5
Cash and cash equivalents at end of
period
$
2
$
10
Hedging Summary A detailed breakdown of derivative
financial instruments and financial basis positions as of June 30,
2021, including the remainder of 2021 and excluding those positions
that settled in the first and second quarter, is shown below.
Please refer to the Company’s quarterly report on Form 10-Q to be
filed with the Securities and Exchange Commission for complete
information on the Company’s commodity, basis and interest rate
protection.
Weighted Average Price per
MMBtu
Volume (Bcf)
Swaps
Sold Puts
Purchased Puts
Sold Calls
Natural gas
2021
Fixed price swaps
103
$
2.80
$
—
$
—
$
—
Two-way costless collars
140
—
—
2.62
2.97
Three-way costless collars
153
—
2.18
2.51
2.86
Total
396
2022
Fixed price swaps
268
$
2.72
$
—
$
—
$
—
Two-way costless collars
125
—
—
2.65
3.04
Three-way costless collars
333
—
2.06
2.51
2.94
Total
726
2023
Fixed price swaps
23
$
2.70
$
—
$
—
$
—
Two-way costless collars
34
—
—
2.50
2.72
Three-way costless collars
215
—
2.09
2.54
3.00
Total
272
2024
Three-way costless collars
11
$
—
$
2.25
$
2.80
$
3.54
Natural gas financial basis
positions
Volume
Basis Differential
(Bcf)
($/MMBtu)
Q3 2021
Dominion South
40
$
(0.65
)
TCO
28
$
(0.51
)
TETCO M3
27
$
(0.47
)
Total
95
$
(0.55
)
Q4 2021
Dominion South
28
$
(0.63
)
TCO
18
$
(0.49
)
TETCO M3
25
$
0.06
Total
71
$
(0.36
)
2022
Dominion South
118
$
(0.59
)
TCO
71
$
(0.49
)
TETCO M3
72
$
0.01
Total
261
$
(0.40
)
Weighted Average Price per
Bbl
Volume (MBbls)
Swaps
Sold Puts
Purchased Puts
Sold Calls
Oil
2021
Fixed price swaps
1,739
$
50.10
$
—
$
—
$
—
Two-way costless collars
92
—
—
37.50
45.50
Three-way costless collars
1,152
—
39.22
49.05
54.35
Total
2,983
2022
Fixed price swaps
3,203
$
53.54
$
—
$
—
$
—
Three-way costless collars
1,380
—
39.89
50.23
57.05
Total
4,583
2023
Fixed price swaps
846
$
55.98
$
—
$
—
$
—
Three-way costless collars
1,268
—
33.97
45.51
56.12
Total
2,114
2024
Fixed price swaps
54
$
53.15
$
—
$
—
$
—
Ethane
2021
Fixed price swaps
3,284
$
7.64
$
—
$
—
$
—
Two-way costless collars
294
—
—
7.14
10.40
Total
3,578
2022
Fixed price swaps
2,362
$
8.97
$
—
$
—
$
—
Two-way costless collars
135
—
—
7.56
9.66
Total
2,497
Propane
2021
Fixed price swaps
4,261
$
24.00
$
—
$
—
$
—
2022
Fixed price swaps
4,092
$
25.90
$
—
$
—
$
—
Three-way costless collars
305
—
16.80
21.00
31.92
Total
4,397
Normal Butane
2021
Fixed price swaps
1,245
$
29.04
$
—
$
—
$
—
2022
Fixed price swaps
1,295
$
29.16
$
—
$
—
$
—
Natural Gasoline
2021
Fixed price swaps
1,281
$
43.58
$
—
$
—
$
—
2022
Fixed price swaps
1,201
$
45.76
$
—
$
—
$
—
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 and adjusted EBITDA, 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.
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Adjusted net income (loss):
(in millions)
Net income (loss)
$
(609
)
$
(880
)
$
(529
)
$
(2,427
)
Add back (deduct):
Merger-related expenses
3
—
4
—
Restructuring charges
1
2
7
12
Impairments
—
655
—
2,134
(Gain) loss on unsettled derivatives
772
229
941
(17
)
Gain on early extinguishment of debt
—
(7
)
—
(35
)
Other (gain) loss
1
(1
)
—
(1
)
Adjustments due to discrete tax items
(1)
141
207
123
881
Tax impact on adjustments
(180
)
(206
)
(221
)
(492
)
Adjusted net income (loss)
$
129
$
(1
)
$
325
$
55
(1)
2020 primarily relates to the recognition
of a valuation allowance. The Company expects its 2021 income tax
rate to be 23.2% before the impacts of any valuation allowance.
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Adjusted diluted earnings (loss) per
share:
Diluted earnings (loss) per share
$
(0.90
)
$
(1.63
)
$
(0.78
)
$
(4.49
)
Add back (deduct):
Merger-related expenses
0.00
—
0.01
—
Restructuring charges
0.00
0.01
0.01
0.02
Impairments
—
1.21
—
3.95
(Gain) loss on unsettled derivatives
1.14
0.42
1.38
(0.03
)
Gain on early extinguishment of debt
—
(0.01
)
—
(0.07
)
Other (gain) loss
0.00
(0.00
)
—
(0.00
)
Adjustments due to discrete tax items
(1)
0.21
0.38
0.18
1.63
Tax impact on adjustments
(0.26
)
(0.38
)
(0.32
)
(0.91
)
Adjusted diluted earnings (loss) per
share
$
0.19
$
(0.00
)
$
0.48
$
0.10
(1)
2020 primarily relates to the recognition
of a valuation allowance. The Company expects its 2021 income tax
rate to be 23.2% before the impacts of any valuation allowance.
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Net cash flow:
(in millions)
Net cash provided by operating
activities
$
270
$
94
$
617
$
254
Add back (deduct):
Changes in operating assets and
liabilities
(2
)
(9
)
(2
)
12
Merger-related expenses
3
—
4
—
Restructuring charges
1
2
7
12
Net cash flow
$
272
$
87
$
626
$
278
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Adjusted EBITDA:
(in millions)
Net income (loss)
$
(609
)
$
(880
)
$
(529
)
$
(2,427
)
Add back (deduct):
Interest expense
30
22
61
41
Provision (benefit) for income taxes
—
—
—
406
Depreciation, depletion and
amortization
100
84
196
197
Merger-related expenses
3
—
4
—
Restructuring charges
1
2
7
12
Impairments
—
655
—
2,134
(Gain) loss on unsettled derivatives
772
229
941
(17
)
Gain on early extinguishment of debt
—
(7
)
—
(35
)
Other (gain) loss
1
—
—
(1
)
Stock-based compensation expense
2
1
2
2
Adjusted EBITDA
$
300
$
106
$
682
$
312
June 30, 2021
Net debt:
(in millions)
Total debt (1)
$
3,039
Subtract:
Cash and cash equivalents
(2
)
Net debt
$
3,037
(1)
Does not include $19 million of
unamortized debt discount and issuance expense.
June 30, 2021
Net debt to Adjusted EBITDA:
(in millions)
Net debt
$
3,037
Adjusted EBITDA (1)
$
1,169
Net debt to Adjusted EBITDA
2.6x
(1)
Adjusted EBITDA of $1,169 million for the
twelve months ended June 30, 2021 includes $57 million of adjusted
EBITDA generated by Montage Resources prior to November 2020
acquisition.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729006138/en/
Investor Contact Brittany Raiford Director, Investor
Relations (832) 796-7906 brittany_raiford@swn.com
Bernadette Butler Investor Relations Advisor (832) 796-6079
bernadette_butler@swn.com
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