Southwestern Energy Company (NYSE: SWN) (the “Company”) today
announced additional natural gas derivatives implemented by the
Company and GEP Haynesville, LLC (“GEP”) to support the repayment
of the borrowings contemplated by the Company to help finance its
pending acquisition of GEP. The incremental positions are
sufficient to cover at least 80% of the expected 2022 to 2024
production from the acquired properties.
“Protecting financial strength is one of the core pillars of our
strategy. With these incremental and acquisition-specific hedge
positions executed at favorable prices, we have locked in
sufficient cash flow to repay acquisition debt in a timely manner,
which aligns with our stated goal to reduce our total debt to a
target range of $3.0 billion to $3.5 billion,” said Bill Way,
Southwestern Energy President and Chief Executive Officer.
Please refer to the Company’s 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.
Weighted Average Price per
MMBtu
Volume (Bcf)
Swaps
Sold Puts
Purchased Puts
Sold Calls
Combined SWN +
GEP natural gas derivatives – October 1, 2021 through November 26,
2021(1)
2022
Fixed price swaps
116
$
4.30
$
—
$
—
$
—
Two-way costless collars
3
—
—
5.00
6.80
Total
119
2023
Fixed price swaps
183
$
3.47
$
—
$
—
$
—
Two-way costless collars
92
—
—
3.25
4.02
Total
275
2024
Fixed price swaps
167
$
3.13
$
—
$
—
$
—
Two-way costless collars
44
—
—
3.07
3.64
Total
211
(1)
Represents the combined derivatives entered into on a
stand-alone basis by SWN and by GEP from October 1, 2021 to
November 26, 2021. Upon acquisition close, GEP’s derivative
positions are expected to be novated to SWN.
Weighted Average Price per
MMBtu
Volume (Bcf)
Swaps
Sold Puts
Purchased Puts
Sold Calls
SWN natural gas
derivative position as of September 30, 2021
2022
Fixed price swaps
539
$
2.77
$
—
$
—
$
—
Two-way costless collars
141
—
—
2.66
3.06
Three-way costless collars
333
—
2.06
2.51
2.94
Total
1,013
2023
Fixed price swaps
274
$
2.76
$
—
$
—
$
—
Two-way costless collars
83
—
—
2.69
2.92
Three-way costless collars
215
—
2.09
2.54
3.00
Total
572
2024
Fixed price swaps
57
$
2.43
$
—
$
—
$
—
Three-way costless collars
11
—
2.25
2.80
3.54
Total
68
GEP natural gas
derivative position as of September 30, 2021
2022
Fixed price swaps
75
$
2.94
$
—
$
—
$
—
Three-way costless collars
14
—
2.15
2.65
2.86
Total
89
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.
About GEP Haynesville
GEP Haynesville, LLC, a joint venture formed by the principals
of GeoSouthern Haynesville, LP and a private equity firm, and based
in the Woodlands, Texas, is a leading energy company focused on the
development of natural gas properties in the stacked Haynesville
and Middle Bossier shale plays in North Louisiana.
Forward-Looking Statements
Certain statements and information herein 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 GEP Haynesville, LLC (the “Proposed Transaction”),
costs in connection with the Proposed Transaction, estimated
financial metrics giving effect to the Proposed Transaction,
including the estimate of additional year-end 2021 reserves and
related pricing assumptions, expected natural gas production from
properties in connection with the Proposed Transaction, repayment
of our debt, total amount of our debt, 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 accurately estimate the future amount of natural gas
produced at the properties in connection with the Proposed
Transaction; our ability to fund our planned capital investments; a
change in the amount of our debt; 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; 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.
Use of Non-GAAP Information
This news release contains non-GAAP financial measures, such as
net cash flow, free cash flow, net debt and adjusted EBITDA,
including certain key statistics and estimates. We report our
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 users of this financial information additional
meaningful comparisons between current results and the results of
our peers and of prior periods. Please see the Appendix for
definitions of the non-GAAP financial measures that are based on
reconcilable historical information.
Use of Projections
The financial, operational, industry and market projections,
estimates and targets in this news release are forward-looking
statements that are based on assumptions that are inherently
subject to significant uncertainties and contingencies, many of
which are beyond SWN's and GEP’s control. The assumptions and
estimates underlying the projected, expected or target results are
inherently uncertain and are subject to a wide variety of
significant business, economic, regulatory and competitive risks
and uncertainties that could cause actual results to differ
materially from those contained in the financial, operational,
industry and market projections, estimates and targets, including
assumptions, risks and uncertainties described in "Forward-looking
Statements" above.
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version on businesswire.com: https://www.businesswire.com/news/home/20211129005749/en/
Investor Contacts Brittany Raiford Director, Investor
Relations (832) 796-7906 brittany_raiford@swn.com
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