HOUSTON, Oct. 26, 2017 /PRNewswire/ -- Southwestern
Energy Company (NYSE: SWN) today announced its financial and
operating results for the quarter ended September 30, 2017, along with other recent
developments. Highlights include:
- Realized net income attributable to common stock of
$43 million, or $0.09 per diluted share, and adjusted net income
attributable to common stock of $29
million, or $0.06 per diluted
share;
- Achieved net cash provided by operating activities of
$211 million and net cash flow of
$248 million, up 23% and 43%,
respectively, compared to the third quarter of 2016;
- Total net production of 232 Bcfe, including 153 Bcfe from the
Appalachian Basin, an increase of approximately 10% and 26%,
respectively, compared to the third quarter of 2016, despite third
party gathering downtime in Northeast Appalachia;
- Achieved record exit production rate from the Appalachian Basin
of almost 2.4 Bcfe per day, an increase of 42% compared to the
third quarter of 2016;
- Realized C3+ NGL prices of $27.82
per barrel, or 58% of West Texas Intermediate (WTI), and realized
total NGL prices of $14.47 per
barrel, or 30% of WTI (net of transportation costs), up 75% and
106%, respectively, compared to the third quarter of 2016;
- Created incremental value of approximately $1.4 million per well from reduced processing
rates in the lean gas acreage of Southwest Appalachia;
- Commenced water infrastructure project in Southwest Appalachia
that is expected to reduce well costs by approximately $500,000 per well beginning in late 2018;
- Demonstrated repeated reservoir deliverability with second
Company-drilled Utica well results in line with the Company's first
Utica well;
- Progressed Tioga County development with first four-well pad
delivering an initial production rate of over 80 MMcf per day;
- Renegotiated Fayetteville firm
transportation agreement, increasing expected cash flow by
approximately $45 million in 2018
while securing flexible takeaway capacity at significantly reduced
rates beyond 2020, subject to FERC approval;
- Brought two additional encouraging Moorefield delineation wells online continuing
to confirm our geologic and reservoir modeling of the play;
and
- Improved debt maturity profile through notes offering and
tender, resulting in only $92 million
in bond debt due prior to 2022.
"The execution of our strategy continued to deliver strong
results in the third quarter," said Bill
Way, President and Chief Executive Officer of Southwestern
Energy. "Through technological advancements, strategic
negotiation of transportation, processing and gathering agreements,
and improving our debt maturity schedule, we are driving material
shareholder value and positioning ourselves for additional value
creation in 2018 and beyond."
Financial
Results
|
For the three
months ended
|
|
For the nine
months ended
|
|
September
30,
|
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
(in millions, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$
|
110
|
|
$
|
(725)
|
|
$
|
564
|
|
$
|
(2,317)
|
Adjusted operating
income (non-GAAP measure)
|
$
|
112
|
|
$
|
94
|
|
$
|
566
|
|
$
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stock
|
$
|
43
|
|
$
|
(735)
|
|
$
|
548
|
|
$
|
(2,514)
|
Adjusted net income
(loss) attributable to common stock (non-GAAP measure)
|
$
|
29
|
|
$
|
12
|
|
$
|
156
|
|
$
|
(52)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.09
|
|
$
|
(1.52)
|
|
$
|
1.10
|
|
$
|
(6.02)
|
Adjusted diluted
earnings (loss) per share (non-GAAP measure)
|
$
|
0.06
|
|
$
|
0.03
|
|
$
|
0.31
|
|
$
|
(0.12)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
211
|
|
$
|
172
|
|
$
|
789
|
|
$
|
337
|
Net cash flow
(non-GAAP measure)
|
$
|
248
|
|
$
|
173
|
|
$
|
816
|
|
$
|
434
|
|
|
|
|
Exploration and
Production Operating Results
|
For the three
months ended
|
|
For the nine
months ended
|
|
September
30,
|
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Production
|
|
|
|
|
|
|
|
|
|
|
|
Fayetteville
(Bcf)
|
|
78
|
|
|
90
|
|
|
241
|
|
|
289
|
Northeast Appalachia
(Bcf)
|
|
101
|
|
|
84
|
|
|
285
|
|
|
268
|
Southwest Appalachia
(Bcfe)
|
|
52
|
|
|
37
|
|
|
131
|
|
|
115
|
Other (Bcfe)
|
|
1
|
|
|
–
|
|
|
1
|
|
|
1
|
Total
production (Bcfe)
|
|
232
|
|
|
211
|
|
|
658
|
|
|
673
|
% Natural
Gas
|
|
88%
|
|
|
90%
|
|
|
89%
|
|
|
90%
|
|
|
|
|
|
|
|
|
|
|
|
|
Average unit costs
per Mcfe
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
$
|
0.91
|
|
$
|
0.86
|
|
$
|
0.90
|
|
$
|
0.87
|
General &
administrative expenses(1)
|
$
|
0.23
|
|
$
|
0.23
|
|
$
|
0.22
|
|
$
|
0.21
|
Taxes, other than
income taxes(2)
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.09
|
Full cost pool
amortization
|
$
|
0.48
|
|
$
|
0.35
|
|
$
|
0.44
|
|
$
|
0.40
|
|
|
(1)
|
Excludes $2 million
and $71 million of restructuring charges for the three and nine
months ended September 30, 2016, respectively.
|
(2)
|
Excludes $3 million
of restructuring charges for the nine months ended September 30,
2016.
|
Realized
Prices
|
For the three
months ended
|
|
For the nine
months ended
|
|
September
30,
|
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Natural Gas
Price:
|
|
|
|
|
|
|
|
|
|
|
|
NYMEX Henry Hub Price
($/MMBtu)(1)
|
$
|
3.00
|
|
$
|
2.81
|
|
$
|
3.17
|
|
$
|
2.29
|
Discount to
NYMEX(2)
|
|
(1.11)
|
|
|
(1.03)
|
|
|
(0.86)
|
|
|
(0.82)
|
Average realized gas
price per Mcf, excluding hedges
|
$
|
1.89
|
|
$
|
1.78
|
|
$
|
2.31
|
|
$
|
1.47
|
Gain
(loss) on settled financial basis derivatives ($/Mcf)
|
|
0.05
|
|
|
0.00
|
|
|
(0.04)
|
|
|
0.01
|
Gain
(loss) on settled commodity derivatives ($/Mcf)
|
|
0.03
|
|
|
(0.05)
|
|
|
(0.05)
|
|
|
0.03
|
Average realized gas
price per Mcf, including hedges
|
$
|
1.97
|
|
$
|
1.73
|
|
$
|
2.22
|
|
$
|
1.51
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
Price:
|
|
|
|
|
|
|
|
|
|
|
|
WTI oil price
($/Bbl)
|
$
|
48.22
|
|
$
|
44.94
|
|
$
|
49.47
|
|
$
|
41.33
|
Discount to
WTI
|
|
(7.73)
|
|
|
(9.53)
|
|
|
(7.99)
|
|
|
(12.80)
|
Average oil price per
Bbl
|
$
|
40.49
|
|
$
|
35.41
|
|
$
|
41.48
|
|
$
|
28.53
|
|
|
|
|
|
|
|
|
|
|
|
|
NGL
Price:
|
|
|
|
|
|
|
|
|
|
|
|
Average net realized
NGL price per Bbl(3)
|
$
|
14.47
|
|
$
|
7.04
|
|
$
|
13.06
|
|
$
|
6.11
|
Percentage of
WTI
|
|
30%
|
|
|
16%
|
|
|
26%
|
|
|
15%
|
|
|
(1)
|
Based on last day
settlement prices from monthly futures contracts.
|
(2)
|
This discount
includes a basis differential, physical basis sales, third-party
transportation charges and fuel charges and excludes financial
basis hedges.
|
(3)
|
Includes the impact
of transportation costs and $0.02 per Bbl of realized hedge gains
for the three and nine months ended September 30, 2017 and $0.01
per Bbl of realized hedge gains for the three months ended
September 30, 2016.
|
Third Quarter of 2017 Financial Results
E&P Segment – The operating income for the
segment improved to $64 million for
the third quarter of 2017, compared to an operating loss of
$777 million during the third quarter
of 2016 that included an $817 million
impairment of natural gas and oil properties during this period
last year. The increase in operating income was primarily due
to the absence of impairments and restructuring charges and higher
realized natural gas and liquids pricing, partially offset by
higher operating costs.
Midstream Segment – Operating income for the
segment, comprised of gathering and marketing activities, was
$46 million for the third quarter of
2017, which included a $3 million
gain on sale of equipment, compared to $52
million for the same period in 2016. The decrease in
operating income was largely due to a decrease in volumes gathered
resulting from lower production volumes in the Fayetteville
Shale.
First Nine Months of 2017 Financial Results
E&P Segment – The operating income for the
segment improved to $435 million for
the first nine months of 2017, compared to an operating loss of
$2.5 billion during the first nine
months of 2016, which was primarily due to the $2.3 billion impairment of natural gas and oil
properties and $74 million in
restructuring charges during this period last year. The
increase in operating income in 2017 was primarily due to the
absence of impairments and restructuring charges and higher
realized natural gas and liquids pricing, partially offset by
higher operating costs.
Midstream Segment – Operating income for the
segment, comprised of gathering and marketing activities, was
$129 million for the first nine
months of 2017, which included a $3
million gain on sale of equipment, compared to $169 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
September 30, 2017, the Company had
total debt of approximately $4.4
billion and $3.4 billion in
net debt. In the third quarter, the Company completed a
public offering of $650 million
aggregate principal of its 7.50% senior notes due 2026 and
$500 million aggregate principal of
its 7.75% senior notes due 2027. The proceeds from this
offering were used to repay $758
million of the Company's 2020 Notes and to repay the
outstanding balance of $327 million
on the Company's 2015 Term Loan. The Company now has only
$92 million in bonds due prior to
2022. The undrawn revolver and the cash maintained on the
balance sheet anchor the strong liquidity position the Company has
built and intends to maintain as part of its disciplined financial
plan.
During the first nine months of 2017, Southwestern invested a
total of $946 million. This
included approximately $921 million
invested in its E&P business, $21
million invested in its Midstream segment and $4 million invested for corporate and other
purposes. Of the $946 million,
approximately $85 million was
associated with capitalized interest and $77
million was associated with capitalized expenses.
Hedging Update
As of October 24, 2017, the
Company had approximately 139 Bcf of its remaining 2017 forecasted
gas production protected at an average swap or purchased put strike
price of $3.01 per Mcf.
Additionally, the Company had approximately 473 Bcf of its 2018
forecasted gas production protected at an average swap or purchased
put strike price of $2.99 per Mcf,
with upside exposure on approximately 62%, or 295 Bcf, of those
protected volumes up to $3.39 per
Mcf. The Company also had approximately 165 Bcf of its 2019
forecasted gas production protected at an average purchased put
strike price or average swap price of $2.97 with upside exposure on approximately 66%,
or 108 Bcf, of those protected volumes up to $3.32 per Mcf.
A detailed breakdown of the Company's natural gas derivative
financial instruments as of October 24,
2017 is shown below. 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
|
Financial
protection on production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price
swaps
|
73
|
|
$
|
3.06
|
|
$
|
–
|
|
$
|
–
|
|
$
|
–
|
Two-way
costless collars
|
32
|
|
|
–
|
|
|
–
|
|
|
2.96
|
|
|
3.38
|
Three-way
costless collars
|
34
|
|
|
–
|
|
|
2.29
|
|
|
2.97
|
|
|
3.30
|
Total
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price
swaps
|
178
|
|
$
|
3.02
|
|
$
|
–
|
|
$
|
–
|
|
$
|
–
|
Two-way
costless collars
|
23
|
|
|
–
|
|
|
–
|
|
|
2.97
|
|
|
3.56
|
Three-way
costless collars
|
272
|
|
|
–
|
|
|
2.40
|
|
|
2.97
|
|
|
3.37
|
Total
|
473
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price
swaps
|
57
|
|
$
|
3.01
|
|
$
|
–
|
|
$
|
–
|
|
$
|
–
|
Three-way
costless collars
|
108
|
|
$
|
–
|
|
$
|
2.50
|
|
$
|
2.95
|
|
$
|
3.32
|
Total
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sold call
options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
22
|
|
$
|
–
|
|
$
|
–
|
|
$
|
–
|
|
$
|
3.68
|
2018
|
63
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
3.50
|
2019
|
52
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
3.50
|
2020
|
54
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
3.65
|
2021
|
35
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
3.51
|
Total
|
225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not
sum due to rounding
|
As of October 24, 2017, the
Company had also taken steps to mitigate the volatility of basis
differentials by protecting basis on approximately 127 Bcf of its
remaining 2017 forecasted natural gas production and 224 Bcf of its
2018 forecasted natural gas production at a basis differential to
NYMEX natural gas prices of approximately ($0.53) per Mcf and ($0.29) per Mcf, respectively, which includes the
impact of both physical and financial basis positions. A
detailed breakdown of the Company's financial basis positions as of
October 24, 2017 is shown below:
|
|
Financial basis
positions
(excludes physical
positions)
|
Volume
(Bcf)
|
|
Basis
Differential
($/MMBTU)
|
|
|
|
|
|
|
2017
|
|
|
|
|
|
Dominion South
|
|
22.1
|
|
$
|
(1.16)
|
TETCO M3
|
|
10.2
|
|
|
(0.48)
|
Transco Z6
Non-NY
|
|
0.3
|
|
|
0.47
|
Total
|
|
32.6
|
|
$
|
(0.93)
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
Dominion
South
|
|
18.5
|
|
$
|
(1.17)
|
TETCO M3
|
|
7.3
|
|
|
1.08
|
Transco Z6
Non-NY
|
|
0.5
|
|
|
2.04
|
Total
|
|
26.2
|
|
$
|
(0.49)
|
E&P Operational Review
During the third quarter of 2017, Southwestern invested a total
of approximately $320 million in the
E&P business and participated in drilling 47 wells, completed
29 wells, and placed 37 wells to sales.
|
|
|
|
|
|
|
|
|
Three Months Ended
Sept 30, 2017 E&P Division Results
|
Appalachia
|
|
Fayetteville
|
|
Northeast
|
|
Southwest
|
|
Shale
|
Production (Bcfe)
(1)
|
|
101
|
|
|
52
|
|
|
78
|
|
|
|
|
|
|
|
|
|
Capital
investments ($ in millions)
|
|
|
|
|
|
|
|
|
Exploratory and
development drilling, including workovers
|
$
|
104
|
|
$
|
90
|
|
$
|
20
|
Acquisition and
leasehold
|
|
3
|
|
|
15
|
|
|
1
|
Seismic and
other
|
|
4
|
|
|
2
|
|
|
5
|
Capitalized interest
and expense
|
|
11
|
|
|
33
|
|
|
5
|
Total capital
investments
|
$
|
122
|
|
$
|
140
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
Gross operated
well count summary
|
|
|
|
|
|
|
|
|
Drilled
|
|
23
|
|
|
20
|
|
|
4
|
Completed
|
|
18
|
|
|
7
|
|
|
4
|
Wells to
sales
|
|
15
|
|
|
18
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Realized
Price
|
|
|
|
|
|
|
|
|
NYMEX Henry Hub Price
($/MMBtu)
|
$
|
3.00
|
|
$
|
3.00
|
|
$
|
3.00
|
Discount to NYMEX
($/Mcf)(2)
|
$
|
(1.39)
|
|
$
|
(1.01)
|
|
$
|
(0.77)
|
Average realized gas
price, excluding hedges ($/Mcf)
|
$
|
1.61
|
|
$
|
1.99
|
|
$
|
2.23
|
|
|
(1)
|
Southwest Appalachia
production consist of 25 Bcf of natural gas, 3,799 MBbls of NGLs
and 639 MBbls of oil.
|
(2)
|
This discount
includes a basis differential, physical basis sales, third-party
transportation charges and fuel charges and excludes financial
basis hedges.
|
During the first nine months of 2017, Southwestern invested a
total of approximately $921 million
in the E&P business and participated in drilling 106 wells,
completed 118 wells, and placed 130 wells to sales.
|
|
|
|
|
|
|
|
|
Nine Months Ended
Sept 30, 2017 E&P Division Results
|
Appalachia
|
|
Fayetteville
|
|
Northeast
|
|
Southwest
|
|
Shale
|
Production (Bcfe)
(1)
|
|
285
|
|
|
131
|
|
|
241
|
Gross operated
production as of Sept 30, 2017 (MMcfe/d)
|
|
1,408
|
|
|
958
|
|
|
1,232
|
|
|
|
|
|
|
|
|
|
Capital
investments ($ in millions)
|
|
|
|
|
|
|
|
|
Exploratory and
development drilling, including workovers
|
$
|
315
|
|
$
|
244
|
|
$
|
73
|
Acquisition and
leasehold
|
|
12
|
|
|
46
|
|
|
1
|
Seismic and
other
|
|
9
|
|
|
3
|
|
|
6
|
Capitalized interest
and expense
|
|
31
|
|
|
97
|
|
|
17
|
Total capital
investments
|
$
|
367
|
|
$
|
390
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
Gross operated
well count summary
|
|
|
|
|
|
|
|
|
Drilled
|
|
56
|
|
|
36
|
|
|
13
|
Completed
|
|
57
|
|
|
38
|
|
|
22
|
Wells to
sales
|
|
60
|
|
|
46
|
|
|
23
|
|
|
|
|
|
|
|
|
|
Realized
Price
|
|
|
|
|
|
|
|
|
NYMEX Henry Hub Price
($/MMBtu)
|
$
|
3.17
|
|
$
|
3.17
|
|
$
|
3.17
|
Discount to NYMEX
($/Mcf)(2)
|
$
|
(0.95)
|
|
$
|
(0.78)
|
|
$
|
(0.78)
|
Average realized gas
price, excluding hedges ($/Mcf)
|
$
|
2.22
|
|
$
|
2.39
|
|
$
|
2.39
|
|
|
(1)
|
SW Appalachia
production consisted of 60 Bcf of natural gas, 10,098 MBbls of NGLs
and 1,673 MBbls of oil.
|
(2)
|
This discount
includes a basis differential, physical basis sales, third-party
transportation charges and fuel charges and excludes financial
basis hedges.
|
Southwest Appalachia – The Company's net
production from Southwest Appalachia was 52 Bcfe in the third
quarter 2017, a 41% increase compared to the same quarter in
2016. Southwest Appalachia achieved record gross operated
exit production rates of 958 MMcfe per day, a 54% increase compared
to the third quarter of 2016. Southwestern brought online 18
wells in Southwest Appalachia in the third quarter, which included
17 Marcellus wells and one Utica well. The 17 Marcellus wells
had an average lateral length of 6,958 feet and an average cost of
$6.7 million per well. In
Marshall County, Southwestern placed the four-well Gladys Briggs pad to sales in July with an
average completed lateral length of 6,576 feet. The pad is
currently producing at a rate of 58 MMcfe per day, comprised of 42%
liquids, with an average flowing casing pressure of 2,250
psi. This productivity exceeds the Company's lean gas type
curve and results in an estimated pad finding and development costs
of less than $0.25 per Mcfe.
During the third quarter of 2017, two key commercial development
opportunities that expand margins and create significant long-term
value were finalized in Southwest Appalachia.
- In Marshall and Wetzel counties of West Virginia, the Company dedicated its dry
gas Utica gathering rights to Williams Partners at competitive
long-term gathering rates and concurrently expanded its wet gas
Marcellus processing capacity optionality up to 660 net MMcf per
day at immediately reduced processing rates. This agreement
also provides connectivity options to several premium gas outlets
and NGL hubs while reducing gathering fees. This new
agreement is expected to add approximately $1.4 million in net present value per well for
the Company's lean gas wells.
- Southwestern commenced a company-owned water infrastructure
project in its Panhandle acreage in West
Virginia to more efficiently transport water throughout the
play. The project is expected to reduce completion costs by
$500,000 per well beginning in late
2018 and reduce the break-even gas price by approximately
$0.25 per
Mcfe.
Southwestern continues to improve capital efficiency with
drilling advancements, lowering costs and increasing
recoveries. The Company set two drilling records in the third
quarter. The first was on the John Hupp 3H in Brooke County, West Virginia, where 6,202 feet
of lateral was drilled 100% in zone of a 15 foot target window,
setting a new 24 hour drilling record. The second was on the
William Rogers 405H well in Ohio County,
West Virginia, which was drilled to a total depth of 13,927
feet in less than 10 days from rig release to rig release.
These well results demonstrate how advanced technology is improving
operational performance.
The Company's second Utica well, the Marlin Funka 9H was placed
online in August 2017. The well had a lateral length of 4,572
feet and was flowing at a rate of 23 MMcf per day prior to being
shut in to perform additional tests. The well is expected to
flow between 16 and 20 MMcf per day as part of its pressure
management program when it is brought back online in the fourth
quarter. The Company is encouraged with the initial results
and the repeated deliverability demonstrated by its first two wells
of the estimated 1,400 locations in its portfolio.
Northeast Appalachia – The Company's net
production from Northeast Appalachia was 101 Bcfe in the third
quarter 2017, a 20% increase compared to the same quarter in
2016. Northeast Appalachia also achieved record gross
operated exit production rates of 1,408 MMcfe per day, a 35%
increase compared to the third quarter of 2016. In the third
quarter of 2017, the Company placed 15 wells to sales, which had an
average lateral length of 8,093 feet and an average cost of
$7.2 million per well. The
average rate for the first 30 days for the six wells that were
online for at least 30 days was 15.7 MMcf per day.
The Company continued its delineation success utilizing enhanced
completion designs in Tioga and
western Susquehanna Counties, placing seven wells to sales with
strong early results. For example, in Tioga County, the Company
placed a four-well pad to sales with an average lateral length of
approximately 7,500 feet and combined maximum rate of over 80 MMcf
per day, flowing against 1,200 psi of line pressure.
Additionally, the Company placed its first three-well pad to sales
in the Susquehanna County acreage acquired in 2015 with an average
lateral length of over 10,000 feet and combined maximum rate of
over 62 MMcf per day. One of the wells on this pad utilized
an advanced completion design and produced at 33 MMcf per
day. The learnings from this well will be applied to future
wells in this area.
The Company also generated an additional $0.09 per Mcf on its Northeast Appalachia volumes
with its financial basis hedges in the third quarter as basis
differentials widened as a result of increased production and
delayed in-service dates on new takeaway projects. The
current financial basis hedge position is expected to generate an
additional $0.11 of benefit during
the fourth quarter of 2017 based on current futures strip pricing,
with the majority of protection being in October. The
diversified firm transportation portfolio continues to position the
Company to maximize realized pricing based on market dynamics, and
the Company currently expects its 2018 price realizations in
Northeast Appalachia to improve by over $0.25 per Mcf as additional infrastructure is
placed into service.
Fayetteville Shale – During the third quarter of
2017, the Company placed three wells to sales, including two
Moorefield delineation
wells. The two Moorefield
wells had an average lateral length of 7,495 feet and an average
cost of $5.3 million per well.
These two step-out wells incorporated learnings from previous well
results, delivering an initial production rate of 5.4 MMcf per day
and an average EUR of 5.5 Bcf. The Company plans to test two
additional wells in the fourth quarter to further test the aerial
extent of its Moorefield
acreage.
Additionally, the Company successfully renegotiated its
Fayetteville firm transportation
agreement, subject to FERC approval, providing savings of
approximately $70 million from 2017
through 2020, including $45 million
in 2018. This agreement also secures flexible take-away
capacity at reduced rates of approximately $0.10 per MMBtu after 2020, a reduction of over
60% compared to the current average rate of $0.26 per MMBtu. The Company is pursuing
additional opportunities to further enhance margins and lower the
break-even cost across the play.
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 and
nine months ended September 30, 2017
and September 30, 2016, and as of
September 30, 2017 and December 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
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Net income (loss)
attributable to common stock:
|
|
|
|
|
|
Net income (loss)
attributable to common stock
|
$
|
43
|
|
$
|
(735)
|
Add back:
|
|
|
|
|
|
Participating
securities – mandatory convertible preferred stock
|
|
2
|
|
|
(2)
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
817
|
Restructuring
charges
|
|
−
|
|
|
2
|
(Gain) on certain
derivatives
|
|
(31)
|
|
|
(81)
|
Loss on early
extinguishment of debt(1)
|
|
59
|
|
|
57
|
Adjustments due to
inventory valuation and other
|
|
−
|
|
|
(1)
|
Legal
settlements
|
|
5
|
|
|
−
|
Adjustments due to
discrete tax items(1)
|
|
(37)
|
|
|
256
|
Tax impact on
adjustments
|
|
(12)
|
|
|
(301)
|
Adjusted net income
attributable to common stock
|
$
|
29
|
|
$
|
12
|
|
|
(1)
|
2016 includes a $51
million loss for the redemption of certain senior notes and a $6
million loss related to the unamortized debt issuance costs and
debt discounts associated with the extinguished debt which were
included in other interest changes.
|
(2)
|
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.
|
|
|
|
|
|
|
|
9 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Net income (loss)
attributable to common stock:
|
|
|
|
|
|
Net income (loss)
attributable to common stock
|
$
|
548
|
|
$
|
(2,514)
|
Add back:
|
|
|
|
|
|
Participating
securities – mandatory convertible preferred stock
|
|
59
|
|
|
−
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
2,321
|
Restructuring
charges
|
|
−
|
|
|
77
|
(Gain) loss on certain
derivatives
|
|
(350)
|
|
|
48
|
Gain on sale of assets,
net
|
|
(3)
|
|
|
(2)
|
Loss on early
extinguishment of debt(1)
|
|
70
|
|
|
57
|
Adjustments due to
inventory valuation and other
|
|
(1)
|
|
|
3
|
Legal
settlements
|
|
5
|
|
|
−
|
Adjustments due to
discrete tax items(2)
|
|
(279)
|
|
|
903
|
Tax impact on
adjustments
|
|
107
|
|
|
(945)
|
Adjusted net income
(loss) attributable to common stock
|
$
|
156
|
|
$
|
(52)
|
|
|
(1)
|
2016 includes a $51
million loss for the redemption of certain senior notes and a $6
million loss related to the unamortized debt issuance costs and
debt discounts associated with the extinguished debt which were
included in other interest changes.
|
(2)
|
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
September 30,
|
|
2017
|
|
2016
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
0.09
|
|
$
|
(1.52)
|
Add back:
|
|
|
|
|
|
Participating
securities - mandatory convertible preferred stock
|
|
0.00
|
|
|
(0.00)
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
1.69
|
Restructuring
charges
|
|
−
|
|
|
0.01
|
(Gain) on certain
derivatives
|
|
(0.06)
|
|
|
(0.17)
|
Loss on early
extinguishment of debt(1)
|
|
0.12
|
|
|
0.12
|
Adjustments due to
inventory valuation and other
|
|
−
|
|
|
(0.00)
|
Legal
settlements
|
|
0.01
|
|
|
−
|
Adjustments due to
discrete tax items(2)
|
|
(0.07)
|
|
|
0.53
|
Tax impact on
adjustments
|
|
(0.03)
|
|
|
(0.63)
|
Adjusted diluted
earnings per share
|
$
|
0.06
|
|
$
|
0.03
|
|
|
(1)
|
2016 includes a $51
million loss for the redemption of certain senior notes and a $6
million loss related to the unamortized debt issuance costs and
debt discounts associated with the extinguished debt which were
included in other interest changes.
|
(2)
|
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.
|
|
|
|
|
|
|
|
9 Months Ended
September 30,
|
|
2017
|
|
2016
|
Diluted earnings
(loss) per share:
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
$
|
1.10
|
|
$
|
(6.02)
|
Add back:
|
|
|
|
|
|
Participating
securities - mandatory convertible preferred stock
|
|
0.12
|
|
|
−
|
Impairment of natural
gas and oil properties
|
|
−
|
|
|
5.56
|
Restructuring
charges
|
|
−
|
|
|
0.19
|
(Gain) loss on certain
derivatives
|
|
(0.70)
|
|
|
0.12
|
Gain on sale of assets,
net
|
|
(0.01)
|
|
|
(0.01)
|
Loss on early
extinguishment of debt
|
|
0.14
|
|
|
0.14
|
Adjustments due to
inventory valuation and other
|
|
(0.00)
|
|
|
0.01
|
Legal
settlements
|
|
0.01
|
|
|
−
|
Adjustments due to
discrete tax items(1)
|
|
(0.56)
|
|
|
2.16
|
Tax impact on
adjustments
|
|
0.21
|
|
|
(2.27)
|
Adjusted diluted
earnings (loss) per share
|
$
|
0.31
|
|
$
|
(0.12)
|
|
|
(1)
|
2016 includes a $51
million loss for the redemption of certain senior notes and a $6
million loss related to the unamortized debt issuance costs and
debt discounts associated with the extinguished debt which were
included in other interest changes.
|
(2)
|
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
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Cash flow from
operating activities:
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
211
|
|
$
|
172
|
Add back:
|
|
|
|
|
|
Changes in operating
assets and liabilities
|
|
37
|
|
|
−
|
Restructuring
charges
|
|
−
|
|
|
1
|
Net Cash
Flow
|
$
|
248
|
|
$
|
173
|
|
|
|
|
|
|
|
|
9 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Cash flow from
operating activities:
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
789
|
|
$
|
337
|
Add back:
|
|
|
|
|
|
Changes in operating
assets and liabilities
|
|
27
|
|
|
50
|
Restructuring
charges
|
|
−
|
|
|
47
|
Net Cash
Flow
|
$
|
816
|
|
$
|
434
|
|
|
|
|
|
|
|
|
3 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Operating income
(loss):
|
|
|
|
|
|
Operating income
(loss)
|
$
|
110
|
|
$
|
(725)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
817
|
Restructuring charges
and other charges
|
|
–
|
|
|
2
|
Legal
settlements
|
|
5
|
|
|
–
|
Gain on sale of assets,
net
|
|
(3)
|
|
|
–
|
Adjusted
operating income
|
$
|
112
|
|
$
|
94
|
|
|
|
|
|
|
|
|
9 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Operating income
(loss):
|
|
|
|
|
|
Operating income
(loss)
|
$
|
564
|
|
$
|
(2,317)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
2,321
|
Restructuring charges
and other charges
|
|
–
|
|
|
77
|
Legal
settlements
|
|
5
|
|
|
–
|
Gain on sale of assets,
net
|
|
(3)
|
|
|
–
|
Adjusted
operating income
|
$
|
566
|
|
$
|
81
|
|
|
|
|
|
|
|
|
3 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
E&P segment
operating income (loss):
|
|
|
|
|
|
E&P segment
operating income (loss)
|
$
|
64
|
|
$
|
(777)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
817
|
Restructuring charges
and other charges
|
|
–
|
|
|
2
|
Legal
settlements
|
|
5
|
|
|
–
|
Adjusted
E&P segment operating income
|
$
|
69
|
|
$
|
42
|
|
|
|
|
|
|
|
|
9 Months Ended
September 30,
|
|
2017
|
|
2016
|
|
(in
millions)
|
E&P segment
operating income (loss):
|
|
|
|
|
|
E&P segment
operating income (loss)
|
$
|
435
|
|
$
|
(2,486)
|
Add back:
|
|
|
|
|
|
Impairment of natural
gas and oil properties
|
|
–
|
|
|
2,321
|
Restructuring charges
and other charges
|
|
–
|
|
|
74
|
Legal
settlements
|
|
5
|
|
|
–
|
Adjusted
E&P segment operating income (loss)
|
$
|
440
|
|
$
|
(91)
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
(in
millions)
|
Net
debt:
|
|
|
|
|
|
Total debt
|
$
|
4,436
|
|
$
|
4,653
|
Subtract:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
(989)
|
|
|
(1,423)
|
Net debt
|
$
|
3,447
|
|
$
|
3,230
|
Southwestern management will host a teleconference call on
Friday, October 27, 2017 at
10:00 a.m. Eastern to discuss its
third 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
|
|
For the nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Exploration &
Production
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
|
|
Gas production
(Bcf)
|
|
205
|
|
|
189
|
|
|
587
|
|
|
605
|
Oil production
(MBbls)
|
|
663
|
|
|
536
|
|
|
1,747
|
|
|
1,729
|
NGL production
(MBbls)
|
|
3,810
|
|
|
3,068
|
|
|
10,134
|
|
|
9,580
|
Total
production (Bcfe)
|
|
232
|
|
|
211
|
|
|
658
|
|
|
673
|
Commodity
Prices
|
|
|
|
|
|
|
|
|
|
|
|
Average realized gas
price per Mcf, including derivatives
|
$
|
1.97
|
|
$
|
1.73
|
|
$
|
2.22
|
|
$
|
1.51
|
Average realized gas
price per Mcf, excluding derivatives
|
$
|
1.89
|
|
$
|
1.78
|
|
$
|
2.31
|
|
$
|
1.47
|
Average realized oil
price per Bbl
|
$
|
40.49
|
|
$
|
35.41
|
|
$
|
41.48
|
|
$
|
28.53
|
Average realized NGL
price per Bbl
|
$
|
14.47
|
|
$
|
7.04
|
|
$
|
13.06
|
|
$
|
6.11
|
Summary of
Derivative Activity in the Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
Settled commodity
amounts included in "Gain (Loss) on Derivatives" (in
millions) (1)
|
$
|
17
|
|
$
|
(9)
|
|
$
|
(52)
|
|
$
|
22
|
Unsettled commodity
amounts included in "Gain (Loss) on Derivatives" (in
millions)
|
$
|
30
|
|
$
|
81
|
|
$
|
349
|
|
$
|
(45)
|
Average unit costs
per Mcfe
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
$
|
0.91
|
|
$
|
0.86
|
|
$
|
0.90
|
|
$
|
0.87
|
General &
administrative expenses (2)
|
$
|
0.23
|
|
$
|
0.23
|
|
$
|
0.22
|
|
$
|
0.21
|
Taxes, other than
income taxes (3)
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.10
|
|
$
|
0.09
|
Full cost pool
amortization
|
$
|
0.48
|
|
$
|
0.35
|
|
$
|
0.44
|
|
$
|
0.40
|
Midstream
|
|
|
|
|
|
|
|
|
|
|
|
Volumes marketed
(Bcfe)
|
|
273
|
|
|
264
|
|
|
782
|
|
|
814
|
Volumes gathered
(Bcf)
|
|
123
|
|
|
145
|
|
|
380
|
|
|
463
|
|
|
(1)
|
Excludes $3 million
amortization of premiums paid related to certain call options for
the three and nine months ended September 30, 2017, which is
included in gain (loss) on derivatives on the statements of
operations (unaudited).
|
(2)
|
Excludes $2 million
and $71 million of restructuring charges for the three and nine
months ended September 30, 2016, respectively.
|
(3)
|
Excludes $3 million
of restructuring charges for the nine months ended September 30,
2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF
OPERATIONS (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the nine
months ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
(in millions, except
share/per share amounts)
|
Operating
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas sales
|
|
$
|
394
|
|
$
|
340
|
|
$
|
1,368
|
|
$
|
906
|
Oil sales
|
|
|
27
|
|
|
19
|
|
|
73
|
|
|
50
|
NGL sales
|
|
|
55
|
|
|
22
|
|
|
132
|
|
|
59
|
Marketing
|
|
|
233
|
|
|
237
|
|
|
736
|
|
|
631
|
Gas
gathering
|
|
|
28
|
|
|
33
|
|
|
85
|
|
|
106
|
|
|
|
737
|
|
|
651
|
|
|
2,394
|
|
|
1,752
|
Operating Costs
and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing
purchases
|
|
|
236
|
|
|
234
|
|
|
740
|
|
|
627
|
Operating
expenses
|
|
|
170
|
|
|
139
|
|
|
481
|
|
|
455
|
General and
administrative expenses
|
|
|
62
|
|
|
61
|
|
|
170
|
|
|
171
|
Restructuring
charges
|
|
|
–
|
|
|
2
|
|
|
–
|
|
|
77
|
Depreciation, depletion
and amortization
|
|
|
135
|
|
|
99
|
|
|
364
|
|
|
349
|
Impairment of natural
gas and oil properties
|
|
|
–
|
|
|
817
|
|
|
–
|
|
|
2,321
|
Taxes, other than
income taxes
|
|
|
24
|
|
|
24
|
|
|
75
|
|
|
69
|
|
|
|
627
|
|
|
1,376
|
|
|
1,830
|
|
|
4,069
|
Operating Income
(Loss)
|
|
|
110
|
|
|
(725)
|
|
|
564
|
|
|
(2,317)
|
Interest
Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
debt
|
|
|
58
|
|
|
59
|
|
|
175
|
|
|
168
|
Other interest
charges
|
|
|
2
|
|
|
8
|
|
|
7
|
|
|
12
|
Interest
capitalized
|
|
|
(29)
|
|
|
(41)
|
|
|
(85)
|
|
|
(123)
|
|
|
|
31
|
|
|
26
|
|
|
97
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) on
Derivatives
|
|
|
45
|
|
|
71
|
|
|
295
|
|
|
(28)
|
Loss on Early
Extinguishment of Debt
|
|
|
(59)
|
|
|
(51)
|
|
|
(70)
|
|
|
(51)
|
Other Income
(Loss), Net
|
|
|
(2)
|
|
|
3
|
|
|
6
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss)
Before Income Taxes
|
|
|
63
|
|
|
(728)
|
|
|
698
|
|
|
(2,453)
|
Benefit for Income
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(10)
|
|
|
–
|
|
|
(10)
|
|
|
–
|
Deferred
|
|
|
(4)
|
|
|
(20)
|
|
|
(4)
|
|
|
(20)
|
|
|
|
(14)
|
|
|
(20)
|
|
|
(14)
|
|
|
(20)
|
Net Income
(Loss)
|
|
|
77
|
|
|
(708)
|
|
|
712
|
|
|
(2,433)
|
Mandatory
convertible preferred stock dividend
|
|
|
27
|
|
|
27
|
|
|
81
|
|
|
81
|
Participating
securities - mandatory convertible preferred stock
|
|
|
7
|
|
|
–
|
|
|
83
|
|
|
–
|
Net Income (Loss)
Attributable to Common Stock
|
|
$
|
43
|
|
$
|
(735)
|
|
$
|
548
|
|
$
|
(2,514)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss)
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
$
|
(1.52)
|
|
$
|
1.11
|
|
$
|
(6.02)
|
Diluted
|
|
$
|
0.09
|
|
$
|
(1.52)
|
|
$
|
1.10
|
|
$
|
(6.02)
|
Weighted Average
Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
499,812,926
|
|
482,485,150
|
|
496,458,435
|
|
417,222,661
|
Diluted
|
|
502,290,779
|
|
482,485,150
|
|
498,527,671
|
|
417,222,661
|
|
|
|
|
|
|
|
BALANCE SHEETS
(Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
(in
millions)
|
ASSETS
|
|
|
|
|
|
|
Current
assets
|
|
$
|
1,476
|
|
$
|
1,872
|
Property and
equipment
|
|
|
25,454
|
|
|
24,489
|
Less: Accumulated
depreciation, depletion and amortization
|
|
|
(19,904)
|
|
|
(19,534)
|
Total property and
equipment, net
|
|
|
5,550
|
|
|
4,955
|
Other long-term
assets
|
|
|
176
|
|
|
249
|
Total
assets
|
|
|
7,202
|
|
|
7,076
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
Current
liabilities
|
|
|
784
|
|
|
1,064
|
Long-term
debt
|
|
|
4,396
|
|
|
4,612
|
Pension and other
postretirement liabilities
|
|
|
46
|
|
|
49
|
Other long-term
liabilities
|
|
|
324
|
|
|
434
|
Total
liabilities
|
|
|
5,550
|
|
|
6,159
|
Equity:
|
|
|
|
|
|
|
Common stock, $0.01 par
value; 1,250,000,000 shares authorized; issued 509,142,659 shares
as of September 30, 2017 (does not include 3,346,703 shares issued
on October 16, 2017 on account of a dividend declared on September
15, 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 September 30, 2017 and December
31, 2016, conversion in January 2018
|
|
|
–
|
|
|
–
|
Additional paid-in
capital
|
|
|
4,698
|
|
|
4,677
|
Accumulated
deficit
|
|
|
(3,013)
|
|
|
(3,725)
|
Accumulated other
comprehensive loss
|
|
|
(37)
|
|
|
(39)
|
Common stock in
treasury; 31,269 shares as of September 30, 2017 and December 31,
2016
|
|
|
(1)
|
|
|
(1)
|
Total
equity
|
|
|
1,652
|
|
|
917
|
Total
liabilities and equity
|
|
$
|
7,202
|
|
$
|
7,076
|
|
|
|
|
|
|
|
STATEMENTS OF CASH
FLOWS (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
For the nine
months ended
|
|
|
September
30,
|
|
|
2017
|
|
2016
|
|
|
(in
millions)
|
Cash Flows From
Operating Activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
712
|
|
$
|
(2,433)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
|
364
|
|
|
349
|
Impairment of
natural gas and oil properties
|
|
|
–
|
|
|
2,321
|
Amortization of
debt issuance costs
|
|
|
7
|
|
|
12
|
Deferred income
taxes
|
|
|
(4)
|
|
|
(20)
|
(Gain) loss on
derivatives, unsettled
|
|
|
(350)
|
|
|
48
|
Stock-based
compensation
|
|
|
19
|
|
|
24
|
Restructuring
charges
|
|
|
–
|
|
|
30
|
Loss on early
extinguishment of debt
|
|
|
70
|
|
|
51
|
Other
|
|
|
(2)
|
|
|
5
|
Change in assets and
liabilities
|
|
|
(27)
|
|
|
(50)
|
Net cash provided by
operating activities
|
|
|
789
|
|
|
337
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
|
|
|
Capital
investments
|
|
|
(943)
|
|
|
(391)
|
Proceeds from sale of
property and equipment
|
|
|
17
|
|
|
434
|
Other
|
|
|
5
|
|
|
–
|
Net cash provided by
(used in) investing activities
|
|
|
(921)
|
|
|
43
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
|
|
Payments on short-term
debt
|
|
|
(287)
|
|
|
(1)
|
Payments on long-term
debt
|
|
|
(1,139)
|
|
|
(1,175)
|
Payments on revolving
credit facility
|
|
|
–
|
|
|
(3,268)
|
Borrowings under
revolving credit facility
|
|
|
–
|
|
|
3,152
|
Payments on commercial
paper
|
|
|
–
|
|
|
(242)
|
Borrowings under
commercial paper
|
|
|
–
|
|
|
242
|
Change in bank drafts
outstanding
|
|
|
–
|
|
|
(19)
|
Proceeds from issuance
of long-term debt
|
|
|
1,150
|
|
|
1,191
|
Debt issuance
costs
|
|
|
(18)
|
|
|
(17)
|
Proceeds from issuance
of common stock
|
|
|
–
|
|
|
1,247
|
Preferred stock
dividend
|
|
|
(8)
|
|
|
(27)
|
Other
|
|
|
–
|
|
|
(4)
|
Net cash provided by
(used in) financing activities
|
|
|
(302)
|
|
|
1,079
|
|
|
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
|
|
(434)
|
|
|
1,459
|
Cash and cash
equivalents at beginning of year
|
|
|
1,423
|
|
|
15
|
Cash and cash
equivalents at end of period
|
|
$
|
989
|
|
$
|
1,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT
INFORMATION (Unaudited)
|
|
Southwestern Energy
Company and Subsidiaries
|
|
|
|
|
|
|
Exploration and
Production
|
|
Midstream
Services
|
|
Other
|
|
Eliminations
|
|
Total
|
|
|
(in
millions)
|
Three months ended
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
470
|
|
$
|
734
|
|
$
|
–
|
|
$
|
(467)
|
|
$
|
737
|
Marketing
purchases
|
|
|
–
|
|
|
645
|
|
|
–
|
|
|
(409)
|
|
|
236
|
Operating
expenses
|
|
|
210
|
|
|
18
|
|
|
–
|
|
|
(58)
|
|
|
170
|
General and
administrative expenses
|
|
|
54
|
|
|
8
|
|
|
–
|
|
|
–
|
|
|
62
|
Depreciation,
depletion and amortization
|
|
|
120
|
|
|
15
|
|
|
–
|
|
|
–
|
|
|
135
|
Taxes, other than
income taxes
|
|
|
22
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
24
|
Operating
income
|
|
|
64
|
|
|
46
|
|
|
–
|
|
|
–
|
|
|
110
|
Capital
investments (1)
|
|
|
320
|
|
|
9
|
|
|
2
|
|
|
–
|
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
378
|
|
$
|
682
|
|
$
|
–
|
|
$
|
(409)
|
|
$
|
651
|
Marketing
purchases
|
|
|
–
|
|
|
578
|
|
|
–
|
|
|
(344)
|
|
|
234
|
Operating
expenses
|
|
|
181
|
|
|
23
|
|
|
–
|
|
|
(65)
|
|
|
139
|
General and
administrative expenses
|
|
|
50
|
|
|
11
|
|
|
–
|
|
|
–
|
|
|
61
|
Restructuring
charges
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
2
|
Depreciation,
depletion and amortization
|
|
|
83
|
|
|
16
|
|
|
–
|
|
|
–
|
|
|
99
|
Impairment of natural
gas and oil properties
|
|
|
817
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
817
|
Taxes, other than
income taxes
|
|
|
22
|
|
|
2
|
|
|
–
|
|
|
–
|
|
|
24
|
Operating income
(loss)
|
|
|
(777)
|
|
|
52
|
|
|
–
|
|
|
–
|
|
|
(725)
|
Capital investments
(1)
|
|
|
179
|
|
|
1
|
|
|
–
|
|
|
–
|
|
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,559
|
|
$
|
2,414
|
|
$
|
–
|
|
$
|
(1,579)
|
|
$
|
2,394
|
Marketing
purchases
|
|
|
–
|
|
|
2,141
|
|
|
–
|
|
|
(1,401)
|
|
|
740
|
Operating
expenses
|
|
|
591
|
|
|
68
|
|
|
–
|
|
|
(178)
|
|
|
481
|
General and
administrative expenses
|
|
|
147
|
|
|
23
|
|
|
–
|
|
|
–
|
|
|
170
|
Depreciation,
depletion and amortization
|
|
|
317
|
|
|
47
|
|
|
–
|
|
|
–
|
|
|
364
|
Taxes, other than
income taxes
|
|
|
69
|
|
|
6
|
|
|
–
|
|
|
–
|
|
|
75
|
Operating
income
|
|
|
435
|
|
|
129
|
|
|
–
|
|
|
–
|
|
|
564
|
Capital
investments (1)
|
|
|
921
|
|
|
21
|
|
|
4
|
|
|
–
|
|
|
946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
998
|
|
$
|
1,862
|
|
$
|
–
|
|
$
|
(1,108)
|
|
$
|
1,752
|
Marketing
purchases
|
|
|
–
|
|
|
1,533
|
|
|
–
|
|
|
(906)
|
|
|
627
|
Operating
expenses
|
|
|
586
|
|
|
71
|
|
|
–
|
|
|
(202)
|
|
|
455
|
General and
administrative expenses
|
|
|
141
|
|
|
30
|
|
|
–
|
|
|
–
|
|
|
171
|
Restructuring
charges
|
|
|
74
|
|
|
3
|
|
|
–
|
|
|
–
|
|
|
77
|
Depreciation,
depletion and amortization
|
|
|
300
|
|
|
49
|
|
|
–
|
|
|
–
|
|
|
349
|
Impairment of natural
gas and oil properties
|
|
|
2,321
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
2,321
|
Taxes, other than
income taxes
|
|
|
62
|
|
|
7
|
|
|
–
|
|
|
–
|
|
|
69
|
Operating income
(loss)
|
|
|
(2,486)
|
|
|
169
|
|
|
–
|
|
|
–
|
|
|
(2,317)
|
Capital investments
(1)
|
|
|
372
|
|
|
3
|
|
|
1
|
|
|
–
|
|
|
376
|
|
|
(1)
|
Capital investments
includes a decrease of $2 million and an increase of $27 million
for the three months ended September 30, 2017 and 2016,
respectively, and decreases of $13 million and $24 million for the
nine months ended September 30, 2017 and 2016, respectively,
relating to the change in capital accruals between
periods.
|
View original
content:http://www.prnewswire.com/news-releases/southwestern-energy-announces-third-quarter-2017-financial-and-operating-results-300544484.html
SOURCE Southwestern Energy Company