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Q1 2012 Earnings Call – Southwestern Energy Co.

Southwestern Energy Co. · Apr 24, 2012 · 36 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 1
    UPLIFTING April 2012 Update NYSE: SWN
  2. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 2
    Southwestern Energy Company General Information Southwestern Energy Company is an integrated natural gas company whose wholly-owned subsidiaries are engaged g g in natural g gas and oil exploration p and p production and natural…
  3. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 3
    About Southwestern Focused on exploration and production of natural gas. 5.9 Tcfe of reserves; 11.8 R/P at year-end 2011. E&P strategy built on organic growth through the drillbit. Over 80% of planned E&P capital allocated to…
  4. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 4
    Recent Developments 2011 Highlights Record earnings of 638 million, up 6%. R Record d di discretionary ti h flflow (1) off 1.8 cash 1 8 billi billion, up 12% 12%. Record production of 500 Bcfe, up 24%, due to strong…
  5. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 5
    Proven Track Record For the Periods Ended December 31 Proved P d Production (Bcfe) Reserves (Bcfe) EBITDA (MM) (1) F&D Cost (/Mcfe) 1,780 2.72 500 5,893 2.55 1,612 1,368 4,937 405 1,362 1.70 3,657 1.59 300 1.53 1.43…
  6. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 6
    Areas of Operations Exploration & Production Segment PENNSYLVANIA 2011: 5,893 Bcfe of Reserves Production - 500.0 500 0 Bcfe 2012 Est. Production: 560-570 Bcfe ARKANSAS Marcellus Shale OKLAHOMA Reserves: 342 Bcf (6%)…
  7. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 7
    Capital Investments 2,500 2,207 2,120 2,105 Corporate & Other 2 000 2,000 Midstream Services 1,796 1,809 Drilling Rigs ( Millions) 1,503 1,500 Property Acquisitions Cap. Expense & Other E&P 1 000 1,000 942 Leasehold…
  8. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 8
    Fayetteville Shale Focus Area SWN holds approx. 925,000 net acres in the Fayetteville Shale play (approx 1,400 sq. miles). Mississippian-age shale, geological equivalent of the Barnett Shale in north Texas. SWN discovered the…
  9. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 9
    Fayetteville Shale - Continuous Improvement Days to Drill Lateral Length Well Cost F&D Cost Production Reserves (in feet) ( in millions) ( per Mcfe) (in Bcfe) (in Bcfe) 17 4,836 3.0 2.05 436.8 5,104 2.9 2.9 4,528 2.8 2.8 14…
  10. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 10
    Midstream - Adding Value Beyond the Wellhead DeSoto Gathering Lines Transmission AR Compression Facility 0 10 20 Miles SWNs Fayetteville Shale gathering system is one of the largest in the U.S. At December 31, 2011, gathering…
  11. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 11
    Marcellus Shale Millennium New York New York Pennsylvania Stagecoach Range Trust Pennsylvania Greenzweig West Virginia Price Lycoming SWN 0 10 20 30 40 50 Mil Miles Pi li Pipelines At December 31, 2011, SWN…
  12. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 12
    Marcellus Shale - Horizontal Well Performance 10,000 SWN Gross Operated Production 160,000 140,000 9,000 Gross operated production of approx. 133 MMcf/d as of December 31, 2011 120,000 d) Gross Production (Mcf/d 100…
  13. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 13
    New Ventures - Brown Dense Project Fayetteville Little River Arkoma Basin Hempstead Nevada Oil Field Camden -4,00 0 Shale -5,00 0 GasDrew Field Bowie Ouachita Calhoun Wesson SWN well Smackover East Arkansas Bradley OBO…
  14. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 14
    Denver Julesburg Basin Exploration Project Denver Julesburg Basin 238,057 net acres Subsea Structure on the Top of Atoka CO KS Arkoma Fayetteville Denver Arkoma Fayetteville N OK Basin B i Basin Shale Shale Julesburg M…
  15. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 15
    New Ventures - New Brunswick, Canada Project Marysville SWN currently holds exploration 2,309,247 acres licenses to over 2.5 million acres within the Maritimes Basin Principal targets are the conventional and unconventional…
  16. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 16
    Outlook for 2012 Production target of 560-570 Bcfe in 2012 (estimated growth of 13%). 2011 2012 Guidance Actual NYMEX Price Assumption 4.04 Gas 2.75 Gas 3.00 Gas 3.25 Gas 94.01 Oil 90.00 Oil 90.00 Oil 90.00 Oil Net Income 637.8…
  17. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 17
    The Road to Invest in the Highest PVI Projects. Flexibility in 2012 Capital Program. Maintain Strong Balance Sheet. Deliver the Numbers. Production and Reserves. Maximize Cash Flow. Continue to Tell Our Story. 17…
  18. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 18
    Appendix 18
  19. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 19
    Financial & Operational Summary Year Ended December 31, 2011 2010 2009 ( in millions, except per share amounts) Revenues 2,952.9 2,610.7 2,145.8 (1) EBITDA 1,779.6 1,612.3 1,368.1 (2) Adjusted Net Income 637.8 604.1 522.7 (2) Net…
  20. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 20
    Gas Hedges in Place Through 2013 Bcf 85 Hedged Avg Price per Mcf Percent 80 Type Volumes (or Floor / Ceiling) Hedged 75 2012 Swaps 185.2 Bcf 5.02 33% 47% Collars 80.5 80 5 Bcf 5 50 / 6 5.50 6.67 67 14% 70 2013 Swaps 185.2 Bcf…
  21. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 21
    SWN is One of the Lowest Cost Operators 4.00 3.50 3.00 2.50 2 50 Lifting Cost 2.00 per Mcfe of Production 1.50 (3 year average) 1.00 0 50 0.50 0.00 UPL RRC SWN SWN COG CHK FST NBL EOG APC SM DVN XEC PXD NFX APA SD MRO…
  22. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 22
    Ark-La-Tex Division Arkoma Basin Arkoma Basin Acreage: 194,494 net acres (at 12/31/11) 2011 Reserves: 194 Bcf (3% of total) 2011 Production: P d ti 16 3 Bcf 16.3 B f (3% off total) t t l) Arkoma Basin OK AR East Texas…
  23. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 23
    Fayetteville Shale - Horizontal Well Performance Wells Average 30th-Day 60th-Day Placed on IP Rate Avg Rate Avg Rate Avg Lateral Time Frame Production (Mcf/d) ( of wells) ( of wells) Length 1st Qtr 2007 58 1,261 1,066 (58) 958 (58)…
  24. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 24
    Fayetteville Shale Horizontal Well Performance Mcf/d 5000 5,000 ft Well 350 341 285 232 173 130 90 58 34 22 11 5 4 3 1 4500 Count 4,000 4 000 ft Well 1058 1023 892 785 672 532 439 332 261 202 151 85 48 26 7 2 4000 Count 4 Bcf…
  25. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 25
    Drilling & Completion Major Cost Categories Average 2012 Fayetteville Shale Well Cost Estimate Major Cost Categories - 2,866M Fracture Stimulation Rig OCTG 25% Environmental & Restoration Drilling Fluids Fracture Directional…
  26. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 26
    Water Demand: Perspective Statewide Demand: SWN Operations Demand: 11,500 million gallons/day 10 million gallons/day (600 Wells/year) SWN Operations Less than 0.09% of States water usage 33% 20% Ground Water Recycle/Reused…
  27. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 27
    Fayetteville Shale Production Compared to the Barnett 3,400 3,200 3 000 3,000 6 Years Total Fayetteville Shale Field 28 Years 2,800 Average Daily Production 2,600 for September 2011: 2,400 2,698 MMcf/d 2,200 2 000 2,000…
  28. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 28
    Fayetteville Shale Activity Compared to the Barnett 2508 Barnett Shale Play 2117 1981 1st Well Drilled 1586 1643 1214 1992 1st Horizontal Well Drilled 701 1997 1st Slickwater Frac 70 260 2 1 669 663 524 165 408 351…
  29. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 29
    U.S. Gas Consumption and Sources Bcf 30,000 25,000 20,000 15,000 U.S. gas production rising in recent years. 10,000 5,000 0 1975 1980 1985 1990 1995 2000 2005 2010 U.S. Gas U.S. Dry Gas Net Imports Consumption…
  30. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 30
    U.S. Electricity Consumption 350 325 Billion 300 Kilowatt Hours Per Month 275 250 225 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Source: Edison Electric Institute 30
  31. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 31
    U.S. Electricity Generation Electricity Generation by Energy Source Electricity Generation Capacities Total 4,120 Billion kWh in 2010. While coal and nuclear power plants operate at very high capacity, natural gas power plants are…
  32. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 32
    U.S. Gas Drilling and Prices Gas Rigs Gas Price Drilling /MMBtu 2,500 16.00 2,000 12.00 1,500 8.00 1,000 4.00 Gas Rigs G Ri Gas Price 500 0.00 Source: Baker Hughes, Bloomberg 32
  33. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 33
    Oil and Gas Price Comparison /Bbl /MMBtu 150.00 15.00 Henry Hub WTI Crude 120.00 Natural Gas (left scale) 12.00 (right scale) 90.00 9.00 60.00 6.00 30.00 3.00 0.00 0.00 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11…
  34. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 34
    Explanation and Reconciliation of Non-GAAP Financial Measures: Net Cash Flow We report our financial results in accordance with accounting principles generally accepted in the United States of America (GAAP). However, management…
  35. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 35
    Explanation and Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income Additional non-GAAP financial measures we may present from time to time are net income attributable to Southwestern Energy and diluted earnings per…
  36. Q1 2012 Earnings Call – Southwestern Energy Co. – slide 36
    Explanation and Reconciliation of Non-GAAP Financial Measures: EBITDA EBITDA is defined as net income plus interest, income tax expense, depreciation, depletion and amortization. Southwestern has included information concerning EBITDA…

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