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Q1 2011 Earnings Call – Southwestern Energy Co.

Southwestern Energy Co. · Apr 29, 2011 · 34 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 2011 Earnings Call – Southwestern Energy Co. – slide 1
    High adventure April 2011 Update NYSE: SWN
  2. Q1 2011 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 in natural gas and oil exploration and production and natural gas gathering…
  3. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 3
    About Southwestern Focused on exploration and production of natural gas. 4.9 Tcfe of reserves; 12.2 R/P at year-end 2010. E&P strategy built on organic growth through the drillbit. Over 70% of planned E&P capital allocated to…
  4. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 4
    Recent Developments 2010 Highlights Production of 404.7 Bcfe, up 35%. Reserves of 4,937 Bcfe, up 35%. Net income of 604.1 million, up 16%.(1) Discretionary cash flow(2) of 1.6 billion, up 10%. Strong Growth and Low-Cost…
  5. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 5
    Proven Track Record For the Periods Ended December 31 Reserve Production (Bcfe) Replacement (%) EBITDA (MM) (1) F&D Cost (/Mcfe) 465-475E 1,612 2.72 592 2.55 405 1,368 523 1,362 474 300 430 399 386 1.70 364 1.59 1.53 1.43…
  6. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 6
    Areas of Operations Exploration & Production Segment Conventional Arkoma PENNSYLVANIA 2010: 4,937 Bcfe of Reserves Reserves: 226 Bcf (4%) 100% Natural Gas Production: 19.2 Bcf (5%) Production 404.7 Bcfe Net Acres: 308,123…
  7. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 7
    Capital Investments Corporate & Other 2,500 Midstream Services 2,120 Drilling Rigs 1,900 2,000 1,796 1,809 Property Acquisitions ( Millions) 1,503 Cap. Expense & Other E&P 1,500 Leasehold & Seismic 942 Development Drilling…
  8. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 8
    Fayetteville Shale Focus Area At December 31, 2010, SWN held approximately 916,000 net acres in the Fayetteville Shale play area (equivalent to approximately 1,400 square miles). Mississippian-age shale, geological equivalent of…
  9. Q1 2011 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 4,528 3.0 350.2 4,345 2.9 2.9 4,100 2.8 2.05 14 3,619…
  10. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 10
    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)…
  11. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 11
    Fayetteville Shale - Horizontal Well Performance Mcf/d 5000 5,000 ft 172 136 89 57 38 25 12 6 4 2 1 Well 4500 Count 4,000 ft 668 548 416 327 273 208 162 91 49 22 6 2 1 Well 4000 Count 4.0 Bcf 3500 3.0 Bcf 2.0 Bcf All Wells…
  12. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 12
    Fayetteville Shale - Gross Production 1,800 1,600 1,400 Gross operated production of approx. 1,635 MMcf/d as of December 31, 2010 Gross Production (MMcf/d) 1,200 1,000 800 600 Pipeline 400 Curtailment Issues…
  13. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 13
    Midstream - Adding Value Beyond the Wellhead DeSoto Gathering Lines Transmission AR Compression Facility 0 10 20 Miles Midstream assets provide rapidly growing revenue stream and potential future funding source. At December…
  14. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 14
    Marcellus Shale Millennium Stagecoach New York New York Pennsylvania Range Trust Pennsylvania Greenzweig Price West Virginia Lycoming Transco SWN 0 10 20 30 40 50 Miles Pipelines At December 31, 2010, SWN held…
  15. Q1 2011 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 2011 Earnings Call – Southwestern Energy Co. – slide 16
    Outlook for 2011 Production target of 465-475 Bcfe in 2011 (estimated growth of 15 to 17%). 2010 2011 Guidance Actual NYMEX Price Assumption 4.39 Gas 4.00 Gas 4.50 Gas 5.00 Gas 77.32 Oil 70.00 Oil 70.00 Oil 70.00 Oil Net Income…
  17. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 17
    The Road to Invest in the Highest PVI Projects. Flexibility in 2011 Capital Program. Maintain Strong Balance Sheet. Deliver the Numbers. Production and Reserves. Maximize Cash Flow. Continue to Tell Our Story. 17…
  18. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 18
    Appendix 18
  19. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 19
    Financial & Operational Summary Year Ended December 31, 2010 2009 2008 ( in millions, except per share amounts) Revenues 2,610.7 2,145.8 2,311.6 (1) EBITDA 1,612.3 1,368.1 (2) 1,362.3 (3) Adjusted Net Income 604.1 522.7 (2) 567.9…
  20. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 20
    Gas Hedges in Place Through 2013 Bcf 60 Hedged Avg Price per Mcf Percent 55 Type Volumes (or Floor / Ceiling) Hedged 2011 Swaps 124.1 Bcf 5.41 27% 5.50/ 5.50/ 5.50/ 5.50/ Collars 62.1 Bcf 5.09 / 6.50 13% 50 6.80 6.80 6.80 6.80…
  21. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 21
    SWN is One of the Lowest Cost Operators 4.00 3.50 3.00 2.50 Lifting Cost 2.00 per Mcfe of Production 1.50 (3 year average) 1.00 0.50 0.00 SWN SWN UPL NBL EOG RRC FST CHK COG APC SD NFX DVN XEC OXY SM PXD APA DNR…
  22. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 22
    East Texas SWN Acreage Haynesville Shale Prospective Area 192 Wells CHK 253 Wells Tyler Overton Avg IP: Avg IP: 8.7 MMcf/d 12.4 MMcf/d HK 123 Wells Avg IP: James Lime Horizontals 13.5 MMcf/d 57 Operated Wells Avg IP Rate:…
  23. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 23
    Fayetteville Shale Activity Compared to the Barnett 2508 Barnett Shale Play 2117 1981 1st Well Drilled 1586 1214 1992 1st Horizontal Well Drilled 701 1997 1st Slickwater Frac 70 260 2 1 669 663 524 165 408 351 Average…
  24. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 24
    Fayetteville Shale Production Compared to the Barnett 3,000 2,800 2,600 5 Years 26 Years Total Fayetteville Shale Field 2,400 Average Daily Production 2,200 for October 2010: 2,309 MMcf/d 2,000 1,800 We collapsed the learning…
  25. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 25
    Water Demand: Perspective Statewide Demand: SWN Operations Demand: 11,500 million gallons/day 10 million gallons/day (600 Wells/year) 7% SWN Operations Ground Water Less than 0.5% of States water demand 33% 20% Ground Water…
  26. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 26
    Drilling & Completion Major Cost Categories Average 2011 Fayetteville Shale Well Cost Estimate Major Cost Categories - 2,825M Fracture Stimulation Rig OCTG Drilling Fluids 28% Directional Drilling Other Wireline Fracture…
  27. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 27
    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…
  28. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 28
    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 Source: Edison Electric Institute 28
  29. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 29
    U.S. Electricity Generation Electricity Generation by Energy Source Electricity Generation Capacities Total 3,950 Billion kWh in 2009. While coal and nuclear power plants operate at very high capacity, natural gas power plants are…
  30. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 30
    U.S. Gas Drilling and Prices Gas Rigs Gas Price Drilling /MMBtu 2,000 15.00 1,700 12.00 1,400 9.00 1,100 6.00 800 Gas Rigs 3.00 Gas Price 500 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011…
  31. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 31
    Oil and Gas Price Comparison /Bbl /MMBtu 150.00 15.00 Henry Hub 120.00 Natural Gas 12.00 (right scale) 90.00 9.00 60.00 WTI Crude 6.00 (left scale) 30.00 3.00 0.00 0.00 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09…
  32. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 32
    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…
  33. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 33
    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…
  34. Q1 2011 Earnings Call – Southwestern Energy Co. – slide 34
    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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