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COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co.

Southwestern Energy Co. · Dec 1, 2014 · 42 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. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 1
    Company Update and Guidance December 2014 NYSE: SWN
  2. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 2
    Southwestern Energy Company General Information Southwestern Energy Company is an independent natural gas company whose wholly-owned subsidiaries are engaged in natural gas and oil exploration and production and natural gas gathering…
  3. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 3
    Southwestern Energy Consistently Creates Value Strategy built on the formula The Right People doing the Right Things, wisely investing the cash flow from the underlying Assets will create Value + 4th largest producer of natural gas…
  4. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 4
    Transaction Highlights Combined CHK & STO Acquisitions Purchase Price: 5.340 billion PENNSYLVANIA OHIO Closing: December 2014 / est. early 2015 Net Acres: 443,000 Held by Production: 54% with < 90,000 acres expiring in next 4…
  5. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 5
    Acquisition Rationale Exceeds Companys Economic Hurdle of 1.3 PVI Based Only On Wells Drilled to Date Entry into liquids-rich part of Appalachia 45+ Tcfe of net recoverable resources 5,350+ drillable locations Stacked pays provide…
  6. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 6
    Well-Positioned in Rapidly Developing Play Acquired acreage is low-risk opportunity in the heart of world-class play Lateral 2 IP IP30 % Liquids 1 ID Operator Well Name Length (Mmcfe/d) (Mmcfe/d) at IP30 (feet) 3 MARCELLUS 1 1…
  7. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 7
    Enhanced Position in Core Areas of Premier Play SWN acreage shown in yellow Appalachian Summary Net Acres 782,000 Producing Operated Hz Wells 500+ Total Proved Reserves: 4.5 Tcfe(1) Increasing Scale in 2015: Bcf/Section 50 Bcf…
  8. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 8
    Southwest Appalachia Type Well Summary Marcellus Marcellus Upper Utica Wet Dry Devonian EUR (Bcfe) 15.8 11.1 16.5 10.6 Lateral Length (ft) 7,500 7,500 7,500 7,500 EUR/1,000' (Bcfe) 2.11 1.48 2.20 1.41 D&C (MM) 9.3 9.3 10.8…
  9. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 9
    Southwest Appalachia Type Curves Marcellus Dry Gas Region Utica EUR: 100% Gas EUR: 100% Gas 4 BCFE Type Curve (Based on LL = 7500 ft) 7 BCFE Type Curve (Based on LL = 7500 ft) 10 BCFE Type Curve (Based on LL = 7500 ft) Wells to Sales…
  10. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 10
    Southwesterns Appalachia Takeaway 1.8 1.6 Transco ET Rover 1.4 Constitution 1.2 Columbia Gas Estimated SWN Marketed Volumes at 1.0 Jan 1, 2015 Bcf/d Tennessee 0.8 0.6 0.4 Millennium 0.2 Firm Sales 0.0…
  11. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 11
    Sources and Uses of Cash (Post Refinancing) in millions in millions Estimated Sources Uses Sources Amount (MM) % of Total Uses Amount (MM) % of Total Total Debt 2,500 - 2,800 46% - 51% Asset Acquisition 5,340 98% (1) 1,850 - 2,150…
  12. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 12
    The New SWN Foundation for Growth PROVED RESERVES in millions SWN Pre-Acquisition Acquisition Pro Forma Other Other 3% 2% Appalachia Appalachia 28% Appalachia 47% 100% Fayetteville Fayetteville 69% 51% 7.0 Tcfe (1)…
  13. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 13
    The New SWN Foundation for Growth Production Growth (Bcfe/d) Gross Well Count 3.7 3.2 2.7 275 90 200 2.1 175 1.4 0.7 465 375 400 400 1.4 1.3 (1) 2014 2015 2016 2017 2014 2015 2016 2017 % Liquids 0% 7% 9% 10% Appalachia…
  14. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 14
    Focus on Shareholder Value Return on Equity (%) Return on Equity (%) 25% Avg. Oil Price - 95.00 25% Avg. Oil Price - 93.42 Avg. Gas Price - 4.40 Avg. Gas Price - 3.67 20% 20% 2014 Estimate(1) 2013 Actual(1) 15% 15% 10% 10% 5%…
  15. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 15
    North American Areas of Operation RESERVES & PRODUCTION E 2013 Reserves: 6,976 Bcfe NB 2013 Production: 657 Bcfe 2014 Estimated Production: 758-764 Bcfe NORTHEAST APPALACHIA A 2013 Reserves: 1,963 Bcf (28%) 2013 Production: 151 Bcf…
  16. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 16
    Proven Track Record (2) Production Adjusted EBITDA (Bcfe and Mcfe/Share) (MM and /Share) (1) (1) 761 2,310 657 1,997 565 1,774 500 1,602 1,638 1,362 1,383 405 300 195 675 113 0.33 0.57 0.87 1.16 1.43 1.61 1.86 1.97 3.96…
  17. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 17
    Capital Investments Sand Wash New BY SPENDING TYPE in Millions Basin Ventures Other 5% 6% 3,000 2% 2,600 Fayetteville 31% 2,400 2,500 2,207 2,235 SW 2,120 2,081 Appalachia 24% 2,000 E&P 1,500 BY DIVISION 1,000 2015…
  18. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 18
    Northeast Appalachia Millennium WPX Acquisition 46,700 Net Acres Laser New York Pennsylvania Stagecoach Bluestone SWN SWN Drilled Wells Pipelines We held approximately 292,000 net acres in Northeast Pennsylvania…
  19. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 19
    Fayetteville Shale Focus Area The top ten wells based on highest initial producing rates have been drilled in the last 12 months Notes: Data as of September 30, 2014. Rates are AOGC Form 13 and Form 3 test rates. SWN holds…
  20. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 20
    Our Path Forward (1) 2014 2015 Guidance Estimate NYMEX Price Assumption 4.40 Gas 3.75 Gas 3.75 Gas 4.00 Gas 95.00 Oil 70.00 Oil 80.00 Oil 80.00 Oil Adj. Net Income(2) 740-750 MM 560-580 MM 590-610 MM 690-710 MM Adj. EBITDA(2)…
  21. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 21
    The Road to Invest in the Highest PVI Projects Maintain Strong Balance Sheet Deliver the Numbers Curiosity to Learning to Innovation to 21
  22. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 22
    Appendix 22
  23. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 23
    Gas Hedges in Place Bcf 150 Fixed Price 140 Total Volumes Hedged 456 Bcf % of Estimated Gas Production 60% 130 Average Price per MMBtu 4.35 120 110 100 90 Total Volumes Hedged 240 Bcf 80 % of Estimated Gas Production 26%…
  24. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 24
    Northeast Appalachia Continuous Improvement -59% +20% Days to Drill Lateral Well Cost F&D Cost Production Reserves Length ( in millions) ( per Mcf) (in Bcf) 185 (in Bcf) 25.6 7.0 1,963 4,956 6.9 2.98 151 4,567 4,223 6.6…
  25. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 25
    Northeast Appalachia Gross Production Proven History of Effectively Ramping Activity Quickly 1,000,000 Average Average 30th-Day Average RE- Gross operated production of approx. Completed Completed Time Frame Avg Rate RE 900,000 (…
  26. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 26
    Northeast Appalachia Well Performance by County 10,000 9,000 8,000 7,000 Daily Rate, Mcf/d 6,000 5,000 4,000 3,000 2,000 1,000 0 0 365 730 1,095 1,460 Note: Excluding downtime Days of Production…
  27. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 27
    Fayetteville Shale Continuous Improvement well cost F&D Cost production Reserves -62% +104% -12% +800% +570% Days to Drill Lateral Well Cost F&D Cost Production Reserves Length ( in millions) ( per Mcf) (in Bcf) (in Bcf) 17.5 5,410…
  28. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 28
    Fayetteville Shale Horizontal Well Performance Wells Average 30th-Day 60th-Day Average SWN Gross Operated Production Time Frame Placed on IP Rate Avg Rate Avg Rate Lateral Production (Mcf/d) ( of wells) ( of wells) Length 2,200…
  29. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 29
    Fayetteville Shale Horizontal Well Performance Mcf/d 5000 5,000 ft Well 713 735 663 626 571 527 470 304 414 353 250 183 142 100 64 38 Count 4500 4,000 ft 1730 1776 1655 1570 1469 1355 1262 1156 1036 912 801 662 562 454 357 275…
  30. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 30
    Midstream GATHERING SYSTEMS NORTHEAST APPALACHIA GATHERING Gathered Volumes at Sep. 30, 2014 (Bcf/d) 0.4 Gathering Lines (Miles) 63 Firm Transportation Capacity (Bcf/d) 1.0 PA Compression Equipment (Horsepower) 53,035 Estimated…
  31. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 31
    Exploration Sand Wash Basin Niobrara Niobrara Structure Map CI: 1000 COLORADO Regional Index Map Moffat Routt Wolf Mtn 1.3 MMBO Powde r Riv e r Wind Riv e r DJ Tow Creek CRAIG 3.0 MMBO Buck Peak 4.9 MMBO…
  32. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 32
    Brown Dense Exploration Project Fayetteville Little River Shale Hempstead Oil Field Arkoma Nevada Camden -4,00 0 Basin -5,00 Gas Field Drew 0 Calhoun Bowie Ouachita SWN Drilled 1 Arkansas Bradley SWN 2014 Plan Texarkana Miller…
  33. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 33
    Drilling & Completion Major Cost Categories Average 2014 Fayetteville Shale Well Cost Estimate Major Cost Categories - 2.6 MM Fracture Stimulation 23% Water Treatment/Disposal Rig OCTG D&C Fluids Rentals Directional…
  34. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 34
    U.S. Gas Consumption and Sources Bcf 30,000 25,000 20,000 15,000 U.S. gas production and consumption 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…
  35. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 35
    U.S. Electricity Generation Electricity Generation by Energy Source Total 4,020 Billion KWh (Nov 2012 Oct 2013). 6% 1% 7% 39% 19% 28% Coal Natural Gas Nuclear 1 2 Hydroelectric Renewables Other 1. Geothermal,…
  36. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 36
    U.S. Natural Gas Supply and Demand 12 Month Rolling Average 28 27 Demand Supply 26 25 24 TCF 23 22 21 20 19 18 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14…
  37. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 37
    U.S. Gas Drilling and Prices Gas Rigs Gas Price Drilling /MMBtu 2,000 16.00 1,500 12.00 1,000 8.00 500 4.00 Gas Rigs Gas Price 0 0.00 Source: Baker Hughes, Bloomberg 37
  38. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 38
    Oil and Gas Price Comparison /Bbl /MMBtu 150 15 Henry Hub WTI Crude Natural Gas (left scale) (right scale) 120 12 90 9 60 6 30 3 0 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Source:…
  39. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 39
    Financial & Operational Summary Nine Months September 30, Year Ended December 31, 2014 2013 2013 2012 2011 ( in millions, except per share amounts) ( in millions, except per share and unit amounts) Revenues 3,076 2,464 3,371 2,730…
  40. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 40
    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…
  41. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 41
    Explanation and Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income Additional non-GAAP financial measures we may present from time to time are adjusted net income and adjusted diluted earnings per share attributable to…
  42. COMPANY UPDATE AND GUIDANCE – Southwestern Energy Co. – slide 42
    Explanation and Reconciliation of Non-GAAP Financial Measures: Adjusted EBITDA EBITDA is defined as net income plus interest, income tax expense, depreciation, depletion and amortization. Adjusted EBITDA is defined as EBITDA less gains…

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