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2Q 2017 Earnings Update – Southwestern Energy Co.

Southwestern Energy Co. · Aug 8, 2017 · 43 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. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 1
    August 2017 Update Enhancing our Future NYSE: SWN
  2. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 2
    Southwestern Energy Company General Information Southwestern Energy Company is a leading natural gas and oil company with operations predominantly in the United States, engaged in exploration, development, production, natural gas…
  3. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 3
    Recent Highlights Reduced total debt by 276 million with retirement of 2018 bonds, leaving no significant near-term maturities Financial Added to 2018 hedge position with 407 Bcf hedged at an average floor price of Discipline…
  4. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 4
    Our Strategy Strengthen the balance sheet Rigorous financial discipline Invest within cash flow Proactive risk management Capital allocation based on highest return projects Stringent capital allocation and Target minimum 1.30 of…
  5. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 5
    Rigorous Financial Discipline Strengthen the balance sheet No significant near-term maturities Strong liquidity position of approximately 1.9B(1) Targeting long-term net debt to EBITDA…
  6. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 6
    Strengthen the Balance Sheet Debt Maturity Schedule Cash balance and undrawn revolver anchors liquidity position Retired 276MM in outstanding debt since YE 2016 No significant maturities before 2020(1) 2,500 2,000 1,500…
  7. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 7
    Stringent Capital Allocation and Investment Practices Fully Funded 2017 Capital Program Dynamic portfolio management and vertical integration allowing flexibility to align activity with prices Investment decisions made based on…
  8. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 8
    Premier Asset Optionality Reserves & Production 2016 Production: 875 Bcfe 2016 Reserves: 5,253 Bcfe March 31, 2017 Reserves: 10 Tcfe* * Unaudited Northeast Appalachia PA 2016 Reserves 1,574 Bcf (30%) 2016 Production 350 Bcf (40%)…
  9. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 9
    Premier Asset Optionality 3 large-scale, low-risk assets provide diversification of cash flow through geographic location and product mix Gas 20% NGLs SW App 44% Oil Revenue Breakout 31% 36% 20% 3/31/2017 Reserves 36%…
  10. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 10
    Increasing Capital Efficiency and Margin Expansion Improving F&D Shifting portfolio to highest return projects in Appalachia Increasing EUR with enhanced completion designs Drilling extended-reach laterals while staying within the…
  11. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 11
    Increasing Capital Efficiency and Margin Expansion Improving F&D Decreasing proved developed F&D costs resulting from deliberate portfolio investment shift to Appalachia Increased EURs in NE Appalachia due to changes in completion…
  12. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 12
    Increasing Capital Efficiency and Margin Expansion Northeast Appalachia completions enhancing economics Susquehanna County initial EUR increase of over 25% compared to previous operational design due to changes in completion…
  13. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 13
    Increasing Capital Efficiency and Margin Expansion Completions testing enhancing well performance across the play 700 Completion enhancements LINDA Cumulative Production (MMcfe)(1) showing increased 600 GREATHOUSE production…
  14. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 14
    Increasing Capital Efficiency and Margin Expansion Vertical integration provides competitive advantages Strategic and economic benefit that lowers net well costs Provides improved operating efficiency and flexibility Mitigates…
  15. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 15
    Increasing Capital Efficiency and Margin Expansion Improving basis differentials Transportation portfolio structured to capture materially improving Northeast basis differentials Construction progressing on multiple new pipelines…
  16. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 16
    Increasing Capital Efficiency and Margin Expansion Increasing NGL realizations driving economics in SW Appalachia Improving NGL prices resulted in 41MM increase in YTD 2017 margins vs YTD 2016 Realized over 80% increase in C3+…
  17. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 17
    An Industry Leader in Corporate Responsibility Model Regulatory Framework Freshwater neutral December 2016 Reviewed 100% of chemicals used Partnership with EDF 3.2 billion gallons of water conservation for hydraulic fracturing in…
  18. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 18
    Building for Tomorrow Driving down breakeven thresholds to expand inventory at lower commodity prices Company Applying on-going technical learnings to maximize future investment economics Objectives Strengthening the balance sheet…
  19. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 19
    Delivering Shareholder Value+ Rigorous financial discipline Enhancing value from vertical integration Proactive risk management Margin expansion through cost Value-driven growth within cash flow reductions and improved well…
  20. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 20
    Appendix 20
  21. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 21
    Hedging Protecting balance sheet and targeted returns Hedge Summary 200 2017 REM 2018 2019 180 Swaps 168 112 2-Way Collars 48 23 160 3-Way Collars 68 272 108 146 139 Total (Bcf) 284 407 108 140 2.29 x Avg. Floor Price(1)…
  22. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 22
    Southwest Appalachia Core position in premier play targeting stacked pays Gas in Place Map SWN acreage shown in yellow Bcf/Section Operational excellence driving 50 Bcf 100 Bcf inventory and margin expansion 150 Bcf 200 Bcf 250…
  23. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 23
    Well-Positioned in Core Utica Acreage O.E. Burge 501H Surpassed 2 Bcf of cum production in 6 months of flowing time Sustained production at a flat rate of 15 MMcf per day at 6,100 PSI casing pressure Drilled 100% in target…
  24. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 24
    Southwest Appalachia Takeaway Increasing Gulf Coast market exposure 1.00 0.90 0.80 0.70 0.60 TransCanada MXP Bcf/d 0.50 Columbia Gas Transmission MXP (project not in service) 0.40 0.30 ETC Rover 0.20 ETC FirmRover…
  25. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 25
    Southwest Appalachia Rich Gas Horizontal well performance Well Results Exceeding Expectations SWN Drilled & Completed Rich Gas Condensate (Normalized to 7,500 ft lateral) Production Mix Gas 20% 36% NGL Oil 44% Average Avg…
  26. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 26
    Southwest Appalachia Lean Gas Horizontal well performance Well Results Exceeding Expectations SWN Drilled & Completed Lean Gas Condensate (Normalized to 7,500 ft lateral) Production Mix 1% Gas 38% NGL 61% Oil Average Avg…
  27. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 27
    Northeast Appalachia Delivering value now and in the future SWN Acreage Gross operated production of 1,265 MMcf/d (1,050 MMcf/d net) as of June 30, 2017 Achieved divisions record all-time gross operated production in June 2017…
  28. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 28
    Northeast Appalachia Takeaway Low cost portfolio with extensive market reach 1.8 Added 140 MMcf per day of new takeaway capacity 0.10 per Mcf to 1.6 facilitate further growth 1.4 1.2 Constitution Constitution Transport Extension…
  29. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 29
    Northeast Appalachia Continued improvement Operating Statistics of wells Average Average Completed Completed Avg Rate for 1st Avg Rate for 1st Time Frame placed to 30 Days 60 Days Lateral Well Cost sales (Mcfe/d) (Mcfe/d) 25.6…
  30. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 30
    Northeast Appalachia Materially improved well performance Susquehanna County initial EUR increase of over 25% due to changes in completion intensity and flowback methods Susquehanna County 20,000 18,000 16,000 14,000…
  31. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 31
    Northeast Appalachia Well performance by county 31
  32. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 32
    Fayetteville Significant asset with upside promise SWN Acreage Gross operated production was 1,288 MMcf/d (851 MMcf/d net) as of June 30, 2017 Aggressively pursuing alternatives to drive enhanced economics Confirmed Moorefield…
  33. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 33
    Fayetteville Takeaway High correlation to Henry Hub 2.5 2.0 1.5 Bcf/d 1.0 Firm Transportation Capacity 0.5 0.0 Sales Locations 100% SWN Firm Reservation Total Firm Annual Firm Sales Rate per 100% 100% 100%…
  34. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 34
    Fayetteville Operating Statistics Time Frame Wells Average Placed on IP Rate 30th-Day Avg Rate 60th-Day Avg Rate Average Lateral Production (Mcf/d) ( of wells) ( of wells) Length (ft) 3.2 10.9 2.8 2.8 2.8 1st Qtr 2014 105…
  35. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 35
    Moorefield Well performance Mcf/d 6,500 6 Bcf Typecurve (1) 6,000 Moorefield Wells 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 100 200 300 400 500 600 700 800 900 1000…
  36. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 36
    Fayetteville Well performance (1) Data as of June 30, 2017. Excludes shut-in wells and wells with mechanical problems (126). 36
  37. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 37
    Midstream SWN Marketing 2016 Total volumes marketed (Bcfe) 1,062 YTD 2017 Total volumes marketed (Bcfe) 509 Fayetteville Shale Gathering Gathered volumes at June 30, 2017 (Bcf/d) 1.45 Gathering lines at June 30, 2017 (Miles)…
  38. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 38
    U.S. Natural Gas Supply & Demand 29 12-Month Rolling Average 28 27 26 25 24 Tcf 23 22 21 20 19 18 17 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 Jan-15 Jan-16…
  39. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 39
    Financial and Operational Summary 6 Months Ended June 30, Year Ended Decem ber 31, 2017 2016 2016 2015 2014 ( in millions, except per share amounts) ( in millions, except per share amounts) Revenues 1,657 1,101 2,436 3,133 4,038…
  40. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 40
    Explanation and Reconciliation of Non-GAAP Financial Measures: Net Cash Flow We define net cash flow as cash flow from operating activities adjusted for changes in operating assets and liabilities and restructuring charges. Management…
  41. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 41
    Explanation and Reconciliation of Non-GAAP Financial Measures: Adjusted Net Income Attributable to Common Stock Additional non-GAAP financial measures we may present from time to time are adjusted net income attributable to common stock…
  42. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 42
    Explanation and Reconciliation of Non-GAAP Financial Measures: Net debt / LTM Adj. EBITDA Net debt is defined as short-term debt plus long-term debt less cash and cash equivalents. LTM Adjusted EBITDA is defined as net income plus…
  43. 2Q 2017 Earnings Update – Southwestern Energy Co. – slide 43
    Explanation and Reconciliation: Proved Developed Finding and Development Costs Proved developed (PDP) finding and development (F&D) costs are computed here by dividing exploration and development capital costs incurred, excluding…

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