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Q3 2017 Update – Southwestern Energy Co.

Southwestern Energy Co. · Oct 31, 2017 · 53 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. Q3 2017 Update – Southwestern Energy Co. – slide 1
    October 2017 Update Enhancing our Future NYSE: SWN
  2. Q3 2017 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. Q3 2017 Update – Southwestern Energy Co. – slide 3
    Our Strategy Delivering robust value growth in core Appalachia areas underpinned by cash flow from vast Fayetteville asset Premier quality, large scale assets High degree of operational control and flexibility Investment return…
  4. Q3 2017 Update – Southwestern Energy Co. – slide 4
    Strategy Delivering Results Recent Highlights Renegotiated Fayetteville transportation agreement, increasing 2018 cash flow by 45 million, subject to FERC approval Margin Commenced water infrastructure project in SW Appalachia that is…
  5. Q3 2017 Update – Southwestern Energy Co. – slide 5
    Strengthen the Balance Sheet Debt Maturity Schedule Cash balance and undrawn revolver anchors liquidity position of approximately 1.8B(1) Extended maturity profile with no significant bond maturities before 2022 Use of September bond…
  6. Q3 2017 Update – Southwestern Energy Co. – slide 6
    Asset Overview 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%) Net acres…
  7. Q3 2017 Update – Southwestern Energy Co. – slide 7
    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%…
  8. Q3 2017 Update – Southwestern Energy Co. – slide 8
    Increasing Capital Efficiency 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 intensity and flowback…
  9. Q3 2017 Update – Southwestern Energy Co. – slide 9
    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…
  10. Q3 2017 Update – Southwestern Energy Co. – slide 10
    Southwest Appalachia Increasing Capital Efficiency 1,500 Completion LINDA Cumulative Production 1,250 GREATHOUSE enhancements showing 1,000 (MMcfe)(1) increased production at 750 higher pressures 500 LINDA 250…
  11. Q3 2017 Update – Southwestern Energy Co. – slide 11
    Southwest Appalachia Incremental Value Creation Significant incremental value being created through operational enhancements and value chain expansion with large upside remaining Rich Gas Lean Gas 12 12 Incremental Single Well NPV…
  12. Q3 2017 Update – Southwestern Energy Co. – slide 12
    Southwest Appalachia Water Infrastructure Commenced water infrastructure project to capture additional value Expected to generate savings of 500,000 per well beginning in late 2018, an 8% improvement in F&D Reduces break-even gas…
  13. Q3 2017 Update – Southwestern Energy Co. – slide 13
    Southwest Appalachia Improving basis differentials as a result of pipeline infrastructure Over the next 4 years, executed transportation agreements will provide a pathway for 12 BCF/d of production to leave the Southwest Appalachian…
  14. Q3 2017 Update – Southwestern Energy Co. – slide 14
    Southwest Appalachia Increasing NGL realizations driving economics in SW Appalachia NGL Composition Increasing NGL Realizations 27.82 5% 10% 58% of WTI 15.91 14.47 25% 35% 60% 30% of WTI of WTI 7.04 16% of WTI Q3…
  15. Q3 2017 Update – Southwestern Energy Co. – slide 15
    Southwest Appalachia Increasing NGL realizations driving enhanced economics SWN ethane take-away portfolio provides direct exposure to Mont Belvieu pricing utilizing ATEX capacity New ethane cracker demand and export capacity…
  16. Q3 2017 Update – Southwestern Energy Co. – slide 16
    Northeast Appalachia Delivering value now and in the future SWN Acreage Gross operated production of 1,408 MMcf/d (1,166 MMcf/d net) as of Sept 30, 2017 Achieved divisions record all-time gross operated production in 3Q 2017, an…
  17. Q3 2017 Update – Southwestern Energy Co. – slide 17
    Northeast Appalachia Improving basis differentials driving margin expansion SWN transportation portfolio structured to capture materially improving Northeast basis differentials Added approximately 140 MMcf per day of new takeaway…
  18. Q3 2017 Update – Southwestern Energy Co. – slide 18
    Northeast Appalachia Completions and flowback optimization enhancing economics Susquehanna County initial EUR increase of over 25% compared to previous operational design due to changes in completion intensity and flowback methods…
  19. Q3 2017 Update – Southwestern Energy Co. – slide 19
    Fayetteville Significant asset with upside promise SWN Acreage Fayetteville E&P and midstream assets have generated over 1.0 billion in free cash flow in the last three years and are expected to generate approximately 425…
  20. Q3 2017 Update – Southwestern Energy Co. – slide 20
    Fayetteville Shallowing Base Declines SWN has the lowest production base decline of peers due to the influence of later life shallower declining Fayetteville Low base decline and robust hedging program ensures stability of future cash…
  21. Q3 2017 Update – Southwestern Energy Co. – slide 21
    Building for Tomorrow Driving down breakeven thresholds to expand inventory at lower commodity prices Company Applying ongoing technical learnings to maximize future investment economics Objectives Strengthening the balance sheet…
  22. Q3 2017 Update – Southwestern Energy Co. – slide 22
    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…
  23. Q3 2017 Update – Southwestern Energy Co. – slide 23
    Appendix 23
  24. Q3 2017 Update – Southwestern Energy Co. – slide 24
    Rigorous Financial Discipline Strengthen the balance sheet No significant near-term maturities Strong liquidity position of approximately 1.8B(1) Targeting long-term net debt to EBITDA…
  25. Q3 2017 Update – Southwestern Energy Co. – slide 25
    Stringent Capital Allocation and Investment Practices Fully Funded 2017 Capital Program Dynamic portfolio management and vertical integration allowing flexibility to align activity with strip pricing Investment decisions made based…
  26. Q3 2017 Update – Southwestern Energy Co. – slide 26
    Hedging Protecting balance sheet and targeted returns Hedge Summary 200 2017 REM 2018 2019 Swaps 73 178 57 180 2-Way Collars 32 23 164 3-Way Collars 34 272 108 160 Total (Bcf) 139 472 164 139 140 Avg. Floor Price(1) 3.01…
  27. Q3 2017 Update – Southwestern Energy Co. – slide 27
    Southwest Appalachia 27
  28. Q3 2017 Update – Southwestern Energy Co. – slide 28
    Well-Positioned in Core Utica Acreage Repeated Utica Delineation Success Initial productivity in the top quartile of WV and PA Utica industry wells(1) O.E. Burge 501H Surpassed 3 Bcf of cum production in 8 months of flowing time…
  29. Q3 2017 Update – Southwestern Energy Co. – slide 29
    Southwest Appalachia Takeaway Increasing Gulf Coast market exposure 1.00 0.90 0.80 0.70 0.60 TransCanada MXP Columbia Gas Transmission MXP (project not in service) Bcf/d 0.50 0.40 0.30 ETC ETC Rover Rover 0.20…
  30. Q3 2017 Update – Southwestern Energy Co. – slide 30
    Southwest Appalachia Rich Gas Horizontal well performance Well Results Exceeding Expectations SWN Drilled & Completed Rich Gas Condensate (Normalized to 7,500 ft lateral) Historical Production 12 BCFe Type Curve 14 BCFe Type Curve…
  31. Q3 2017 Update – Southwestern Energy Co. – slide 31
    Southwest Appalachia Lean Gas Horizontal well performance SWN Well Results Exceeding Drilled & Completed Lean Gas Condensate Expectations (Normalized to 7,500 ft lateral) Historical Production 24 BCFe Type Curve 26 BCFe Type Curve…
  32. Q3 2017 Update – Southwestern Energy Co. – slide 32
    Northeast Appalachia 32
  33. Q3 2017 Update – Southwestern Energy Co. – slide 33
    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 Constitution 1.2 1.0 Bcf/d Transport…
  34. Q3 2017 Update – Southwestern Energy Co. – slide 34
    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 25.6 sales (Mcfe/d) (Mcfe/d)…
  35. Q3 2017 Update – Southwestern Energy Co. – slide 35
    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…
  36. Q3 2017 Update – Southwestern Energy Co. – slide 36
    Northeast Appalachia Well performance by county 8,000 Company Operated Drilled Wells (Utilizing Historical Completion Designs) 7,000 6,000 5,000 Daily Rate, MCF/d 4,000 3,000 2,000 1,000 0 0 365…
  37. Q3 2017 Update – Southwestern Energy Co. – slide 37
    Fayetteville 37
  38. Q3 2017 Update – Southwestern Energy Co. – slide 38
    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…
  39. Q3 2017 Update – Southwestern Energy Co. – slide 39
    Fayetteville Takeaway High correlation to Henry Hub 2.5 2.0 1.5 Bcf/d 1.0 Firm Transportation Capacity Volumetric Firm Transport 0.5 - Sales Locations SWN Firm Reservation Total Firm Annual Firm Sales Rate…
  40. Q3 2017 Update – Southwestern Energy Co. – slide 40
    Moorefield Well performance Mcf/d 6,500 6 Bcf Typecurve 6,000 (1) Moorefield Wells Normalized to 6,500 CLAT 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…
  41. Q3 2017 Update – Southwestern Energy Co. – slide 41
    Fayetteville Well performance Mcf/d 5,000 4 Bcf Typecurve 3 Bcf Typecurve 4,500 2 Bcf Typecurve Fayetteville Wells Normalized to 5,300' CLAT 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 100…
  42. Q3 2017 Update – Southwestern Energy Co. – slide 42
    Vertical Integration 42
  43. Q3 2017 Update – Southwestern Energy Co. – slide 43
    Midstream SWN Marketing 2016 Total volumes marketed (Bcfe) 1,062 YTD 2017 Total volumes marketed (Bcfe) 782 Fayetteville Shale Gathering Gathered volumes at Sept 30, 2017 (Bcf/d) 1.4 Gathering lines at Sept 30, 2017 (Miles)…
  44. Q3 2017 Update – Southwestern Energy Co. – slide 44
    Vertical integration provides competitive advantages Strategic and economic benefit that lowers net well costs Provides improved operating efficiency and flexibility Mitigates service cost inflation Drilling Services 7…
  45. Q3 2017 Update – Southwestern Energy Co. – slide 45
    Other 45
  46. Q3 2017 Update – Southwestern Energy Co. – slide 46
    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…
  47. Q3 2017 Update – Southwestern Energy Co. – slide 47
    Appalachia Takeaway Capacity Improving basis differentials as a result of pipeline infrastructure 45.0 40.0 35.0 30.0 25.0 BCF/d 20.0 Over the next 4 years, executed transportation agreements will provide a…
  48. Q3 2017 Update – Southwestern Energy Co. – slide 48
    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…
  49. Q3 2017 Update – Southwestern Energy Co. – slide 49
    Financial and Operational Summary 9 Months Ended Sept 30, Year Ended Decem ber 31, 2017 2016 2016 2015 2014 ( in millions, except per share amounts) ( in millions, except per share amounts) Revenues 2,394 1,752 2,436 3,133 4,038…
  50. Q3 2017 Update – Southwestern Energy Co. – slide 50
    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…
  51. Q3 2017 Update – Southwestern Energy Co. – slide 51
    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…
  52. Q3 2017 Update – Southwestern Energy Co. – slide 52
    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…
  53. Q3 2017 Update – Southwestern Energy Co. – slide 53
    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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