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March 2018 Investor Update – Southwestern Energy Co.

Southwestern Energy Co. · Mar 16, 2018 · 60 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. March 2018 Investor Update – Southwestern Energy Co. – slide 1
    March 2018 Investor Update Repositioning to Win NYSE: SWN
  2. March 2018 Investor 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. March 2018 Investor Update – Southwestern Energy Co. – slide 3
    Building for Tomorrow Pursue strategic alternatives for Fayetteville Shale Further de-lever balance sheet Expand financial flexibility Accelerate value from Appalachia assets Target liquids growth in Southwest Appalachia to enhance…
  4. March 2018 Investor Update – Southwestern Energy Co. – slide 4
    Executing on Our Strategy Stabilize Optimize and Increase Value Reposition to Compete and Win Strengthened the balance Expanded margins and Actively pursue strategic sheet improved capital efficiency alternatives for the…
  5. March 2018 Investor Update – Southwestern Energy Co. – slide 5
    Our Formula Drives Our Success Delivering robust value growth in core Appalachia areas Low decline, cash flow generating Fayetteville asset Premier quality, large scale assets High degree of operational control and flexibility…
  6. March 2018 Investor Update – Southwestern Energy Co. – slide 6
    Asset Overview Reserves & Production 2017 Production: 897 Bcfe 12/31/2017 Reserves: 14.8 Tcfe Northeast Appalachia 2017 Reserves 4.1 Tcf (28%) PA 2017 Production 395 Bcf (44%) Net acres 191,226 (12/31/17) Southwest Appalachia…
  7. March 2018 Investor Update – Southwestern Energy Co. – slide 7
    2017 Highlights Delivered on commitment to invest within net cash flow(1) Production of 897 Bcfe and total proved reserves of 14.8 Tcfe Optimized completion techniques resulting in increased type curves and improving economics in the…
  8. March 2018 Investor Update – Southwestern Energy Co. – slide 8
    2017 Proved Reserves Growth Year-end Reserve Profile (Tcfe) 2017 Proved Reserves 14.8 Proved reserves - 14.8 Tcfe (181% increase) 75% natural gas and 25% liquids 3.7 46% proved undeveloped Appalachia reserves - 11.1 Tcfe (393%…
  9. March 2018 Investor Update – Southwestern Energy Co. – slide 9
    2018 Key Objectives Expand value Capture additional value from higher margin natural gas liquids Expansion of economic inventory Reshape cost structure Further enhance well productivity Increase capital efficiency Accelerate…
  10. March 2018 Investor Update – Southwestern Energy Co. – slide 10
    Doing More with Less in 2018 Fully funded 2018 capital program at 2.85/60.00 with flexibility to adjust investment levels and align with commodity prices Hedges on 69% of projected 2018 natural gas volumes 2.97 per mcf (1) 2018 cash…
  11. March 2018 Investor Update – Southwestern Energy Co. – slide 11
    Increasing Capital Efficiency Improving PD F&D Costs Deliberate capital allocation to Appalachia driving down PD F&D costs Optimized drilling and completion designs increasing EURs throughout Appalachia acreage Vertical integration…
  12. March 2018 Investor Update – Southwestern Energy Co. – slide 12
    Appalachia Growth Story Capable of self-funding future growth Investment flexibility between wet and dry gas Production to grow 18% (assuming midpoints) over 2017 from only 770MM in drilling and completions capital 30% increase in…
  13. March 2018 Investor Update – Southwestern Energy Co. – slide 13
    Southwest Appalachia Core position in premier play targeting stacked pays Operational and technical excellence driving inventory and margin expansion 2018 plan focusing on wet gas window of the panhandle to capitalize on improving…
  14. March 2018 Investor Update – Southwestern Energy Co. – slide 14
    Southwest Appalachia Increasing NGL realizations driving economics in SW Appalachia NGL Composition Increasing NGL Realizations 39.38 5% 10% 27.91 71% of WTI 17.98 25% 57% 60% 12.08 32% of WTI of WTI 25% of WTI 4Q…
  15. March 2018 Investor Update – Southwestern Energy Co. – slide 15
    Southwest Appalachia A look to the future Southwest Appalachia provides future liquids rich production and cash flow growth Capable of doubling production over next 4 years assuming only 500 million per year in capital…
  16. March 2018 Investor Update – Southwestern Energy Co. – slide 16
    Northeast Appalachia Delivering value now and in the future SWN Acreage Gross operated production of approximately 1,446 MMcf/d (1,218 MMcf/d net) as of Dec 2017 Record gross operated production rate in 4Q 2017, an increase of…
  17. March 2018 Investor Update – Southwestern Energy Co. – slide 17
    Northeast Appalachia Generating Free Cash Flow 2018 expected to be an inflection year in Northeast Appalachia Basis improvement of 0.25/Mcf without significant transportation cost increases Free cash flow(1) generation of 150 million…
  18. March 2018 Investor Update – Southwestern Energy Co. – slide 18
    Fayetteville Core position with material production, cash flows and low risk inventory SWN Acreage Gross operated production was 1,170 MMcf/d (771 MMcf/d net) as of December 2017 Pursuing strategic alternatives for the…
  19. March 2018 Investor Update – Southwestern Energy Co. – slide 19
    Fayetteville Low decline asset with significant upside Applied big data analytics to 4,000+ Fayetteville wells to define optimal well design Drilled first redevelopment well that resulted in a 40% improvement in initial production…
  20. March 2018 Investor Update – Southwestern Energy Co. – slide 20
    Repositioning to Win Rigorous financial discipline Enhancing value from vertical integration Proactive risk management Margin expansion through cost Returns-focused growth within cash flow reductions and improved well…
  21. March 2018 Investor Update – Southwestern Energy Co. – slide 21
    Appendix 21
  22. March 2018 Investor Update – Southwestern Energy Co. – slide 22
    Corporate Governance Snapshot Strong governance practices Independence Independent oversight to serve the long-term interests of Southwestern Energy and our shareholders 9 out of 10 directors determined by Board to be independent…
  23. March 2018 Investor Update – Southwestern Energy Co. – slide 23
    Strategy Delivering Results Recent Highlights Announced initiative to actively pursue strategic alternatives for the Fayetteville Shale E&P and related midstream gathering assets Total net production of 239 Bcfe, including 162 Bcfe…
  24. March 2018 Investor Update – Southwestern Energy Co. – slide 24
    Rigorous Financial Discipline Strengthen the balance sheet No significant near-term maturities Strong liquidity position of approximately 1.7B(1) Targeting long-term net debt to EBITDA…
  25. March 2018 Investor Update – Southwestern Energy Co. – slide 25
    Strengthen the Balance Sheet Debt Maturity Schedule Cash balance and undrawn revolver anchors liquidity position of approximately 1.7B(1) Extended maturity profile with no significant bond maturities before 2022 Created additional…
  26. March 2018 Investor Update – Southwestern Energy Co. – slide 26
    Hedging Protecting balance sheet and targeted returns 200 Hedge Summary(1) 2018 2019 180 Swaps 265 93 2-Way Collars 29 9 160 147 149 3-Way Collars 273 112 138 Total (Bcf)(2) 566 215 140 133 Avg. Floor Price 2.97 2.96…
  27. March 2018 Investor Update – Southwestern Energy Co. – slide 27
    Southwest Appalachia 27
  28. March 2018 Investor Update – Southwestern Energy Co. – slide 28
    Southwest Appalachia Increasing Capital Efficiency 3,000 Improved productivity BROOKE COUNTY Cumulative Production 2,500 BROOKE COUNTY across the rich and lean PARKS PARKS 2,000 (MMcfe)(1) gas windows showing 1,500…
  29. March 2018 Investor Update – Southwestern Energy Co. – slide 29
    Southwest Appalachia Rich vs Lean Economics Liquids Rich Economics F&D (/Mcfe) 2018 program targeting rich gas acreage with best economics in portfolio EUR - 16 Bcfe 400 Marcellus rich gas locations economic at 1.75/50 NYMEX price…
  30. March 2018 Investor Update – Southwestern Energy Co. – slide 30
    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…
  31. March 2018 Investor Update – Southwestern Energy Co. – slide 31
    Well-Positioned in Core Utica Acreage Progressing technical and economic 1 understanding of 15+ Tcf Utica resource base Advancing delineation efforts to enhance drilling economics 1 7 200 sq mile 3-D seismic acquisition OBO well…
  32. March 2018 Investor Update – Southwestern Energy Co. – slide 32
    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…
  33. March 2018 Investor Update – Southwestern Energy Co. – slide 33
    Southwest Appalachia Improving basis differentials as a result of pipeline infrastructure Over the next 4 years, executed transportation agreements will provide a pathway for 9 BCF/d of production to leave the Southwest Appalachian…
  34. March 2018 Investor Update – Southwestern Energy Co. – slide 34
    Southwest Appalachia Takeaway Increasing Gulf Coast market exposure 1.00 0.90 0.80 0.70 0.60 TransCanada MXP Bcf/d Columbia Gas Transmission MXP (project not in service) 0.50 0.40 0.30 ETC Rover ETC Rover 0.20…
  35. March 2018 Investor Update – Southwestern Energy Co. – slide 35
    Southwest Appalachia Rich Gas Horizontal well performance Well Results ExceedingSWN Expectations Drilled & Completed Rich Gas Condensate (Normalized to 7,500 ft lateral) Production Mix 15% Gas 37% NGL Oil 48% Average Avg…
  36. March 2018 Investor Update – Southwestern Energy Co. – slide 36
    Southwest Appalachia Lean Gas Horizontal well performance Well Results ExceedingSWN Drilled & Completed Lean Gas Condensate Expectations (Normalized to 7,500 ft lateral) Production Mix 1% Gas 47% NGL 52% Oil Average Avg…
  37. March 2018 Investor Update – Southwestern Energy Co. – slide 37
    Northeast Appalachia 37
  38. March 2018 Investor Update – Southwestern Energy Co. – slide 38
    Northeast Appalachia Takeaway Low cost portfolio with extensive market reach 1.8 1.6 1.4 Constitution Constitution 1.2 1.0 Transport Extension Options Bcf/d 0.8 Transport Extension Options 0.6 0.4 Firm…
  39. March 2018 Investor Update – Southwestern Energy Co. – slide 39
    Northeast Appalachia Improving basis differentials driving margin expansion SWN transportation portfolio structured to capture materially improving Northeast basis differentials Over the next 4 years, executed transportation…
  40. March 2018 Investor Update – Southwestern Energy Co. – slide 40
    Northeast Appalachia Continued improvement Operating Statistics Average Average Avg Rate Avg Rate of Wells for 1st for 1st Completed Completed 12.9 Time Frame Placed to 30 Days 60 Days Lateral Well Cost Sales (Mcfe/d) (Mcfe/d)…
  41. March 2018 Investor Update – Southwestern Energy Co. – slide 41
    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…
  42. March 2018 Investor Update – Southwestern Energy Co. – slide 42
    Northeast Appalachia Well performance by area 25,000 Normalized to 6,500 CLAT 20,000 Daily Rate (Mcf/d) 15,000 10,000 Impact of third-party gathering line issues, which were resolved in late 2017 5,000 0 0…
  43. March 2018 Investor Update – Southwestern Energy Co. – slide 43
    Fayetteville 43
  44. March 2018 Investor Update – Southwestern Energy Co. – slide 44
    Fayetteville 2017 activity focused on delineating Moorefield 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…
  45. March 2018 Investor Update – Southwestern Energy Co. – slide 45
    Fayetteville Takeaway High correlation to Henry Hub 2.0 1.8 1.6 1.4 1.2 Bcf/d 1.0 0.8 Firm Transportation Capacity 0.6 Volumetric Firm Transport 0.4 0.2 - Sales Locations SWN Firm Reservation Firm Sales Rate…
  46. March 2018 Investor Update – Southwestern Energy Co. – slide 46
    Moorefield Well performance Mcf/d 6,500 6 Bcf Type Curve (1) 6,000 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…
  47. March 2018 Investor Update – Southwestern Energy Co. – slide 47
    Fayetteville Historical well performance Mcf/d 5,000 2 Bcf Type Curve 3 Bcf Type Curve 4,500 4 Bcf Type Curve Fayetteville Wells Normalized to 5,300' CLAT 4,000 SWN has production history in 4,000 wells from the Fayetteville…
  48. March 2018 Investor Update – Southwestern Energy Co. – slide 48
    Vertical Integration 48
  49. March 2018 Investor Update – Southwestern Energy Co. – slide 49
    Midstream SWN Marketing 2017 Total volumes marketed (Bcfe) 1,067 2018E Total volumes marketed (Bcfe) 1,000 1,025 Fayetteville Shale Gathering Gathered volumes at Dec 31, 2017 (Bcf/d)(1) 1.3 Gathering lines at Dec 31, 2017…
  50. March 2018 Investor Update – Southwestern Energy Co. – slide 50
    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 costs Reduces…
  51. March 2018 Investor Update – Southwestern Energy Co. – slide 51
    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…
  52. March 2018 Investor Update – Southwestern Energy Co. – slide 52
    Other 52
  53. March 2018 Investor Update – Southwestern Energy Co. – slide 53
    An Industry Leader in Corporate Responsibility Freshwater neutral December 2016 Reviewed 100% of chemicals used Gold Certification by IES 3.2 billion gallons of water conservation for hydraulic fracturing since 2016 (Independent…
  54. March 2018 Investor Update – Southwestern Energy Co. – slide 54
    Appalachia Takeaway Capacity Improving basis differentials as a result of pipeline infrastructure 40.0 35.0 30.0 25.0 Bcf/d Over the next 4 years, executed transportation agreements will provide a pathway for 13…
  55. March 2018 Investor Update – Southwestern Energy Co. – slide 55
    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…
  56. March 2018 Investor Update – Southwestern Energy Co. – slide 56
    Financial and Operational Summary Year Ended Decem ber 31, 2017 2016 2015 ( in millions, except per share amounts) Revenues 3,203 2,436 3,133 Adjusted EBITDA(1) 1,247 721 1,471 (2) Adjusted Net Income (Loss) Attributable to…
  57. March 2018 Investor Update – Southwestern Energy Co. – slide 57
    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…
  58. March 2018 Investor Update – Southwestern Energy Co. – slide 58
    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…
  59. March 2018 Investor Update – Southwestern Energy Co. – slide 59
    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…
  60. March 2018 Investor Update – Southwestern Energy Co. – slide 60
    Explanation and Reconciliation: Proved Developed Finding and Development Costs Proved developed (PD) finding and development (F&D) costs are computed here by dividing exploration and development capital costs incurred, excluding…

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