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August 2018 Investor Presentation – Southwestern Energy Co.

Southwestern Energy Co. · Aug 8, 2018 · 48 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. August 2018 Investor Presentation – Southwestern Energy Co. – slide 1
    August 2018 Investor Update Repositioning to Win Contact: Paige Penchas Vice President, Investor Relations paige_penchasswn.com Phone: (832) 796-4068 NYSE: SWN
  2. August 2018 Investor Presentation – Southwestern Energy Co. – slide 2
    What Defines Southwestern Energy Our Strategy in Action Rigorous Increasing Our People - financial Premier quality, capital Leading discipline and large scale efficiency and technology, value focused assets margin operating and…
  3. August 2018 Investor Presentation – Southwestern Energy Co. – slide 3
    Growing Momentum Delivering Today, Building for Tomorrow Pursuing strategic alternatives for Fayetteville Appalachia 73% Shale Simplifying balance sheet and improve liquidity 2018E (2) New revolving credit facility Production…
  4. August 2018 Investor Presentation – Southwestern Energy Co. – slide 4
    Strategy Delivering Results Recent Highlights Net production of 234 Bcfe, up 5% vs 2Q 2017 Record liquids production of 61,370 barrels per day Second Quarter Appalachian production of 167 Bcfe, or 1.8 Bcfe/d Highlights Adjusted…
  5. August 2018 Investor Presentation – Southwestern Energy Co. – slide 5
    Financial Strength Net Debt / Adjusted EBITDA(1) Debt Maturity Schedule (MMs) Significant improvement 2,500 4.5x 2Q 18 Debt = 3.6B in credit metrics 2,000 3.6x 3.1x 3.0x 2.8x 2.7x 1,500 2.7x 2.0x 1,000 No significant…
  6. August 2018 Investor Presentation – Southwestern Energy Co. – slide 6
    Q2 2018 Highlights Delivering strong results in lower NYMEX gas price environment Weighted Avg. Realized Production (Bcfe) Price, incl Hedges (/Mcfe) Liquids Revenue (MMs) Cash Costs (/Mcfe)(1) 44% Liquids 5% increase 5% 98% 5%…
  7. August 2018 Investor Presentation – Southwestern Energy Co. – slide 7
    SWN Asset Overview Independent Natural Gas & Growing Liquids Producer 17 YE Proved Reserves: 14.8 Tcfe (25% Liquids) Net Acres: 191,226 18E Production*: 955 970 Bcfe (14% Liquids) Net Acres: 290,291 Northeast Appalachia 2017…
  8. August 2018 Investor Presentation – Southwestern Energy Co. – slide 8
    Appalachia Growth Story Appalachia Adjusted EBITDA (MMs) Appalachia Production (Bcfe) 406% 835 41% 701 Increase Increase 578 19% 675 498 17% 17% 81% 83% 165 83% (2) 2016 2017 2018E (1) 2016 2017 2018E 2.46/43 3.11/51…
  9. August 2018 Investor Presentation – Southwestern Energy Co. – slide 9
    Liquids production and realizations Higher liquids realizations enrich economics at lower gas prices Liquids production increased by 44% since Q2 2017 5% 10% 2Q 2018 gross exit rate of 15,000 Bbls per day of oil Ethane Propane…
  10. August 2018 Investor Presentation – Southwestern Energy Co. – slide 10
    Expanding Margins in Appalachia Appalachia Margin(1) NYMEX - 3.11 75% Gas NYMEX - 2.90 NYMEX - 2.46 1.50 Appalachia 1.16 1H 2018 Revenue Mix 0.33 16% NGL 9% Oil 2016 2017 YTD 2018 Margins continue to expand in…
  11. August 2018 Investor Presentation – Southwestern Energy Co. – slide 11
    Leveraging Appalachia Transportation Advantages Future natural gas firm transportation Other 2017 - 0.09 13% portfolio consists of over 2.0 Bcf/d of 2018 - 0.47 11% M3 2017 - (0.48) 33% 2018 - 0.31 31% capacity DOM Northeast…
  12. August 2018 Investor Presentation – Southwestern Energy Co. – slide 12
    Southwest Appalachia Core position in premier play targeting stacked pays Drive value creation through enhanced Super Rich Gas(1) Rich Gas(2) performance Dry Gas Target high value liquids inventory to enhance returns Continue to…
  13. August 2018 Investor Presentation – Southwestern Energy Co. – slide 13
    Southwest Appalachia Increasing capital efficiency, doing more with less in 2018 Average Drilled Lateral Length Number of Stages Pumped/Day Facility Installation Times 7% 13,407 36% 63% Increase Increase 7.7 60 Decrease 6.7 5.9 6.0…
  14. August 2018 Investor Presentation – Southwestern Energy Co. – slide 14
    Northeast Appalachia Delivering value now and in the future Drive value creation through enhanced performance Expected substantial 2018 free cash flow with margins improving despite decreasing commodity prices(1,2) Enhanced…
  15. August 2018 Investor Presentation – Southwestern Energy Co. – slide 15
    Northeast Appalachia Enhancing Tioga area inventory Area Highlights Building Scale in Tioga Acreage position 37,500 net acres Gross production as of June 30, 2018 - 210 MMcf/d Q2 2018 Highlights Placed 8 wells to sales, 4 in…
  16. August 2018 Investor Presentation – Southwestern Energy Co. – slide 16
    Fayetteville Core position with material production, cash flows and low risk inventory Pursuing strategic alternatives for the Fayetteville Shale E&P and related midstream gathering assets Fully integrated upstream, midstream, and E&P…
  17. August 2018 Investor Presentation – Southwestern Energy Co. – slide 17
    Fayetteville Redevelopment Identified numerous redevelopment 25% - 50% EUR Improvement opportunities Applied big data analytics to 4,000+ wells to define optimal well design Utilized advanced completion designs and optimized…
  18. August 2018 Investor Presentation – Southwestern Energy Co. – slide 18
    Vertical Integration Competitive advantages increase capital efficiency Strategic and economic benefit Well Completions Provides improved operating efficiency One frac spread in Southwest Appalachia and flexibility Total capacity…
  19. August 2018 Investor Presentation – Southwestern Energy Co. – slide 19
    Repositioning to Win Pursuing strategic alternatives for Margin expansion through cost Fayetteville Shale reductions, improved well productivity, and vertical integration Vast Appalachia acreage, inventory, and growing liquids…
  20. August 2018 Investor Presentation – Southwestern Energy Co. – slide 20
    Appendix 2020
  21. August 2018 Investor Presentation – Southwestern Energy Co. – slide 21
    Environmental, Social and Governance Board independence Management Compensation 7 out of 8 directors are independent Independent directors approve compensation Bill Way, President and CEO, is sole non- Mix of awards weighted heavily on…
  22. August 2018 Investor Presentation – Southwestern Energy Co. – slide 22
    Improving Proved Developed (PD) Finding & Development Costs PD F&D is a metric that evaluates capital efficiency SWNs PDP F&D has improved by over 40% as a result of: Shifting capital to higher return Appalachia projects Optimizing…
  23. August 2018 Investor Presentation – Southwestern Energy Co. – slide 23
    Hedging Protecting cash flow and returns 200 Hedge Summary(1) 180 REM 2019 2020 2018 158 Swaps 156 147 2 160 147 2-Way Collars 6 53 - 140 3-Way Collars 143 133 47 Volumes Hedged (Bcf) 2.40 x Total (Bcf)(2) 305 333 49…
  24. August 2018 Investor Presentation – Southwestern Energy Co. – slide 24
    2017 Proved Reserves Growth Year-end Reserve Profile (Tcfe) 2017 Proved Reserves Proved reserves - 14.8 Tcfe (181% increase) 181% 14.8 75% natural gas and 25% liquids Increase 46% proved undeveloped 3.7 Appalachia reserves - 11.1…
  25. August 2018 Investor Presentation – Southwestern Energy Co. – slide 25
    Southwest Appalachia 2525
  26. August 2018 Investor Presentation – Southwestern Energy Co. – slide 26
    Southwest Appalachia Super Rich Gas Horizontal well performance WellSWN Results Exceeding Drilled Expectations & Completed Super Rich Gas(1) Condensate (Normalized to 7,500 ft lateral) 15% 37% PRODUCTION MIX 48% Gas NGL…
  27. August 2018 Investor Presentation – Southwestern Energy Co. – slide 27
    Southwest Appalachia Rich Gas Horizontal well performance Well Results Exceeding SWN Drilled Rich Gas(1) Condensate (Normalized to 7,500 ft lateral) Expectations & Completed 1% 47% PRODUCTION 52% MIX Gas NGL Oil Average…
  28. August 2018 Investor Presentation – Southwestern Energy Co. – slide 28
    Southwest Appalachia Incremental Value Creation Significant incremental value being created through operational enhancements and value chain expansion with large upside remaining Super Rich Gas(1) Rich Gas(2) 12 12 Incremental Single…
  29. August 2018 Investor Presentation – Southwestern Energy Co. – slide 29
    Southwest Appalachia Takeaway Increasing Gulf Coast market exposure Sales Locations 100% 5% 5% 5% 12% 6% 10% 10% 80% 42% 35% 33% 33% 60% 24% 40% 54% 52% 52% 20% 22% 0% 2018 2019 2020 2021 Nymex M2 TCO Gulf SWN Firm…
  30. August 2018 Investor Presentation – Southwestern Energy Co. – slide 30
    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 Permitting 200 sq mile 3-D seismic acquisition…
  31. August 2018 Investor Presentation – Southwestern Energy Co. – slide 31
    Northeast Appalachia 3131
  32. August 2018 Investor Presentation – Southwestern Energy Co. – slide 32
    Northeast Appalachia Well performance by area 25,000 Normalized to 6,500' CLAT Normalized to 6,500 CLAT 20,000 Daily Rate (Mcf/d) 15,000 10,000 5,000 0 0 100 200 300 400 500 600 700 Days of Production…
  33. August 2018 Investor Presentation – Southwestern Energy Co. – slide 33
    Northeast Appalachia Continued improvement Operating Statistics Avg Rate for Avg Rate for Average Average of Wells 1st 1st Completed Completed Day to Drill Well Cost (MM) Time Frame Placed to Lateral Length Well Cost 30 Days 60…
  34. August 2018 Investor Presentation – Southwestern Energy Co. – slide 34
    Northeast Appalachia Takeaway Low cost portfolio with extensive market reach Sales Locations 100% 5% 5% 5% 7% 80% 29% 28% 28% 31% 60% 48% 47% 47% 40% 51% 20% 18% 20% 20% 11% 0% 2018 2019 2020 2021 Gulf M3 Dominion…
  35. August 2018 Investor Presentation – Southwestern Energy Co. – slide 35
    Fayetteville 3535
  36. August 2018 Investor Presentation – Southwestern Energy Co. – slide 36
    Fayetteville Wells Average 30th-Day 60th-Day Average Operating Statistics Time Frame Placed on IP Rate Avg Rate Avg Rate Lateral Production (Mcf/d) ( of wells) ( of wells) Length (ft) Day to Drill Well Cost (MM) 1st Qtr 2015 99 4,424…
  37. August 2018 Investor Presentation – Southwestern Energy Co. – slide 37
    Moorefield Well performance Mcf/d 6,500 6,000 Moorefield Wells(1) 6 BCF Type curve 5,500 Normalized to 6,500 CLAT 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…
  38. August 2018 Investor Presentation – Southwestern Energy Co. – slide 38
    Fayetteville Historical well performance Mcf/d 5,000 Fayetteville Wells Normalized to 5,300' CLAT 2 Bcf Typecurve 4,500 3 Bcf Typecurve 4,000 4 Bcf Typecurve 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 100 200 300…
  39. August 2018 Investor Presentation – Southwestern Energy Co. – slide 39
    Fayetteville Takeaway High correlation to Henry Hub Sales Locations 100% 100% 100% 100% 100% 80% 60% 40% 20% 0% 2018 2019 2020 2021 Gulf Coast SWN Firm Reservation Total Firm Annual Firm Sales Rate per Year…
  40. August 2018 Investor Presentation – Southwestern Energy Co. – slide 40
    Midstream SWN Marketing 2017 Total volumes marketed (Bcfe) 1,067 1H 2018 Total volumes marketed (Bcfe) 554 Fayetteville Shale Gathering Gathered volumes at June 30, 2018 (Bcf/d) 1.2 Gathering lines at June 30, 2018 (Miles) 2,045…
  41. August 2018 Investor Presentation – Southwestern Energy Co. – slide 41
    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…
  42. August 2018 Investor Presentation – Southwestern Energy Co. – slide 42
    Appalachia Takeaway Capacity 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 Appalachian…
  43. August 2018 Investor Presentation – Southwestern Energy Co. – slide 43
    Financial and Operational Summary 6 Months Ended June 30, Year Ended Decem ber 31, 2018 2017 2017 2016 2015 ( in millions, except per share amounts) ( in millions, except per share amounts) Revenues 1,736 1,657 3,203 2,436 3,133…
  44. August 2018 Investor Presentation – Southwestern Energy Co. – slide 44
    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…
  45. August 2018 Investor Presentation – Southwestern Energy Co. – slide 45
    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…
  46. August 2018 Investor Presentation – Southwestern Energy Co. – slide 46
    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…
  47. August 2018 Investor Presentation – Southwestern Energy Co. – slide 47
    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…
  48. August 2018 Investor Presentation – Southwestern Energy Co. – slide 48
    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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