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Q3 2018 Company Presentation – Southwestern Energy Co.

Southwestern Energy Co. · Oct 26, 2018 · 40 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 2018 Company Presentation – Southwestern Energy Co. – slide 1
    October 2018 Investor Update Repositioning to Win Contact: Paige Penchas Vice President, Investor Relations paige_penchasswn.com Phone: (832) 796-4068 NYSE: SWN
  2. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 2
    What Defines Southwestern Energy Our strategy in action Rigorous Our People - Increasing financial Leading Premier quality, capital discipline and technology, large scale efficiency and value focused operating and assets margin…
  3. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 3
    Delivering on Commitments Execution of three-phase strategy Stabilize Optimize and Increase Value Reposition to Compete and Win Strengthened the balance Expanded margins and Reached agreement to sell the sheet improved capital…
  4. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 4
    Growing Momentum Delivering today, building for tomorrow Selling Fayetteville Shale assets Appalachia 73% 1.865B sales price subject to adjustments, expected close in December 2018 (2) 438MM net long term obligations assumed by…
  5. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 5
    Financial Strength Fayetteville proceeds to significantly reduce debt Net Debt / Adjusted EBITDA Pro Forma Debt Maturity Schedule(1) (MM) 2,500 4.5x 2,000 3.6x 3.1x 3.0x 2.8x 1,500 2.7x 2.7x 2.5x 2.0x 1,000 500 No…
  6. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 6
    Q3 2018 Highlights Weighted Avg. Realized Production (Bcfe) Price, incl Hedges (/Mcfe) Liquids Revenue (MMs) Cash Costs (/Mcfe)(1) 38% Liquids 9% increase 19% 111% 173 4% Increase 252 Increase Increase Decrease 232 2.48 1.37…
  7. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 7
    SWN Asset Overview Independent natural gas & growing liquids producer Resource Potential 45 Tcfe Net Acres: 191,226 17 YE Proved Reserves: 14.8 Tcfe (25% Liquids) 18E Production(1): 955 970 Bcfe (14% Liquids) Northeast Appalachia Net…
  8. Q3 2018 Company 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. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 9
    Liquids Production and Realizations Higher liquids realizations enrich economics at lower gas prices Liquids production increased by 38% vs Q3 2017 5% 10% Q3 2018 condensate production rate of Ethane 10,850 barrels per day…
  10. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 10
    Expanding Margins in Appalachia Appalachia Margin(1) NYMEX - 3.11 NYMEX - 2.90 NYMEX - 2.46 71% Gas 1.47 Appalachia 1.16 YTD 2018 Revenue Mix 19% NGL 0.33 10% Oil 29% Liquids 2016 2017 YTD 2018 Revenue Margins…
  11. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 11
    Value Growth from Improving Appalachia Basis NE Appalachia Appalachia benefitting from Other Transport 2018 - 0.49 11% M3 2019 - 0.34 17% 2018 - 0.34 26% SW Appalachia 2019 - 0.35 26% improving basis differentials Transport DOM…
  12. Q3 2018 Company 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 2019 development plan focused on high value liquids-rich inventory…
  13. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 13
    Southwest Appalachia Increasing capital efficiency, doing more with less in 2018 Average Drilled Lateral Length (ft) Number of Stages Pumped/Day(1) Facility Installation Time (days) 7% 15,559 25% 60 56% Increase Increase 7.4 7.7…
  14. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 14
    Liquids-Rich Upper Devonian Potential Upper Devonian 9 Tcfe of resource potential 100,000 acres 150 feet above the Marcellus Initial unbound well test (July 2018) Encouraging early results Similar performance to rich Marcellus…
  15. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 15
    Well Positioned in Core Utica/UPP Acreage Progressing technical understanding of 15+ Tcf of resource potential Cost effectively accelerating learnings through industry data trades Estimated 600MM of trade value Acquired data on…
  16. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 16
    Northeast Appalachia Delivering value now and in the future Drive value creation through enhanced performance Free cash flow positive asset Enhanced completions efficiency includes increased stages per day, tighter stage spacing…
  17. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 17
    Northeast Appalachia Enhancing Tioga area inventory Area Highlights Building Scale in Tioga Acreage position 37,500 net acres Gross production as of Sept 30, 2018 201 MMcf/d Q3 2018 Highlights Placed 3 wells to sales Average…
  18. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 18
    Vertical Integration Competitive advantages increase capital efficiency Strategic and economic benefit Progressing water infrastructure project in Southwest Appalachia Provides improved operating efficiency and flexibility…
  19. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 19
    An Industry Leader in Corporate Responsibility Freshwater neutral since December Reviewed 100% of chemicals used Gold Certification by IES 2016 for operations since 2016 (Independent Energy Standards) Advancing Technology to…
  20. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 20
    Repositioning to Win Fayetteville sale expected to close Margin expansion through cost December 2018 reductions, improved well productivity, and vertical integration Vast Appalachia acreage, inventory, and growing multi-bench…
  21. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 21
    Appendix 2121
  22. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 22
    Environmental, Social and Governance Board independence Management compensation 8 out of 9 directors are independent Independent directors approve compensation Bill Way, President and CEO, is sole non- Mix of awards weighted heavily on…
  23. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 23
    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…
  24. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 24
    Hedging Protecting cash flow and returns (1) Does not include basis or NGL hedges. Financial NYMEX hedges based on an average swap or purchased put strike price as of September 28, 2018 (2) Amounts may not add due to rounding Note:…
  25. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 25
    Natural Liquids Hedging Protecting cash flow and returns Ethane Hedge Summary Quarter Volume (Bbl/day) Weighted Average Price (/gal) Q4 2018 15,100 0.32 Q1 2019 9,100 0.32 Q2 2019 9,100 0.32 Q3 2019 9,100 0.32 Q4 2019 9,100…
  26. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 26
    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…
  27. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 27
    Southwest Appalachia 2727
  28. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 28
    Southwest Appalachia Super Rich Gas Well performance WellSWN Results Exceeding Drilled Expectations & Completed Super Rich Gas(1) Condensate (Normalized to 7,500 ft lateral) Gen 1 Completions (42 wells) 12 BCFe Type Curve 16 BCFe…
  29. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 29
    Southwest Appalachia Rich Gas Well performance Well Results Exceeding SWN Drilled Rich Gas(1) Condensate (Normalized to 7,500 ft lateral) Expectations & Completed Gen 1 Completions (22 wells) 24 BCFe Type Curve 30 BCFe Type Curve 36…
  30. Q3 2018 Company Presentation – 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 Super Rich Gas(1) Rich Gas(2) 12 12 Incremental Single…
  31. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 31
    Southwest Appalachia Takeaway Increasing Gulf Coast market exposure Sales Locations 100% 5% 5% 5% 12% 80% 34% 33% 33% 24% 60% 6% 10% 10% 40% 46% 54% 52% 52% 20% 18% 0% 2018 2019 2020 2021 Gulf M2 TCO Nymex SWN Firm…
  32. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 32
    Northeast Appalachia 3232
  33. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 33
    Northeast Appalachia Well performance SWN Drilled & Completed Dry Gas (Normalized to 6,500 ft lateral) Average Avg Rate Avg Rate Average Wells Placed Completed Well For 1st 30 Days For 1st 60 Days Time Frame Lateral on…
  34. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 34
    Northeast Appalachia Takeaway Low cost portfolio with extensive market reach Sales Locations 100% 11% 17% 21% 22% 80% 26% 26% 27% 29% 60% 40% 60% 53% 47% 44% 20% 0% 3% 4% 5% 5% 2018 2019 2020 2021 Gulf Dominion M3…
  35. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 35
    Financial and Operational Summary 9 Months Ended Septem ber 30, Year Ended Decem ber 31, 2018 2017 2017 2016 2015 ( in millions, except per share amounts) ( in millions, except per share amounts) Revenues 2,687 2,394 3,203 2,436…
  36. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 36
    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…
  37. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 37
    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…
  38. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 38
    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…
  39. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 39
    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…
  40. Q3 2018 Company Presentation – Southwestern Energy Co. – slide 40
    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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