Financial News

Southwestern Energy Announces Fourth Quarter and Full Year 2020 Results; Provides 2021 Guidance

Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the fourth quarter and full year 2020 and issued 2021 guidance.

“In 2020, Southwestern Energy delivered on its commitments, exceeding expectations on all key metrics while navigating the uncertainties of a global pandemic and the associated challenging commodity price and operating environments. We have positioned the Company to deliver material free cash flow going forward through an enduring conviction to our returns-driven strategy. We delivered strong results across all of our strategic pillars, including an accretive acquisition, a meaningfully lower cost structure and an increased underlying asset value,” said Bill Way, Southwestern Energy President and Chief Executive Officer.

“Southwestern Energy has entered 2021 with greater scale and resilience, prepared to capture increasing value from more than one trillion cubic feet equivalent of expected annual production flowing into diverse and key markets. The free cash flow we expect to deliver this year will be used to reduce debt as we progress towards our goal of sustainable 2 times leverage. Consistent with our disciplined approach, any further improvement in cash flow from higher commodity prices will accelerate the delivery of that objective,” Way continued.

2020 Highlights

  • Completed acquisition of Montage Resources, delivering over $30 million in G&A synergies, while maintaining balance sheet strength through associated capital market transactions;
  • Delivered $55 million of free cash flow in the fourth quarter;
  • Realized $90 million in additional expense reductions including a 33% decrease in G&A to $0.12 per Mcfe;
  • Reported total production of 880 Bcfe; 3.05 Bcfe per day pro forma fourth quarter net production rate;
  • Invested capital of $899 million and delivered 100 wells to sales;
  • Generated $362 million of realized hedge gains, including $76 million from basis;
  • Repurchased $107 million of senior notes for $72 million, a 33% discount;
  • Enhanced liquidity with borrowing base increased to $2.0 billion following acquisition;
  • Reduced well costs, averaged $637 per lateral foot in the second half of 2020; annual reduction of 19% to $670 per lateral foot with an average lateral length of 12,154 feet;
  • Lowered Proved Developed F&D costs by 25% to $0.40 per Mcfe through well cost reductions and increased well productivity;
  • Realized 26% of WTI on full year NGL prices, above the high end of guidance, and 36% of WTI in the fourth quarter, both associated with strengthening market fundamentals and NGL marketing optimization;
  • Reported proved reserves of 12.0 Tcfe, including 1.4 Tcfe of positive performance revisions and 741 Bcfe of reserve additions, partially mitigating the impact of backward-looking SEC prices;
  • Released our 7th annual corporate responsibility report; key environmental highlights included top quartile GHG and methane intensity among AXPC peers; and
  • Recorded the fifth consecutive year of freshwater neutrality; have now replaced over 14 billion gallons of freshwater in communities where we work and live.

2021 Guidance

The Company’s 2021 guidance is underpinned by the four pillars of its shareholder returns driven strategy: creating sustainable value, protecting financial strength, increasing scale and progressing best-in-class execution. The 2021 plan prioritizes free cash flow generation, disciplined investment at maintenance levels and debt reduction. Highlights are presented below; full guidance is available in the attachments to this press release.

  • Guidance based on $2.77 per Mcf NYMEX Henry Hub and $50 per barrel WTI; expect to deliver free cash flow of over $275 million, which is expected to be utilized for debt reduction;
  • Prices of $3.00 per Mcfe NYMEX Henry Hub and $58 per barrel WTI would increase free cash flow estimate to more than $375 million and results in achieving targeted leverage ratio of 2.0x;
  • Capital investment of $850 to $925 million; expect 3.05 Bcfe per day average fourth quarter 2021 net production, flat with fourth quarter 2020;
  • Estimate 75 to 90 wells to sales including 12 to 15 in dry gas Ohio Utica; approximately 50% of total capital investment in dry gas and 50% in liquids-rich acreage;
  • Continued focus on costs, expect G&A per Mcfe to decrease 20%;
  • Expected to reduce well costs another 10% to an average of approximately $600 per lateral foot for all wells to sales inclusive of Ohio Utica; expect average lateral length of 14,000 feet;
  • Hedges in place for approximately 85%, 60% and 95% of expected natural gas, natural gas liquids and oil production, respectively; approximately 80% of natural gas hedges allow for participation in upside from improving prices;
  • Protecting 75% of natural gas basis through physical and financial basis hedges and out of basin transportation portfolio; expect financial basis hedge gain of $0.07 to $0.09 per Mcf; and
  • Continued commitment to corporate responsibility, investing in human capital and our communities, and developing energy responsibly with a focus on reduced air emissions and water conservation, including maintaining top quartile performance in the industry for GHG and methane intensity.

2020 Fourth Quarter and Full Year Results

FINANCIAL STATISTICS

For the three months ended

For the years ended

December 31,

December 31,

(in millions)

2020

2019

2020

2019

Net income (loss)

$

(92

)

$

110

$

(3,112

)

$

891

Adjusted net income (non-GAAP)

$

119

$

99

$

221

$

328

Diluted earnings (loss) per share

$

(0.14

)

$

0.20

$

(5.42

)

$

1.65

Adjusted diluted earnings per share (non-GAAP)

$

0.18

$

0.18

$

0.38

$

0.61

Adjusted EBITDA (non-GAAP)

$

276

$

266

$

742

$

973

Net cash provided by operating activities

$

121

$

225

$

528

$

964

Net cash flow (non-GAAP)

$

249

$

246

$

662

$

913

Total capital investments (1)

$

194

$

207

$

899

$

1,140

  1. Capital investments on the cash flow statement include decreases of $5 million and $18 million for the three months ended December 31, 2020 and 2019, respectively, and a decrease of $3 million and an increase of $34 million for the year ended December 31, 2020 and 2019, respectively, relating to the change in accrued expenditures between periods.

Fourth Quarter 2020 Financial Results

For the quarter ended December 31, 2020, Southwestern Energy recorded a net loss of $92 million, or ($0.14) per diluted share, including $335 million of non-cash impairments and a $134 million non-cash gain on unsettled mark to market derivatives. This compares to net income of $110 million, or $0.20 per diluted share in the fourth quarter of 2019.

Adjusted net income (non-GAAP), which excludes non-cash items noted above and other one-time charges, was $119 million or $0.18 per diluted share in 2020 and $99 million or $0.18 per share for the same period in 2019. The increase was primarily related to increased production volumes and a decrease in average unit operating costs, partially offset by wider natural gas basis differentials. For the fourth quarter of 2020, adjusted EBITDA (non-GAAP) was $276 million, net cash provided by operating activities was $121 million and net cash flow (non-GAAP) was $249 million, resulting in $55 million in free cash flow.

As indicated in the table below, fourth quarter 2020 weighted average realized price, including $0.37 per Mcfe of transportation expenses, was $1.93 per Mcfe before the impact of derivatives, down 9% compared to $2.12 per Mcfe in 2019. The decrease was primarily due to widened basis differentials in the Appalachia basin. Fourth quarter weighted average realized price before transportation expense was $2.30 per Mcfe.

The Company realized $52 million in cash-settled derivative gains during the fourth quarter of 2020, a $0.21 per Mcfe uplift. Included in the fourth quarter settled derivative gains is a $47 million gain related to natural gas basis hedges, which protected the Company from widening basis differentials.

Full Year 2020 Financial Results

The Company recorded a net loss of $3.1 billion, or ($5.42) per share, for the year ended December 31, 2020 compared to net income of $891 million, or $1.65 per share in 2019. In 2020, the Company recorded non-cash impairments of $2.8 billion and $138 million of non-cash loss on unsettled derivatives, and had an $818 million change in its deferred tax provision. Excluding these non-cash and other one-time items, adjusted net income for 2020 was $221 million, or $0.38 per share, compared to $328 million, or $0.61 per share, in 2019. The decrease in adjusted net income compared to prior year was primarily the result of a decrease in commodity prices, partially offset by a $182 million increase in settled derivatives impact, increased production volumes and decreased G&A and depreciation, depletion and amortization expense. In 2020, Adjusted EBITDA (non-GAAP) was $742 million, net cash provided by operating activities was $528 million and net cash flow (non-GAAP) was $662 million.

For the full year 2020, weighted average realized price, including $0.37 per Mcfe of transportation expense, was $1.53 per Mcfe before the impact of derivatives, a 30% decrease compared to $2.18 per Mcfe in 2019, due to decreased prices across all commodities. In 2020, the weighted average realized price before transportation expenses was $1.90 per Mcfe.

Cash-settled derivative gains totaled $362 million in 2020, a $0.41 per Mcfe uplift, bringing the weighted average realized price including the impact of derivatives to $1.94 per Mcfe in 2020, compared to $2.42 per Mcfe in 2019.

As of December 31, 2020, Southwestern Energy had total debt of $3.15 billion and a cash balance of $13 million. At the end of 2020, the Company had $700 million of borrowings under its $2.0 billion revolving credit facility with $233 million in outstanding letters of credit.

Realized Prices

For the three months ended

For the years ended

(includes transportation costs)

December 31,

December 31,

2020

2019

2020

2019

Natural Gas Price:

NYMEX Henry Hub price ($/MMBtu) (1)

$

2.66

$

2.50

$

2.08

$

2.63

Discount to NYMEX (2)

(0.99

)

(0.69

)

(0.74

)

(0.65

)

Realized gas price per Mcf, excluding derivatives

$

1.67

$

1.81

$

1.34

$

1.98

Gain on settled financial basis derivatives ($/Mcf)

0.23

0.05

0.11

Gain (loss)on settled commodity derivatives ($/Mcf)

(0.09

)

0.26

0.25

0.20

Realized gas price per Mcf, including derivatives

$

1.81

$

2.12

$

1.70

$

2.18

Oil Price, per Bbl:

WTI oil price

$

42.66

$

56.96

$

39.40

$

57.03

Discount to WTI

(10.69

)

(10.59

)

(10.20

)

(10.13

)

Realized oil price, excluding derivatives

$

31.97

$

46.37

$

29.20

$

46.90

Realized oil price, including derivatives

$

52.27

$

49.16

$

46.91

$

49.56

NGL Price, per Bbl:

Realized NGL price, excluding derivatives

$

15.28

$

12.46

$

10.24

$

11.59

Realized NGL price, including derivatives

$

14.65

$

14.83

$

11.15

$

13.64

Percentage of WTI, excluding derivatives

36

%

22

%

26

%

20

%

Total Weighted Average Realized Price:

Excluding derivatives ($/Mcfe)

$

1.93

$

2.12

$

1.53

$

2.18

Including derivatives ($/Mcfe)

$

2.14

$

2.44

$

1.94

$

2.42

  1. Based on last day monthly futures settlement prices.
  2. This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.

Operational Review

Total production for the quarter ended December 31, 2020 was 257 Bcfe, comprised of 81% natural gas, 16% NGLs and 3% oil. Included in the fourth quarter 2020 results was 49 days of production from the acquired Montage Resources properties. Production totaled 880 Bcfe for the year ended December 31, 2020.

Capital investments in the fourth quarter of 2020 were $194 million, bringing full year capital investment to $899 million. The Company brought 100 wells to sales, drilled 98 wells and completed 96 wells during the year.

Operating Statistics

For the three months ended

For the years ended

December 31,

December 31,

2020

2019

2020

2019

Production

Gas production (Bcf)

207

160

694

609

Oil production (MBbls)

1,365

1,486

5,141

4,696

NGL production (MBbls)

7,001

6,609

25,927

23,620

Total production (Bcfe)

257

208

880

778

Average unit costs per Mcfe

Lease operating expenses

$

0.92

$

0.94

$

0.93

$

0.92

General & administrative expenses

$

0.11

(1)

$

0.19

(2)

$

0.12

(1)

$

0.18

(2)

Taxes, other than income taxes

$

0.06

$

0.05

$

0.06

$

0.08

Full cost pool amortization

$

0.33

$

0.54

$

0.38

$

0.56

  1. Excludes $38 million and $41 million in Montage acquisition-related expenses and $4 million and $16 million in restructuring charges for the three months and year ended December 31, 2020, respectively. Excludes $1 million of legal settlement charges for the year ended December 31, 2020.
  2. Excludes restructuring charges of $2 million and $11 million and legal settlement charges of $3 million and $6 million for the three months and year ended December 31, 2019, respectively. Excludes a $6 million residual value guarantee short-fall payment to the previous lessor of our headquarters building for the year ended December 31, 2019.

Southwest Appalachia – In the fourth quarter, total production was 132 Bcfe, with liquids production of 91 MBbls per day, including 49 days of production from properties previously owned by Montage Resources. The Company drilled 10 wells, completed 11 wells and placed 16 wells to sales, excluding four wells placed to sales that were drilled and completed by Montage Resources. The average lateral length of wells to sales was 15,477 feet, and included five wells in the rich area and 11 wells in the super rich area. All five of the rich wells were online for at least 30 days and had an average 30-day rate of 23.2 MMcfe per day, while only six of the super rich wells were online for at least 30 days and had an average 30-day rate of 9.8 MMcfe per day, including 72% liquids.

In 2020, Southwest Appalachia’s total production was 407 Bcfe, including 85 MBbls per day of liquids. The Company drilled 49 wells, completed 52 wells and placed 55 wells to sales during 2020, with 14 drilled uncompleted wells as of December 31, 2020.

Northeast Appalachia – In the fourth quarter, total production was 125 Bcf. There were four wells drilled, seven wells completed and 11 wells placed to sales in the quarter with an average lateral length of 14,667 feet. Of the 11 wells to sales, eight wells were online for at least 30 days and had an average 30-day rate of 15.6 MMcf per day.

Production for the year was 473 Bcf in Northeast Appalachia. The Company drilled 49 wells, completed 44 wells and brought 45 wells to sales during 2020, with 10 drilled uncompleted wells at year-end.

E&P Division Results

For the three months
ended December 31, 2020

For the year ended
December 31, 2020

Northeast

Southwest

Northeast

Southwest

Gas production (Bcf)

125

82

473

221

Liquids production

Oil (MBbls)

1,360

5,124

NGL (MBbls)

6,999

25,923

Production (Bcfe)

125

132

473

407

Gross operated production December 2020 (MMcfe/d)

1,639

2,745

Net operated production December 2020 (MMcfe/d)

1,340

1,702

Capital investments ($ in millions)

Drilling and completions, including workovers

$

53

$

85

$

321

$

360

Land acquisition and other

4

7

18

29

Capitalized interest and expense

6

32

23

121

Total capital investments

$

63

$

124

$

362

$

510

Gross operated well activity summary

Drilled

4

10

49

49

Completed

7

11

44

52

Wells to sales

11

16

(1)

45

55

(1)

Average well cost on wells to sales (in millions)

$

7.6

$

10.7

(1)

$

6.8

$

9.3

(1)

Average lateral length (in ft)

14,667

15,477

(1)

10,765

13,265

(1)

Total weighted average realized price per Mcfe, excluding derivatives

$

1.65

$

2.20

$

1.37

$

1.71

 
  1. Excludes 4 wells placed to sales during the fourth quarter of 2020 that were drilled and completed by Montage Resources.

2020 Proved Reserves

The Company reported total proved reserves of 12.0 Tcfe at year-end 2020, compared to 12.7 Tcfe in 2019. Reserves consisted of 76% natural gas and 24% liquids. During 2020, the Company reported 1.4 Tcfe of positive performance revisions related to increased well performance and lower operating costs, 741 Bcfe of reserve additions, and also acquired 2.4 Tcfe of reserves related to the acquisition of Montage Resources. The Company incurred 4.4 Tcfe of downward price revisions related to significantly reduced trailing 12-month SEC prices on all commodities.

Lower SEC prices, which were $1.98 per Mcf NYMEX Henry Hub, $39.57 per Bbl WTI and $10.27 per Bbl NGLs, resulted in a PV-10 of $1.85 billion. Using 2021 strip prices as of January 4, 2021, which were $2.70 per Mcf NYMEX Henry Hub, $47.67 per Bbl WTI and $11.82 per Bbl NGLs, the PV-10 of the reported year-end 2020 reserves would increase to $5.85 billion, without consideration of any PV-10 increase from the expected higher reserve volumes at those prices.

2020 Proved Reserves by Commodity

Natural Gas

Oil

NGL

Total

(Bcf)

(MBbls)

(MBbls)

(Bcfe)

Proved reserves, beginning of year

8,630

72,925

608,761

12,721

Revisions of previous estimates due to price

(2,143

)

(32,507

)

(338,639

)

(4,370

)

Revisions of previous estimates other than price

763

3,816

106,444

1,424

Extensions, discoveries and other additions

714

135

4,371

741

Production

(694

)

(5,141

)

(25,927

)

(880

)

Acquisition of reserves in place

1,911

18,796

55,141

2,354

Disposition of reserves in place

Proved reserves, end of year

9,181

58,024

410,151

11,990

Proved developed reserves:

Beginning of year

4,906

26,124

226,271

6,421

End of year

6,342

33,563

276,548

8,203

2020 Proved Reserves by Division (Bcfe)

Appalachia

Northeast

Southwest

Other (1)

Total

Proved reserves, beginning of year

4,837

7,883

1

12,721

Revisions of previous estimates due to price

(389

)

(3,981

)

(4,370

)

Revisions of previous estimates other than price

46

1,378

1,424

Extensions, discoveries and other additions

672

69

741

Production

(473

)

(407

)

(880

)

Acquisition of reserves in place

223

2,131

2,354

Disposition of reserves in place

Proved reserves, end of year

4,916

7,073

1

11,990

  1. Other includes properties outside of the Appalachian Basin.

The Company’s 2020 proved developed finding and development (PD F&D) costs decreased 25% from the prior year to $0.40 per Mcfe, when excluding the impact of capitalized interest and portions of capitalized G&A costs in accordance with the full cost method of accounting.

Total Company Proved Developed Finding and Development

Three-Year

12 Months Ended December 31,

Total

Total PD Adds (Bcfe):

2020

2019

2018

2020

New PD adds

267

191

177

635

PUD conversions

1,631

(2)

1,441

1,139

4,211

Total PD Adds

1,898

1,632

1,316

4,846

Costs Incurred (in millions):

Unproved property acquisition costs

$

124

$

162

$

164

$

450

Exploration costs

2

5

7

Development costs

812

936

1,014

2,762

Capitalized Costs Incurred

$

936

$

1,100

$

1,183

$

3,219

Subtract (in millions):

Proved property acquisition costs

$

$

$

$

Unproved property acquisition costs

(124

)

(162

)

(164

)

(450

)

Capitalized interest and expense associated with development and exploration (1)

(60

)

(81

)

(93

)

(234

)

PD Costs Incurred

$

752

$

857

$

926

$

2,535

PD F&D

$

0.40

$

0.53

$

0.70

$

0.52

Note: Amounts may not add due to rounding

  1. Adjusting for the impacts of the full cost accounting method for comparability.
  2. Includes increased reserve estimates of 144 Bcfe in the Appalachian Basin associated with productivity enhancements for newly developed PUD locations.

Conference Call

Southwestern Energy will host a conference call and webcast on Friday, February 26, 2021 at 9:30 a.m. Central to discuss fourth quarter and fiscal year 2020 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6506 and enter access code 3652399. The conference call will webcast live at www.swn.com.

To listen to a replay of the call, dial 877-344-7529, International 412-317-0088, or Canada Toll Free 855-669-9658. Enter replay access code 10152130. The replay will be available until March 26, 2021.

Due to the inclement weather last week, the Company plans to file its Annual Report on Form 10-K on March 1, 2021.

About Southwestern Energy

Southwestern Energy Company is an independent energy company engaged in natural gas, natural gas liquids and oil exploration, development, production and marketing. For additional information, visit our website www.swn.com.

Forward Looking Statement

Certain statements and information herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “attempt,” “appears,” “forecast,” “outlook,” “estimate,” “project,” “potential,” “may,” “will,” “are likely,” “guidance,” “goal,” “model,” “target,” “budget” and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Statements may be forward looking even in the absence of these particular words. Examples of forward-looking statements include, but are not limited to, statements regarding the financial position, business strategy, production, reserve growth and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained in this document are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see “Risk Factors” in our most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas, oil and natural gas liquids (“NGLs”), including regional basis differentials and the impact of reduced demand for our production and products in which our production is a component due to governmental and societal actions taken in response to the COVID-19 pandemic; our ability to fund our planned capital investments; a change in our credit rating, an increase in interest rates and any adverse impacts from the discontinuation of the London Interbank Offered Rate; the extent to which lower commodity prices impact our ability to service or refinance our existing debt; the impact of volatility in the financial markets or other global economic factors, including the impact of COVID-19; difficulties in appropriately allocating capital and resources among our strategic opportunities; the timing and extent of our success in discovering, developing, producing and estimating reserves; our ability to maintain leases that may expire if production is not established or profitably maintained; our ability to realize the expected benefits from the acquisition of Montage Resources Corporation (“Montage Acquisition”); costs in connection with the Montage Acquisition; integration of operations and results subsequent to the Montage Acquisition; our ability to transport our production to the most favorable markets or at all; the impact of government regulation, including changes in law, the ability to obtain and maintain permits, any increase in severance or similar taxes, and legislation or regulation relating to hydraulic fracturing, climate and over-the-counter derivatives; the impact of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally; the effects of weather; increased competition; the financial impact of accounting regulations and critical accounting policies; the comparative cost of alternative fuels; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other factors listed in the reports we have filed and may file with the SEC that are incorporated by reference herein. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

2021 Guidance

PRODUCTION

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter (1)

Total Year

Natural Gas (Bcf)

211 – 216

217 – 223

219 – 226

226 – 233

873 – 898

Oil/Condensate (MBbls)

1,575 – 1,675

1,890 – 2,015

1,710 – 1,835

1,500 – 1,625

6,675 – 7,150

NGLs (MBbls)

7,425 – 7,700

7,575 – 7,850

7,445 – 7,720

6,900 – 7,175

29,345 – 30,445

Total Production (Bcfe)

265 – 272

274 – 282

274 – 283

276 – 286

1,089 – 1,123

Total Production (Bcfe/d)

2.94 – 3.02

3.01 – 3.10

2.98 – 3.08

3.00 – 3.11

2.98 – 3.08

 

CAPITAL BY DIVISION (in millions)

Northeast Appalachia

$220 – $240

Southwest Appalachia

$475 – $500

Other

$20 – $30

Capitalized interest

$80 – $90

Capitalized expense

$55 – $65

Total Capital Investments

$850 – $925

 

PRODUCTION BY DIVISION (Bcfe)

Northeast Appalachia

475 – 489

Southwest Appalachia

614 – 634

PRICING

Natural gas discount to NYMEX including transportation (2)

$0.69 – $0.84 per Mcf

Oil discount to West Texas Intermediate (WTI) including transportation

$9.00 – $11.00 per Bbl

Natural gas liquids realization as a % of WTI including transportation (3)

30% – 38%

 

EXPENSES

Lease operating expenses

$0.92 – $0.96 per Mcfe

General & administrative expense

$0.08 – $0.12 per Mcfe

Taxes, other than income taxes

$0.06 – $0.10 per Mcfe

Interest expense - net of capitalization

$110 – $120 MM

Income tax rate (~100% deferred)

23.2%

 

WELL COUNT

Drilled

Completed

Wells To Sales

Ending DUC Inventory

Northeast Appalachia

21 – 26

27 – 32

27 – 32

2 – 7

Southwest Appalachia (4)

49 – 59

48 – 58

48 – 58

13 – 23

Total Well Count

70 – 85

75 – 90

75 – 90

15 – 30

  1. NGL guidance for the fourth quarter assumes 4 MBbls per day of incremental ethane rejection based on strip prices at the time of guidance. NGL volumes may vary based on economic decisions to maximize value of the ethane barrel as a liquid or in its gas form (ethane recovery/rejection).
  2. Based on $2.77 per Mcf NYMEX Henry Hub. Includes impact of transportation costs and $0.07 — $0.09 per Mcf gain from financial basis hedges.
  3. Based on $50 per Bbl WTI.
  4. Includes Ohio Utica.

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended

For the years ended

December 31,

December 31,

(in millions, except share/per share amounts)

2020

2019

2020

2019

Operating Revenues:

Gas sales

$

356

$

298

$

967

$

1,241

Oil sales

43

70

154

223

NGL sales

107

83

265

274

Marketing

272

293

917

1,297

Other

1

1

5

3

779

745

2,308

3,038

Operating Costs and Expenses:

Marketing purchases

271

298

946

1,320

Operating expenses

236

197

813

720

General and administrative expenses

32

47

121

166

Montage merger-related expenses

38

41

Restructuring charges

4

2

16

11

(Gain) loss on sale of operating assets

(1

)

2

Depreciation, depletion and amortization

90

119

357

471

Impairments

335

8

2,830

16

Taxes, other than income taxes

17

11

55

62

1,023

681

5,179

2,768

Operating Income (Loss)

(244

)

64

(2,871

)

270

Interest Expense:

Interest on debt

48

41

171

166

Other interest charges

4

3

11

8

Interest capitalized

(21

)

(25

)

(88

)

(109

)

31

19

94

65

Gain on Derivatives

186

54

224

274

Gain on Early Extinguishment of Debt

1

35

8

Other Income (Loss), Net

(2

)

1

(7

)

Income (Loss) Before Income Taxes

(91

)

100

(2,705

)

480

Provision (Benefit) for Income Taxes:

Current

(1

)

(2

)

(2

)

Deferred

1

(9

)

409

(409

)

1

(10

)

407

(411

)

Net Income (Loss)

$

(92

)

$

110

$

(3,112

)

$

891

Earnings (Loss) Per Common Share

Basic

$

(0.14

)

$

0.20

$

(5.42

)

$

1.65

Diluted

$

(0.14

)

$

0.20

$

(5.42

)

$

1.65

Weighted Average Common Shares Outstanding:

Basic

641,576,267

539,434,877

573,889,502

539,345,343

Diluted

641,576,267

540,574,288

573,889,502

540,382,914

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

December 31,

2020

2019

ASSETS

(in millions)

Current assets:

Cash and cash equivalents

$

13

$

5

Accounts receivable, net

368

345

Derivative assets

241

278

Other current assets

49

51

Total current assets

671

679

Natural gas and oil properties, using the full cost method

27,261

25,250

Other

523

520

Less: Accumulated depreciation, depletion and amortization

(23,673

)

(20,503

)

Total property and equipment, net

4,111

5,267

Operating lease assets

163

159

Deferred tax assets

407

Other long-term assets

215

205

Total long-term assets

378

771

TOTAL ASSETS

$

5,160

$

6,717

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

573

$

525

Taxes payable

74

59

Interest payable

58

51

Derivative liabilities

245

125

Current operating lease liabilities

42

34

Other current liabilities

20

54

Total current liabilities

1,012

848

Long-term debt

3,150

2,242

Long-term operating lease liabilities

117

119

Long-term derivative liabilities

183

111

Pension and other postretirement liabilities

45

43

Other long-term liabilities

156

108

Total long-term liabilities

3,651

2,623

Commitments and contingencies

Equity:

Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 718,795,700 shares as of December 31, 2020 and 585,555,923 shares as of December 31, 2019

7

6

Additional paid-in capital

5,093

4,726

Accumulated deficit

(4,363

)

(1,251

)

Accumulated other comprehensive loss

(38

)

(33

)

Common stock in treasury, 44,353,224 shares as of December 31, 2020 and 2019

(202

)

(202

)

Total equity

497

3,246

TOTAL LIABILITIES AND EQUITY

$

5,160

$

6,717

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the years ended

December 31,

(in millions)

2020

2019

Cash Flows From Operating Activities:

Net income (loss)

$

(3,112

)

$

891

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization

357

471

Amortization of debt issuance costs

9

8

Impairments

2,830

16

Deferred income taxes

409

(409

)

(Gain) loss on derivatives, unsettled

138

(94

)

Stock-based compensation

3

8

Gain on early extinguishment of debt

(35

)

(8

)

Loss on sale of assets

2

Other

6

10

Change in assets and liabilities

Accounts receivable

50

234

Accounts payable

(131

)

(141

)

Taxes payable

(7

)

Interest payable

(11

)

Inventories

2

(7

)

Other assets and liabilities

20

(17

)

Net cash provided by operating activities

528

964

Cash Flows From Investing Activities:

Capital investments

(896

)

(1,099

)

Proceeds from sale of property and equipment

12

54

Cash acquired in Montage merger

3

Net cash used in investing activities

(881

)

(1,045

)

Cash Flows From Financing Activities:

Payments on current portion of long-term debt

(52

)

Payments on long-term debt

(72

)

(54

)

Payments on revolving credit facility

(1,671

)

(532

)

Borrowings under revolving credit facility

2,337

566

Change in bank drafts outstanding

1

(19

)

Repayment of Montage revolving credit facility

(200

)

Repayment of Montage senior notes

(522

)

Proceeds from issuance of long-term debt

350

Debt issuance costs and other financing costs

(10

)

(3

)

Proceeds from issuance of common stock

152

Purchase of treasury stock

(21

)

Cash paid for tax withholding

(4

)

(1

)

Other

1

Net cash provided by (used in) financing activities

361

(115

)

Increase (decrease) in cash and cash equivalents

8

(196

)

Cash and cash equivalents at beginning of year

5

201

Cash and cash equivalents at end of year

$

13

$

5

Hedging Summary

A detailed breakdown of the Company’s derivative financial instruments and financial basis positions as of February 23, 2021, including 2021 derivative contracts that have settled, is shown below. Please refer to our annual report on Form 10-K to be filed with the Securities and Exchange Commission for complete information on the Company’s commodity, basis and interest rate protection.

Weighted Average Price per MMBtu

Volume (Bcf)

Swaps

Sold Puts

Purchased Puts

Sold Calls

Natural gas

2021

Fixed price swaps

203

$

2.80

$

$

$

Two-way costless collars

255

2.57

2.94

Three-way costless collars

303

2.16

2.50

2.86

Total

761

2022

Fixed price swaps

112

$

2.68

$

$

$

Two-way costless collars

64

2.52

3.03

Three-way costless collars

278

2.06

2.50

2.97

Total

454

2023

Three-way costless collars

103

$

$

2.05

$

2.46

$

3.01

Natural gas financial basis positions

Volume

Basis Differential

(Bcf)

($/MMBtu)

Q1 2021

Dominion South

16

$

(0.42

)

TCO

5

$

(0.31

)

TETCO M3

21

$

1.95

Total

42

$

0.80

Q2 2021

Dominion South

35

$

(0.58

)

TCO

28

$

(0.51

)

TETCO M3

24

$

(0.44

)

Total

87

$

(0.52

)

Q3 2021

Dominion South

35

$

(0.62

)

TCO

28

$

(0.51

)

TETCO M3

24

$

(0.44

)

Total

87

$

(0.53

)

Q4 2021

Dominion South

23

$

(0.58

)

TCO

13

$

(0.47

)

TETCO M3

17

$

(0.00

)

Total

53

$

(0.37

)

2022

Dominion South

94

$

(0.56

)

TCO

35

$

(0.43

)

TETCO M3

53

$

(0.10

)

Total

182

$

(0.40

)

Weighted Average Price per Bbl

Volume (MBbls)

Swaps

Sold Puts

Purchased Puts

Sold Calls

Oil

2021

Fixed price swaps

4,887

$

48.59

$

$

$

Two-way costless collars

201

37.73

45.68

Three-way costless collars

1,543

37.42

47.22

52.86

Total

6,631

2022

Fixed price swaps

1,470

$

47.34

$

$

$

Three-way costless collars

1,380

39.89

50.23

57.05

Total

2,850

2023

Three-way costless collars

878

$

$

33.52

$

43.52

$

53.41

Ethane

2021

Fixed price swaps

5,976

$

7.16

$

$

$

Two-way costless collars

584

7.14

10.40

Total

6,560

2022

Fixed price swaps

1,758

$

8.68

$

$

$

Two-way costless collars

135

7.56

9.66

Total

1,893

Propane

2021

Fixed price swaps

7,149

$

20.72

$

$

$

2022

Fixed price swaps

2,422

$

20.98

$

$

$

Three-way costless collars

305

16.80

21.00

31.92

Total

2,727

Normal Butane

2021

Fixed price swaps

2,092

$

25.44

$

$

$

2022

Fixed price swaps

667

$

22.77

$

$

$

Natural Gasoline

2021

Fixed price swaps

2,021

$

37.95

$

$

$

2022

Fixed price swaps

765

$

39.48

$

$

$

Explanation and Reconciliation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). However, management believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and of prior periods.

One such non-GAAP financial measure is net cash flow. Management presents this measure because (i) it is accepted as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt, (ii) changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the Company may not control and (iii) changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

Additional non-GAAP financial measures the Company may present from time to time are net debt, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, all which exclude certain charges or amounts. Management presents these measures because (i) they are consistent with the manner in which the Company’s position and performance are measured relative to the position and performance of its peers, (ii) these measures are more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the Company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP.

3 Months Ended
December 31,

12 Months Ended
December 31,

2020

2019

2020

2019

(in millions)

Adjusted net income:

Net income (loss)

$

(92

)

$

110

$

(3,112

)

$

891

Add back (deduct):

Montage merger-related expenses

38

41

Restructuring charges

4

2

16

11

Impairments

335

8

2,830

16

(Gain) loss on sale of assets

(1

)

2

(Gain) loss on derivatives, unsettled

(134

)

14

138

(94

)

Gain on early extinguishment of debt

(1

)

(35

)

(8

)

Legal settlement charges

3

1

6

Non-cash pension settlement loss

1

6

Other loss (1)

2

2

10

Adjustments due to discrete tax items (2)

22

(32

)

1,042

(526

)

Tax impact on adjustments

(56

)

(5

)

(702

)

14

Adjusted net income

$

119

$

99

$

221

$

328

 
  1. Includes a $6 million residual value guarantee short-fall payment to the previous lessor of our headquarters building for the twelve months ended December 31, 2019.
  2. 2020 primarily relates to the recognition of a valuation allowance. 2019 primarily relates to the release of the valuation allowance. The Company expects its 2020 income tax rate to be 23.2% before the impacts of any valuation allowance.

3 Months Ended
December 31,

12 Months Ended
December 31,

2020

2019

2020

2019

Adjusted diluted earnings per share:

Diluted earnings per share

$

(0.14

)

$

0.20

$

(5.42

)

$

1.65

Add back (deduct):

Montage merger-related expenses

0.06

0.07

Restructuring charges

0.01

0.00

0.03

0.02

Impairments

0.52

0.01

4.91

0.03

(Gain) loss on sale of assets

(0.00

)

0.00

(Gain) loss on derivatives, unsettled

(0.21

)

0.03

0.25

(0.17

)

Gain on early extinguishment of debt

(0.00

)

(0.06

)

(0.01

)

Legal settlement charges

0.01

0.00

0.01

Non-cash pension settlement loss

0.00

0.01

Other loss (1)

0.00

0.00

0.02

Adjustments due to discrete tax items (2)

0.03

(0.06

)

1.81

(0.97

)

Tax impact on adjustments

(0.09

)

(0.01

)

(1.21

)

0.02

Adjusted diluted earnings per share

$

0.18

$

0.18

$

0.38

$

0.61

 
  1. Includes a $6 million residual value guarantee short-fall payment to the previous lessor of our headquarters building for the twelve months ended December 31, 2019.
  2. 2020 primarily relates to the recognition of a valuation allowance. 2019 primarily relates to the release of the valuation allowance. The Company expects its 2020 income tax rate to be 23.2% before the impacts of any valuation allowance.

3 Months Ended
December 31,

12 Months Ended
December 31,

2020

2019

2020

2019

(in millions)

Net cash flow:

Net cash provided by operating activities

$

121

$

225

$

528

$

964

Add back (deduct):

Changes in operating assets and liabilities

86

19

77

(69

)

Montage merger-related expenses

38

41

Restructuring charges

4

2

16

11

Other loss (1)

7

Net cash flow

$

249

$

246

$

662

$

913

 
  1. Includes a $6 million residual value guarantee short-fall payment to the previous lessor of our headquarters building for the twelve months ended December 31, 2019.

3 Months Ended
December 31,

12 Months Ended
December 31,

2020

2019

2020

2019

(in millions)

Adjusted EBITDA:

Net income (loss)

$

(92

)

$

110

$

(3,112

)

$

891

Add back (deduct):

Interest expense

31

19

94

65

Provision (benefit) for income taxes

1

(10

)

407

(411

)

Depreciation, depletion and amortization

90

119

357

471

Montage merger-related expenses

38

41

Restructuring charges

4

2

16

11

Impairments

335

8

2,830

16

(Gain) loss on sale of assets

(1

)

2

(Gain) loss on derivatives, unsettled

(134

)

14

138

(94

)

Gain on early extinguishment of debt

(1

)

(35

)

(8

)

Legal settlement charges

3

1

6

Non-cash pension settlement loss

1

6

Other loss (1)

2

2

10

Stock-based compensation expense

1

2

3

8

Adjusted EBITDA

$

276

$

266

$

742

$

973

 
  1. Includes a $6 million residual value guarantee short-fall payment to the previous lessor of our headquarters building for the twelve months ended December 31, 2019.

December 31, 2020

Net debt:

(in millions)

Total debt (1)

$

3,171

Subtract:

Cash and cash equivalents

(13

)

Net debt

$

3,158

  1. Does not include $21 million of unamortized debt discount and issuance expense.

December 31, 2020

Net debt to EBITDA:

(in millions)

Net debt

$

3,158

Adjusted EBITDA (1)

$

900

Net debt to EBITDA

3.5x

  1. Adjusted EBITDA for the twelve months ended December 31, 2020, including $158 million of Adjusted EBITDA related to Montage Resources prior to the close of the acquisition.

Contacts:

Investor Contact
Brittany Raiford
Director, Investor Relations
(832) 796-7906
brittany_raiford@swn.com

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.

Use the myMotherLode.com Keyword Search to go straight to a specific page

Popular Pages

  • Local News
  • US News
  • Weather
  • State News
  • Events
  • Traffic
  • Sports
  • Dining Guide
  • Real Estate
  • Classifieds
  • Financial News
  • Fire Info
Feedback