Slides prepared for use with December 18, 2000, teleconference discussing
Southwestern Energy Company's 2001 Strategy and Outlook.
(slide 1)
Southwestern Energy Company
2001 Strategy and Outlook Teleconference
[picture of Harold Korell, President and Chief Executive Officer]
[picture of Greg Kerley, Executive Vice President and Chief Financial Officer]
(slide 2)
Strategy for 2001
o Continue to pursue the sale of utility on appropriate terms.
o 2000 is not 1999.
o Current commodity prices allow flexibility in timing of sale.
o Hedge approximately 80% of 2001 gas production.
o Provides financial flexibility to pay down debt.
o Allows for funding of 2001 capital program and improves our capital
structure.
o Allows opportunity to pursue our E&P strategy which is working.
o Planned capital investment program of $82 million.
o Up 9% from 2000 investment level.
o Planned E&P capital program of $75 million.
(slide 3)
Core Operating Areas
[map showing the states of Arkansas, Louisiana, Texas, Oklahoma and New Mexico
with the following areas identified: Mid-Continent in North Texas and western
Oklahoma, including the panhandle; Arkoma in western Arkansas and eastern
Oklahoma; Permian/East Texas in southeast New Mexico and eastern and central
Texas; and South Louisiana in gulf coast region of Louisiana]
Reserves & Production @ Sept. 30, 2000
Mid-Continent
Reserves - 31.9 Bcfe (9%)
Production - 2.7 Bcfe (10%)
Arkoma
Reserves - 198.1 Bcfe (55%)
Production - 15.0 Bcfe (56%)
2001 Capital - $20.5 MM (27%)
Permian/East Texas
Reserves - 99.6 Bcfe (28%)
Production - 7.4 Bcfe (28%)
2001 Capital - $30.3 MM (41%)
South Louisiana
Reserves - 31.0 Bcfe (8%)
Production - 1.5 Bcfe (6%)
2001 Capital - $24.2 MM (32%)
(slide 4)
Overton Field Potential
[map showing Overton Field area by units indicating locations of active wells
and planned wells]
OVERTON ACQUISITION
East Texas - 10,000 Acres
16 Active Wells in 13 Units
(Developed at 640-Acre Spacing)
8 Wells Planned for 2001
(Developed at 320-Acre Spacing)
Overton Field Drilling Potential
EUR (Bcfe)
--------------
# Wells Gross Net
------- ----- ---
320 Acre Spacing 10 16 13
160 Acre Spacing 26 42 33
TOTAL 36 58 46
=====================
(slide 5)
Atchafalaya Mini-Basin
[map showing location of the Atchafalaya Basin in Assumption, St. Martin &
Iberia Parish's in southern Louisiana indicating the location of the E.
Atchafalaya & Boure 3-D Surveys, the Jeanerette 3-D Survey, the North Grosbec
and Gloria discoveries, an unsuccessful well, and the Malone and North
Jeanerette prospects]
North Grosbec Discovery
Gross EUR: 93.3 Bcfe
WI: 25%
Curr. Prod.: 15.4 MMcfd & 567 Bopd
Gloria Discovery
Gross EUR: 16.1 Bcfe
WI: 50%
Curr. Prod.: 9.6 MMcfd & 310 Bopd
Malone Prospect
50 Bcfe Gross Reserve Potential
WI: 33%
North Jeanerette Prospect
394 Bcfe Gross Reserve Potential
WI: 25%
(slide 6)
Outlook for 2001
o Targets:
o Production target of 38 Bcfe in 2001.
o Excess cash flow goes toward long-term debt reduction.
NYMEX Commodity Price Assumptions
---------------------------------------------
$3.50 Gas $4.50 Gas $5.50 Gas
$25.00 Oil $25.00 Oil $25.00 Oil
---------- ---------- ----------
o Earnings $32MM $37MM $46MM
o EPS $1.28 $1.49 $1.84
o Cash Flow $103MM $112MM $126MM
o CFPS $4.13 $4.48 $5.04
o EBITDA $128MM $136MM $150MM
(slide 7)
The Road to V+
o Continue to Pursue the Sale of the Utility on Our Terms.
o Stay the Course with Our Balanced E&P Strategy.
o Build on Exploration Success.
o Reduce Debt with Excess Cash Flow.
o Deliver the Numbers.
o Production and Reserve Growth.
o Add Value for Every Dollar Invested.
o Increase Cash Flow Multiple to the Peer Average.