SWN - Earnings call transcript Q3 2017 | Southwestern Energy Company

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Operator

Greetings, and welcome to the Southwestern Energy Company Third Quarter 2017 Earnings Teleconference Call. At this time, all participants are on a listen-only mode. A brief question-and-answer session will follow the formal presentation. In the interest of time, please limit yourself to two questions. Afterward, you may feel free to re-queue for additional questions.

conference recorded. this reminder, a is being As It Vice Southwestern President my pleasure Energy Michael Hancock, to introduce of is now Company. Investor Relations for

Michael Hancock

Vice joining Jason today Thank today. Officer; President Jennifer Tim. Good Chief and Executive you you, Financial our Officer; morning, Vice President President and Chief With our David Operations; Paul of of Vice Senior President and Bill Development. Marketing are for me Vice Corporate Advance; Stewart, our Way, Kurtz, of and President Senior our Cecil, SWN Transportation; our Executive Jack thank Bergeron, us of Geiger,

involve not are these out and night's and results, more third and statements you you've our Sections many Many during uncertainties discussed beyond comments Exchange in of our that I'd website, and are release the operating quarter it find the that regarding outcomes. Also, in on our of the and the If Securities our Risk received teleconference Filings last can at this Factors and with are Statements point detail XXXX forward-looking affecting of Commission. to risks Forward-Looking financial swn.com. press Quarterly control Annual like

facilitate the of across developments We assumptions, on are expressed are not comparison periods refer to results they also may and peers. measures, guarantees believe based help may financial we future Although which actual expectations and materially. with performance reasonable or differ non-GAAP some

to our to I'll discuss a Way recent nearest our can use, any GAAP over reconciliation release found the earnings and call results to turn non-GAAP website. we measures activity. on For in be our corresponding the Bill available measure

William J. Way

These earlier quarter commitments joining strong and emanate everyone, delighted from strategy growth in the and you, today be focused, we on night's and in We're of our Thank us. laid last third of disclosed to year. XX-Q. we delivering value release to discuss press the out Good thank risk-adjusted you continued results here trend morning, for the the results Michael.

consists we of key that five define and are elements delivering how who are strategy we company Our value. as a

scale, leverage operational assets. leading of economics portfolio, We First, have future to our quality, investment and value-adding of integration enhance along of premier and company. quality, large each in we the the deep scale long this vertical with teams, the performance diversity life in from the projects inventory our and

large risk upside we demonstrate the returns and cash cash economics improve. investment within should for discipline. the commit to and a protect deliver financial invest prices to our of We backstop or commodity Second, management rigorous flows we portion each project flow bases program retaining while through

Third we strip, for economic discounted have of our strip the of a see the allocation hedge highest stringent utilize prioritize Fourth added. because create those at XX% pricing least greater We $X.XX and we program. capital value process each value investment where increasing where require to invested transparency at performance and across analysis the we margin bringing to a value-focused investments by capital efficiency the we expansion we $X portfolio. present are can commitments against we

of contributing that individual improve additional and SWN. Jack Both contributors delivered demonstrating step performance these wells our add couple the will completion major items the This the while in drive commercial company-owned to of handling cost, significantly finally, to and operating material which year front both results has and has being well delivering in all the to from operational new to improve process in this percentage flow-back improvements placed this are testing discuss of are costs will contracts potential our the accomplishments and of resulted third-party and of on Appalachia nearly And for to well innovation. rigs, length on the advancement company. achievement and setting us drilling higher to savings even drilling moments. with optimization, further technology a margins the of a down arena, our of line leading our our including records a list change value laser-focused in technical are this targeted few water stay the our and improvements to We negotiations full wells the we numerous along effectiveness XXX% financial operational F&D we which strategic from and in are operating margin, including of Basin, in zone by continue have complete capabilities drill allow in the technology and to assets clearly of lateral been leading strategy. way evidenced

and returns getting strongly new industry, discipline who recently rather a consistently are, in but and will this on we concept returns-focused us, so believe for is attention focus the the not the culture defines has continue more and started While that it capital in we demonstrate. we

be to drive improving projected value clear: outcome creation. highest the invest we core discuss commodity of We'll projects, February well. of our you expect. to see plan projected plans cash will will capital XXXX so sure for an culture with the come As XXXX return-focused should have align the impacts is we have our within at be returning winter this activity flow and the to approach prices, in can once But be we as we disciplined detailed how our cash production and allocate flows. will

three of maintenance leading transportation helped on in long-haul hit transportation limit impact of pipelines. and with these also two unplanned the limit me of highlights. the February we provided of challenges partially production downtime despite in within we briefly from from third-party volumes our on discussed growth. compressor this on Flexibility Let a us our us still days these again August range gathering the associated also quarter production one portfolio In and helped few one-off station two portfolio of once quarter's the providers. sequential the we guidance. challenges in value-adding in We guidance X% touch mitigated delivered we downed impacts quarter transportation third impact third-party third

these a exit million from equivalent assets move strong as a realizations and attention assets daily received no previously, ended two almost from issues over feet in finish. production quarter and billion per the are a new Southwest Price rate This attention. We per in XXX we've these Appalachia mentioned cubic the infrastructure investment us XXXX. the of gross day The we We the in-service were from included feet for with Northeast of Bcf X.X record around. X.X needing one-off Appalachian community cubic have equivalent assets. Appalachia per strong Basin a longer recently day the lot As built dates day. momentum achieved finish to positions

diversified financial larger and $X.XX hedges when to per is mitigate were in of people better the of differentials this risk pipelines, $X.XX quarter. and that our in combined in Appalachia during hedge the Mcf portfolio, the Despite transport were of the third in the period compared quarter However, peers. the addition basis in Northeast our some our new realized XXXX, delays combination to the our Southwestern gains to compared the basis same Appalachian for

basis expect per balance fourth and $X.XX our but for approximately basis Looking of and to the protection. many. forward challenge the for in management substantial $X.XX Appalachian, moving hedges risk to for you to hedge continue to our strengthen with into our hedges Mcf line took we have plan per in the which align protection fourth a In add October process, commodity fourth continue next to be speak we we on quarter, and differentials positive will liquidity about Mcf respectively. place we basis have October quarter, management basis impact our Northeast to to sheet our the Jennifer XXXX quarter, with hedge steps strength. liability and

delivering our capital and value we enhancement drive. that margin Looking to forward, we're unlock excited about through efficiency the continuous continue

clear further value improving made. each driving and path investment a have that to We economics well of is out additional

invest, improve Our every contribution investment strengthens economic of core economic growth investments. value-generating and and our the inventory value we capability vast drives remains of returns focus our the which of to through $X

turn for now who'll Jennifer, the over highlights some to me discuss quarter. Let

Jennifer E. Stewart

result improving increase quarter as corporate-level and to good We in to another returns. net margins third and Bill, XX% compared cash compared million advantage generated meaningful quarter providing improving We everyone. a per quarter a Thanks, prices, strong increase positioning of continue of price commodity with providing XXXX. was of focus $XXX the to morning, we $X.XX the a take flow, the of uplift on had third per uplift $X.XX This XXXX. ourselves Mcfe to liquids in primarily Mcfe

compared Our demand the to per our XX% high total of should continue Southwest to for XXX% XXXX. quarter improve these believe we charges incremental a increase. asset, NGL third was transportation of WTI, record barrel realizations These as and were of up realizations barrel, for Appalachia NGLs $XX.XX inclusive or

billion management offering our before debt liability tender maturities profile a XXXX our attractive quarter debt and was markets leaving The September, steps financial term $XX fully XXXX XXXX. million offer took for tenet environment. This is mentioned, million of of notes. repay opportunistically successful XX% core Bill $XXX of our to and offering We bond capital loan discipline maturity extending As notes, in used strategy. retire meaningful our company a $X.X notes unsecured the by important. is an only improved due its debt In through our this

XXXX, of notes that XX% loan fall million XXXX It the to we not maturity maturity prior refinance XX% in we do easily the $X springing if approximately in a XXXX eliminating address are With future. tender term retire or secured can the the matures notes, XXXX Our springing our of requires of we of contains successful XXXX. feature. within this maturity, which springs of this to near

modified facility, in certain liquidity thresholds met. easing we if covenants Additionally, banks include our credit of our requirements the and are existing which

returns hedge investment. to continue capital on to add to ensure economic We of our part as commitment our portfolio our

production to As company XX% average protected with with volumes. $X.XX on at of exposure purchased The XXXX XXXX put $X, hedged $X.XX, up put average had approximately our those on or those hedged up approximately October approximately of an purchased exposure swap also of per or price Bcf Mcf XX% swap had XXX of production an strike at of to price upside Bcf upside approximately $X.XX strike protected XXX volumes. of of XX, we

in Our I'll to turn to expected it to positions to for predominantly update. continue an order be XXXX now XXXX and commodity collars upside retain improvements prices. in Jack operational over exposure

John E. Bergeron

approximately and third $XXX good the and across E&P in many everyone. In invested we business Jennifer, reached Thanks, million the quarter, company. operational our milestones morning,

times, feet in efficiency. For target on time to team drilling our while in reduction continues example, achieved we X,XXX capital maximize zone. Southwest over period XX-hour focus XX-foot XXX% XX-foot to record cycle Appalachia, in to drilling a drilling The

generate that will commenced several acreage production a development opportunity equivalent to West In Mcf. for is XXXX. of day, savings billion look beginning feet that third Additionally, provide Appalachian breakeven and an we of price expand finalized of Basin just approximately Virginia a increase In record cubic of our the $XXX,XXX as to increasing operational we to throughout a long-term Across per X.X XX% approximately to increases gas in This rate XXXX. commercial the we exit quarter the project the reduce the this the increase earlier, portfolio we projects project late thereby compared water had our per value expected economics flexibility by Bill Panhandle infrastructure efficiency, gross well mentioned margins over of will inventory. in quarter, Appalachia, value Southwest and our continue $X.XX capital third significant almost enhancement.

from Virginia upside enhanced and are and reducing completion hubs finalized present per Virginia competitive on XXX for renegotiation in gas transportation This in provides Utica to options alone by our immediately while significant rates. $X.X This with Wetzel XXXX approval. This the We firm net that each which outlets estimated capacity. to well to to rates. Marshall day Panhandle portion will create for in processing agreement designs, provide announced and approximately the million improvements at long-term West at our that Panhandle million. expected Marcellus wet capacity with we reduction of $XX cubic XXXX, The our connectivity net expected be Southern Fayetteville, services processing West agreement also to current NGL remains million, large development successful provide still, through feet excess over expanded our an fees. is savings wet agreement, also counties the the agreement approximately value, gathering future savings provides these Virginia. are very up reduced gathering $XX also in million in XXXX subject increase the several premium value to through of gas XXX Combined FERC Marcellus of West of wells agreement will of In remaining the capacity

in MMBtu, rates. Additionally, to flexible current XX% takeaway the at compared per reduction secures XXXX capacity average this beginning $X.XX a

and We We an fourth initial with two previously two Tioga approximately also feet day Appalachia, are located from expectations X.X per average of Based the placed the the X.X quarter delineation recovery the performance in XX of more encouraging million had wells first cubic play. lower at field XX about to continue miles well. drive pad third to to above undeveloped the an an company two the Bcf the our four-well company Southwest fourth to placed its results an portfolio there This drilled inventory. combined in in on and each Pennsylvania to to pad in company to this rate economic and the modeling a In first estimated English had its Appalachia, test wells in company additional our of sales lateral high as or sales rate our with plan of continues had the plans development in across to-date, the to to away well length XX,XXX seven-well per reservoir geologic confirm that and over miles million The million of seen performing production cubic per Well successful day across acreage quarter of at our the line development ultimate XXXX. program. quarter quarter. the demonstrates delineation successful wells second of company County, In that flowing day threshold in average additional are feet Washington the feet management additional of in sales we've pressure. rate pressure with placed sales XX-day XX.X continued of place our Northeast County In in the results our the wells the acres X,XXX Fayetteville, efforts sales asset. feet X,XXX PSI quality Utica placed average quarter. against cubic maximum this XX of a per These of part pad to

costs explain to procedure reduced bringing to million expected operator, well reservoir very While the for very is Utica prepared $XX We'll who the range. This remarks. asking and $XX concludes costs, the it for the encouraging well are per on to compete of first we our will focus million the turn will back now the two questions. of capital wells down our deliverability our once

Operator

you. Thank

We will be conducting session. now question-and-answer a

Our your first Johnson the from Meade question Charles comes line of question. of Rice. Please with proceed

Charles A. Meade

there. Yeah. your Bill, team morning, Good to and whole you

William J. Way

Good morning, Charles.

Charles A. Meade

If that are I ask doing Susquehanna wells, Susquehanna? from to west your best stuff Tioga you can And that idea can best getting how Tioga those us you're you're is? give an in in far how close results that acreage those the about of

John E. Bergeron

Bradford, County tell hours' can't it it's and by from miles I how our is but Jack. it's is several a Tioga drive. County miles, ways This exactly many Susquehanna is, quite separated

Charles A. Meade

getting are I guess within well, more of economics the you more when to know PBI, what encouragement then is just that distance, do so you I'm you this or do guys And work? your it. is Got striking what I'm

John E. Bergeron

average development well. No, wells These for We're we $X.X and there. still X,XXX shooting X per think early, phase the believe we're but X,XXX – about greater per These lateral feet. foot we're Bcf than million it's cost in wells length.

it because was early. of truck there have water lot We to a

and So costs it's drive on development we at the think believe a very we this down. continuing we're can encouraged But still point. project and

Michael Hancock

I'll that we've time this One multi-well in pad. there, Michael. county the that Charles, And had this is add is thing a first

about quality you've have they're rock that now for tells same acreage. you So, even which that good got the you really pad of results, more competing a and four-well the

Charles A. Meade

could Thanks helpful ask some that. That's And related guys. question I then color it. for Got the if maybe about Moorefield.

we to to the So, on in wider investigation the going be be XXXX that possible two still XX XXXX. your be confirming doing last a Or through condemning wells from XXXX that miles existing away respect to to the these wells concept and Will pads with I step us in be with definitive the Moorefield? pad this you're or about you Can with respect get to these talk miles you'll footprint? will out in XX two Moorefield? application the in

Michael Hancock

we geographically, did where these Well, of the and out of wells, acres acres, mapped we're lot XXX,XXX-plus laid and will there's what wells. prove finding Moorefield somewhere went our now and in the XX,XXX the prove limits way done up and up we've development think we've and We to the possibility gas the are the It XXX,XXX-acre area our delineation But between delineation we've on English need we've is our mapped, to Moorefield. up the on wells. we to we've between acre, these stepped out is in still the the prove what initially pad a edges each think pad. XX,XXX economics. And of

Charles A. Meade

Thank it. Got you.

Operator

comes Our from question. of the proceed JPMorgan. Please of Arun next your question with Jayaram line

Arun Jayaram

Bill... morning, Yeah. from Arun Good JPM. Jayaram

William J. Way

Good morning.

Arun Jayaram

Good morning.

get lower And You in about terms some how and into reinvesting talk that. just beyond. reinvestment were Fayetteville. XXXX think costs, was play in able future the Fayetteville we about about favorable agreement But midstream your think how MVCs you and opportunities wondering the in obviously to Moorefield could given the at guys your just I

William J. Way

at Yeah. with level. that I'll these a XXXX agreement high start expire we in for the XXXX. able and agreements reach And were to transport

strong opportunity got the indicative we've a the extend stretch into consolidate fact amend the agreements are to that tail future and them, long out in and so, Fayetteville. player them And a very to production with of those the to

of other decline opportunities base for curve and and option that opportunity look we Moorefield the MVCs above such takes agreement that as us an the whereby these a optimize with investments as structure pipeline both tranche the to capacity to some Second, provides capital us the going forward out risk from results, at first opportunities. excess the of then rides of

a projects. And highest very the prioritize the competitiveness to of enables the well-structured entire capital asset Fayetteville improve PBI us that agreement to we so it's as the for capital

look further well do to So, when their by taking and we challenge how the of at highest we capital you you applying projects the and processing each on work work our allocate the on on that this, like we the sharing based individual Virginia, knowledge, realized PBI gathering improvement actions drive step did and West plays drive value highest back the renegotiating areas investments. in knowledge capital doing all then we of allocate around agreements, those we're to and capital, to we that competitiveness allocate and returns improvements,

Arun Jayaram

Great. Bill, as a not just Great. been is free market is, premium the same valuing And follow-up flow the And can growth generation. in on way. you clearly my tell, there's cash

about you're As beyond, the you could allocating think value how XXXX you how and program way think thinking shift your and basis? the of on go-forward a capital that do the about company about proposition

William J. Way

is to in improve dialogue focusing perfectly quality that of allocation shareholder returns. highest line the on the the think It investment value, growth. the capital production line create the day over quality in with in returns I of industry, projects on the our is especially with Well, return way of perfectly and in projects community, and

what we And are that's so exactly doing.

of at look capital any we be it like will allocation for year. the other XXXX, As

that drill go the already table is and of come value-adding with shape And to that for investing debt this production the costs; look as creating again, we weigh We'll other the an $X look pricing returns to begun growth balance work reduction options that won't down and the focus the more. (XX:XX). year, be invest. value, Our But we'll together, those bit create us to It's at it forward. comes about to, And and been able be options isn't have all on hasn't on highest it of we us through any for to at how the outcome going plan. forward. lock the at we plan at take improving every winter,

Arun Jayaram

Thanks a lot.

Operator

Piper Our Simmons next line Please Harrison question on of Kashy your question. with comes the of proceed Jaffray.

Kashy Harrison

everyone, morning, Good taking my questions. for and thanks

William J. Way

morning. Good

Kashy Harrison

I outlines could in the that us inventory and Williams the which NYMEX all with remaining help So, at to put what the presentation combination in various of water Appalachia, higher-level at in to was does that you just economic do build-out, prices, together, locations if infrastructure Jack, just Southwest the wondering agreement prices through $X think gas the reference percentage the you terms? gas when

John E. Bergeron

Michael. ahead, go Well,

Michael Hancock

this is help, talk deal. of wells. and that still is When you already enhancing you And But then the gas are of Yeah, like doing Hey. about no, in gas those economics on the very those XXX Utica, those, what at $X. Marcellus already have rich pricing, you're Panhandle, economic almost liquids and of of XXX because wells lean get you're even those, Most Michael. now or obviously XXX all lower. are dry some too. Those

bucket. number definitely So, I but $X these some know exact the don't enhancements, driving from bucket you're that in into

Kashy Harrison

Got in was then mention what was completion other was, new a it. completion Susquehanna, I details. share the more broader pieces importantly, design in night portfolio? in your if towards perhaps advanced wondering but it. And bit and an design there of advanced the light the could application the Got on press the you little just release it last was

John E. Bergeron

advantage, spacing, of spacing high stage went think Without but loading stage spacing. it's it And a changing a completion all and the intensity. it's cluster we Well, Jack. there, to details, because competitive this tighter really is long sand giving ago is the you pretty we

Michael Hancock

bit, and any evaluated to area, operational or have company and a commercial just for And other broaden the parts that particular different the learning is the results. application transferred application to then And that the a question technical you of of applied. we get and learning, in immediately

case. You in can advance an completion have this

leaders upsizing the X,XXX of pounds to one sand loading as are as in foot. up a high we recall, You'll

transfer and applied you others operate the some view, application more looked of we areas enabling those greater and of the in be impacts blend, to across All of kinds activities get on enterprise. everywhere those importantly, is are as some impacts knowledge greater the And other faster assets move of joined-up and and, at the in way in to knowledge that areas. else, a

Kashy Harrison

very Got it. Thanks much.

Operator

the proceed Our KeyBanc Capital comes Deckelbaum your with of next on David of question. question line Markets. Please

David A. Deckelbaum

taking questions. for Thanks my everyone. morning, Good

William J. Way

David. Hey,

David A. Deckelbaum

I wanted question first, guess, hedges in basis that to on I put added place. you ask the a

relative is practical better you're You're should but and to much those much basis a contracts, And protection basis your be basis? improve in now, general there what willing for securing do to to on limit view there's some XXXX? a in granted how have probably you'd realizing you a corporate-wide how seasonality hedge

Jason Kurtz

Kurtz. so is David, what have continue to those hedges this is basis Jason Yes, program we're basis that looking at add to our when hedge in try with match NYMEX we we we place.

So, trying our to what program. hedge as we're achieve overall effective an with

Michael Hancock

of second is that this – the Then Michael. part

you say at Going year. what have how probably the winter you're improvement to year, a $X.XX to company-wide next that, back all obviously $X.XX with looking, but shapes see and up guess, we'll today's to for next

David A. Deckelbaum

capital to areas I long-term want once that I I And it like put this, already? applications to where retain this to you'd is you'd undertaking. then, on guess are that built the then monetize? vision in Okay. project it one, out, there something ultimately something other your is appreciate the then or is And you'd infrastructure for water this in? like that. handling to that just you're guess, plan included And two, is

William J. Way

our trucking and Pennsylvania, and which we a to where really network genesis brings Virginia higher the capability pad and cost – quite economics. move is project and a the very, well this program, of have is will because Pennsylvania. certainly needed across especially will move with It practice successfully value forward. got water phases your water opportunities of enhancement an we'll expand opportunity, in the pad opportunities And for and the you water around. capital we the It's phases. develop that in development from further results be always is avoiding continue in program, use areas, road to the integral it we'll is going when both think and I it as around, of the everything, look we'll space of see the – to expand are question but three the part part of play actually our that keep we the to it enhance for the It really it off to to to West operation, and we the look in remote And look time in of very leveraging our in comes. – do it? on to trucking to terrain how first and cost capital of sites we Well, that we This

David A. Deckelbaum

at within I investments delever, the know flow spending opportunities Are through of you asked non-core cash guess some able be context you'd trying questions in that about right to and to looking assets. ARP I have people other make now to strategic externally (XX:XX) monetization?

William J. Way

space. now. portfolio, out time significant we're in is is there. on in about, of company the you the think focused in the keep as the those power real this But And value present breadth there's we've that PBI generation, drivers improvement value Yeah, the it's generation, Obviously in the significant the what long-term, not well the talked of deepening when economic you economics, that realizing intent. direct in significant at

David A. Deckelbaum

Thank you, guys.

William J. Way

Sure.

Operator

Please from line question the comes Wolfe of your Our Silverstein Josh next proceed of Research. question. with

Josh Silverstein

capital Fayetteville Hey, wanted like balance looks last well to competed the Because go thanks. that a significantly that's down improve and if improves on paper, question years. and improvement, hasn't margins does it mentioned for above. corporate But, three updates in the help. contemplated, the you $X guys. just stick restructuring. all path of Good on to look really certainly it like in the it performance morning, sheet exit, the flat Yeah, world, pipeline and I And it the

to this path? make this not, not is to would this wanted if something might of you consider, that obstacles magnitude. down if I see that And, you go something the be what So,

David Cecil

to are announced David all It of looking and we It's of or Appreciate all parcel focus management the value. shareholders. create looking to I Look, think we've We've got for assets and portfolio in portfolio avenues the expand of and us great intently all that is creates avenues assets. continue this opportunity as a for at Cecil. entire the that that, optionality lot think value lot Hey. we part the results management as and to question. for of emblematic that I value think unlock a through around we've here. And got portfolio,

look to that various would continue we other So, as with we things in Fayetteville we look forward by but the move value. doing also operationally that we for we're the and that unlock with the particular, at which assets, means

we're excited we about where So, going. excited doing, are about what we're we're

there's in us think of opportunity front I of here. a lot

And the we down look throttle initiatives. to keeping those so, on forward

Josh Silverstein

I another current how the free past This curious Fayetteville to years guess asset on the been it cash within now. you the for within few guys the wanted way, Is generate for guys? what decline it has maybe asked serve and see portfolio the right portfolio? you does you asset just

David Cecil

is this David. Yeah,

amount of look at and portfolio obviously also Fayetteville large tremendous the cash I a asset the production the a it importance portfolio; generates flow. As a of today very in lot is and of Fayetteville,

move value again, us key time in we value-earning is Moorefield as look to for ways this at growth, Fayetteville the And think optionality asset the about for we that continue it ways our do to we're in to point But, as we that continues other unlock unlock in forward value. So, things will to and at those looking as Fayetteville. at, be some about growth talk that. we all look other to is allowing driving performance will that an divisions, we creating continue us. And and in some

today; place continue So, where to stand. a importance relative it's we see a with got we

Josh Silverstein

through the asset large refinancings if through then you a need contemplated, can wanted there. a go And to back do those that. have through or development versus repurchases? and it's would share little I covenants. just Thanks debt And went even to you sale much fast capital, see if sale, for if to an walk reduction you how go asset potentially the

Jennifer E. Stewart

is morning. Jennifer. Good This

term unsecured our to off the XXXX So, We and used of our issued with notes. billion of and million with of maturities. pay loan to to $X.X we XXXX XXXX that $X.X start, the XX% to recap, billion retire banks proceeds notes $XXX

beyond to maturity our maturities, term we did loan. extend to prevent XXXX to So, secured maturity springing the extend and our that wall of

also And that with of work facility. modified of amount were existing event asset in So, asset some those sales. in flexibility the that covenants gave with proceeds our that, modify our us the banks covenants to we could they use with additional credit on we one combination increased we the so that sales, there

that that credit use go up on billion, to we the toward please an $XXX we facility. the anything And after $X to have then asset on to We sale. up commitment million has reducing as cap can

Josh Silverstein

Got Thanks it. guys. for Thanks, the clarification.

Operator

your Our comes McAllister of next line question Securities. Michael of with from Please question. proceed MUFG the

Michael McAllister

everyone. morning, Good

off percentage this Fayetteville of at question, from last proved juncture? is what the the Just your of reserves

Paul W. Geiger

the about reserve this put that Michael, a Paul third as basis, on We is generally, that of is look we something But now, quarterly Yeah. release the Geiger. not an base and got out. numbers you've so annual Fayetteville. are at we

Michael McAllister

And projects, the off you. then in that Thank water the of the build $XXX,XXX infrastructure? to the out of net put capital Is savings. infrastructure Okay.

Paul W. Geiger

what realize No. be after we building. That will

Michael McAllister

At the well.

Okay.

Paul W. Geiger

Yeah.

David Cecil

it And ability just you for have quickly Mike, do to the color or as need expand that, as you it in on phases. to

$XX And have million this done. so, year, we and capital the probably that see right $XX it's next and $XX year, outflow. now, But gets million all XXXX over way control things that it million you

Michael McAllister

the Okay. That's great. it. you count? mentioned Thank think for you Tioga And I acreage that.

David Cecil

XX,XXX approximately.

William J. Way

Acres.

David Cecil

Acres. Yep.

Michael McAllister

would way guess the – put Tioga? is Yeah, that slide, the that and include it does I the guys you locations that phrase drilling on is I

David Cecil

that. portion a includes It of

Michael McAllister

Okay.

David Cecil

count put we've the And are only when that them they sure in we there. confident belong and are delineated we enough in

Michael McAllister

you great. very That's much. Thank it. Got

Operator

proceed question of Our James the comes Fargo. Spicer Wells Please of your line next with from question.

James A. Spicer

of a with Hi. Got particularly with your perhaps that's six-year refinancing clearly, a TA a transactions. Obviously, large couple there's term But, step sheet revolver your Good a place, balance. AC morning. of a liability getting next or balance you've XX% here bondholders going of towards loan management covenant? inefficiencies progress recent the that What's traditional for lot made whether (XX:XX) consent out good such to questions. carrying still change to in in cash

Jennifer E. Stewart

is This Jennifer. morning. good James,

respect and options secured to into our XXXXs We're right. (XX:XX) You're debt XXXXs. all considering with

clearing And will direction streamlined a to committed one that stage path that definitely haven't structure. the working have for associated to the to need steps sight and another set more with right our we'll capital now, We taking definitely negative a of path. we line And or eliminate balance but gates amount on the the towards a open carry the to large cash sheet.

James A. Spicer

that secondly, the recent why you the liquidity that? and leverage you there your covenants replace they Is then reason wouldn't your credit with with provided any ahead facility, ability minimum a Okay. That's amendments Thank helpful. And to do go to covenant. with you.

Jennifer E. Stewart

what want Right to like. into on we don't XXXX looks a have until now, boxed get better view we something

back looks like until we we what to. as like. we right of we and kind optionality, now, our as But is what we forth we're long-range flip an pat just need standing would can So, have see plan of

James A. Spicer

it. Thank you. Got Okay.

Operator

Please Bank Our next with comes proceed the of line from Doug question of of America. question. Leggate your

John H. Abbott

Leggate. in This Abbott Good John morning. Doug calling is for

William J. Way

Hi, John.

John H. Abbott

Yeah.

the in water PA. a that, you rate about have quick third-party on return opportunity rig to question infrastructure related think operators? getting to a services sell you of Just project to When the do the Southwest

William J. Way

We opportunity. the project set absolutely do. we that for up And would

John H. Abbott

regards question per additional And right. your is that All How processing of agreement, the to second the of for Southwest million your inventory? in well. value out $X.X gas, much Appalachia inventory lean then

William J. Way

so. or it's Yeah, wells probably XXX

John H. Abbott

That helps. you. Thank

Operator

of Please line question. of Our Brian your the Sachs. Singer from next comes proceed with question Goldman

Brian Singer

Thank you. Good morning.

William J. Way

Brian. Morning,

Brian Singer

next moving be and more year constraints then may Pennsylvania about in talk you you (XX:XX) your the lateral in over Southwest lengths the lateral on Appalachia, Can and any what and Northeast both that? see length how

William J. Way

successfully feet success. and Well, over gone we've do wherever XX,XXX lateral the lateral we length, with try maximize good length

areas, comfortable We've drill working with with that have can feet already X,XXX the there. feet to Usually average we're in to we we some on We pursue and do unit, that our and to Northeast lateral is work successfully We issues been a Appalachia lateral continuing lengths speak. look with very in Appalachia. requirement the if work landowners. no have X,XXX able lengths Currently, and do to where We that. those We it's are you landowners. expand that. longer as them feel Southwest in

David Cecil

to just move more XX,XXX-foot handful X,XXX-foot share. targeting wells form of go of We've figure we've looked to a there that our how without and in and a any we've strong. feet target laterals even really commercial have, can issue where at zone to they're There's that, done the targets under also try range. so able We're flexibility lot target laterals to up. opened up commercial out set, have discussions X,XXX And do we're all, We're the a to, feet, after units. where up XX,XXX after minds trying you it those to that XXX% set got and we let's guys' can make

Brian Singer

then, average, average relative just or I be next of – to should and higher? guess to as expect longer there year? change would slightly them it a we work the no, to into in Or, gradual where continue laterals more be that warrant, would would averages are, step these some you work

William J. Way

it'll think gradual be I Yeah, first. at

time We And economic. to will is. I are, lateral acreage units all actively look are that more and trade make as to we, think at wells there have we of as extend geography again, lengths set, well. where what even the what acreage continue the

Brian Singer

then just And one one quick more the on Moorefield. thanks. Okay,

out expect to the Moorefield Can on the for very wells the from most how be. the see and to capital? you recent early. Fayetteville competing, economics EURs of the relative and the put I costs relative Appalachia numbers for well know You the you it's then you'd very, what comment just to

William J. Way

wells, right a point, is allocation to the Basin, if wells were cost costs working in the for sub-$X at improve wells compete. is system. a notice, very first driving Again, drill mode. higher-cost and – so were the well well, wells. early, million quarter now our they they of, That's well the did productivity to the are in now, really capital competing Well, allow these one to they we're down most believe development you matter per compete have Appalachian one-off a economics well pad in costs and development I to we were for economic the recent reason to do and well our Moorefield. best in We and It's Fayetteville it this demonstrate, drive

Brian Singer

Great. Thank you.

Operator

comes question proceed of Markets. line question. next from Capital Our of RBC Hanold Please with your Scott the

Scott Hanold

some lateral length. of drilling in Yeah. had with Brian's longer question And hi. there. the activity dovetails the Shale extend it those it wells Fayetteville like And the the or that recent at optimizing nice more Fayetteville Is bit you're depth future when just And you laterals like X,XXX ones Fayetteville? Moorefield those can traditionally a area, little in my Thanks, little think in you a look looks a feet. on What limitation I were longer there, the longer? over is working the

William J. Way

land very We Appalachia. there We than longer have some are in we have But, drilled easier that. yes, comfortable. we and situation a do will and do actually we

depth, we feet problem X,XXX feet it's no have to of even X,XXX drilling there. – Some the

Scott Hanold

that, of lengths So seen little I why haven't my be, lateral we limits more there? faster on bit why question we guess those would a so then aren't the pushing

William J. Way

X,XXX and wells go then is and a longer productivity to on to goal prove delineation on drill feet, will we laterals. our these mode Really, per EUR development

Scott Hanold

Okay.

a So staging. it's more

we'll to go then okay. to understand First stage, next it, you that want

William J. Way

test. to (XX:XX)

Scott Hanold

a all that that first, tell well drilled pretty that in what No, Okay. Utica overall? though is recent about the your the makes lateral And out Appalachia, especially then looks what does step than good, next And considering shorter had you there? sense. acreage you well it

William J. Way

It convincing just, there. there, that is the potential again, repeated good more just the and from the and gas is deliverability encouraging reservoir is that

drill the wells right do to deliverability and complete of to is now and there. economically, it reservoir be challenge job industry's to all wells. the The is Our able

David Cecil

cost, we our so learning operators and exchange in together work results to which the less to continues. and together learn how with faster, And we in data a working do that are at area at look

is Our on wells going scenes. only so learning, of of drilling a is we're there behind activity way not the lot the

Scott Hanold

look it as still XXXX? And more then far you in to consider steps, that move as mode project next would development Okay. into is versus to so as something you

William J. Way

quality the acreage, to and the costs we've the down. to And of Utica disclosed, to our of got very under we've the then it. we really, get well really, expanse clearly Yeah, need as understand continue

understand drive associated continuous drilling And so, these wells. a the with there's to risks

and down subsurface, the what driving confidence wells performance interested record to go are We very well as very, well mode, costs expensive forward. the get But teams costs a go are in. just These get down the that track we've seeing, we the down. to we we're to once got dramatically. gives so to We've the one-off us we're have development of clear wells, challenged

get and and, path we the need capital out coming a put teams to have it's in and that can the and mapped it demonstrate in analysis again, system the allocation heads-up we that completion. that then there have to We wells path is so

Scott Hanold

sense. all appreciate makes That I the answer. Thanks.

William J. Way

was of if know don't agreement West solution I it – part of the a changes did and finding And a is Utica the gathering for wells. or not, lost but Virginia processing gathering get we

the So, piece ultimate of Utica. we of development another is we have entered into agreements, which those in that have confidence the

Operator

the Please from KeyBanc with Markets. Deckelbaum question. comes David line of Our proceed next Capital question of your

David A. Deckelbaum

Appalachia? the just of of Thanks quantify for outages letting impact in some me wanted to I you follow-up, Northeast third-party the could re-queue.

David Cecil

Yeah.

you So, ballpark. the of kind give I'll

offset probably different what you move X it But so somewhere you was hard range. when Bcf in and to it, of directions gas say that, exactly it's at you to compressor, look between lost. that the As downtime some Millennium the

David A. Deckelbaum

should just I as base minimal choking to decline wells, about In that sequential asset, a to and given you're we limited Appalachia, the doing guess very base pretty when the achieve Okay. in some Southwest despite right flat? about now growth some on decline of you think been follow-up. the think able almost tie-ins just have the strong I then this amount constraints one maybe And guess we other that guys there.

William J. Way

management fast maximize EUR. on choking That's back too to them is, wells a doing program. why especially don't condensate we're wells doing maximize out we of and subsurface pressure say as choking manage coming that the as ones so the a far that the wells condensate, Well, program draw again, management have down wouldn't and the what hold have we're goes. we I pressure pressure We're to we're back. we value the back

David A. Deckelbaum

XXXX, about minimal? think extremely guess pressure in I coincidence program that pressure about But managed being Understood. as that program, wells on Southwest level Appalachia before when by should putting new decline we continuing management throughout corporate that was think you

William J. Way

not the certainly declines very but those especially the the competitive one is other with well well economics, individual advantaged, improved and base of single not very, areas, the together, of if minimal, decline It's each are because that.

David A. Deckelbaum

you. Thank

William J. Way

And wells. of the out strong performance the

David A. Deckelbaum

it. you. Thank appreciate I

Operator

of end Way and to gentlemen, back Ladies over floor the have for Mr. allotted the turn I our you. Thank like now for reached we time would closing questions. comments. to

William J. Way

Yeah, assets. our we're leading unlocking debt investment ongoing sheet value to access the and the thank the expand value learnings vast EBITDA economics, prices. resource balance We're your we potential chain want markets. future and you opportunities by at support and to high-value pay applying maximize our to thank to transportation continued reduction, value. to expansion portfolio We're and thresholds deliver breakeven you our identifying strengthening for to lower inventory strategy across the shareholders we for our improving our in opportunities our opportunistic extract We're joining shareholder throughout company as us leveraging commodity returns. through stack additional driving execute technological targeting today enhanced We're down

forward. moving teams Our to and high-quality our stringent assets discipline our strong accomplish operational up our momentum more us capital and from sets even

on with highlights all weekend. And, our for you look again we hope call XXXX today discuss have fourth next we and So, that, thank a forward discuss call great our you plan. to you quarter joining to the our and joining on

Operator

conference. Thank your participation. you today's for concludes This

this Have your may of a disconnect lines at day. rest You your wonderful time.

Southwestern Energy (SWN) 27 Oct 172017 Q3 Earnings call transcript