SWN - Earnings call transcript Q4 2017 | Southwestern Energy Company

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Operator

Greetings, and welcome to the Southwestern Energy Company Fourth 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. reminder, is a recorded. As Instructions] this being conference [Operator Mr. pleasure It my introduce is now to Michael Hancock. Mr. you, Thank Hancock, you begin. may now

Michael Hancock

Thank you, call. Tim. Energy’s fourth Good morning and and year welcome full XXXX earnings quarter to Southwestern

are has Joining to issued release Jennifer Interim website. team. members Clay me CFO; we Along been our our other President COO; with our discuss results also Stewart, along today Carrell, posted of and on Bill our with CEO; which Way, XX-K management press yesterday’s

to and point and during these Securities and Annual like Statements that outcomes. we many forward-looking in comments with I’d Before Filings our are Quarterly get of the out this detail Forward-Looking more Sections statements the of started, of Exchange control Many in beyond and the Commission. are that uncertainties Risk our are discussed the teleconference Factors involve risks affecting and

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

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

Bill Way

Michael. morning, for everyone. joining Thanks us Thanks, Good today. on our call

their Carrell, last announced And Penchas, industry Clay like I careers gained how that about tell recently the Relations talk and call. in Paige are to the new each management their rest to Bott, outstanding I perspectives started forward. leadership continue and in team. has serving in look would team had new at forward to weeks. get room work to opportunity also our Jenifer excited I for the extensive the we the the Vice us on Jennifer transition Michael about you company. the Investor to we’ve roles since energy will to results, personally President Julian going for today. Stewart experience over with thank SWN CFO; and Before will leadership bring our with want our Michael their work throughout XXXX I respective them of they the we to on take Hancock and COO, are and incoming diverse Paige of changes that want and this in our our Julian coming work a

and point billion solid production the financial operating generated Southwestern -- Jennifer The win. Clayton detailed Following rigorous compete laid exceeded clear. trillion feet our give operational and Carrell commitment with $X.X results the we company last allocations we our focused We XXXX and decision to discipline of my record met our capital equivalent. summary are BCF financial cash the the review. highlights, to XXXX year returns month on through equivalents; confidence and asset morning financial every a or portfolio, XXXX of reposition XXX our of out provide high-quality in and will of remarks, and cubic this where strength, Building performance XX.X recorded for a we will guidance. to flow announced in Stewart Energy reserves

and and and organizational actively the process related alternatives to leadership. are Shale and structural changes implementing for Fayetteville market identifying We strategic E&P cost gathering pursuing and midstream assets improve

for purposes. over which we our general maximum the debt, utilize believe economic supports navigating large-scale, to continuing strategy and long-term our capital momentum XXXX, successfully This strong our X Our return built our funds our our we drive and capture the We're our intensely in we environment, sector. strategy position deliver the value to Tier assets two focused improve the shareholders. high-quality is years last This this potentially reduce company's development multiphase In margins through other is supplement Appalachia the executing prices by real ongoing. growth corporate of realized to highest $X. price to gas on to in expanded our value for phase commodity enable challenging and to from step will SWN deliver is second delivering assets, at realize next activities results intention within from and these shareholders flow strategy below highly well cash capital, natural

to results, the laterals, optimize assets, from excellence track in agreements as existing impressive already scope It of It our we're own. significant wells enviable value gathering measured of being of also and large core scale of across transportation in our the portfolio handling and and technical, our cycle longer from and including dramatic time, by and among drilling renegotiation Given we design and the implementation. improvement position commercial drive includes operational uplift water assets savings material others. cost team's improving significant includes able

the focus seek results gas growth, investment grew compares the higher breadth to Basin for the ability is ago, assets strengthen portfolio natural to strategic During doubled a XX% Tcf in price per the at when and XX MMBtu flow over Appalachia portfolio $X.XX in and reserve to area the in production capital economic words, up take in has much the Appalachia only further the at returns environment. a forward. time XXXX, per next growth and other X.X depth MMBtu resiliency transform The on To to our lower area reserves and in base to increased step once in backed commodity with our $X.XX to contributing liquids MMBtu. even the we cash again clear our highest metrics strong prices. XX.X in alone. company alternatives per Tcf, to prices with contribution price additional put The returns the our were higher to right demonstrating this and at and we've which decrease from reserves projects perspective, compete in Appalachia positioned growing return price, SEC Appalachia, natural just of our generated in gas to In three our Appalachian further years $X.XX the lower are Fayetteville significant gas that Tcf allocated

While cost numerous that opportunities, and are in our stepped projects in has additional rigorous allocation it return portfolio. assets I further for and – our of Fayetteville note our our high Fayetteville the development capital highest challenging process the by compete investing capital make work bar work Appalachia our here reductions discipline forward. has for moving to on Fayetteville will the economic

and these provide additional actions XXXX objectives. to context XXXX our We strategic have announced strong two results our early to

on the right time, in actions process, once at early However, work. these two we we the will in are discussion very engage completed and our and have we further

While and all come laser-focused these way on creating well large-scale from our repositioning expect vigor quality the assets, the actions Southwestern value delivering from same to exciting progress, our with we you on Energy. high are of have to plans XXXX, we are for three

capital gas funded rigorous Mcf $X.XX and our portfolio. an despite forecast Our demonstrated and Liquid discipline, XX% is demonstrates investment benefits assuming $X.X increase flow. the fully the our production compared mandate decrease XXXX program over grow guidance NYMEX to our guidance, expected margin XXXX, from approximately be growing X% of expansion of in the cash will Consistent our to of billion, prices. the liquids cash helping in deliver per with of a capital flow impact of midpoint

and almost Southwest Pennsylvania million up to to in within assets Appalachia million almost XXXX, setting $XXX EBITDA in production cash $XXX of drilling self the Virginia assets to capital. are growth for alone. from nicely Appalachia West are completion expected delivering just these growth future approximately generate flow. In generate more in with expected XX% less fund This includes XXXX, and production them growth are Our and XX%

capitalized production, gas are over growing capable with assets, the of Looking per doubling four year providing only rich of $XXX investment, forward Southwest to and capital liquids and interest company’s the next Appalachia expenses. million years growth, natural excluding production

continues Appalachia, to to is SWN the into in While well and pipeline infrastructure future. improvements well resulting expand basis today the positioned capture

drilled expansion low with years participant an As transportation and locking cost for eight capacity and than the the access area, in value Marcellus in more our Southwestern has ample business grow high markets. a in firm pipeline multiple was the to early in reminder,

costs basis realize transportation $X.XX the business in we to a materially Appalachia XXXX, to Northeast throughout expect with development. Our improvement In positioned Mcf improving is capture per solidly flat essentially differentials Appalachia, Appalachia an over and have production gas differentials, sufficient Southwest per growing to our Northeast are we outlooks $X.XX market pipeline In delayed. Mcf projects in companywide if differentials. improvement even

continue to monitor pipeline capacity demand gulf the We forward. going growing additional opportunities coast access to

expanded, gas improve development. further will fully natural cost of billed availability portfolio time future of impressive pipelines are we believe future support and and and the the over capacity As

over momentum I specifics exiting to the about are we We some and for would provide to built. now to like ahead turn we the have on solid this are excited have foundation in confident company. Clay the road further place about

Clay Carrell

action key technical good you, excited continuous see and Bill, team that has that that’s even improvement been chance excellence. be understanding my that has Southwestern. operational our get my one a I on a A attracted asset Thank to excellence, of a the philosophy of in and core career morning, operational culture and things firsthand base. of to to I'm focus the more the have of now deeper I'm To of with, tenant everyone. part operating a begin throughout long-standing company a and me impressed

XX% XXXX. generated cash our intense in production is this production Bcfe production a gas liquids efficiency. in XXXX. December XXXX, XXXX Appalachia total operating XXX total increase for per XX% day in Bcfe, Bcfe flow technology improving As of or a gross of XXXX. and applying was Appalachia, Underlying Bill $XXX compared well mentioned on increase an from assets and was rate Appalachia an component XX% in natural exit million XXX our higher Further, to focus compared EBITDA to X.XX over growth accounted

doing it and So with less more doing better.

meaningful cluster across portfolio. XX% portfolio. type techniques resulted proved XXXX, to increase flow economics economics compared lateral in XXXX, by driven Appalachia in gathering along through lengths XX% completion Operationally Southwest XXXX and stage and longer breakthroughs the curves throughout with assets. reserves. panel processing able our and agreements. latest of liquids optimize reserves and increased in enhance drilling utilize liquids improvements and economics Tcfe of gas Appalachia improved reflect gas we year-end in significant our natural increased were to spacing were and innovative both X% across comprised natural We pipeline of rich technology a the reserves and Our improvements tested These and to liquids renegotiated techniques Proved generation XX.X our XX% tighter that proved

And the an feet XX% or As density compared horizontal Southwest sand respectively, Appalachia, by XX% lateral the we in over increased and to XXXX, and in X,XXX XX%, average stage and increase by example, loading length basis. results can by approximately shown you foot from type XXXX. on The outperforming night's the these uplift per offsets historical last a curve are in press wells see the release. XX% lateral in

well precision life completion Additionally, in in and the optimal Appalachia, designs the EUR production productivity XX% first yielding as XX% evidenced, higher increased the Northeast approximately over by in are enhanced in an increase cumulative and and higher returns, approximately year well drilling increase well. zones landing of

the position. tested in and counties in our designs acreage mentioned new uplift are have seeing Appalachia multiple past, our As Northeast the we in across

this our on development. capture enhanced future Northeast to expect We Appalachia of all value

even of efficiency application proved as Our improving we in is learnings demonstrated total value. capture Ncfe, the F&D. in additional per ways XXXX improvement company than proved by F&D and XXXX. more the expected translating better to $X.XX costs level developed productivity were X% for the In is well to continued efficiency further take capital look Capital into XXXX, next developed improve to

placing Brooke pad expanded rich West four-well approximately most Bcfe Beyond in delivering $XXX,XXX acreage each value of project, Southwest sales County, Brooke with our cost current prices. on plan XX% our to F&D water pad liquids $X, price County per we $X.XX approximately than Appalachia focus acreage, Southwest added and approximately average per enhancing Appalachia, company of an acreage additional we X,XXX In is million technical and footprint asset. in testing additional through Appalachia, prospective a based XXXX gas have less beginning X of of of In Tioga also are an have to produced in activities gas late has the Virginia. and operating cumulative which on capability, expected these XXXX. XXXX, we our in play, of In Mcfe in an to production well This year-end economics. breakeven our we acres results, development save the northern gas feet XXXX. Based our expanded increasing its day comprised commenced further in gross production to the with window the County, Northeast rich the of at XX cubic of our oil

Tioga of eight XX the sales and gathering gas has approximately additional first commissioned the water and acreage. installation throughout and had In area of Southwestern this system area a wells an progress. this the distribution phase XXXX, to placed in wells holds in XX,XXX we acres in

two acres concepts Moorefield prospective tested included in and Shale. The of more the tests approximately activity part XXXX as and net we to Tioga capture continue in in program, encouraging reservoir results XX,XXX redevelopment to Moorefield our develop XXX,XXX Fayetteville, XXXX, in to pads The of as derisked the the portion further continue have shown the acres acreage. in opportunities further Northeast first productive increase which development Tioga is delineation has play. we the In Appalachia of delineate planned out result Fayetteville the in of

performance future The performing the drilled Fayetteville spaced lower and our of and lateral techniques in redevelopment cases value technology utilizing supported drilling analytics. Data well, redevelopment the Big older, and latest internal the Additionally, include areas normally additional wells lengths. in first extending vintage averages, production a second opportunities its of company to some we through both which which redrilling opportunities proved to validate Shale analytics generation financial opportunity some over now the a of field, drilling completion for to the The resulted locations result redrill redevelopment by the by of field. a Jennifer drilling using identified predicted XX% infield model. of offset significant latest in model well the and again completion the generated undeveloped this I’ll the is it by improvement company data results discuss the in initial the in older on data rates validated recent an analytics further improved the additional Based redevelopment across currently turn drilling Stewart XXXX, over well highlights. the half

Jennifer Stewart

everyone. morning good and Clay, you, Thank

commodity key financial continuing over investing delivered gross flexibility ratio in the announced our in initiative. enhancements We and extended we cash combined Further, our XX% XXXX. actions In One was our on offering. took Xx. end that X.Xx $XXX improved below maturities improvements path our in debt to a steps by to price end in initiatives debt and and $XXX XXXX further of of sheet pricing order by several from XXXX We EBITDA our the no improvement remaining to improve volatile flow, our balance the years, resilience our to to strength prior increase to we with attention X.Xx XXXX, at the net liability stated significant the of metrics XXXX debt the XXXX. to within resulting maturity was bond by equity management to strengthen net million of supplemented which million our reduced with environment. operational alternatives at where We remain from strategic our committed to implemented accelerate debt schedule last two to

generated XXXX and well and majority received covenants those bonds In the flexibility. bonds of quarter XX% compared financial lower primarily net natural to XXXX, fourth improvement offset the to gas $XXX in than of fourth pricing, we higher more quarter flow, liquids with amend XXXX that as our of additional fourth covenants XXXX our certain the prices. created XXXX cash which to align consent the the we NYMEX approximately XXXX, as of XXXX, bond million in from quarter, to a Additionally, holders, due

compared a capturing on in XX% of the increase Our increase in development ago. liquids pricing. in In over rich focus year XX% Appalachia, improved resulted benefits an resulted NGL this production to gas Southwest a in margins liquids

to uplift in Mcfe XXXX. a provided a For per price per $X.XX revenues Mcfe total the price compared uplift $X.XX company, liquids

flow capital add we to returns cash investments, ensure portfolio. and to our our continue economic commitment on As part to of hedge our

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

continue retain to collars in to in now and questions. Operator, positions XXXX commodity order expect concludes upside remarks. price. Our open to up That an like XXXX exposure prepared our predominantly improvement costless we’d to the for call be

Operator

Thank you.

Rice. We will line session. [Operator Please your now question. question comes be conducting question-and-answer Our Meade of a with Instructions] Johnson the first Charles of from proceed

Bill Way

doing you How morning. are Good Charles?

Charles Meade

Thank I'm and should Bill, about? maybe you add this? that what And going doing to we about talk about could targeting some be for like of that to you're communicate the would Fayetteville you. Can the I sort timeline also be to ask for. you'd -- wanted well. you expectations be buyer thoughts thinking about Shale

Bill Way

callers the us. for bear ask in this and put comment entire me with all Let around a room the process you to

now, funds the We that about performance We to are the monetization the and the I driver debt, process. in mentioned order started. from to on them. in just XXXX and any may and that to we as details -- come liquids .We through asset any that to got I'll process in be milestones, and about pricing an major ask to -- understand for and repositioning ready early bring floor to on XXXX things other than you us. and you those. at fact have non-success underway, a go kind is pay ask we'll in that talk a more the our timing happy success capture this context communicate right for instance that of to us down to just first the then angle be Northeast is going the would work we're this which cases to to patient with your This not to this cases that we critical spoken and and company and things ask process It's and achieve But you call. put and we for be get I'm for announced I question, the But other with that of indulgence patient

Charles Meade

particularly, you then, Bill. doing follow-up with the Clay, Certainly. though could sharing. Well, redrilling maybe a ask in would wondered, you elaborate it. on to on Was rebuilding wondered an an be bad Understood, be well. the interested see guys even more I to to a had ways talked well had with I about you was you're a could that. on a And bigger this Fayetteville, you interesting several previous more lot for of what well? old that also, set actually what you redrill I And frac up partying little maybe what if this question are screen outs stages, just going bit I you asset, or that why old was hear if

Clay Carrell

Yes, has field developing, across the to plays. quality we've many improve of continued all these that for techniques shale idea years, producing was been and the drilling around, completion many, and

said, wells We analytics team out best value analytics look to our put X,XXX add up around right redrill the existing them. like for line the the in in think. used through helped do generation wells identify now model a that that XXX on all as away field that played that out fracs those different more identify it the the for the this of mode. to and essentially didn't the with identified that recent had asset performed model to model. that ways not We older get our averages foot we the continued from of you analytics data look an were based areas and we so that And And the can to go, some performance. perform well had of where into help And of candidates

So we that with were really result. pleased

Bill Way

position in going in and value asset right And the our it that's present Charles, the maximum behind for in Fayetteville, get and forward. all to follow-up bit, note all that company is world to going with strategy the now, is that you'll of work class the upside capture to out on a that value results,

asset work doing the the the encouraging work And part to is redevelopment doing so around and teams value are maximize very the opportunities the Moorefield, transportation all of and and strong process. that of -- this in renegotiations, that incredible around work entire they're drive

Charles Meade

Bill. helpful That's

-- that's -- if of opportunity. field was areas you So one performing more you maybe productive in and the find the how your understand I sorted comments, of the this and pick productive that then of well the the kind lowest area

Bill Way

the started we one. how That's first

to have wells that dimensions. testing The that been is of real approved. the that And and was and some we've uplift other first -- be delivers Appalachian number will have basin testing the well back from proven, a brought that value, results. We drive the we those the nugget encouraging. that spacing, increased applying Fayetteville here very on strong And technology we've latest additional additional the

Charles Meade

for Bill, the detail. you, Thank

Operator

comes Our the Please Morgan. question. next line of your from with J.P. question proceed of Arun Jayaram

Arun Jayaram

My year-end regarding PDPs Fayetteville, with good the just and gas, morning. the XXX I but inventory guess to help time? the that only question you at split could of split, and maybe undrilled between I wondering value, and Yes, kind just PVXX maybe us if

Bill Way

PVXX value, Arun? You're from talking

Arun Jayaram

have strip… Yes. And if this don't I know at that you

Bill Way

And price. strip. great of to we don't going deals breakout today's to be have -- SEC Yes, most be But going PDP. of of most hadn't to changed that's that's it

PDP that it are of cycle, because those the but So, so out is later most value jamming. development in is

Clay Carrell

a the Yes, PDP over $X million. Fayetteville component is the little of

Arun Jayaram

just of Thanks, kind just you And Fayetteville. potentially of Clay. you Could the a give ways you follow-up, helpful. were to my transportation color little that's agreements in okay, looking us bit about the Bill, around that? talked some at successful more Great, renegotiate

Bill Way

I the quarters consume of for our today; couple transportation Southwestern. they major two, parts there's Fayetteville two Sure. and transportation in ago, in operations all One, out use we two and agreements, believe. that We expire those previously And don't 'XX, it: routes has announced, 'XX a to

under company out they've how we of growing options the How do and have do the is what done at And market? did across what the and so some to we that so did from do we And extend basically to went a a they the get take Coast the They lock-in that. we look excesses have? pathway like team Gulf parties, we to And amended near-term extended some particular, so a them, us, agreement, and and rate long-term basically, the about be which to transportation at very-very favorable XX rate. engaged back value, a years wanted in million come to one the us. for $XX renegotiated, And engage them. extended Gulf to of for allowing then renewed Coast, can transportation

Arun Jayaram

And do is something in Appalachia? there similar to opportunity

Clay Carrell

In of the low Northeast Appalachia, we've already got transport. very cost industry-leading portfolio

pay around opportunity so, to And work us that strategy has the built for Basin, clear then off very done expectation term, transport cost tact, are the for of play different of history And grow and high basin. those In these us. that clear we've begin that will to allow that not us – develop to that be long to as very we is much on transport a renegotiated. pipelines pipes believe capacity them large we been to some paid committing our our portfolio a We we add to Southwest there significantly well. under phase to a we amount And into the that lower as capacity get in enough at very and going took to into wanted certainly on to grow needed very present. very, more has in built in this, all the comes and a is think and where than we cost we been transportation that we needs our it’s our as it’s we've with about of Appalachia asset come all

Arun Jayaram

Thanks a lot.

Operator

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

Michael McAllister

is million doing $XX being My program. of midpoint? Fayetteville what the is or with at done budget on redevelopment you million are the or you into the go XXXX? $XX question And Can in it

Clay Carrell

Yes.

with model budget rig running part testing right now. in a redevelopment the dollars those So, we're different And are opportunity we've that this of concepts we're the like line included using XXXX that got are the further mentioned, all Bill drilling in capital. and

Michael McAllister

high as XX what the they're was Fayetteville? working So, in as that’s it’s and

Clay Carrell

non-drilling some number, on. total total that we money capital that that’s and that’s in but That’s There’s working are the related other total capital. pool completion currently of

Bill Way

that is sense, you the capital practices projects remains. the high think, just but kind majority in terrific invest actually we come think the whole these could unlocked for be XXX,XXX Northeast, as on change potential just from is be the of game the tests acres of a changer the that allocated broader capital if the game could to to the our The through have. Fayetteville we a breadth principles -- And, of about – and allocation PDI our view

it. so structured it very about a very test days. and this early And at We're one very disciplined doing it’s time, being about

of investments. All of capital honoring while the our practices allocation targeting high value

Michael McAllister

alternative put for if to this I capital to find as you bit of – to kind you is strategic not areas. bit capital because convey would can accelerate sell be by almost and guess a in Fayetteville, in create put and why you you're doing you are you form. -- the upside to show And trying field? PVXX, the try might I more this to more a ways little it, more get wouldn’t capital if But have to the other the higher because rates balance trying of it, for of there, more goal little some that into this you, that,

Clay Carrell

certainly point. your Yes, headline and discuss we to quite

I'll And so, be just is straight-line you. tell what

enterprise, pace, and us We certainly mine. mine the of got of the in working front to this in are greater value we've

So you go – we we'll update forward. just more stating as

Michael McAllister

Okay. Thanks. Fair That's great. enough.

Clay Carrell

Thank you.

Operator

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

Brian Singer

little about objectives. potentially if into pay add exposure you leverage then the and And start, to play acreage for would balance you you Fayetteville as hopefully accelerating question. opening something will the would qualify Can And stay you with your to this how in Wanted talk framework acquisitions that? coming as cash okay, accelerate down comments, PA specific think about think about in? talk bit the sheet liquids that, but debt you just a use Southwest wondered and to or to

Jennifer Stewart

what sales receive did, longer of with Hi, decision versus Jennifer. prepared yes, of that processes. maturities? amount X-K market my get we to of based proceeds we're on we that targeting proceeds on sale really our any debt We debt about really bank or there the remarks. both strategic debt the we address includes announced, times. the decision is we in time the alternatives actually in the be two going bond EBITDA think, we we this are to of Shale and potential It's or said going for And, that two we're times But to lower, the the near and conditions dated at Fayetteville

as just Bill of said, now, -- that. again, stay on tuned So, right it's as

Bill Way

broader Today we're be And to our return in usage, potential to terms prohibited there. under agreements mentioned of we shareholders.

acreage look we a balance this shareholders, to available return priority first. that. at Jennifer doing debt get and continue clarity much implementation that reduction will, get are So like to pursue that, will funds data spot budget with our sources do We as stronger we'll first, certain certainly provides about that as of we and and County, acreage capital get a our But funds to successful are we're Brooke this a have exactly of able be to we it of overall by around us that we assets, so greater the better or it to identified -- flexibility, funds about bring the plan, to more to talked by to going Jennifer sheet, said, have go that budget options will this, If us in where uses the and we go. with we're portion label we of Certainly, within in do in find a numbers things use land the talked there. the an approval, to a and for Clay some and that.

Brian Singer

Great. Thank And to you. is Appalachia. with my regard then follow-up Southwest

increases greater type efficiency. the than further offset in your talk rate recovery You and locations of that raised curves where recovery just your by Can you in productivity cumulative fewer recovery? about now? and improvements is, other's rates talked reflective Is

Clay Carrell

stages. in getting intensity greater Yes, it's each because our we improving definitely are frac of recoveries

in we're the the part that's and and recoveries around believe continues ongoing drilling completion the the greater we EURs to so its of translating and proven designs. improvement then And the

Brian Singer

rates you recover Can talk about your Thanks. or… are

Bill Way

reliant. think, this some now, our work I right is of Yes,

what both determine the all the be to So long But do EURs direction. right try recoveries. to is to a and get it's in enough able pointing history determine we plug

Brian Singer

Thank you.

Operator

from comes Drew Venker question next with Our of the Stanley. line question. your of Please Morgan proceed

Drew Venker

Good morning, everyone.

Bill Way

morning. Good

Drew Venker

what could forma, to you guess, in year about XXXX think pro thinking you I the What to in you're deliver, and still through run high, then same about potentially process again and this spending metrics don't going you have hoping growth kind of pay flow that's, beyond you cause talked you in and be sale you them, talk Fayetteville you're is think, if but I cash at the really look pretty might those and sale. down, could brings numbers the beyond, and that growth rate XXXX for Bill, like?

Bill Way

objective. the within invest Yes, going I flow. That's continue we cash model, We're to mean, obviously. to

said generates total the so, Appalachian pricing determined I that alone numbers we opening and for digit these the The my double that And the yet at comments with to around premature. volatility in Basin kind get ability Fayetteville's that growth robust. and and would of will to grow the be be numbers flow amount, cash of

Drew Venker

that Bill, XXXX? -- you That beyond meant for number

Bill Way

Right.

Drew Venker

midstream would gathering? Fayetteville sold Okay. And that you be significant left any there EBITDA is after amount of

Clay Carrell

meters from guidance We've put like got placeholder marketing captured we in that activities XX and like out. that things Tiago that's

Drew Venker

I'm for Okay. provided And that. updated missed if inventory I sorry Appalachian? any you have drilling

Clay Carrell

I think, we've in Northeast deck Appalachia, inventory got that the and in locations But then be in total, presentation out to come -- of in around call. drilling this Appalachia XXX. it's Southwest over We future X,XXX after future release that'll is going the

Drew Venker

Clay, Appalachia And, much of how Southwest that attributable is Or in all is Okay. to Marcellus? Marcellus? that

Clay Carrell

it’s is No, all little over not of that About X,XXX Marcellus. a Marcellus.

Drew Venker

structure the and opportunities are costs sold doing whether have review it's not the you quite pretty And guys Well, detailed then corporate just cost could guys level about, you or still or there, and you Fayetteville are of reduced targeting? that materially do big costs, a that be the okay. number, you Okay. anticipate the a G&A on there talked high other

Clay Carrell

looking that's piece along LOE dollar the we're of company. all costs everything. at any kind G&A, And in transportation the Well, and other whether costs

is of stated So be business. quartile evaluate objective to this our the table our are the everything's in to on top part scenario

that to well the a this the objective group. against analysis, rigorously and in in quartile. evaluate to our that very to into all do We're dig even top peer which those our looking range don't we what is kind We we the not And as so benchmarked be dynamics is bring table. we're own of segments underway limit stated our we any put or will And so head project, that haven't dimensions cost -- want at. number we of or

Drew Venker

Nice. Okay.

Operator

Our Tuohy with next the comes of question of Brothers. Campbell proceed your from Please question. Jeffrey line

Jeffrey Campbell

morning. Good

Clay Carrell

Hi Jeffrey.

Jeffrey Campbell

Second, on us, want first, Fayetteville type -- I improvement of is the percentage variety you thought a to in well the to increased need do question. quite this completions ceiling performance for ask [] the a is improved you XX% well percentage as to curve fairly are Or basis on performance after and ask come really see uplift view so just on similar starting and on? based I uplift the to all other in not expect Just noteworthy. counties?

Bill Way

continue in the performance improved the our generate lead think shale grow, increases. going similar to technology around way see similar continue but continued these development across increases. the to And varying to be to position. we're to it, we to believe I able position, is We There’s going wells across acreage completion will to best think, going learning areas and we improvements is the frac

Clay Carrell

of asked capturing the what getting we and learning we've a I had say record six continued no. have and at and demonstrate of is matters it continue track have we question applying and and some, about have into for this we're we an applying don't learning, to no to asset an know really area the years, and ceiling,

of analytics our engineers that folks wells, and leveraging innovation. thing the ready it’s And we've of watch. the a operations So have and really then a of data reconfirming to continue drive two inventories have, to that models the one, largest we delightful use and scientists and

Jeffrey Campbell

enhanced just still there? the much the to you completions you I And longer upside themselves, color. a laterals let in Northeast pretty have from regard as do where appreciate that limit apart are or tapping me follow-up, the with ask

Clay Carrell

or Yes, we have connected to we to It’s units size the unit do. in. obviously extend renegotiate to

to areas we for of so to opportunities side from And where have might help commercial that in deal. And in we some all company lateral renegotiating group that. and the the the of objectives even assets to facilitate a in by And extend do length. be not obvious the Fayetteville big our of have of land out of it of front people some in the you landside

Bill Way

some that offset with would of And operations. partnering

Clay Carrell

Yes.

Jeffrey Campbell

for the color. it. I Okay, guys. Thanks appreciate

Operator

Sean comes with question question. Our the your Securities. line next Guggenheim Please of from of proceed Sneeden

Sean Sneeden

guess, you is Hi, on thank for term loan, the the taking number one just Jennifer. questions. I

that how XXXX for, you you the term I sale about Fayetteville near more place need event of wait to that? Given are in maturity, thinking take there’s you Do do the sense? think guess, guys to or refinancing

Jennifer Stewart

nearer plans. bond debt a have the longer with really to part structure anything, bond the we now. caller, what the now, see efficient. there’s we for waiting advantage proceeds a up we and what to then, how no or decisions then the Fayetteville remarks, options make said concrete And don’t We're previous capital we lot have more maturities. we've lot of And of have versus make right on want of flexibility also, of flexibility are. that and I our As like debt to then we as what the take in bank to and of to respect scripted progresses debt, evaluate to built And

the and the put outlook frequency? on and conditions bit market right time for make also outlook based we So our that a are going little from to across our at decisions

Sean Sneeden

That, sense. make think Okay. that I

really so, of cap fair structure in more really holistic should review sale Fayetteville have of that And whenever be a sense? kind about you the thinking we a in hand that

Jennifer Stewart

Yes. Yes. right. That's

Sean Sneeden

and or there that? to use so in just, the to to think need you and if previous share little the generate these buybacks. Okay. cash thought be But then, I think, Bill, I where do the of amount term, talked remarks, cash scale free your questions. just order in flow return process And guess more the And the you think shareholders the a be up, that to about sheet do balance -- prepared is as levers through needs to mentioned I you longer is dividend to you guess, of bit I some assets Appalachian

Bill Way

two at Again, we’re or targeting two. debt less than to EBITDA

be to those we continue third taken risk that some able about the return go large get And of best in to would from and to shareholders fund covenants of clear we've assets think debt And to to able debt then time the we as those changes then off. get change and the and and We free forward in some capital to think cash be need move improve those are we to able point be grow get to those optional to ties. scale. to they time debt the once and probably flow Jennifer if is occur from mentioned we as to in the we that transaction improve

Sean Sneeden

Appalachian don’t make the just to nice makes one that you in you last just more guidance want and And you guys that think type is performance incorporating sure there outcome? highlight I current or but you sense. have out I then mind, that that one uplift if using guys performance repeatedly the guys there, curve.

Bill Way

can out. includes on It Once put we we we move curves, what the that our performance these similarly performance. performance we debt validate put into

Sean Sneeden

you much. Thank perfect. Okay, very

Operator

your Bank comes with Brody of proceed Merrill the Lynch. Please Our next from America question. question of of line Greg

Greg Brody

restrictions well? on buying mentioned securities prevent that of follow-up, would Is one that bond at Is covenant term that just from Is what the guys, debt that? the side, as the -- you back out Hey, that equity. you that loan?

Jennifer Stewart

us we when the and right buying or issuing way facility able whatever loan, utilization prevents consortium as of use certain -- our we currently amounts structure capital anticipate have credit and certain that that facility on credit buybacks. we do now, to Yes, metrics we of would to look facility We from that. But depending as prevent current capital the type shares. term when outlet of a looking to more our to the our current efficient we're dividends our with structure before of or mentioned negotiate to become negotiated become more dividends some back I banks streamline of with bank be would

Greg Brody

term how are remind Could loans? new me many you types just

Jennifer Stewart

XX. Approximately

Operator

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

Bill Way

to and joining business. great all team, the company. deliver just the reposition I We're got and the drive the on the think in our to assets. again commitments position to we high-value company our our everyone next on shareholders to on I today. opportunities be and We've in call U.S. for existing call We for the value our to top to shale focused long-term existing as a come quartile basin. do we to that of look repositioning thank in the want around to got more Appalachian results discuss you the our forward within our rich being exciting seen on liquid progress company things made continue you've investment performer of being And

being hope weekend. have call, Bye. care. you So on Take the for a thanks great

Operator

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

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

Southwestern Energy (SWN) 2 Mar 182017 Q4 Earnings call transcript