SWN - Earnings call transcript Q1 2018 | Southwestern Energy Company

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Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to the Southwestern Energy Company First Quarter 2018 Earnings Call. My name is Brenda, I’ll be your conference coordinator today. Prepared remarks will be followed by a question-and-session. In the interest of time, please limit yourself to two questions. free for feel questions. may you to additional re-queue Afterward, is reminder, [Operator a conference being Instructions] As this recorded. now call over would to I like Mrs. to turn the Southwestern Penchas, Energy's President Investor Paige Vice Relations. of

begin. may You

Paige Penchas

to Brenda. Southwestern call. morning you, Thank and Energy’s quarter XXXX Good first earnings welcome

Bill other today and President March management Energy on Yesterday, members Chief of are Clay Chief Financial released Chief Julian Southwestern to ended Officer; our website XX, and section Joining release Bott, Officer; the at financial Officer, Carrell, is Way, Investor me the Executive Operating and The along quarter results company's with the XXXX. swn.com. team. available Relations

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

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

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

Bill Way

shareholders, exceeding to delivered discussion webcast. results that commitment the sharing welcome quarter everyone, like we've Good our of Paige. create our first again value or XXXX this on we call and morning, all our by once where I’d commitments Thanks, quarter conference to meeting made. leadoff to for and first

to the our and Appalachia that we're drives quarter compete assets high-margin environment, a growth forward in we company the low momentum. continued strength of During high-quality commodity price and our the repositioning win announced

will our commercial increase improve operational We relentless the delivery technical our of shareholders. across are confident excellence value that for our assets and returns strategy and and

of driving our done expanding returns. off I want and start today being and So corporate discipline to level is financial more examples and margins asset the detailed work and share that

As on minutes. reposition for commitment. The opportunities Yesterday improve steps maximum we in into sheet. more $X.X Energy this focused our with the as and laser revolving reduction capital, will about few we interest provide we facility you of continued company balance company credit initial liquidity to the and Southwestern took throughout expense future. reshape our a our And simplify know, lower and details cost are deliberate billion a $X entered Julian a just million cost

from investing time We based the first and company's Appalachia first Appalachia adhering are within while returns capital accelerating discipline strategy, in XX% representing a consolidated XX% EBITDA to generated assets to quarter increase In at value $XXX million allocation quarter cash a business the EBITDA. flow. our high-quality approximately the same of

each to are weighted generating gas this production. In our MCF is production value this set from improved continue teams These dollar first Our liquids natural received $X.XX included and a volumes efficiency. the liquids liquids in quarter. key increase production high uplift a The we words, Appalachia by quarter to overall XX% average first growth XXXX, include invested. other for per of operational NGL realized in compared we growing XX% contributor to execution, importantly high-value which condensate pricing watermarks increasing improved the price new greater our for capital

investment exceed return liquids our and resiliency rate included way value As portfolio, an condensate hurdle got Marcellus example the of prices $X which our pricing. current and and demonstrating of XXX Appalachia we've gas that of and rich gas Southwest at by internal wells NGLs

a we and have dollar invest in $X believe for production. barrel. barrel so past of efficiency incremental not increased we over $X liquids per value over before, million capital generates have pricing NGL have over price This value the about year, just per increase every creating said increasing $XX we well, condensate net increased Over an prices present is

leverage capabilities resulting well reservoir across project company. Clay continue operating in upside moment, highly steps marketing our From XXXX In average from a at pressure will several and competitive taken We while an our technical in share delivered to an examples production a economics. XX% and improvement retaining the performance by half hedging of pricing the of of hedge perspective, volumes. we've price to our XXX exposure mitigate on price approximately teams

price an XXX hedged average we've billion feet XXXX, cubic XXX. For of at

the NYMEX came and billion billion outlook late on basis prices X cubic XX Due constraints for Appalachia as pipeline important feet realized day eased. has of at cubic pricing the it to improving. is market, to moving the of XXXX feet the per additions weaker suggest that forward While an capacity know capacity differentials narrowed that takeaway in been additional ahead, have now have

update Fayetteville outcomes closely you we the of discuss into speculate to I to announced our benefits to operating compared realize Fayetteville turn process. quarter to the our per forward details to have is working the of of on Northeast our of $X.XX the that however an continue to business. in the of Appalachia moved wanted shareholders do alternatives to process Since have the in with being capacity Clay. complete. interest know over strategic process minds additional look JPMorgan been on February. and evaluate business nor Fayetteville cost alternatives many then into not we’ve infrastructure We we the in on will and and basin when And first weather best MCF value in this a have I placed that In the year and it and service. we transportation the the last maximize demand differentials increases your working low of to updating process, due integrity future than strategic secured commenced with the you more more We the to once we there. in give Northeast We process, Because transportation improved you

Clay Carrell

webcast. on company now to innovation and our everyone I’ve five you, on and capabilities the the and good months I'm asset and phone technical operating and the with morning teams. operational Thank with for about of been pleased very Bill

our while were Bcfe. operating on results a have and strong we overcoming with quarter. weather track and compressor strong that display and addition, environmental first and at for they quarter maintenance. areas events Production XXX on in all all facility culture our In quarter activities safety of winter one-time The some the operational goes execution significant the first hand-in-hand were achieved the was

to to total XX,XXX XX% approximately day equivalent per margin which production higher the now makes We liquids of barrels grow up production our company. continued of the

base that by to window, driving of drilled capital of and That or XXX% component included of operating we XX entire along foot longest to performance of the time is extend returns benefit the in organization our a Our further the drilling of integrated lengths lateral improvement target Southwest economic in lateral plus the of key across Appalachia several the results lateral of from we efficiency, In the a the are opportunities. typical asset precision our lateral. kind drilling completions. of minus length is portfolio well drilling of maximizing continue which and records investment date highly foot our XX,XXX the

completion to the for greater allow a our by day flexibility on contributor sand increase accomplished to fracs two speed of and from the Appalachia record majority In per with and This we and also in completion efficiency our by pace. part of completions. of completions and our on the cost of effort zipper number Appalachia utilizing utilization also increased the increase Southwest logistics, demonstrated of and Along productivity as objectives company savings. fracs. completion per to alignment achieved use our improved logistics averaging premium cost the XX% drilling on to personnel $XXX,XXX equipment the operations X of up zipper stages pumped improved key company. our improved day lower focus results operated through pad per X.X owned A of Northeast water utilization well we As contribute We increased execution accomplished are water and to be approximately a greater our in providing performance sand location stages required this the to wells. and that results is well ongoing we is X, through the enough shared assets

We Southwest Appalachia. are currently in Appalachia rigs, four and running drilling Northeast six in two

crews. owned All of and of These rigs operated our the Southwestern are program and latest with key component drilling again own custom-made technology were success. our the rigs are drilling a by by Energy

our led completions frac In addition, fleet in Southwest are way company a Appalachia the owned improvements. efficiency in utilizing which has we

services drilling own and our categories reduce our and drilling Major costs products of are to like integration vertical and inflation use that costs. source secure rigs them cost often helps the also self not in we assets because keep to pumping services ourselves or subject the to unbundle check. spend completion we Importantly,

As help to a offset expect further that benefit cost this efficiencies and result, low to from expect single-digit we year inflation. service inflation to will operational cost

of both cost control the drilling The which will the will through liquids area In to timely condensate areas. of our of majority in also Southwest services. activity XXXX northern Panhandle our the NGLs. addition be some area highlights savings, in walk done better now Virginia and I asset specific logistics each we're for and ensure to in includes deliverability Appalachia able of West rich

Our first to of XX% XXXX. quarter liquids Appalachia the in Southwest production compared increased

we gas quarter of compared a placed of completion and In asset, barrels XX costs to lowering rich the sales our over water the lateral we rate. area During per wells economics lengths. day XXXX installation total through a in improve that the produced infrastructure Appalachia resulting to Tioga the in XXXX to with by XX% increase condensate three pads increasing area Northeast exit continue

which and We per third We commissioned wells area development expect the in water third-party into project our second save and $XXX,XXX go a to put approximately to phase sales well. the service this quarter. to in is continued expected quarter in infrastructure recently early five

lateral improvement had pad over in latest to compared XX,XXX area. In historical the a three addition, length feet the wells well an the of XX% in is drilled which area average

The Fayetteville our both our program where methods of drilling over an stage Additionally XX an In completion cubic from wells performance rate density and of day. flowback from redevelopment to methods. increased latest continues our foot designs where with improve we initial field per production gas to performance strong improve County benefit we continued utilizing progressed development production we the in lateral our we XX,XXX are Susquehanna infill and feet area and technology wide million re-drills. drilled

a with high The feet lateral. were the wells online predicted During additional the inline earlier to with it two compared both an a day wells redrill call big foot XXXX risk infill a away wells improved fourth generation that foot million have early analytics normally opportunities quarter online of well is from X,XXX investment Both feet system along lateral. drilled an The in existing development producing are the XXX placed quarter mid-April. discussed Guinn we wells across James we from the These and to time economic from well from an offset was two cubic quality X the model. are feet production testing field. producing low new approximately and X that brought performance in recent we cubic brought well are examples producing spaced that data they a day the performance our sales approximately a is approximately and million was well

financial generating the turn some So Julian not value shareholder to capabilities done discuss execution of and yet. overall, our are over high-quality growing highlights. and now we're assets it recent to continuously I'll the improving for

Julian Bott

XXXX grows being organization me first extending and be you, I'll our Thank my Southwestern this cash which the of call, as basis of period volumes. warm prior liquids such generated I versus Energy Appalachia to million, the would take driven greater drivers production performance by cash improvement weather improvement pricing. within year capital million company's approximately cash $XXX rich much to were realized million In driven key cash associated due today with and and and million Northeast generated you asset to around higher flow of generated my strong our $XXX quarter colleagues $XXX cash same double throughout of truly The be capacity. a higher Appalachia welcome. this Northeast capture company's cash production in a With $XXX results financial in Consistent with and flow allocated free million by value almost through flow of like the new In now Southwest higher the we to with in $XXX talk Clay. operations. delighted and a about and to in of flow, improves expenditures $XXX discipline XX% Fayetteville away of flow detail thank winter I’m first assets continues more investing flow table Appalachia the approximately million. for the and quarter,

company's versus quarter per The first XXXX. per production pricing gas to discounts compared a hedges MCF quarter, gas production. the XXX realized at $X increased $X.XX million, per the increased first due improvement quarter year-over-year XX% a of financials gas MCF XXXX to the gas in included gas year, For flat primarily in NYMEX was pricing. realized excluding offset XXX quarter differentials higher $X.XX company which natural the in prices XXX natural The a in were MCF company's NYMEX in while X% essentially X%, by while of revenue XX% decline last in first natural the

We as expected are service. base pipeline capacity placed to additional see beginning improvements into is

With and our range. narrowing for the the basis to to to a our are outlook strong $X.XX view discount NYMEX full to range start year the guidance or we $X.XX differential year of pricing improving

quarter increased natural Additionally, same liquids liquids in by the a last the XX% the revenues oil gas in first and by Natural XX% to to year. XX% revenue gas realizations liquids in XXXX improvement to and first production. increase period due compared increase $X.XX a pricing quarter the The $XX.XX in in condensed by to increase production realized to barrel increased and per due price oil XX% $XX including in CX increase increase $XX.XX. XX% an a revenues oil price XX% per plus barrel of the company’s in of

quarter, usual from maintenance Now weather I'd resulting like liquid a onetime gas charge than this higher to related to address LOE fees. processing natural which was related primarily and

levels historical LOE We to to return forward. expect going

holding managing our substantially at hand structure, Yesterday is April a are and revolver It efficiency. banks took credit reducing the loan during revolving completed from facilities credit we initial new a to of a have commitments we an credit RBL new three also as EBITDA cash the bank we facility, corporate borrowing of customary term to as and revolver. Financial reserve maturing of The incurring debt term a unnecessary the borrowing and on cash capital simplify an debt as $X.X are supported X.X replaces liquidity facility times term and cost that maximum year effectiveness is negative our analysis million facility billion billion, carrying base. decreased pays the It initial the a $X.X base costs off under more with reduces base loan in and per fees. elected commitment asset current drawings lower with Interest was oversubscribed provides announced benchmarking costs $XXX is initiatives initial with Regarding or usual paid prior we support clearly expected reduce covenants billion without ample of and bank result and commitment quarter, secured debt and to billion the not progressing which of XXXX and X:X. than we replaces loans. minimum new in a $XX while expense XX a We've bank the $X.X ratio aimed with costs. included Pipes revolving efficient. $X million off initiatives but by wide step level which the by significant facility. and continue announcing borrowing

on update hedging. Lastly, a brief

indicates reflected using flow that hedging planned hedging hedges and XXXX press fund additional dynamic ability for cash to activity in the Energy hedging program the been in collars. the Southwestern investments. capital release schedule XXXX added three-way have and primarily maintains a Recent protect to

upside the of XXXX to an to of is That price the comments I’ll For on approximately average it volumes. XX% turn Brenda my of forecast flow price concludes back X.XX production hedged at half session. the retaining begin while hedged Q&A and exposure

Operator

Our Capital. with first ahead. McSpirit question BMO Dan line Please go [Operator from of Instructions] comes

Dan McSpirit

day, that about increases facilities be if spoke physical rightly front is remarks more can you in Behind pumped did highlighted on what emphasized the these in as you you gains? this your or per installation the it cycle times, done you stages times, update company limit capital improve are efficiency the nearing on will op's prepared efficiency

Clay Carrell

opportunity in anywhere into believe the This efficiencies and to results the I being we're zipper utilizing be more about the our so there of are side the much the our don't is efficient gives some We're and business, continue on times for both logistics of the in us completions sand on to near to more on around continuing around water dramatically Clay. the to talked expand and done in our side us business business. that which allows is of this fracs we the improving move completion call. the to cycle in the the facilities opportunity drilling focus Appalachian us

Dan McSpirit

further as it at time repositioning to of "potentially of and use guess has the capital ranks been context or that the see refined these to days. that the was follow And was the the the of question rage do it up reduction appreciating maybe likely today portfolio share I expressed defined on shareholders", proceeds debt in all highest? announcement option being buybacks to a that, one ranking return of that where you

Bill Way

We're you're that think right. well aware I of trend. And

and targeted first obstacles place structure limited just to to amounts the do there's we probably on reduce focus certainly said, The some think initiatives. we that I some We until share balance have we flexibility to in us clarity give times. of greater anything around to we've debt strategic would That imprudent that would have continuing our do capital could it on facility two our think said is that put I our and new address today and sheet remove does be buybacks.

Clay Carrell

as really the to further company too. on table those ones and we we've those strategic a to and the continue as work all on But progress of point this all options public you that that understand talked obligation talked value that are to the in we enhance to at the about we consider about we'll work

Operator

with question comes your go Arun from with Jayaram ahead next questions. Our Please JPMorgan.

Arun Jayaram

northeast and think wondering some go elaborate of that was on strategy maybe forward manage basis? on do do portfolio, you're if company's at look of you your to I transportation kind but you how options you could going on a portfolio go Bill, basis the forward have kind a

Bill Way

to I'll go start in Appalachian Jason chime with and as Northeast Southwest here and you appropriate.

strategy $X.X those Pennsylvania the in the up commitments significant development we we region. transportation time have of and took was a when it. billion saw firm value when high at present those transportation lock and first announcements in to quarter of Today up markets to almost in day into different ability Our the first entered including a flexibility of amount for costs $X.X future there moved winter were to We area. in to markets our low including as we was lock a our billion firm to multiple you the access advantage in transportation

flexibility We or our volume and around even either acquire volumes shift continue don't transport, its not given we full it if we put yet retain through again we're and quite actually cost. to that to if go

capacity. We have for continued look to additional

added capacity. found We had ago our quarters marketing XXX a kind when portfolio. to in day of folks You'll that of our wasn't really a know any another an that couple there era million

XX going invest access our the economics. Appalachian, capital Certainly pipelines was the our strategy capacity develop ground, make XX low rich and the you're and highest were is and portfolio a built gulf sure to there's continue the different there reports being our area day so to news were that out needed to a development and to the to get get allocation much In in to brought is So, of or when we of that in seeing with cost-high pipes high level production our couple in to strategy in and to the acquired billion focus portfolio, the begin to and we manage region. that asset. strategy originally continue for line as we pipeline the very the coast had where southwest billion actually capacity commit that we as add that pipeline as value liquids up, into in eventually seeing to transportation had got near we of on

including lower this is a or the the development Gulf and than get very look about are to has initial And movement residue dry gas then market measured strategy It's to will additional take they into gets gas so at our built long expansion a so to real approach. million liquid to add capacity it is demand and about There then the additional charges to Remembered our rich a transport this be we total new And options of gets some it and built, more a likely get our a opportunities we've it market. liquid Coast we transport. additional our and leg transportation, was more as there's point. grown which to that XXX range view in want as of cost as are into day much and a side lot at going have to and that been build wells opportunistically available. is at be side, preference take more capacity nicely becomes that plan, this of pipe our hear

Arun Jayaram

of of kind and capacity, you today on where that? transport costs Bill, see any new do that color some

Jason Kurtz

coming buy we're of so when and spread given it's Jason, what can Dominion to right transport the now. now it’s you what out capacity in for, is right the and probably indexes we Coast $X.XX market Gulf new Appalachian at that range somewhere between the that look release Southwest This $X.XX the seeing in

Arun Jayaram

the compete PVIs Fayetteville optimized elaborate was and my environment? in re-drills and could some about wondering you're way lower looking the changing what follow those this in the I projects are priced Clay, the the a could the if of is like how you thinking And up on completions Fayetteville, in

Clay Carrell

of the with early wells. We're encouraged really performance these

landing stage the current doing completion vertical is used right distance cases the our think and benefit think We’re and in we the smaller really Appalachia the think in that in generation the clusters the going they in our been also but about and performance we performance. tighter better the staying generation which a to the favourably on early our like returns we wells the lateral PVIs when the are We're little of the we're were that the encouraged really keep our that a earlier that with PVIs, at Fayetteville benefit integration in throughout us between those assets, of assets. definitely we're Fayetteville, don't conversation the precision zone wells. incorporate perv Appalachia we I is higher our drill facing then having versus with designs PVIs of current improving a than XX that some and our compete and in wells performance lateral that watching than has the When

So mode we right it's keep to differently and watch could to on working of so enhancements things that we're going see those, keep early. We're kind going that in a now. performance. We're could improving do subsurface keep and watching the

Bill Way

going way we even commercial of in it's in to continue further And long transportation in at bit, of operate it last even say through year, move through in to we'll future can we terms changes commercial the do as have, or whether that be then the I would into we we're best when but we as wherever value the optimize drill the as realized a do that. arrangements. stages I moralistically early have asset did every asset that, And we're the we work look

Operator

of of Citi. Morris Our proceed line questions. with Please next question your comes from Bob the

Bob Morris

cash now touched and bit like I proceeds from said on versus Marcellus little the thinking the efficiency here on within facility, that share Cash bit apart under better. and do know you this return realize about those more about quarter, from here the shareholders, cash type buying all stock that point? spending the always you in credit incremental from the so how better little the might a apart Fayetteville would spend that but or to not of lifted so flow the forward concept on go restriction back you your flow you on the an you from more capital with curves, and Fayetteville, performance with new wells you Southwest sale of from think sale flow, as front of drilling a versus again looks repurchases factors,

Bill Way

investment, Well, we that think share I reduction, debt options. run we - of those buybacks, models again on on all on

more and availability We whether got to debt, moved paying that’s restrictions investment that’s RBL, will limited speak to the buying do in flow cash shares. within down but We on there's we invest invested have and limited whether it. in the investment that can back once ability do and Julian

prudency through point that the debt then us make that a the objective move the of look the at reduction take in which and front is presented I is at Fayetteville are to process, in primary with focus real options and decisions. time those think material

Julian Bott

credit look see because this will agreement the we Yes, I entered mean filed. into it and you'll be when

is normal So today. agreement under payments effective it the we limitations restricted as have

not your something which got lot you've So today a gives X.XX like test to times of room do a buyback. us stock

you Now to Fayetteville will that some such the flexibility. see then an will trigger Shale built consummation there process, is that a if additional greater in that have flexibility of we've ability

right do and So know I what's it. capital. have We'll know we the appropriate we'll much time to of address to with how think that's uses right

Bob Morris

Okay, forward at and Conference you here weeks. I look our great. to Thanks Energy seeing in a few

Bill Way

Look forward to it.

Operator

with of line comes with Johnson from question proceed questions. Rice. Charles next our And Meade Please your the

Charles Meade

go back I and that system the there. paper understood. to actually well wanted everyone to morning sure good in Yes, we if I make could

like this that McNew, well, you one new kind these location, new the went in novo was de of brand know So of is and wasn't that kind with but twined, where a and right? of design, wells the back completion

Clay Carrell

That correct. is

and applying were normally thought we the lateral field different in the to locations redevelopment This infill includes is in-fill the to that would normally completion improved acreage spaced we spaced have designs the well. performance new have has. and wells. We it it generation earlier system drilling Our X,XXX foot next remaining re-drilling it of and both parts across drilled and

Charles Meade

but with respect for the your place those the if portfolio? the recent Appalachia I Appalachia back with can you that results, Tioga Fayetteville Thanks are Tioga the Tioga results to then compete County you does your asset and how could portfolio, those remainder already the go think position I clarifying don't that of of us, talked good about results give the how to how in does rest they

Clay Carrell

phase in learning’s encouraged just We're and that on that party that. flowing water development from in has working addition Appalachia enhance area putting to a in in mentioned, of that to the back new incorporating the performance brand And the really the then Northeast wells with same early - from upward and is as performance then we're get continuing our place Southwest that first comes in third all rates to going we're sharing benefits wells are we're currently quarter some that and returns trend some we that. brought hurdle of savings and with we're the above seeing infrastructure been Tioga there. we're and Yes, that the to also in we the

Bill Way

Which is well. $XXX,XXX a about

Charles Meade

Susquehanna more, the Marcellus Southeast Southwest mature fits get I can but on versus offer getting County? better, anything you where guess so or it Right, I or message it's

Bill Way

is the improve. Appalachia, days not PVI the and mentioned. and but above I Southwest again of early as areas condensate rich geo continues it’s to X.X the performance It good as It's that

Operator

Please Stewart questions. comes next ahead the Weil. with your Holly Our question line Howard with from go of Scotia

Holly Stewart

recognizing that from generation the the on free in may cash year Northeast the Just some cash in pricing that be you benefit had Northeast I is flow during the you million the nice thoughts think that for Julian, maybe flow we first your Can you volatility just saw. free there XXX us update PA quarter beginning guidance believe called I for of starting remarks, highlighted area? the your and off

Julian Bott

We're point. not changing at guidance this

we’re Holly At the guidance. have quarter. right, we you're think changing a point with differentials not I in strong those So performance did base first really this

Holly Stewart

Maybe the a to just moving lot Fayetteville, the of redevelopment. talked on you about

give AFEs on you first maybe the wells? two cost just outlook us the first can the the or So updated

Bill Way

to in the and of would range. so going and lateral lateral, yet vertical assets, mode expect and benefit not we’re $X integration to in million our the efficiencies and it’s be benefits system the to foot utilizing the in continue $X.X Again we it's full see the the is X,XXX longer range development but million Guinn then

Operator

Goldman next line questions. Our Brian Singer Sachs. comes ahead of Please from with the question with go

Brian Singer

your on years if Southwest Wanted length, lateral Northeast where could lateral the over to thoughts couple to us refresh on could of start Appalachia. next lengths of wanted go in average see you and

You've highlighted kind the releases XXXX. long press significant I some are and decent averages but between think your lateral lateral lateral in wells - of XXXX

opportunities technical acreage are may address could limitations acreage you have acquisitions? perhaps So, swaps and or and what you what interest or

Bill Way

We’re definitely the extending making laterals. on progress

was laterals. north to longer us to and development estimate that’s drill we to benefit in us swaps, for of to get acreage and some as our length can allow acreage beneficial approval the the drill that Southwest laterals. longer XXXX edges that us mentioned foot that And an XXXX. cotenancy against we other a West allows our into bill some You acreage is in Virginia, going Appalachia of was where be average lateral in of we forecast, And bring up also incorporated have

Brian Singer

this MCF and company of almost volume opportunities? that you to or seeing Coast you $X.XX $X.XX Gulf of you the see significant for is to is any those about my type you're I mentioned enticing And contribution correct do and gas then is, given being to how time opportunity your to this me expectations some move that per now if follow-up see not seem right the think what earlier that over

Jason Kurtz

Really what you the two of or we’re is out is out value seeing the available to into. of that extra when of Devonian rest the that's you kind of build that That some spread service. marketable of kind Coast and there. are And XXXX look goes massive transportation of will the capacity that’s that’s capacity between on in have know differential into at on the the this the between Gulf customers market that’s way producers be just sell XXXX

Brian Singer

short-term period during kind to essentially would up pick more spot be this So this small opportunity quantities? of

Jason Kurtz

Yes, to probably months. XX XX

Operator

line the comes with question Scott Please your from And our of RBC. questions. next Hanold with proceed

Scott Hanold

is vertical how like like lot direction are of become further looking you integration see it talk seems integration, your you the to guys evaluating do. also a go? what co-part And long-term are early on some of Southwestern There about sort Could it’s that of like a you is you this of conversation you to crews frac many own enhancing efforts. and

Bill Way

that like other prioritize and measured do, cash of I to is economics And then everything invest. we and done against have that against flow. all think we strict opportunities it returns within being

it vertical loses here. So of ourselves today that a in the the whole fact it’s is business the we purpose we works real for our do track that embodied for and not believe so success only integration others of that

with it So competitors for around It us. us. works compete must

the we’ve the And our predicated better teams drilling teams know since rigs been decisions. has to-date that utilization and our that include of we seventh of and business rigs our integrated one to generation in-house performance on the is is seven So and of that we in today and case. have have performance. in six delivering mindful important been of performance drilling economics this the working the that those High our latest

of margin sand In the the well. we're think a and I In can have for we days of in the business a drilling we only us for had have we so not example improvement And plant. do because that think frac Fayetteville, and sand now plant business, alone. fleet we returns serves it that rigs, development we that right-sized show significant for that have you Fayetteville in

margin think that we an those sand so can high kind of where source, you components. that's any asset to sell of business or And

You got mind. to and take a utilization look in at cost rate again it, but economics with

They and that be to to to change for liquids able gas plan, prioritization allow are us. parts do or and ever of you economic us it is vertical its its so highly now dry evaluate other permanent, for integration all regularly to right and market but of be rich think gas highly from our nothing conditions corporate well our this I and working and we for any as So, for shift us. flexible capital

Scott Hanold

right now how and you how And frac own? remind many you could those leads many me of you are running

Bill Way

two, this leads other five own one and is we one We of are ours, the frac we time. the in across are running Arkansas. running And then company

Scott Hanold

on about to the could guess I something well? be a where see point effort ranks to discuss And time that and there further do potential is that at that work a - or monetization and you little the bit as some priorities Utica could some

Clay Carrell

This is Clay.

data are make wells. Spending forward through Utica. to around We’re that execution and the actively done some continuing ways to the some this part the wells We've Utica our in in subsurface numerous the of in the trades participated year. year. our opportunity subsurface plan going the sure and then as efficiently our We knowledge understandings drill most working capital

our same we’re in it delineation thing of asset and So asset. that then is Appalachia Southwest around in is in the our part subsurface there progress Devonian an doing active ongoing And our Upper also knowledge. inventory

Operator

of Our Guggenheim. go Please with comes ahead the questions. with next line Subash question Chandra from

Subash Chandra

and start think Southwest XXX you Marcellus? if guide Marcellus. feel locations to Southern off how somewhere something between about PA. gas we inventory earlier was the mentioned Southern I had and XXXX what for in the XX about call at And look of And XXX should overall in in curious in XX completions the You context

Bill Way

XXXX. above in focusing we Definitely we’re be where should or that guide that's at and

We have both NGL the prepared and like we are that mentioned comments the condensate XXX in rich in area.

that XXX We another have NGL in content. that area a have high

Subash Chandra

think the what you and is just XXX I NGL us off the initial - so should of cutoff of about economic cut we other So the think gave about sort window. the XXX, what

Bill Way

to around XXX NGL vary it’s the doing is XXX to but somewhere with are for that. good number prices prices going gas Yes, what probably

Subash Chandra

Northeast forward so it again, market is portfolio are core in only et on a just cetera. how if prices be PA, to fits your seems as that you asset? appears up testing looking Can reveal capacity coming why and better fits

Bill Way

multiple pretty the at drilling the going goes for Southwest and between much of near-term. Northeast we as that back-and-forth among be have. Tioga economic very this have sort we forward plus or cash performance we highest continue liquids the wells economic flow the least today, and areas that reposition of entire - one fly Appalachia, technologies objective latest a for with - bit direct no portfolio using returns, as to and Northeast lower to asset is have we region work a us, cost Pennsylvania our It's are not company shift the of has the the to on generate Appalachia drilling investments. other additional asset wells million those we return wells to the And in strong in for high-quality some a $XXX and and of direct we cash that that can flow our between access very if higher positive on Southwest replaces year for is get and in positive Pennsylvania to today breakeven large well us additional high a are being markets. - a example needed It’s access basis

and to transportation, So, have cash call very to in don’t in high the Northeast place benches we an are opportunity. in wells Fayetteville economics looking this - wells we Marcellus we’re valuable - the we've it’s executing and if wait of generation on for a Pennsylvania already access about the core different asset talked in same actually in inventory looking redevelopments

And that are generator strategic so flow a getting returns cash just to that has our bit and is a we but and a more there ever it do, quite improving company. we’re are to

Clay Carrell

further that we're Marcellus upper that would opportunity I to the continuing also. add Bill,

Operator

the MUFG. Please from And your questions. our go next ahead question of Michael line McAllister comes with with

Michael McAllister

the current decline Fayetteville budget, XX%? around Until the rate XXXX remains for for

Bill Way

XX. About

Michael McAllister

basis higher guidance for a NGL of because seems little for okay, weren’t from year? you But it to Thank that in with the XX you’ve year-over-year. or to lean XX, you And current the mentioned then, things, know that. and the rate fair XQ, is the change guidance to that’s production it going on higher fine. end XQ I

Bill Way

actually we I we’ve think guidance, stick it. range think there, a got to the out guide I don't I

Operator

the Our Fargo. Wells James question Please next with of Spicer ahead. from comes go line

James Spicer

then the new cash, X.XX what it if to means finally ratio, then of provide the any revolver about contribution times like more detail credit base. look terms was. also Fayetteville what Wondering sure cash and on facility, of refinancing wasn’t this what you. you borrowing quite you talked Thank that the the in I And post can terms balances the

Julian Bott

restricted So was couple I basket just XXX, questions, payments customary to sort of the of test. referring

that’s So meeting then you EBITDA to be have test debt that. to a and

under outstanding revolver payment. amount limited have able to order the in to have also restricted You to be make

of course. you from had, banks worked would at, believe and looked question? what we've I still the extract for to so was took support that question, other we’ve a I on that we properties $X we the be will question think we another in price we were all Fayetteville's am environment one other billion, sorry, And and commitment type if out borrowing to say, able the this what the - with of was this the was Okay, I base,

James Spicer

wondering and was still post if the you anything revolver? material I refinancing, Yes, just any cash balance on drawn had

Julian Bott

drawings revolver. do have we the under Yes

with had capital been obviously of that the ended some $XXX had spent. million we working quarter at know You and

As I $X to about of out term said debt. billion billion took $X we

run the cash our revolver, sheet between expect so benefit a go So to cash sitting it. fairly on because with is for payment the small made with obviously was there no and that balance I this that are and the cash revolver. forward balance delta is balances a On basis paying

Operator

the And Sean our questions. go with from Guggenheim. ahead next of line question your Sneeden Please comes with

Sean Sneeden

versus on breakout window a looks this us can call gas are planning the or give wells gas what so XX Southwest like? lean Of bring Appalachia, that rich you in to the, it year of you

Clay Carrell

window rich about I think gas three roughly. it's fourth

Sean Sneeden

think that your about have target think going leverage will it? return getting or on Okay, talking is are okay. the you times you two to I buybacks or you that and share clarify, of about concept, if capital I your want guess priority, XX% correctly are then then below to guys order is at – just just And I you the about understand how

Bill Way

all and the stated is that balance looked and so sheet, I Yes, continue that think other delever said mean those. buybacks we options priority we to of then one one Bill to I have are had as number earlier, at want is

at We value. to options all will viable add look

Sean Sneeden

And component us clarification you kind what's of like? the actual $X.X say of looks of on a give one borrowing just the it is the can base what – the borrowing billion then sense today, base, that

Julian Bott

the because expense have PV the you I banks rate are banks don’t base. I the XX share exact typically have can see and goes a actually us what think But it the XX% with proved don’t calculation borrowing the that of against reserves that. into our

Bill Way

the $X And billion. equation, just to be we're then again, once from Fayetteville roughly that you we move forward still exclude whole and expected Fayetteville at a if

Julian Bott

that's Correct, right.

Sean Sneeden

And then upstream I the the just assume the this is value but of not the midstream include component case right? it does

Julian Bott

calculated is base E&P the of reserves. borrowing the Yes,

Operator

closing question-and-answer for our comments. concludes the to This I'd like to management back you. floor Thank turn session.

Bill Way

had all it. Well, being you and questions we and thank dialogue today, appreciate for all the we here for

our can I think and a continued there into teams XXXX are got of to on lot exciting we've things impressive company. results see in deliver going you

and of made the as includes are our know, achievements operating this company capabilities the we've number of with commercial, quarter again a You well. strength demonstrated technical, and records

prices or those. delivered what doing said we're really for low here future resulting a to steps the on high proud have of come we simplified targeting also exposed We're way new We Southwestern The our prepare what structure at are credit we capital we took facility. in would Energy few our or the do, value. drive whether price help value as look us additional growing with to to highlights and years forward quarter a we momentum the and to commodity sustainable we this discuss creating ways environment again in what we've capitalize in over create relentless joining more our doing, last support our to we're built with about you on we're commodity

and weekend care. So joining great thanks Have us for again. a take

Operator

This you. today's concludes conference. Thank

at disconnect may lines for You and you time thank this participation. your your

Southwestern Energy (SWN) 27 Apr 182018 Q1 Earnings call transcript