SWN - Earnings call transcript Q3 2018 | Southwestern Energy Company

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Southwestern Energy Third Quarter 2018 Earnings Call. In the interest of time, please limit yourself to two questions. Afterward, you may feel free to re-queue for additional questions. Please note this event is being recorded. to call like to now would turn over the Ms. I of Southwestern Energy's Penchas, Investor Vice Paige President Relations.

begin. may You

Paige Penchas

Thank you, Brandon. third Good morning and welcome earnings quarter to call. XXXX Southwestern Energy's

Web Clay President Joining for Financial Chief the at financial XXXX. Yesterday Jason site of XX, Chief Bill afternoon, today President and Operating The Way, quarter-ended Vice available and me Executive Julian September are Officer, on Officer; release results Marketing Carrell, Kurtz, Bott, Southwestern Chief Officer; released our and www.swn.com. is Transportation. Energy

Our this Web has posted site. been XX-Q quarter for on our

post We updated will an week. investor presentation next

get point statements and control the sections in and discussed quarterly in the forward-looking of I'd forward-looking these affecting we the Before call filings and with that and are risk statements started, of like our uncertainties out that are beyond detail this the during to Commission. of more outcomes. many and risks Securities annual factors involve our Many comments are Exchange

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

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

Bill Way

and Paige, us to morning. everyone you, thanks joining Thank for this

next continued forward best our financial of defined strong is and operating The by strategy. in commitments step on quarter the outperformance and third our our taking each

necessary to sustainable of of the our towards are Shale an permanently assets. quarter and reduce the a initiated steps sell debt the shareholders, to signed Fayetteville leverage. we This completing capital two-times return agreement to goal We

our provide sheet balance to our evidence that delivering program is clear and from in Development greater strength working, improving value and shareholders. Appalachia strategy returns Basin our investment Our

recorded year-ago. higher quarter. period Thanks in liquids than quarter speak me revenue XX% improved, liquids volume our assets. flow than to its more company a a Appalachia Results the our Let Cash strong benefited growth and prices was highest history. the same bit of performance from the liquids its as about the production and

Additionally, transportation alone purely we company historically generated to value than as was of The accelerate higher a Appalachia production basins regional of low-cost tightened. I gas of portfolio we leading our natural you XXX% benefited record million EBITDA $XXX our know many SWN assets. continue Appalachia for from as producer. as last year. the of think gas liquids

liquids percentage forward, significant of growing revenues. are a As representing and we our move

of liquids for our expect to approach We one third total revenue the Appalachia year.

We of Appalachia NGL are one the producers now basin. in largest the

XXX,XXX in position acre is know we an Our core well. area vast Appalachia

Tcf the One-third potential of which liquids. resource comprised Our XXXX. acreage of of holds is from yearend reserves intervals XX.X and XX proven at Tcf several of

I previously, customary we adjustments agreed As the in delivering sell of form to shareholders indicated and for are capital $XXX million promise Fayetteville our Bond to will offer. and of to by December. return subject closing in $X.XXX reduction debt early with SWN's billion accepted effective as And program. tender repurchase such, share bond transaction we a of on the reduce the holders of debt our

to in $XXX our date. have program $XX began we repurchase of million September and share repurchased Additionally, million stock

of We free cash are on achieve by ratio times neutrality a sustainable and XXXX. mission leverage both end a to two the

responsibly basin. funding And in invest liquids of return Appalachia's as cash plan we two cash Fayetteville high the over proceeds Our the part by the utilizing $XXX to in million per years, assets year next are flow a with southwest Northeast the projects of replace approximately positive. sales development Appalachia portion flow already of to

team. own, When operational assets. that frac built performance are steps goals. expect our drilling I we with impressed the to their of continue and purpose skill couple in our and with of We both fleets you be our our excellent rigs we these quality to drive achieve positioned us a uniquely consistently technical will sets enable high capabilities to

rigorous laser performance, efficiencies, capital allocation provides on innovation improvement. for focus continuous well focused cost returns Our and

results, evidenced As delivering manner. and continue we to end safe on by and and make our results high quarterly in a focused remain improvements meaningful operational financial efficient

greater value program, capabilities Going forward, leading improvement execution SWN 'XX solid capital 'XX in with and focused a basis team's well-positioned our and creation. with combined liquids funded fully for exposure, return

how Now prices are. commodity volatile know we all

clearly and throughout all in As and not when our financially outcome results cash asset flows our capital while economic a and had operation committed we plan reduced we experience and through focused generate with the for investment guidance. not Production our outstanding quarter in another program generating if our of Southwestern let changes driven yields reinforce we point, to goal capital capital to when be and required I management exceed value drill line improving be in and an drill operating not commodity our from protect strategy projects return And cannot cost, right will we clear will remain for shareholders. returns. capital And has with operationally. Energy highly meaningful demonstrated, continues speak our have is portfolio original in we and increasing hedging real both We of only production further demonstrated outperformed efficiency At guidance. growth adjust raised remain guidance practices here, have summary, Year-to-date, the will we times, clearly our me allocation, flexible. the base. price I investment In without our to risk returns opportunities itself. our capturing

truly to the Southwestern I last own you remarkable what year Thank our that of coming assets. this it what years done place setting this in And one results, a of to Our nation's Clay, strategy leading firm really all finally in this for today, the we with delivering everything do. stage you want turn I that team. work, continuous to team we is are Fayetteville a And is over extraordinary Energy employees, quarter is shale guides the producers. make for will Fayetteville extraordinary say to it the success before you've

are an the of and be we the its inspiration SWN Please that business changed of dedication our And commitment. asset the well part grateful and people You note have forever. at all you and will gas us your for into this to leave legacy company future. are

discuss COO, Now Clay, call let to to me turn highlights. over the our operating

Clay Carrell

on Thank another good and everyone the Operationally, webcast. quarter. had our morning you, strong Bill, call team and to

commitment continue liquids guidance production has exceed which efficiencies NGLs we is we end The while production our Total within and would we the at by NGLs operational original $XXX raised As top full-year a revised guidance barrels million while capital year-over-year approximately recently Gas original barrels. production production condensate grown production has near know, produce while on was oil for million were performance Bcfe XX%. the guidance. affirming the X.X deliver volume of our and grown oil, also expectations spending Appalachia remain above combination invest to within and to our guidance. Bcfe improved revenue. at liquids approximately midpoint XXX and record the XX% company midpoint at of a XXX Bcf. production. XX% and that This results total per XX% by of included well gas, liquids and at guidance were you at included barrels production XX,XXX day of capital was

of We rich quality are Appalachia. liquids developing some the in highest acreage

present Our produce barrel gas XXXX to where yields per XXX rich Btu million super rich the and range. areas in XXXX condensate and initial XXX to

activity acreage liquids and quality a XXXX. rich of of this XX% in focused approximately current and the result completion high drilling As for we have area prices, our

During feet. operated the rigs company Pennsylvania longest drilled history and using XX,XXX quarter, drilling One two laterals crews. in was we the in SWN

continuous Virginia next Both was to record of the budget length the a time extension. new into a of extended wells credit set is our and lengths have in these on gradually feet. West time improvement approach state which we and lateral and lateral other where then over learnings incorporated The were our on XX,XXX

positions. now and we two from Bcf and rigs teams overruns four and to or These drilling in We rigs And averaged and X-year significant fourth from for assemble crews. three feet three XX,XXX original we original net deviations ability day. per our with Northeast our of crews have drilling period average year. Appalachia, X.X XX,XXX execution the quarter, any contiguous cost the successes feet to feet production the frac technical consistent drilling leading over and to company's progressed frac to capabilities, our the without third quarter, a posted the record acreage investment In In we completion plans and and expect operational result XX,XXX plans. activity

compression maximize we addition brought In throughput. to the was added online quarter, to wells the new in

cost. continue optimize production significant adding without We to

per of quarter savings the total wells of a rich production Southwest the quarter the averaged XX% in will NGLs, operational super NGL was well. of Fourteen and the $XXX,XXX sales had wells were of project In per mix day of to that production product XX day, gas. from Bcfe. all water XX% percent cost barrels area totaling oil, XX% the of had benefit per we and in barrels liquids. oil Tioga day Our which two was liquids. and and XX,XXX Fifty XX,XXX barrels future expected XX,XXX area during per turned XX in Appalachia, and

new completed our Our generating Southwest the benefits Appalachia as water project water this was is system already first quarter. pad utilizing

water piped all wells approximately $XXX,XXX deliver the in result Further, We this per taking water of in are schedule beginning next will off year. with estimated to savings. an truckloads expect on we to XXXX well roads $XXX,XXX

wells than liquids in XX% add to continues to Marcellus testing well to Devonian inventory. rich in and our Upper initial ongoing greater line our liquids. contributing XXXX rich with Our Further perform planned is

similar processing rich. opportunity. are it existing the gathering can about It the to development and Upper It's utilize has cost the We Marcellus encouraged a and Marcellus infrastructure. Devonian liquids

our For Point ongoing trades subsurface through advance and the and evaluation. drilling technical our continue to data Utica, completion Pleasant, or Upper knowledge we

our a guidance. the on or while our original planning of we metrics, assessment in program are enhance at play. XD deliver to expenses further XXXX operational track summary, the In are and cost seismic guidance above on all keeping We to within

During low inflation, cost have seen been operational efficiencies. the and able service we've that single-digit offset with year, to we

the turn call I'll the Now, for Julian financial highlights. over to

Julian Bott

Thanks, everyone. to Clay, and good morning

operational production, higher, our execution, our leading XX% third financial higher adjusted $XXX generated higher cash quarter strong and driven third press $XXX We gas, realized flow than release, you XX% prices, initiatives. very in benefit reported As we of condensate year. cost performance and saw of of last the EBITDA liquid, the savings million, our million, and higher by quarter

assuming $X.X For the guidance flow the cash sale expect and for Based EBITDA almost revenues, than nine-month million, just on be above or of was December. months year prices, the in first the XX%, is we after adjusted higher closes XXXX. billion, nine under current period, $XXX excluding our even Fayetteville to

As we infrastructure as and Bill commenced incremental higher benefit oil saw pricing Bases all-time from improvements liquids, Appalachia gas, we highest driving expect additions value the service, throughout pipeline and production mentioned levels year. realized tightened earlier, continue from this to to directly our Appalachia.

total this and during drive gas guidance below differentials hedges, Compared improvement our including and ethane Appalachia gallon this company curve consistent guidance strong 'XX barrels in improved last While range issued a realized per XX%, reported hedging We XX% quarter. hedge included strategy, was ethane realized could and realizations versus differentials gas pricing $X.XX NGL and basis earlier Appalachia year. and differentials this in pricing pricing in our the propane hedging forward impact. to NGL averaged $X.XX for second year, the includes barrel do quarter. with indicates improved, above per $X.XX ethane. our Fayetteville, quarter, has mid pricing, range over particularly Both propane gas and the full-year the for the

reflect Coast have the We to to on recover discount of NYMEX and ethane, the our Condensate transport a continue realizations, all per include to $XX.XX barrel, transportation. pipeline. via pricing, Gulf firm and XX% direct access

committed mentioned and during well to area. year in done cost cost address in takeaway tight I Bill we $X.XX give to of as capacity continue manage Total over capacity billion we've bit approximately We financing be our share. capital, per successfully remain in XXXX. million with more starting detail what previously $XXX the cost announced per our an reductions. the capital total keeping the $XX repurchase billion to program and expense in We Year-to-date, want just of the a shares initiatives, as trucking million $XX will year, condensate guidance approximately incremental million and $X share for despite we investment this the for includes invested quarter, year. buying savings, reductions organizational have of savings in X.X for $X.XX within interest This opportunities. million average cost remainder cost initiated or

once impact on $XXX will as reported reductions associated quarter's transaction statements, we and results. our quarter save with its The quarter, value. sales December, described with sale I'd and G&A of liquidity, we September, to allocated will in transaction a pro marked debt non-cash proceeds related progressing million the the forma fair in as realized impairment third look to Fayetteville, fourth that start were like to second Fayetteville closes. initiatives remainder primarily million $XX assets, to and the Fayetteville year. we the announced financial and to the which we market and of them In the the the call, per reclassified midstream, held-for-sale as considerations to On are be address briefly Having the close

is excludes the the close assets. at same the sale. of And commitment $X the Our our billion that RBL fall Fayetteville banks have our level re-determination base following confirmed borrowing completed

successfully our which contingent alleviates bond material sheet a million and completed maturities. on strengthens also near-term any further We tender, debt $XXX balance closing,

Looking expect will ahead, operations you transaction we we in early we December. until which occur Fayetteville continue to of and to production the from cash the flow assets remind our part as report closes, that

Finally, to I'd address like hedging.

have quarter the hedge price our we by risk strategy period, to the to position in and seen capture markets. we During the subsequent recent our in continued proactive adding NGL the have management increases

comments. exposure. protect and flow I'd philosophy concludes we upside like the our gas to Brandon utilize session. cash hedging Q&A it levels, possible where collars continue to over pricing Our to And turn unchanged, That retaining to begin remains current at while to our

Operator

Thank you.

go We Stewart Instructions] question session. [Operator question-and-answer Please ahead. from now with will comes the being Our first Howard Holly Scotia Weil.

Holly Stewart

gentlemen, morning, Good Paige.

Paige Penchas

morning. Good

Holly Stewart

of through from just where a standpoint you've Could pricing, takeaway, done cetera. Maybe walk you that talk capacity NGLs? on processing and just your and strategically of about looks maybe you infrastructure just uptick, fractionation first, sit XXXX for how kind lot and and et production NGLs, maybe your beyond, an

Jason Kurtz

is this Jason. Holly,

you. see me for a of Let there if data can I couple put points together

able liquids that secured out have capacity construction be be growth around prepared, frac we've we've we to that's under right will value XXXX. can get and And then So on value and think all when of this accommodate based those we growth gathering, about our now growth that of been to processing, the highly we're infrastructure liquids. And through that that. the focused we

that have do of on economics Gulf achieves capacity recovery pricing. receive does that Coast ethane the through that we [ph] team we excellent mentioned our And Additionally, an capacity. job we maximizing the [Xx] rejection value

Bill Way

We And XXXX. constraints gathering, that so processing, to no I'll so add we have ahead or into transportation that. fractionation contract well

Holly Stewart

some are that, side, Okay, there? that's to a or follow-on Jason, And in POP all just maybe fee-based those great. the processing is there on contracts

Jason Kurtz

fee-based. all are They

Holly Stewart

is that in. thinking you've and that the projects right quarter capacity guidance, I'm year-to-date is then about the that so kind at But averaged your good quarter are $X.XX, follow-up, a look you've midpoint fourth we beyond Julian, natural pretty And if specifically basis. curious pretty sit fourth just like that just a are of I now on you on mentioned you look basis got gas in Okay. uptick couple you probably maybe on quarter. of for situation, well at as you the as for a $X.XX. just sort assuming the the It about factored of how looks you fourth all these guidance, sit think

Julian Bott

probably we the mid will see basis. guidance. $X.XX was our in expect in this Sure, And point, range $X.XX probably I be at that to as the think we continue Holly, on suggesting, things as we if I forecasts, below

Holly Stewart

great. that's Thanks, Yes, guys.

Operator

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

Arun Jayaram

of Bill, the if walk towards Yes. Good could longer morning. of wondering laterals. though was you I kind benefits the shifting

see Are talked it, do returns to lateral you about XX,XXX call from could you feet maybe XX,XXX-foot are lengths returns? any types drilling You uplift and discuss lateral. And XX,XXX? optimizing going, of XX,XXX-foot a optimal you maybe seeing which from what

Clay Carrell

more long at XXXs probably on definitely And see see metric, somewhere an look to is you we're wells. the we standpoint between of a to uplift economic this those a a per mid benefit we wells. XX% one generates in our the longer in per release, in standpoint. to as two dollar foot We When a the be the and drilling XXXs going Arun, on cost Clay. mentioned foot it definitely low by efficient laterals. press Hey, that XX% shorter the long laterals well increase on the two It's opposed

Bill Way

went done in very past risk-adjusted about learning latest the move And along a XX,XXX, about, produce that is a wells done these to then the on we've has we So what went learnings length we've it in we're right their these terms great value optimized looks XX,XXX, lateral, cost. we those past on We're we went forward like It the from here terms And our reported, as XX,XXX create. path. wells as economics. continue past way. of really target value objective two And in isn't lengths, record-length around the will can of on We and of deliberate benefited job see creation. always but we and a basis, XX,XXX. what is feet, team

Arun Jayaram

Yes, to Bill, just follow-up.

as those able operating been have your you One some about challenges, move that? peers of are talked some feet. manage you how having and What beyond to challenges operating XX,XXX against of

Clay Carrell

Clay. again Arun, It's,

critical is The torque all start casing successfully out the get around way longer issues bottom. and torque the the And your drag there's lot you're a have issues; your the get and the data position lateral laterals. you and casing think around pre-modeling already you with bottom. you that to TD have those to as these be you drilled, lengths wells to longer drag that's there with, you I have all out of that you rig you've there seen occurring to the to drilling extra-long able get getting

there's of science so goes a lot into And that it.

these on right as You taking wells. deliver to you top we planned your think steps can you stay but that have keep got the equipment, measured and of on

Bill Way

for company, else, the to or we our that from people see think someone team drilling that learnings slowdowns avoiding learnings we our by got of or those they’re team owned rigs applying we've that company, the others. whether work in we're a is I have, and and are secret us the mishaps

very we're this. encouraged by So very,

Arun Jayaram

just quick have XXXX with a six you out Okay. for to rate. of 'XX, more X% running give one maybe guys And XX% think about rigs Bill? capital could shake question, year you of sense Can in kind next talked to up growth an where you us and

Bill Way

because Yes, And and to We're flow. budget. get in Fayetteville after quarter. we're right it's want cash approve But closes from where the from, the out first probably budget sourced some take a to our company's at it's the sourced assembling our guidance bit now just right working if look you earlier, reset. a typically we capital

six the that is off And said a natural generate Fayetteville forward our gas And with flow. and put curve replacing capital the of so upper an proceeds, through -- cash as we And a limit of the I flow based it model, earlier. of sets estimate program. are cash take commodities. rigs we the other our We

then still cash you forecast forward flow have, hedge we'll set now between and it, that that lock And curve, a winter, budget. in December a then on capital or can now and tradable and and so appropriately

work as but the that put year we underway. that, on out we'll So, through more detail is move

Arun Jayaram

a lot. Okay, thanks

Operator

with ahead. Charles Please from Our go next comes question Johnson Meade Rice.

Charles Meade

your this I to want you on off. up more, pushing left bit where team for just I a morning, little Arun to pick Bill, there. Good and but apologize

as and look what go about a operational to but to you're I I we point know pace give can maybe into position guidance at starting QX looks not here, in As QX your, on 'XX. XXXX in talk your like a

in That a if running two it, the should completion three you're million 'XX going beginning right crews is I to here to XQ. starting six at a or -- is think $XXX kind and guidance and the 'XX, look ending? up hard implies rigs just 'XX 'XX that of in ramp be on your about to would rigs way be -- am I and As about we of you're that overnight off

Bill Way

our we're and believe for recall, advantage Do about. we employees Those an be us, that rigs. are own to own this we our talking operate and

our and down invest in And been position rigs number going first quarter time. ramp to the rigs then is to so doing that run rigs, flow, and ability we've in within beyond at those of the we're do something and wells bring we up our say cash some back to for right

will good it. So be And this we're at no year actually different. quite

quarter, to on will teams get have down how the in fourth to clear But already phase We as it. disclosed. plans right we've got the back

Charles Meade

on or to your the where of characterize of a Okay, you're that's Devonian, is something I your could Bill. if if maturation to before. Could in talked or perhaps, about helpful what distinction understand be? would you've that again, a that zone, Upper talk where a now? you I it count about question then in understanding And you perhaps And ask position location in the scope development is Clay, right for where highlight us of this kind know

Clay Carrell

that. on I'll comment Sure,

it test inventory, we way our with that a one that which performing history the the we line long and have right is have Marcellus with. So, in lean is

sorry, And And tracking work the what subsurface And Marcellus our a so be of well have there. rich we our that there. Marcellus performance. the history of was indicating that and the type area geology the nicely long that would is -- acreage, our is and that's

where virgin we've to below And it, then going frac both we're and Devonian. foot development with interval is that So we're that development. understand had rock a Marcellus in Devonian the Upper with working height the the production some an above we're pleased XXX-XXX and where an do underlying Marcellus sure really of that. with What now we they're on and Upper making interaction

going liquid that We're seven to our spend dollars a understand resource prize the resource, with And better. an advantage. our for we existing there. 'XX that's us So, to of current really have that fact in that prices, science to on to number in Ts or adjust we that the nine we're gives steadily progressing more think, rich it's including the commodity acreage, the and it

Charles Meade

for Thanks Clay. that added color,

Operator

comes Tuohy Campbell go with ahead. Jeffrey Brothers. from Our Please question next

Jeffrey Campbell

on morning quarter. congratulations solid Good and another

Bill Way

Thank you. Good morning.

Jeffrey Campbell

Just a in analogues, quick analogue? I times. or real the will all question if is Upper Devonian mentioned wells rich tested several because there Are superrich Marcellus Devonian rich they think gassed any Upper upcoming be and you'd so really the inventory

Clay Carrell

We think there's present. sure an what be to not yet. We're opportunity for condensate at levels

we think And there upside may we contribution. that of start delineate getting further so as there's that we superrich some

Jeffrey Campbell

wells a Bill, Thank as great. they think Okay, little we've to of level operators significantly higher And, ago of on offset future overestimated the to due A lead unconventional started eyebrows they question, it. be of Schlumberger weeks usually that couple and production some performance that all made raised because this just Permian on Appalachian want parent don't throughout child lower saying I growth much Schlumberger bit of saw resource. I heard you. kind they when as clear that might thought issue American an and concentrates North but it is discussion

interested regions. reference in particular your and in to view I'm white So your in gas

Bill Way

it. Clay add now let and Yes, to to shot a me get take

footprint part and parent with really moving wet base some degradation a about and say and securing very area that them type and an how acreage of issue I that planning and both that a think immaterial backed exists back in areas child that very our I as quite go seen develop timing then through that drilling the that dry happen that plans for coming about in acreage wells about Permian impact large then this relationships. move should flock in of possibility that we've our that you seen Appalachian think we a time I have going acreage, facts and What have that in your not being we've where pads the have proving try to there're can and development an lockup deliberate in not And up up doesn't to we've to issues and risk where that, and is and and the then and us. you planning, does our not we assure way. been of to have create efficient you develop other our

Clay Carrell

in little further, presentation. come a I'm with familiar the Now, I'll

is five I potentially and a than benches when operating what with and issue you're more you development tighter basins we significant think it are in six much spacing have on.

of we issue, understanding profit creating and develop the loading are greater And so, is more and the which as then and spacing the profit it greater that then out figure it usage, not optimal loadings starting optimal about have some what's benefit sand child coming it's of lot with subsurface wells that that asset benefit this and is your forward. to of think greater are not parent much continuing is -- as maybe paper some you and from whole think and just go cost we I get to is a go or the of about you I other on an the right situation, part from less that was

Jeffrey Campbell

thing over I the to be Southwestern on you I fair? And that Okay. the mean, that would a very want name production, increase that I marginal you sensitive returns based you is is guys think capitalize knowing think to in of well, said. I I that mean, so just on last focused would

Bill Way

per than was got wasn't that XXXX in from that and increasing up bit way pounds that did because that. very on san because quickly it pay back foot loading, production off technically then would of our we've is front one we do and Sand tiny it very evidence -- to that didn't about in about little work to and more returns Exactly, much it loading back that clearly of terms as out the to as

so, drove an how and And work that. example economics we at doing that's just that and that's of

Jeffrey Campbell

I look next to forward color and seeing month. great. you the appreciate Okay, really we

Bill Way

you forward as We look seeing to well.

Jeffrey Campbell

you. Thank

Operator

ahead. go Carver question comes with Heikkinen Please Our from Advisors. next Marshall Energy

Marshall Carver

some of expect on gave and the XQ pricing less depth sort here. assuming commentary you triples, would pricing worthy Yes, NGL you what for

Jason Kurtz

and we with Marshall. expect probably over off, we've have early to little based in be we now, in into. then Jason, line is Yes, pricing got up what I the October what line This bit, come a will would back what on got right move prices got saw I be think with back, so have in September the come think the NGL are we down year, for pricing seeing we it it's into

Marshall Carver

Okay. Thank you follow-up. and one

you year? oil commentary drilling into versus NGL with oil cut. color you given into have really a split Do XXXX, wells any the are next growth You've liquids on high

Jason Kurtz

So don't percentages have Yes, definitive I there.

think I somewhere split? is I the math are coming from we condensate and of is rest our coming the with think X% from current NGLs. around

I it's time. we get right and of will then we that our now XX% tighten budget X% we'll up schedules, as information the to X% the out and it of tighten with at think up

Marshall Carver

you. Okay, thank

Operator

Our is from BMO Capital. next question Dan with go McSpirit Please ahead.

Dan McSpirit

years flow pricing. over $XXX as should Good years the that's you, the cash Thank that's allocated two That the next the strip spend supplement cash we two What's next look million the on doubt folks. growth? tolerance flow is, morning. over governor at to

Clay Carrell

the flow generated and you million together, cap us, $XXX the are you of replacement for that's and forward is the capital curve it The cash you governor flow XXX growth Appalachians Fayetteville on this on that's -- and all from that been when consuming cash investment. supplement take pricing take put

and wells. will We won't go funded a budget that to are, add past that just we have drill we to we fully

Dan McSpirit

base Appalachian better of as Very burden the and they efficiency get good effort the follow-up marginal that, effectiveness an base are asset compare gains and and a and gas? further how a needs change asking of to handle the really and fully cost across how expected on on breakeven do your prices supply how it to to associated and cost with

Clay Carrell

rich our NGLs assume -- condensate and down rich below Yes, the of in super $X $XX/barrel and gas NGL XXX-gas is rich a at when rich price northeast then benefit breakeven. around $XX so super price area down you $X pushes our oil look around an staff. price evens price our of the are you price a the you a break gas areas, when We're and around a and because then breakeven if and

Dan McSpirit

Thank Very helpful. a day. great you. Have

Clay Carrell

Thanks. Sure.

Operator

Our question go Jane Stiefel. Trotsenko Please comes with from ahead. next

Jane Trotsenko

My have how based Pennsylvania coming morning. on interested question that in if you do possibly better could production about do you the more and of Pennsylvania growth so online how became pipelines, Northeast Atlantic think changed available pricing could please comment you Appalachia, dynamics you I'm the right Northeast about hear and first space is in with for in year? to especially much Good next the local now Northeast sunrise -- on get

Jason Kurtz

that's a is good question. This -- Jason. I'll

a service, of day the in a somewhere definitely in around service with pipes Atlantic, -- off Bcf pipe see this and Appalachian of me a Let the X about Atlantic some day total entire five day in production a PA coming recently day around going into in so that Atlantic and initially higher Sunrise Pennsylvania, create gas a so was service are Atlantic up if some going Bcf Sunrise of basin northeast we've Sunrise is put new we've X.X to we color existing Bcf capacity going I a Bcf Bcf into what capacity the out seen is probably when and half of Sunrise they we going a differential created can a and service up and of prices area. about standpoint in day, about years seen Nexus local opportunities in seeing seen Northeast there probably Atlantic what that Rover, Northeast to of from sell of we've than specifically cash from in indices [indiscernible] local prizes and X.X in

margin industries. some create opportunities area that to definitely in in that local the going into there's So

Jane Trotsenko

I see that. and Go ahead. Yes.

Bill Way

cash We combined run And figure as the against portfolio of Appalachia and on economics have rank force them of flow. well growth as in again, as them production we far to that that out was our program project. at each and into we we look and assets unit capital feed budget, we the lines part then rig a models,

we So all that that that details we put around we we and capacity that, we those will that move have but we refine the that we as need numbers, we've each move markets the gas we asset, to can choose to. already thought transportation own to out to individual go

Jane Trotsenko

you curious Northeast a assets. just should your this you asset in changed know, given related basin has how Okay, has pricing I'm Appalachia compete even way improvement curious Southwest just this with question. and at I'm in in Pennsylvania, NGL Southwest look got it Appalachia, well I maybe the quite though, mean, the component.

Bill Way

you're right. exactly Yes,

both competitive highly some in We have areas. projects

them if our to in the as move And portfolio So make best at have projects down margin the those come up gas our down, and from one Appalachia our funding up handpick being of we schedule. of around doing each go the mechanism goes put best and in cash so or and flow. go focus within that prices drilling projects we is completed highest we're liquids adjustments or so or to again look

Jane Trotsenko

see Got it XXXX you is question do And think cost low Okay. like my low or you'll flat? in relatively final it. about would be cost, inflation

Bill Way

of kind at We little different. a actually look bit it

First of our of our of two of rigs quite well. we fracs, rigs cost two mitigate our so all in and and own all, increases we

our overall. actually effect we're increase anticipating source that deflationary cost to are group we're able lot the sand, -- a from self expecting a really just to in use not mechanisms and we contracting on market, strategic a do items seeing able with the of they terrific sourcing balance We we're to

Jane Trotsenko

much. That's terrific, thank you so

Operator

ahead. Our next Sneeden go from with question Guggenheim. Sean Please, comes

Sean Sneeden

questions. Hi, good for taking thanks morning and the

Bill Way

Sure.

Sean Sneeden

and pretty guys you, in guess, to you prioritizing do out for NGL limited talk that of are capacity? little how context you a your see can growth and about more that how the thinking with I export more peers you no and know, NGL as kind long-term of playing Bill, maybe new production bit put strategy you're about or

Bill Way

we pathway to trend through I it understand optimize of on to through get from And we take that of and Yes, infrastructure, both the these the work export growth all how for rock, it's trends whether that each access in and the look we the value view, very any be how the a processing re-fractionation any before, ahead our to and efforts we piece integrated question. facilities -- routes or an in approach NGL chain fractionation said at company of is in securing, we a route. a pipeline gas and it great exit us pathway -- accordingly. the process helps particular How through the we're manage of as rock ahead gathering the way through area then we

liquid isn't get you a rich unless know, well can advantaged You to market.

we ahead. at as look So infrastructure with we manage that that, stay and

up our the the routes, Coast, view Our two Gulf export the projects that with coming export ability capacity behind projects of that basin for come opening in to purity ethane that. additional marries development are are project online and it, under ethane to -- the that

approach this the that a and securing how near-term effectively that's we strong on the compete folks the the positioned need. work some operate the we'll and that. get and get our to access any view economics to strong -- in get our business work -- the produced, part and is on think capacities will -- to that testament available, they'll basin constraints I have capacity so very We and But of everything will can and We we We're in it's in quite demand through are that we do. we'll advisors moment of really get the front view best confident of we that's is don't rock out are they'll we those. we're at that that we into

Sean Sneeden

Great.

of think the and along Now roughly for appreciate success of X,XXX QX feet. in lateral here as the XX,XXX should the How that's go some average on think XXXX footers? earlier, with recent especially progressing that I around helpful was but commentary I And the length we about kind we

Bill Way

So our -- next of year length interesting. a average averages for lateral And X,XXX But got average should -- feet. it. lot be approach in can and our dimensions has to

and them especially, in We're that Tioga land then able land XX able enough can all already enough to a -- those is are laterals, northeast to you set, capitalize in XX with can across from of XX to of great XX around position Clay the do that early -- cycle, in in the you negotiating have where them? up the work the units units teams and there latest conditions his development in extend a are -- laterals team that area, to mature set are with extend be our which set Appalachia any secured to and to longer our is on early area our great One we're in is doing that in acreages southwest the in again on, we you and to be work. to our heading know, so on long

not set here who a the tell We -- they lateral trend won't for as said not how point has don't we isn't longest This And That's us us so and economics our our don't number is longer. that's game X,XXX. I a about work. if and we risk Emphasis it. go further, further. go do

Clay Carrell

links sales. that quarterly turned the lateral wells Yes, report add tie the one to to is that we thing I would

drilled have wells then they'll there and those little our XQ So then sales. there's laterals to that and current drilled average longer, wells those get bit a lag in when because of may've up been than wells a show XQ, turned XQ,

Sean Sneeden

Perfect. That's Thanks a helpful clarification. guys.

Clay Carrell

Thank you.

Operator

would the like concludes closing over This Bill Way remarks. conference to back our to for question-and-answer I turn session. any

Bill Way

back this, you long-term shareholder supports was drive this joining look teams today. Yes, commitment When talented thank to us all step and value. in I deliver it to shown all continue our that I and highly our impressive at for quarter and results

And everybody unlock the to future to on performance, and as we're company on value value quite and even to our being our part call to liquids assets. you opportunities look the more discuss rich our continue and growing the that's our quartile for we mission. high value of to capture deliver top joining in We assets focusing again understands in reposition And company shareholders. every our I'll next about in made enthusiastic you tell forward progress investment

you So Take have all and I for for us. you hope great a questions care. weekend. to thank want you the joining all Thank

Operator

call. earnings third Energy quarter Southwestern concludes This

disconnect. now may You

Southwestern Energy (SWN) 26 Oct 182018 Q3 Earnings call transcript