SWN - Earnings call transcript Q4 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 Fourth Quarter and Full-Year 2018 Earnings Call. Management will open up the call for question-and-answer session following prepared remarks. In the interest of time, please limit yourself to two questions and re-queue for additional questions. Please note that today's event is being recorded. the of to Investor turn Energy's Penchas, now President Vice Relations. will call Paige over Southwestern I Please go ahead.

Paige Penchas

Call. Thank you, Quarter Earnings Fourth to Southwestern Denise. Good morning and and Year-End welcome Energy's XXXX

and of which Joining press also Chief section Operating me Investor release, website Julian Financial of we Kurtz, Chief is issued www.swn.com. the and Bott, Bill Relations Along Marketing today Way, and Officer, Executive Clay Transportation. available Carrell, at are in Officer; our Chief Jason Head XX-K, Officer; our President with yesterday's

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

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

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

William Way

fourth and clear joining Appalachia reposition Thank conference began to and a a player. you, natural leading everyone, Paige. in with quarter gas and plan strategy, Basin and XXXX our the morning, as you for thank We XXXX right SWN place liquids Good call. team

and transformed our our shareholders delivered very we're Energy close reduced sheet, moving concluding Fayetteville XXXX, deliver focused of the commitment we returned for team every and capital projects. year, performance million financial I'm our the we've to front We this, We performance Extraordinary in sale and billion thank while Southwestern our $X.XX strengthened and year, balance out to During all XXXX forward. and Shale of transitioning of, and flow, improved another it nearly our costs. while every culminating or achieving asset and from and $XXX and cash shareholder value focus great proud in above generating assets beating investments operating want doing with quarter-after-quarter foundational high-return safely. quarter on to capital meeting the investments. in and the talent, metric, high-level of

you. what my more billion. reduced We right, debt team would of on? the $X What country, focus get I'm to to So than by did do well and across we done, proud we else continue

costs have cost costs. year, early of implemented continued both the annualized And promised savings as We reduce to we interest million. G&A $XXX in and we

content costs. Additional XX% and also well to capital are our liquids savings efficiency increasing and realized our total of for increased in of and We've operating the grown expansion adjustment Fayetteville, portfolio. the excluding were across reserves. the has reserves proved reserves, expense we margin Further,

contracts third-party We accomplishments of to are value improve and arena, of full of numerous add assets the continue to margins. this including to strategic potential on the our in laser-focused delivering list renegotiations

water teams Our improvements, process wells operational drill direct the improvements and drive sourcing, are to including we in sand F&D as and as technical optimization. operating value way driving well and costs, and down of flowback complete handling,

Let points. me give some you proof

cased and in SWN of XX,XXX West one rig and our excess utilizing people, just in another this ultra-long Company-owned Virginia lateral, we First, successfully drilled feet.

for least connected our is in drilled water promised, per saving Virginia future. the and and well well as every $XXX,XXX operational project new Second, in West at

our details committed per Third, Clay on guidance. reduction our delivering give XXXX, enhanced to and in and will recent management has dramatic we in And foundation. achieved, improvement cost XX% performance well have We a in as team solid time cycle been and in you are foot frac indicated that a shortly. we

are a this of chatter Southwestern deal current been three There's a commodity on cash our demonstrated prices. new and returns-focused free culture generation sustain part the investment. is at industry nothing has track At deliberate about last of Energy to capital it great flow a We discipline and for years.

entered upside a record have Company's through protect highest investing basis unhedged. of in prices meet supported retaining large our return in the that program, We plan Fayetteville strong our the flow our in We to transition cash should proven flow with a re-engineered and cash our while position cash to flow pricing balance Further, hedging clear from place requirements free improved at XXXX or we cash of higher-returning flow replacing from improve. sale three-year by re-energized, return rigorous is our return neutral portion rolling assets. repositioned, sheet, track the projects of strip and the commodity liquidity expected XXXX,

guidance, funded we base. projects of year, last commodity you continue and down, premier liquids our reserve about by sustainable on prices. ramping Company-owned acreage and Supported value We the to and our fully and cost-saving and like should gas. elevate flow in Marketing capital talk to in completion multiple technical natural improvements, investment high-quality inventory and have change will program increasing our resulting commodity is year, an be by to to existing our The high-value briefly with returns rigs, returns asset changes benches from operational of extensive to This year, continuous returns just last Appalachia both opportunities, efficiencies and investments and unique strategy. capital portfolio cash drilling teams across prices adhere a around. to as of like gas or assets the natural deep in impacted productivity flex it and like have we maximize Transportation base, our I'd a investment ability our our our from

with of we XX% the gas city-gate are opportunity of have winter-driven segments. market XX% are gas price gas firm We than markets sales Coast elevated in markets are this and the to where year from country pricing access to premium the sales numerous capture leading tied our Northeast to the a demand. More marketer our high-value to Gulf tied

a Southwestern to marketing of gas to of deep capacity firm deliberate, and the avoid measured in transportation transportation us over-commitment. meet a pitfalls over Our which portfolio right-sized select layering business, our experience capability allowing capacity time, Appalachia opportunistically to significant reflects but approach growing to enable

teams Our surplus work from to adjusting our to optimize any demand program capacity investment capital charges. resulting offset

established will added margins improving it when Looking new recently forward, and further to require our we market rate, timed access. capacity, until a XXXX, not long-haul but at the discount we

ahead midstream anticipating future markets. thinking have strategic We have some needs. the premium value no chain applying bottlenecks to for the time flow In same liquids, to we planned our throughout assurance supporting our

We XX% direct to capacity firm We including crude gathering, our we'll and takeaway our in multiple further to of near and our acreage The secured enjoys sufficient pursue barrel. marketing NGL truck, along to and options, continue NGLs, processing NGL ethane with access CX+ continue a easy propane for future growth expanding healthy rail this Company improve value fractionation of our place, with for effort plus realizations. pipe.

methane zero. put stewardship, of to X.XX. Southwestern's an few current industry for our assets almost like is loss leader was I'd and lower perspective, this meaning than the into site at low that average Finally, places in XXXX environmental share reclamation. methane practices use rate XXx The from best industry To a X.XXX, record on a fresh national which water emissions, reduced highlights commitment as us derived to

to for care freshwater maintained recently We this We are of we the we we our basin. West we every recognition use or addition, the gallon and for leave consecutive for the landscape year, of top the Environmental In in within team. gallon way from operations, Virginia third great communities exercise replenish and fresh the we outstanding it our for that found freshwater we neutrality meaning live. Virginia West our water offset of in for work earned reclaiming work honors Protection grateful where Department sites the

invest sheets, issues, can we've We're clearly it and generating previously see, balance and dollars Southwestern the with execute. basin Energy. best major real time a an already measured one leaders proven can energized no infrastructure producer investments one NGL on great and becoming with as disclosed, returns you in of that's XXXX per CLAT So the our it's efficiency of by team to commitments largest the third the in Appalachia, now as in capital

me over Clay comments. further for the Let to turn call

Clayton Carrell

Thank you, another outstanding off throughout with production and have operational year, good technical, Operationally, high-end achieved an carried year we performance into and Bill. We XXXX. quarter capped momentum in the QX. that

December. continued metrics from for X% to elevate key Fayetteville XX Company compared days Total strong Additionally, production production year. XXX and year without for the for the we up to and was records performance culture XXXX, of the all environmental in even last contribution set Bcfe, safety our the our safety

records and included of which Our condensate. was total Liquids Appalachia of a increase XX,XXX Appalachia was which XX% liquid per of of of Company's X,XXX versus consisted XX,XXX and production day, barrels day XXX XX% increased production a production Bcfe, a day NGLs XX% and barrels year-over-year barrels the production. XXXX approximately was

installation projects per we per a optimize optionality of both in areas completion both and our to drilled enhance us times. return cycle increased the XXXX. and reduced production further our in in As allows portfolio, we areas and Throughout gas day capital a grew liquids-rich well operational result capital Appalachia capabilities, our year, We gas time. liquids to based the performance. high-quality efficiencies, our footage to at on in highest facility inventory execution dry gas allocation prices and our the continue our and allocate commodity stages our day, That

guidance. cost three these foot feet, while of were our All laterals on-budget. being allowed a get XX,XXX record of Company capital one more over activities and these all over original with on-time of investing drilled three and items reduced us We to XX,XXX done, - wells each, our within and

ultra-long drilled an to and February of West we cased and successfully foot We will Virginia continue this in test lateral in year. XX,XXX laterals in XXXX,

wells well improve completion announced average previously We enhancements lift we approximately expect gathering our links XXXX greater to guidance, in performance in ongoing optimization. production to discussed XX,XXX through and than X,XXX expansions on and to optimization from in XXXX. As artificial increase capacity were foot to new deliver through foot able sales lateral base

And well per much online now reductions our brought reduce successfully two expect Tioga Pennsylvania well we per well. a also area, Virginia, cost well. $XXX,XXX projects. we by will the as water West in $XXX,XXX In and costs as to least from at $XXX,XXX We well

with We reductions are these Year. cost fully from the the start of benefiting New

complete our and piped savings guidance, by in lateral per this $XXX a cost disclosed to with well associated optimized longer costs links we The lateral and with of drivers year foot. XX% number XXXX, than and lateral essentially sand, footage source drill compared approximately foot. lateral XX% but for XXXX this associated will water, reduce designs, direct but plan Company-owned XXX% completed nine per XXXX, per we completion foot are to XX% As XX% in improvement wells same XX% more integration In frac fewer to the with capital fleet. XXXX, wells our more vertical footage with rigs and of drilled less

are investment of our area and continuing the Appalachia prove we last efficiencies, improve So improve of $XXX the year, spend more focus we majority our acreage to less, million. done will with economics. Consistent with - approximately Southwest get our super-rich and capital in

with We total XX,XXX grow full-year rate average greater day condensate barrels per day. over barrels a per liquids XX% to for NGLs growing over to than expect to and day XX,XXX the a barrels XX,XXX production liquids of production

gas production investment of level a maintenance approximately year-over-year Northeast flat $XXX capital Appalachia be D&C dry with million. expect We to

half be will As of of activities the six will we drilling rigs crews mentioned guidance, weighted four first in the frac towards year completions and 'XX. and in quarter first approximately we the average and

billion, With become up player the higher proved benefited reserves. reserves value our the year-end Fayetteville, a pricing. proved which XX.X liquids pre-tax In last Liquids just with Appalachia, Tcfe our clearly for sale reflected value XXXX is proved in X% have PV-XX years, XX% a we in the associated which the of growing in from liquids and with reserves, year $X.X from XXXX. of three value meaningful of XX% were of accounted

from program our XXXX, reserve-life Appalachia X% and Shale. Our XX%. improved the capital an and grew completion Fayetteville efficiency index The and production as F&D to PV-XX developed drilling cost, grew was measured of pre-tax years, excluding by proved XX reserves Mcfe the value $X.XX proved all our

XX these we We progress future XXX,XXX resources. upon acre inventory and locations drilling in our of of XXXX, dependent drilling and across X,XXX Tcfe greater future commodity year-end our and continue resource than of locations Appalachia, all position approximately At have to prices. are

plan fourth two inventory we updated have in initial quarter brought potential and Upper the for and the more Devonian interval. percentages production expectations have SWN across We and Upper continued further Virginia, in West with laterals longer We 'XX. has been line production Appalachia. the gain Northeast Devonian Pennsylvania, both in In to Upper in rates online with Utica for in the tested wells delineate Marcellus operators the Marcellus had and as XX%. momentum both The in Upper to offset liquids of this

We as Upper activity. XXXX, Marcellus well as offset are the drilling in continuing to test monitoring

an ongoing to have our proved We inventory existing to effort resources convert reserves.

incorporating completion economics we execution are in commodity with wells and efficiency We advancements all profiles coupled prices. of improve to the improvements improved are operational can a subsurface the move existing wells. without production actively and lower inventory The of combination uneconomic change cost economic currently and of and EURs to realizing,

continue And focused value on to Company. achieve over for have move continuing we technical, to now, call the the and to into the I'll to improve Julian operating commercial, as So XXXX, we financial outcomes operational high-end and turn of momentum strong highlights. are

Julian Bott

Clay, morning you, and everyone. to good Thank

monetization Fayetteville months million and were Bill both We latter figures on cash closing our December Xrd, deleveraging capital $XXX date effective closed the and XXXX over sheet investment a net exceeded net of flow for July reflects our Shale. We flows of throughout flow in was which record-high cash of by $X.XX balance December held following of proceeds of was the include of liquids price on the Both cash the plan original flow, sale received to the as mentioned, of to billion, $X.XX expenditures have successful a Fayetteville $XXX contributions deliberate transition set with billion adjustments and approximately and net of and the million, our production, back cash the year. guidance primarily free preliminary which XX capital related only year date. year. marking and As acceleration the pivotal billion, to purchase from to Xst the Clay of the $X.XX Fayetteville EBITDA revenue firmly to one-third positive

of we the our refinancing balance million debt; while on XXXX. in bank now fourth the quarter bond repaid the cash-on-hand, bank $XXX our and billion we facilities; a revolver. course tender in year, $XXX in have first million in the $X.X Notably, quarter; maturities through debt Over before $XXX million completed the using just

resulting BB Our was leverage BaX. ratings than and remain at less debt-to-EBITDA Xx year-end ratio our credit

price of at shares repurchase bought We a program, share. completed of our have per stock $X.XX largely authorized having total million XX an average

$XXX further focus use a portion previously the with towards of of As to intend the borrowings our funded our on locations. sales revolving year-end free credit allocation have committed discussed, a to billion fully Company proceeds ample to flexibility back remaining our we approximately highest transitioning development cash cash a financial strategy on no and The value and balance million in remained sheet disciplined flow inventory through has $X our We of under capital XXXX. with program at capital facility.

charges. restructuring which $X.XX certain excludes For of the Mcfe, reported G&A quarter, we fourth per

initiative from million we to As million million, $XXX $XX over annual million, of recognized previously costs. charges interest. by approximately restructuring from total undertook reducing million was and G&A $XX announced, a severance costs $XX major which of future $XX We related cost-cutting

$XX Additionally, per G&A the be The this range XXXX aggregate $X.XX savings our Mcfe. non-personnel Mcfe reflected of per realized in $X.XX are will G&A to of million fully these guidance year. reductions of

per losing the unit one-quarter from G&A our our no approximately production volumes of in You'll notice monetization. was there increase guidance, despite Fayetteville

prior prices compared than $X.XX were year. our liquids higher XXXX, flat natural $X.XX gas realized NYMEX raised price per to While to gas our essentially Mcfe, the

of differentials, realized impact plus and hedges. include basis prices transportation Our include the

reduced gas believe spikes We program. was the impact flow the cash three-year quarter, in short-term the fourth a committed hedging are For markets, derivatives price realized there gas of $X.XX. hedging and with settled and our by price our to of in NGL when policy dynamic protecting

basis we As floors, takeaway to improved of price gas provide Appalachia and earnings which driven using our our more collars shown differentials, a XXXX $X.XX. guidance XX% wave pricing includes new going of approximately the better long-awaited in in ongoing Gas than $X.XX to is of even release, upside. XXXX, of reported in swaps $X.XX our XX% to schedule production total providing In exposure approximately into gas of service. by transportation, year than a combination anticipated, whilst hedged

coming are Bill key deliberate we have that planning As so access premium Gulf volumes, Southwest to project Coast capacity Appalachia mentioned pipeline markets. and West keep in a costs on increases new we into This our approach earlier, In low, we in while access to XXXX, to Appalachia layer over XX% Northeast Virginia our capacity prior have service. referenced, for improving $X.XX in gas any will time XX% new $X.XX. in-basin for to that be sold F&D excess our same the the Appalachia for included on Greater cost The differentials which capacity guidance is in our differential the layering volumes of of XXXX Bill the capacity, base. at filled to

strategy We the provide with have team a excess will updates mitigate we an of portion and progresses. experienced capacity any year marketing as to a

indicated, to consistently next a it environment debt-to-EBITDA the Fayetteville pricing by free our intend and current believe we've to inventory is Xx. focusing in cash the target liquids-rich years over to two flow replace back achievable our We EBITDA. is As investment sustainable transition in

We hedges, ongoing proposition long-term in is to we'll That on liquidity, we We our continued not as protected execution, so recognized allocate the lowering cash leverage, per have capital, and believe by improved added of believe our we demonstrated, remarks. costs investors. debt-adjusted as will share. compensation will efficient and replacing currently metric cash return consider We concludes price. return on remain reward prepared ROACE XXXX program, flow favorable conditions average share operational with Company's attractive an This or our a clearly as that to has offer flow investment. market we focus employed value flexible strong to been capital continue maximize reinforced being

you Q&A So Denise, the session? could begin

Operator

Thank you, Certainly. sir.

first morning session. We will come will JPMorgan. go from Arun ahead. of the Your question-and-answer Please Instructions] this now question begin [Operator Jayaram

Arun Jayaram

good strip cash roadmap Fayetteville well where you the timing of Yes, benefits a could a Bill, morning. of as the sale expect get wondering in I inflection terms discussing on some as to and if us current provide you of flow point, using of basis? the free go-forward to was that

William Way

morning. for Yes. you question. your Good Thank

economics This then into higher the our of the with we made As grew the Fayetteville it would forward, became look keeping this the very move to as economics of and and Appalachia into service in far brought company benefits our Appalachia with and invest much allocation that dramatically. Fayetteville. we sale were Basin and But those capital founded I'll out exceed those following an that of the in asset selling start a was opportunities, in, to Fayetteville. true able clear strategy, that we

the And those lot while keeping that Appalachia. to monetize the can from a you investment you investment shifted it growing remains, in question and your all of we sense so then and Fayetteville, makes asset cash base forward, first a EBITDA in and if that, and that, value with flows creation and have do large away asset bring your

XXXX third projects, growing was flows very for thereby of on a as liquids, So, whole we from put cash path funded fully was portion our we we debt, the clear at pay in generated all higher look reflect end investing which that going projects, brought know, flow but value, we company. higher And by carried free strategy then neutral on our that deliberate forward. market, and will flow, to flow now to returns then return again in cash path very of And our and to replacing original higher resulting money forward in, major and flow those the cash return second path fully major was did. margins conditions And pricing, that XXXX. transition we growing objective that objective and to capital our taking the return this with clear benefit We which us cash in mid-cycle to them did. value, on we believe moderated from And as guidance by we the transition the and a to cash have higher are out return shareholders, now, a to program monetize asset you take forward, cash Fayetteville flow down growing a a

Arun Jayaram

XX-K, from did Got maybe cost PV-XX called $X.X sugar I trying to think it. selling the versus, just interesting Fayetteville. mentioned billion the Clay change if a you And from the - changes higher value in highlight after-tax the at to prices, from on I basis, but is was the just high Appalachia, from can it in the what's just increase follow-up. PV-XX call drill-bit the in Appalachia. the increase despite wondering XX% to but the us, value In isolate try drill-bit

Clayton Carrell

the benefit Yes, liquids drill-bit curves. that are in we is biggest then SEC definitely The had continued pricing the the driver and some growth our liquids from prices. with of improved-type year-end benefiting part

that's Appalachia from growth value from now So to $X.X - billion. the billion a came big where number $X.X

William Way

of the the Yes, Basin. but them get for you can Appalachia to a higher I repositioning capture them. the prices, got is you've put to And you just position in yourself before Company portfolio get to [indiscernible] think the

high-liquid driver of growth opportunity this and major reserve so is content Company repositioning a of that. the in And driving this

Arun Jayaram

Thanks.

Operator

be Meade the Charles ahead. from Johnson question will of And Please next Rice. go

Charles Meade

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

William Way

morning. Good

Charles Meade

Upper that to take suspecting wells. in - two give I you more because was the was didn't could you you detail But in Boe guys I I'm because anything don't with want what bit wells? a expectations, overall from hoping was Devonian going press can on idea could those us there is that said us or on those give flier they an rates, the to. in your that you hoping this. - add give about rate little I'm release a comments, prepared line you but are you -

Clayton Carrell

the day press is those producers equivalent all both release from wells are The in This million take are is, of production a that. we early. getting moving I rates We're test. performing were parts The we're I'll with XX-day are But a and wells to for. them doing interaction, over it's and so of can - XX-day as really understand part those brought we Sure, that The of XX wells liquids stages, five-well in the well. we into Clay. that line content in where go that average, science offset beginning, lot the on the reason the online, we a said hoping a include just didn't next. incorporate early all that we

Charles Meade

Clay. you, Thank Okay.

William Way

Let nothing underscore one approach me and just is thing, just so you understand this our new.

Our into or same well and to of for facts not from, in we be wells of that new get put last we the it's well behavior to as Upper sure well When years. can, derive don't been are we is the to want as well now extremely out very careful more because we information they exactly have we don't we several could time. yet. but have any along put bring yet, result three large somebody as whatever, that areas a quickly implications need a Devonian. - have just these unclear area just these We result a to results, we want are you major get or We results

Charles Meade

this kind But to if allocated of on talk it on done Fayetteville an my whether - - looks increase second Thank is buyback, $XXX part rate. more out of at the there. you I just you're program, the a basically or continue million the it for or could question buyback a attractive well, Can you, after the still or about so Bill. Shale there ask you about essentially guys we is appetite that the that's liquids - I carved are XX% that's to Board point? - or the like management and buyback, any

William Way

Well, it'll shortly. you very and nearly wrapped up that very, then here are be we've correct it, completed

- As repurchasing talk option we And a come any additional company the merits in remain short-term time. economic as value the us. make of option shares of table of as the or whole about to of at any - as use look we long-term the terms they those on other far and of we capital, all creation, the decisions those and really and them, as

what on it I options investment, them evaluate other debt and completed straight and table understand might of the you say just have that those can up. play We that out all is, and we option

Charles Meade

Bill. you, Thank

Operator

The of next Trotsenko go Stifel. Please question will be ahead. from Jane

Jane Trotsenko

for morning, question Jason. Good gentlemen. is first My

the through issued the Mountaineer is ramp-up and Gulf the your about is couple capacity full if TransCanada access provide release comments of and XPress have year? pipelines, was in in press you could both XPress service. service if to that today So guys you partial I the on a then interested profile

Jason Kurtz

Thanks. This our Xst, Thank March Jason. today. did on question. is you start the contracts effectively for Yes, both

think and as higher in So Gulf. of piece that in for we're GXT capacity, basin - moving around we the the to then to value volumes the to a nominated basis. possible processing through and the we our be gas also from into right middle sell all and our With we're move located MXP, gas as connects able directly it's it the the always processing much have down of the be Gulf about on today - acreage. through down our multiple we strategically facilities to markets able well When in-basin facilities, to try as as or long-term to of optionality two in the to

connect the have future, into So know gas to ability systems in gathering further the MXP. - development dry you directly we

were max piece capacity volumes into a little bit we it get where our of a the at strategic to for pipe to take So us time up will it's future. and of

Jane Trotsenko

Thanks. F&D call shouldn't helpful. costs that Mcfe average now is $X.XX to was guess, divested, just around This I in My really from to I $X.XX decline, - three-year that thinking costs. question the per Mcfe is a is Mcfe, second Fayetteville per XXXX? to Clay, $X.XX per F&D about range is it,

Clayton Carrell

to about in PUD script, the our relate conversions are adds that and F&D I that the talked my the So numbers of PDP the program. PD part drilling

seen We PD on in improvement continued in and been mix they to over much haven't activity couple we've of the years had that F&D the last haven't year-over-year Fayetteville there. where calculation,

from way The been super-rich other to talking but the about in value inventory. high go, that's liquids think benefiting like have our right less is, about you When wells we've us Mcfes. super-rich those piece the for

you bit they an a on super-rich have get we do F&D, wells wells nowhere the inventory. calculation, in So our when so and conversation, are the most short-changed that math valuable but those in value little is might in that

Julian Bott

all capital value prioritize company. the program the around contribution we And of to our

And so the top they that's at why of pile. are

Jane Trotsenko

say wells, rich gas wells make just to just I have May want right? sure the liquids that high than dry confirm, cost let's I F&D

William Way

Most definitely.

the reason there's greater that value. well, liquids a and have For gas drive Mcfe on, more liquids less than I the commented dry you

Jane Trotsenko

Okay. helpful. cost last my That's operating guess, wells. - for is liquids And it My had that they'll on I'll if I question, to you cost I like rich F&D may, understanding structure, operating say right? just lower commented cost similar is exceptionally that

Julian Bott

in the a on lower a Southwest was - cost. increase of greater seen we've little it Yes, production, the corresponding Appalachia mix overall the the app then volumes LOE year-over-year we've Southwest the but unit grown little in as with liquids,

Jane Trotsenko

Got Okay. it.

Julian Bott

to Southwest lot of to higher is tied costs it LOE in processing tied A growth. the bit Appalachia being or liquids the that all elevation a the little

Jane Trotsenko

questions. very my taking was Thank much Thanks helpful. That you so gentleman. for

William Way

you. Thank

Operator

The from ahead. of Scotia Holly go Weil. Please question will next be Howard Stewart

Holly Stewart

a comments of potential any in that just just prepared Maybe strategic could through Bill, renegotiations. contract Paige. you you're your provide mentioned gentlemen, savings? morning, some color cost up, Is terms you there Good first here working in that

William Way

certainly, transport get posted we'll we've haul long rates. to at when a you to Well, know this I managed discount but we're think done let

looking so We out better our, items. at looking expand value are other a other of can we with any the and get and processing medium or best that always along haul providers costs to pi gathering related our contracted any and value that at how

no stone there's So left unturned.

Holly Stewart

Okay.

is midstream sort So this services? and of both

William Way

Exactly.

Holly Stewart

Okay, great. how question, book just backwardation maybe now? guys the And my then right next in for the looking just and thinking are through at such hedge XXXX wondering curve you with

Julian Bott

cash the committed program backwardated flow. to this Holly, want is Don't particularly hedging curve. Yes. Again, the Julian. to a like protect

on up getting lower in at but upside preserve we've some been upside on outer write Taking we more the where years. collars So level a little leaning exposure. least the floor, of a

Holly Stewart

Got it. Thank you, guys.

Operator

Campbell will Jeffrey question Please Brothers. go be Tuohy ahead. next The of from

Jeffrey Campbell

Good morning.

a wells, Devonian kind Upper the questions interrelated couple to so there. just quick back Going of

when map, both? in Upper rich super does gas The primarily gas Europe occur acreage First I all, rich the of look the at or Devonian area?

William Way

the so We've that be further both. of north testing in will it only super the go believe our plan rich far rich. We part to and tested test it in

Jeffrey Campbell

Okay.

So that was today to alluded in that test rich have you gas five area. the well

William Way

It in Correct. County. Wetzel was

Jeffrey Campbell

you're going but was test you going I in Upper you're which ask XXXX tests you going I to the to Devonian the I saying was just what just going answered rich. and you're might think to up in And standard again, super and it, some ask, ask to area, do get

William Way

delineation be and and the in the quality around to try the comprehensive to also then rich thoughtful going super We're rich. Correct. and in info so

Jeffrey Campbell

ultra-long long. longer to And just to hopefully I pretty are laterals any Okay. ever that feet seems wanted in to show mean, drill it and was in on order completion quarter. starting drilling that I are every these not answer, conquer ask, were real question. there - you've to higher closing XX,XXX long wondering, had up just I a level hurdles specific or that

So to just wondered what to this overcome, point? have to get if anything you had

William Way

definitely challenging. They're Yes.

think rigs in specifications to these progress those unique on go that's And the need all you off big are we part to that our start we think laterals. timing quality have as and lateral they us continued I position to of owning the on that why our that high ultra-long us we I enabling lengths. stayed costs we've on have a with track, have that a

Clayton Carrell

a different teams our and the move in have and right now faster. to therefore the this privilege in a the in and the very it And learning being here. and fashion same drilling real in to faster pace is of we and we do and company being in is to the on learn and up with of say enabling states able comment wrap applying deliberate factor going two facilitating source, region can that the completion learning ability is test I'll

So it's been very good.

William Way

interesting up you you're for that of people of equipment, I'm point sure it, have tying a add, keeping is, it. criticize because, you're think is what aware capital but saying E&P this that's didn't just in I'll I really sometimes as kind companies

You wouldn't kinds to be able results. these of get

Julian Bott

a doing teams are job. our Just great saying

Jeffrey Campbell

Great.

Okay. Thank Appreciate color. you the much. very

Operator

ahead. Energy Your next go question Advisors. of Carver will be Please from Marshall Heikkinen

Marshall Carver

well well the of you impressively or expect down walking couple Would A through already that the on the questions cost year CapEx, at you're Yes. well down trend basically year-over-year. to cost are costs? you targeted

William Way

down it the trend. et length tied will to lateral be cetera. the trend and But be quarter-by-quarter, progression, will will will of It big that No. that part

Marshall Carver

starting is current I Where point guess? costs? you're Where your

William Way

Yes.

online of and big et a included that is all this which And four So the $X,XXX and we in the to and that. water that the point We wells driver about forward That's from going our we've frac And the were XXXX talked around driving direct be and work there. with greater company big in all is the a science, and learnings step then projects kind we sand, starting the the combined longer. costs making then from forward is lateral vertical part And the lengths lengths, is of for cetera. contracted. we're those versus reduction optimization. completion benefiting did getting both The enable the our already our of are a been. with benefit that designs other foot lateral where upfront categories moving sourcing those, significant to integration, a the

execute. us really and in to got so we go it's all for then And place

Marshall Carver

expect to you So $X,XXX? foot, costs per what would first be quarter

William Way

year have but progress, We're average that to making going throughout to to it trend will be XXX. the

Marshall Carver

you the below So end level? year significantly that

William Way

to the quarter through wells be mix get we to of The range going to year, XXX average. but mean the showing and progress upon be that, I as that progressed up will on dependent every it's

Clayton Carrell

necessary, the to all contracted and building have We ready execute. blocks understood,

Marshall Carver

the guess that is I would it year, in if it if lower could it XXX through higher…? Average a than end starts that averages cost Well, I assume XXXX? lower

William Way

are. everything my lateral Yes. that lengths impacted where and Again that we else to is

yet thought We or is and to getting. range what to that XXXX far improvements around we to guided that expect maintain the execution ahead that continue we're haven't the going but efficiencies to do,

Marshall Carver

a year? weighted? Okay. first talked being percentage through CapEx And as give of about being quarter by go the us the the you you Could CapEx wells we half

Clayton Carrell

to is with and back as begin the year. then similar pattern that feather to within what We'll a field departure we see adjust prices. we a remain last commodity accordingly should big capital of you'll the we'll on or that Well, see cash budget. within X-rigs did in And then

in So pattern. of back not of they're that the just kind terms similar look too you at if

Marshall Carver

Okay. Thank you.

Clayton Carrell

Bet. You

Operator

Rehan Riley from ahead. of Please B FBR. question next be The will Rashid go

Rehan Rashid

guys. morning, Good

these of in I've your CX+ kind building comes XX% Just assets a could is numbers bring there lines XX CX+ the a out of benchmark second sheet you months miscellaneous question Is those there good you're help? the functions that of for number, of then And mind could months house? or some XX the is non-core but other further on seen some over that to as couple maybe questions. that be other along be course Thanks. from number anything peers balance to Any of achievable more XX%? next one that discussion, the to in Houston that monetized - else a the could

William Way

Sure.

base, did cleanup went of asset recall years. that in lot the last of and terms through a we you'll the of that couple In

targeted cleaned again, portfolio have our has this assets up. very well been that are don't we And So for point. sales

the so moving other our the well disposing tower out that. already we're Your ahead - question of we on we building, will buildings, be are in of of that's, of the two one

team side whole had to is do with… that. other question one And the in your fact of just In

Rehan Rashid

CX+

William Way

Our is in our price. are transportation - realized

if who and you benchmark So do that I'd or transportation that. or That's see get number check been have always I that got does not. an my better has it have we that day just need doesn't understanding to of every else a a, issue see to

Rehan Rashid

from good. Thanks. hand. And have assets on direction the of strategic a that Okay, then standpoint we

out Sounds a speaking, like would in good. year In how kind lay kind to not would you standpoint. the plan XX,XXX high of think broadly mean, I accomplish concept strategic about, of were just of if years? you you foot three numbers, three next at kind what to but

out could kind that you that'd If great. of lay be

William Way

of any opportunities that I'll A&D as like specific don't tell Yes, we like, work. that you or things that comment the looks really anything we on

and any always way thinking we to short-term back looking way sometimes opportunities But opportunities company and come and that highest and you on figured at part us of focus you on you them improve your and strategic long-term assets in creation the about shareholder we're our for now going creating you're So value ideas sometimes look the drive those to value. of least focus value the forward what or ones at out. the to already have, at

a - and demonstrated and approach we've from that benchmarked and to margins can So creator need our got the peers we've we and we're we taking share greater multifaceted improve this. in of business, cash action that. value to do as gas We've greater got piece those. that We're liquids. really a expanding of every We our returns flow derived against building believe is

resource efficiency, look have that don't resources and our of our If We or our the us that longer to at reserves, refining we've including in and reserves to we've your inventory this thing build a from kind lot opportunities those deep that. drives laterals buildings acreage structural for grow structural leverage thing. doesn't our with ability flex to costs different question bolt-on focus around is other costs, out move then got Devonian, any We resource an and our like it of pricing, our Utica building to for Marcellus perspective, agenda and more organic add grown Our kind it work it A value, of need across of we to gives drive do improving we can and so we that of The prove on. company last year. entire deepen Basin. the in understanding objective Upper greater continuously focus portfolio of that then Appalachia inventory. lot our on our Upper

have laterals. clear path to longer We a

We have costs. a to path clear reducing

we'll assure of and business and liquids - in they and around clarity We that decisions for have And us the or discipline decisions total those expanding opportunities to as that the known them our around the a as we make to come our our are than path again, we'll benefit and make always, clear to of we happen. those will rigor can total capturing and revenues. as evaluate with share margin ideas

is going that forward. our track so And

Rehan Rashid

answer passion it. lot of Thank That a had it. behind Love you.

Operator

Palmer. Parks question ahead. next Coker from & go will of Please be Noel The

Noel Parks

morning. Good

William Way

Good morning.

Noel Parks

some With it the course, Fayetteville that of changes me of so much the made wonder talk portfolio things about issues. about you have sale, other the

Does inventory it gas was were dry the relative be far misleading costs. inventory, as - say just the far different commodity this F&D inventory with gas now? out But and XXX plant? a your between a you are drill the versus pricing? on looking How the As you or you mix you costs the lot Mcfe dry the thinking given I overall that it again, rich of we change about in gas as if it'll as dry talking where unit basis, XXX kind have XXX gas,

William Way

have we and that being to the that about three we're of gas things then that that. flexibility commodity pricing or and on we've the differentials differentials impact commodity components, deal liquids great pricing, focused together much one put with is portfolio Yes, the and the that major so

gas on liquids and basis look how going to prices fact develop forward, we that of can up from the shot value, we that as an value to at how And and we high high again prices we same agile equivalent be, shift gas wells about If can so where in today. can the our switch because control you business perspective. we our physical volume could dwindled, a are money

such Pennsylvania, you up versa. over invest the in continue that and we of in West to period, the - our on so next in the view vice we rigs rigs finish back. move six two switch And and program, can easily the well Virginia or Pennsylvania West the that liquids and to Today series well we strength through Virginia, relative four on gas liquids the

this these is piece doesn't required thing in the we rigor of to or capital whole out. sheer to down discipline that big returns on if set pricing meet Another the where fact investing wells our and goes just

months it we XXXX just completions we back or company. will stopped before. slow and simply later, And the drilling resumed. across prices did stop. that We all when have down in We we're done and We collapse. whole Six pricing

informed don't capital, understand, and those we moves other we the against you we and But that every look with generate those so at day flow as we And as strip, flex at look in flow decisions around. around cash make trends you total decisions total strip we when cash the do consumed those prices.

So dynamic, it's I is portfolio a think that. a big very our agile we're piece and of very

Noel Parks

the about XX,XXX ask Virginia. foot to wanted I lateral And Great. plus had West you in

and pushing you did you said it be your of you'll the wondering you're just to any or to done forward I time in next bit quite going incremental how challenges anything them. you're out successfully, a you watch do I a length, just your that drilling lateral process, tweak struggled wondered if pretty with to Some have approach pretty was that realized try out peers straightforward that you have that has much - got if it long. I was been

William Way

Yes.

Let drill be designed purpose chose own we me seven we laterals to length rigs able anywhere with to - to drill them. and the we built start extended that

into as back we averaging laterals. this we helps on were began in saw them a then them place or the point to in build we people were at one opportunity our business mean, we I had built. drill feet the laterals. We help them then at purpose our and that longer So process shorter much and X,XXX time entered

We a drill we different look what for pinch a couple learn paper, that. take a the the we on on hear and and challenges, well mitigants industry. issues, from We And with very deal team tabletop, well a things. points, plan we others. of that integrated rigorously with do We to in and we absorb so

and longer. it, we're a torque or a and call and you're be create an and drag issue, - to torque at haven't if and guidelines. just torque we And to when We far, go we So able don't against looking if drag up we have budget drag model budget know what a as go work we an issue we it that. solved we

If so again We dry the learn can to well it of a extend see as total little the then walked we delivered. gas see up that longer and we extending. we see into risk, we manage We capabilities as can't well successfully the managed, those risk further. don't that we've We can the convince that. we issues by, through how between they total not people's different places, drill wet laterals. that two technical XX,XXX all our extend our for can simply we a worked sake So of equipment, risks we feet you people ourselves and gas. well advance will and the expect case that works and we And just we can and that understood have

pitfalls an I get for just a do where the place it you're incremental you you lateral, think believed longest you are more and get can approach. just if one all into and, possibly there at we reaching once, this is of

Noel Parks

just And do similar just out you expect AFE, be wells talked set need would be this budgeting, the science down you'd originally driving you about forth. to cost did we of - think meet for you or about what same clarify, less to on the and and would the so would forward, be those sort you going

William Way

more get and will well. up, and costs of bring forward as we in time, move the as So down and efficient go laterals, wells, we that's we those whole this proudly individual more, in on said beginning down and well. as time, on of we And drill cost managed more on budget, rigorously as will thing, against portfolio fee, the then these our and we'll

Noel Parks

Great. Thanks lot. a

William Way

bet. You

Operator

have Securities. for And we'll final Guggenheim ahead. go gentlemen, one Sneeden ladies Sean and time from of question Please

Sean Sneeden

me and in. morning for fitting good thanks Hi,

William Way

Sean. Hi,

Sean Sneeden

marketing, remind efforts the the that up like Clay, kind you your Could is it yourselves on NGL currently me still ramp there. scaling are of own or internal volumes Bill party up of you to you then of and could versus marketing third that sounded talked how kind much guys process? marketing plan about

Jason Kurtz

is I'll take this Sean, Jason. that question.

with multiple NGL to and while the same barrel NGL value and to is for, logic our sales commitments. portfolio one looking as our use minimize and that going and of we're facility, And done rail, of our the up where several markets. maximize the what to entered through place propane those to flexibility optionality try we've working into access taking with to volumes access them third that agents about were in in in put barrel, hype directly agreements time. going experienced the some we were we've members and we're and our we lock at trying time. a And facility done, the recently taken gas. strategic we're use we've sales at end truck we've long-term with FT we're have at of other hired And experienced where Right directly We're takeaway them building markets what to So create facilities we're well. processing now a team to XXX% access

barrels. So we when go they price where those sales direct to have ability the the on

Sean Sneeden

for perspective Hook guess on demand, Marcus talk I you then of reposition you in some basin, other longer-term think about that marketing like kind the And cause NGLs? stuff could the from helpful. about, built may new that That's marketing that, strategy as get the how of in you Okay. projects how

William Way

all area. because business connect So starting of they we I commitments right the of our contracts and to or ability ramp the think in we're that and a have frac a in to grid position made up there long-term up that facilities, unique now haven't we're to lot

Hook East over winter. and the have ability Mariner rail trucks do and well get into we the into as the then trucks, to So as sell Marcus access to ability to in

in of that forward to of as possible. moving now So set process the as create up much we're that such strategically we right portfolio value trying

Sean Sneeden

know want or go the I or strategic of kind view the Is change of Got about as neutrality flow of helpful. a around goal mentioned forward? talk And return return lastly been has in picture just then That's to thoughts XXXX. more Julian, there you guys achieve you formulaic that you of there? you any capital end your it. or to more Bill Can neutrality cash just free to just

Julian Bott

Yes. path we to We're think into I that mix. free you wanting Xx cash because We another the changed down way to so flow, the all. of put don't want leverage the sort of get think that to to the business. to get and run at right sustained we've that's continuing that's parameter

us flow, back change different we as you how plant cash it free the you obviously, to maximize because takes you get may that to forth, Xx, prices, that very keep of it's us sheet have long-term greatest balance to move to you build and get can gives but so, And to strength as value. and long sustain important it the ability the to the

when So in two returning mix, but something that's the other of capital, hitting it wouldn't comes detriment to those to capital you return the goals. that's

Sean Sneeden

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

Operator

closing gentlemen, question-and-answer to to like hand Way would this his conclude session. and Bill Ladies conference the back will our I for remarks.

William Way

we being thanks ahead say XXXX things on hallmark how our we commitment we've forged of everybody to Company, here that for that capture that delivered hope Company. really value that shareholders I and a we plan demonstrated first you made. got reposition just this determined Thank in to on the operate creation the of fact I've is, and morning. to that's this of greater And couple all, every for a and we

as driven and certainly out we've within financial flow the by the transition Company back defined time following cash are demonstrating Fayetteville. we table rigorous returns-focused We to laid of the as free by possible prudently discipline divestment as investment and

opportunities long-term We those and and is eye real creation with discipline to know evaluate that value say but gotten ideas for, there are creation go keen value when that we a with always is about be assuring rigor to us thinking you've to ideas it and long-term can deliverable, clarity, delivered. and forward that we

from reserve now focused resource, that to resource have the We - and building inventory converting our the right reserves. are the on we growing

that. at gas actions in greater the to of that are we and forth our we track Appalachia. and of have liquids we shift that that we we basin. back in will But this is every our you're a you of is investments we look the in record win making any look do it to do look greater with how always will cash otherwise how to flexibility safely win fully long-term and We for us a sure We the completing every we all the flow doing strong believe stewardship. remembering to at and you capabilities this and want it every we business continue preserve all funded year taking years, rigorous our supported because value. success, from with top-quartile and do revenue and that drive investments share that's we drive continue stewards we careful in and in create and pull we fully a in high-value and margin, environmental matter benchmark And doesn't drilling make day but vertical And have to budget have we that have unless we that coming that we're Throughout of shareholder differentiated to the integration, back. every returns, at funded and by - always have cost, the budget

want look We weekend for and hope great next worth concludes time to today. we're next that talking to us So of achievements about our forward I a you Thanks we thank you a joining have quarter's our together. call, lot.

Operator

Thank gentlemen, presentation. has time, conference today's this attending concluded. you Ladies and may At you, lines. sir. the your Thank you for disconnect

Southwestern Energy (SWN) 1 Mar 192018 Q4 Earnings call transcript