SWN - Earnings call transcript Q3 2019 | Southwestern Energy Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Southwestern Energy Third Quarter 2019 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. This call is being recorded.

to President over of like Southwestern Paige now Vice Energy's Investor will the to call Penchas, I Relations.

You may begin your call.

Paige Penchas

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

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

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

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

measures be on nearest to a use, GAAP measure release corresponding can non-GAAP reconciliation our any found For earnings we our site. in the available Web

the turn Way. to now call I'll Bill over

Bill Way

Paige. you, you Good today. Thank morning, us everybody. of We all joining appreciate

the of price value today's objectives disciplined commodity previous tough. of to our and Consistent one is be approach obvious creation. environment the state To company core in is rigorous our conversations, the to with

commodity our further price faces challenge already we we regarding today the to are. industry importance The We differentiates remaining taken play assure have in designed have of discussions and and to led any that resilient SWN. strengths environment the clear actions the

So, share like. resilience with you let looks me what

or next balance looming risk strongest the high-cost and of due liquidity the refinancing in challenge. maturity nothing leading one debt and sheets years, has SWN thus five profile with a material First, no

billion ratings and same. $X yesterday, have remained Moody's with credit company announcement facility, agencies and liquidity completed both substantial our a the rating have the have We now of after reviews

demonstrated gains improvements Second, record time outperformance These added sight efficiency and some of dramatically record we have are with today, a achievements future. and cost are clear being completions in lower forecast and Further from and continuously. not financial to in happening drilling execution. operational the and efficiency happen

pricing. acreage leading diversification our Third, own to in and and to Virginia not just enough using are this margins condensate condensate strategic we acreage highest and commodity great current reservoir basin the operations management captures area, It provides West highest our returns capabilities the is at in yield. maximize

increased XX,XXX We barrels last by production the to XX% alone have quarter in day. per our condensate

of and the at Marcellus has rich, threshold meet XXX company an dry strip. current XXX volume inventory which super high of locations, economic approximately core totaling wells Fourth, required our gas rich,

suggest. flow Fifth, ahead our upside the robust, our year’s cash opportunity future program the of cash rolling protect look to to to fundamentals the hedging program and flow that rolling we three-year continue is means while capture protect market to designed retaining nature

first As we $XX point, in a hedges settled of million million from $XXX was quarter. in the nine proof realized the realized cash in which months,

of and can’t. many facts things combine our of what you are operational When criteria mitigating the can controlling are quite the outperformance, all with We we we critical ongoing these compelling.

strategic team. made talented, quite efforts expert proud highly at execution every both detailed innovative, possible and by that is and All day on of and I'm team, committed our of everyone's this the

cash Appalachia successfully reinvest transition the million. to we assets portfolio sheet When neutrality XXXX, we flow in the asset Tier-X cash I by balance give monetized talk maintaining XXXX, our you return our strength. of of by I to while the two-year flow monetizing we of XXXX, In some end to about portion a plan flow want in in excess to context. a order generated committed cash repositioned Fayetteville, Before free to $XXX

the This operational the to to with we plan plan have remains of In on incremental improvements dramatically we as track words, sustainable we unlock to despite and plan, efficiency In the commodity better-than-expected in performance, subsequent XXXX. improved are will the other year for first decline continue make value. continue prices. we

to on let targets, specific it's some how While about color we capital be XXXX still early are brief give you allocation. too on me thinking definitive

our of of million Fayetteville on pricing limited flow. be year we cash second strip lower a 'XX up budget we XXXX monetized with expect to Consistent will this have front-loaded cash plan, at to plans, investment at Should plus to a strip reduced flow capital set the XXXX program. time our transition capital I remaining based For we the $XXX plan, our we set the would in as years, in program than be time well. prior the the set expect

our I adjust to temporarily, a implement the use discipline will program the prices we instead of But, from the know the several or would plan, flow, we last were would the if purchase purposes. where capital beyond years. budget, set for that over of reduction, clear, that unchanged. dictate just other increase activity done we Once have you've last to including have like shares, XXXX. around accordingly will to And set would to we this plan, the come to curve lower over cash remains not for allocation the expect be forward investment capital the years if expect down repeat, debt be change, goes corporate for capital begin curve forward to evaluate we excess we several options the and If increase

to I achievements couple over for mention ESG a company. important hand water-related to of I it Before Clay, want the

neutral. Southwestern by Energy environment continues the its commitment to being freshwater

In freshwater fact, since we've XXXX. been neutral

freshwater billion restore of you that we of to freshwater each at the over we've work the back with that through excess return conservation we amount returning operations, use For share to to reached gallons least environment that an delighted in live our we freshwater of of of milestone gallon projects environment where I'm habitats. this aquatic and important streams time. XX and in

of which continued for the X.X piped water our all economics company's all West of do. targets implementation while Pennsylvania improving the addition, In completions off and Therefore, to of freshwater million roadways our Virginia, of well removed through have environment strategy, it's truckloads and water we extensive the the delivery value water network, pipe SWN wells. of right in core thing through the is the

the call to detail. turn will who highlights in discuss Clay, now I'll operational more over

Clay Carrell

morning, Thanks, good everyone. Bill, and

We high well guidance to reduce and had outperformance of continuing the delivering at production another end quarter of by costs.

enhance they improve and ways bar embraced and continuous lower to up improvement The costs, keep quarter-over-quarter, finding our well as performance, Our teams keep that our expanding efficiencies. performance has going culture organization approach. keeps

BCFE, focus activity XX% liquids. driven both condensate in XXX super the of growth was improvements quarter capital the Appalachia, production for our by is The optimization. highest. in our our area capital A production base was yield continued including production has and primary where program Total rich performance Southwest been of

lower maximized approximately XX,XXX XQ, XX% at periods the ethane compared our quarterly volumes. the we liquids increased was a prior value certain quarter the barrels result, condensate quarter year barrels our above per a by by NGL last to condensate increased Similar day, during to Driven end day. XX% production compared of the production, which in rejecting high quarter increased guidance. production total As year to the XX,XXX third slightly to to resulting

third three and fleets our the activity delivered In frac reduction. two averaged as we quarter, on approximately rigs planned we drilling

$X.XX activity We are quarter quarter, will annual billion be two frac $XXX that will million and the the such the rig fourth currently in one capital total utilizing drilling and invested guidance. fleets. exceed capital We not managed

to the continued quarter well reduce sales. to We wells costs average in on

With our will the of the beat or from $XXX our stages annual wells which lateral reduction a sales already to completion, late XX% online we majority of XXXX. the per of foot, in cost represented year for target

lateral laterals, $XXX averaged feet. from per cost of had direct and we of year and third XX,XXX operational the cost In water, are average sand, improvements. benefits they and length continuation length average we represent longer quarter, have lateral foot this best the an execution the realizing piped foot are with the per average source a Both the lateral we

times by installations. ongoing facility reducing The our operational and cycle completions drilling are driven improvements team's on in success

For efficiency days. example, completions on by well record company each, and $XXX,XXX a a reduced reduced This complete we time four quarter, per averaging improvement day four-well stages total pad. by the new XX set XX to in cost wells wells the on these the

capital. year. we end Year-to-date, which XX% year are efficiency sales averaging efficiency we will to improving be of per improvements and at increasing estimate now we is wells high wells full economics, day, without cost improvement are The greater sales to X.X an coupled the and bringing of last guidance with versus sooner overall our completion than stages

Mcfe was LOE anticipated completion mix and quarter Third $X.XX our an given as timing. well

guidance Mcfe within $X.XX range lower $X.XX of for be to expect We our to the revised year. per

equivalent of well the a increase rate condensate and per online, XX% we Devonian pad well. equivalent wells driven improved acreage, rich XX-day rate XX X laterals. with the acreage a in XX longer per production. well over average XXX representing well of performance brought and the per XXXX Of equivalent peak of quarter XX prior and driven X Upper had the and of XX-day per also rich day feet feet rate rich cubic in XX-day In or super and third by days were XXX XX online barrels XXX% million XX the a feet company's day wells, increase cubic least Southwest million laterals. In at quarter delineation compared represents The four day Appalachia, located cubic well more longer average combined performance had an for of X an year rich per day located rate to an area million equivalent the of by super average

we that at the mentioned In cubic Marcellus per had year day quarter wells. of wells inline had cubic of average ago estimates quarter. which which from an The wells day gas previous lower rate consistent upper six Marcellus XX The call. feet of of increase delineation lower the tests. three with and is a Nine XX XX Marcellus wells wells Marcellus and Marcellus Marcellus were represents upper least wells for offset our an brought XX-day wells rate XX online million three per X Northeast average our X in with and XX XX% Appalachia, XX upper lower feet online, consisting dry wells days I million XX-day

an see production compression benefit In day began experienced from Northeast installations. cubic uplift installations. We pad per XX from of addition, we our the the feet Appalachia, initial million gross production to XX

continue a base the asset. see a We to this program shallowing as more And we'll decline of the result. expect across of

super the We continue online standalone area. our in mentioned which Devonian earlier, we performance offset rich effort the in inline our initial The as to with progress Appalachia rich acreage. well Southwest reserves was well in Upper Marcellus our resource first was brought to super fourth test wells

in we test Appalachia, three pilot that included brought evaluate earlier our and evaluate well performance. third online to the two continue test production The in in subsequently combined wells quarter. lower we are and larger came the early to of continuing Also that upper interval were Bradford Northeast The counties. expect as Marcellus a consistent forecasts to is I across mentioned Marcellus acreage wells and continue we this Susquehanna the with performance online portion our to

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

Julian Bott

everyone. Clay, good morning, you, and Thank

price for last environment. million match income quarter exceeded last each and reported $X.XX share again $XX this As operational of despite challenging targets we million was to our or $XX or per financial compared quarter from headwinds quarter. Adjusted the net night, the once

$XXX XXXX. for Adjusted in which is QX than higher was million EBITDA X%

flat including costs second and Our price transportation Mcfe, weighted quarter. derivatives essentially $X.XX was realized average per

and million Our commodity of production in the XX settlements increased offset entirely liquids prices. impact almost hedge decreased

from differential for to the quarter in able natural transportation our as second $X.XX portfolio. was to benefit low we compared cost optimizing Our gas the were $X.XX quarter proactively

our quarter, diverse to to several basin, flow markets. pipeline the were our we thanks able During that assure there of to production nature portfolio, but affected continual were Appalachia key of the outages transportation our

risk price a As hedging mitigate we utilize said, flow. program protect cash Bill and three-year to

by we roughly quarter, strike periods price swaps hedges hedged Of of future to the as below in XXX $X.XX. downside total and limiting detailed on of price natural XX-Q. fixed During gas our XX% for the risk average in for upside Bcf slightly hedged while continued XX% with an XXXX layer additional allowing collars the roughly

which expense. On quarter includes the compensation our per impact decreased mark-to-market were cost Mcfe, of expenses third G&A side, $X.XX stock-based the

year. last the a to was XX I transaction last one-time Excluding charge small the related headquarters that million quarter, discussed quarter G&A third compared down to

balance a key priority our remains of sheet and differentiator. Strength a

EBITDA to debt net reported X.Xx we of excluding quarter, this For Fayetteville.

The discount X.XX% As in notes opportunistically at maturity. interest an by on XX% previously notes average million we asset and notes sales. had funded senior quarter announced, buyback non-core, million during further the non-producing over principally weighted and average times by our XX the interest savings of strengthened of repurchasing the a of rate XX senior results remaining repurchase

Our last year-to-date to expense year. compared interest is $XX down million

We to XXXX. by their and also banks credit with the completed one announced year our of extended redetermination to the change semi-annual facility that base borrowing April our no maturity

are We our enviable maturities bond with XXX in profile, an XXXX. with only of maturity position debt until million

delivering identify capital continue what focused to our in return managing recent end improvements further remain to flow broadly of plans. following That we efficiencies, drive to of remarks. We our focusing continual the control, we a and operational teams XXXX prices. strategy, and the free even confident neutrality at capture can costs the our concludes by remain on macro prepared to environment By downwards, on strip hedging challenging cash the

So open line Anita, for you questions. could the perhaps

Operator

you. Thank

will question-and-answer We the The begin session. question Please now Meade today with Rice. from Johnson comes ahead. first go Charles Instructions] [Operator

Charles Meade

team appreciate CapEx, make 'XX your your it right. I I you're but I in wonder to there. prepared Good going if and your the Bill just got through morning, comments, could I sure approach whole

I So, million. -- cash going capital is let's look you plus And what you going June said XXX cash also let's to 'XX in you're February is down, the than you is cash if I strip to that you flow set going something stay in is, million the what time at guess and the it when look at to X, X, say when strip flow? I'm XXX -- right? can you're then your heard you if at think to about budget, your the flow do at what is so I the that say at curious time strip set budget are the less decrement at goes in that, within budget the

Bill Way

your Yes. for you Thank question. Yes.

parts said that accurate. and because for as time is that to The well. At from pretty we plus important. But, we make proceeds the the first up you we of million flow multiple intact $XXX Cash set of economics budget, curve for what at the the budget of the up off that, Fayetteville years our the are curve. we sure projects part look flow or to two is cash want forward set

week, and As exceed that of or month generation that through what go terms to looks there stack the of look Then, not and we million capital strip we risk like approval cash rock from will model, begin economic we'll cash do committee, we then flow at whatever off is. will the up our to and time get plus projects so dropping. through and meets the past to your June peeling the flow funded the back trend any every the in strips other which sees we month XXX

a we doing had that's years. that for been several practice And

a time one one it the -- period circle drilling the seeing remain these week in the again, longer will a one bit adjusted. jump winter And and It's or get and by it projects decision. say, most of even doesn't but go quarter, make a matches the term, then back or to and goes always u-red we're month strip important is or projects pricing prices back surges of year set. but something, you and a month of what them on it we in, one have when the subsequent where add those up, that list, economics then budget robust, the you over that's not If we program

Charles Meade

and least the One there's for three then clarity. mix I wonder ask, I on the third, of interesting, Bill. of that little helpful of is is maybe And on be is you my at he shift, follow-up, because are this which yield is high bit has guys two a in could guides. maybe just which be a things actual made number can questions that the beat just the and you -- getting a but there's your And to it. of be down of I a it. end volumes your the the terms Wells, it Thank quarter. that of most Clay, could imagine condensate is of there's your planning. lot wells there's in and but, That could I you're more for near the drill would driving timing be near And going wells probably wells productivity into condensate earlier some the were you, I think if could more addressed that higher than

So, to that of into be are, give if the we beat on continue something or it could for how drivers should looking us going you a behind that temporary what sense they're condensate, and 'XX.

Bill Way

I'll to it me, let make So and hand a couple Clay. comments

First of super look component than acreages out number and has our all, in condensate to one. if area, acreage the contains so gas that our area leading basin, more other rich the rich super across there, our any you condensate is a

we do lot two, yield Number a of management.

So, about it's all economics.

so, greatest be product, of the wells to happens we the flow most condensate. valuable create manage to And which those yield

And has to that. increase that's back generating condensate yield, additional some gas the value and we for those on further the so, on to as Clay the details what's talk side throttle company, about

Clay Carrell

Yes.

of and the in our in know some XQ focusing those barrel our from XQ, majority all our with number the have the our we that As production in wells. Bill of as and continuing materials talked the had the of area, condensate we're the our online benefit how we in come landing into in condensate to completing you can previous million mentioned, where subsurface plan so see production from wells the we the that per optimization the performance and largest and been coming Bill facility and wells we're highest in Ohio the yields, where and XXX-plus maximizing Brooke it through wells wells we've IR what XQ have of calls, the we're about, County design, and sales max timing And areas. benefit knowledge

with where pleased remaining set area that we we're So, continue in and a there. the condensate focus of really healthy the drilling in inventory to can have we growth

Charles Meade

the Thank color. you for

Clay Carrell

Thank you.

Operator

Please from Stanley. comes Drew go with Morgan question next The Venker ahead.

Drew Venker

everyone. Hi,

did So, it's the us little wanted and whether Upper Upper Upper much the on it’s Devonian give you that test different if dig in to on more reservoirs you well Upper the really a results, offsets, realize Devonian could different Marcellus, there's results. the well. to great things different just a relative bit and in similarly if I the Marcellus as some and doing then you're and on I color

Clay Carrell

And Certainly. production area This upper order previous economic Devonian in our is you upper the of as we adjusted and Clay. This and the in rich Marcellus. testing maximize test the completion benefit to in know, the the our the of of rich. Devonian designs year, we took combined is from super our testing during what in the first learned both the

up ended the we design which similar a economics seeing completion and reduced we're performance. with So, helped

up, progress combined and but price we're on have to in ways elevating current the we environment. So, keep commodity still think that it's pushing development some to we early go continuing to make the

Bill Way

looks reduction designs is or of creation cost value the any that. at reduction involved in completion always of Any that

costs impair wells to managed in and value, how fact. it's great a costs reduce highlight and these that reduce don't we So, to they've example

Clay Carrell

what testing we're testing upgraded line results of as latest the And operators we the wells by some so the designs, been performance are that we seen pleased upper in the that this with upper XXXX. those And continue zones. we've on latest would have completion Marcellus that move been performance we designs. and our plans really be, year thought with to then, into other And generation improved the production have Marcellus like landing

Drew Venker

Thanks color. for that

lower seen upper, follow-up because pressure. Do to part in it performance Devonian, you reduced that's Marcellus, subsequent and think prior and operators just maybe was reduced So, the had thus Devonian the of upper upper because I on relative a to drawn it's the the Marcellus had lot drilling acreage. Devonian drilling upper maybe the your been the think operators partly higher just past to Is reservoir? in maybe more it, pressure on drilling or productive pressure productivity sorry, on I'm of

Clay Carrell

optimize the the Yes. of zones Devonian the of upper interaction the discussions limit to co-development of maximize two the well between the and our kind how economics from around We're it's aware Marcellus. with minds, you In co-development the the past the lower there. completions do

completions, progression back interference, yet results, are we exist on, the that's that on still production of that off there, the working economics. or better Because like the which we so interference limiting Bill And we're the that the when would getting enhance mentioned. can same but

Drew Venker

lot a color Thanks Okay. the Clay. for

-- Just point. drilling have follow-up Marcellus upper you on inventory identified for you one this upper locations identified any last and Do these your of in Devonian? either

Clay Carrell

our future playground those areas. of in inventory both full definitely of in locations drilling have We two locations, of drilling

plans. XXXX finalized not have We

we'll go so sure expect that mentioned would the Marcellus plans. the I that And earlier, upper as will forward. into XXXX in be factor But for the I

Drew Venker

color Great. Thanks for guys. the

Operator

Scotia The with Howard from question Holly comes Weil. Please ahead. go Stewart

Holly Stewart

morning, and Paige. Good gentlemen,

level you and profile. you talk you wondering, with a starting giving prepared of maybe this then of the Do we've provide operational also in Was off being basin? of Bill, given take if in position your might kind comments, a some in insights make financial, a about Just here think strategic what question merger and to high basins equals. other maybe sense opportunities, further your could with in maturity Appalachian advantage seen

Bill Way

two for assets and about talking that expansion inorganic. you, look good in shareholders. to our and that or thank Holly, with at and you. value creating growth beyond along ways, the morning assets organic look we the lines And constantly We Well, our at you're

intent economic test The reserves We've of budget a the we've drilling those resource multiple into mentioned converting opportunities to of and the benches. XX we've that. got in little shareholder base. with expand a of Tcf As already got owns into bit, helps the across reserves that resource basin all kind science Appalachian

sure a there's on that that making getting value. all so we're And focus

company's We At the where And accretive the mergers. further that those or and to we expand there's can methodology to a of for of then the opportunities in combinations we we ability as create long just same accretive, value significant opportunities can of at added our we time. clear both look believe to the study also of couple ought including longer the create all footprint efficiency levels of the line. look as expand to where can't greater at time, on looking adjacent expand those be value, acreage space, ability that real editions and for in a we it's find thinking laterals focus drilling that opportunities lot through but screening playroom including commercial through with beyond that bolt-on a advance around negotiations

First do. that to commitments sheet generate of then balance is accretive have financial and a of to industry, scale, all, in then, remain it those think and things about, the real those based returns environments be to pricing on will we basis, inventory opportunities. those may economics commodity a have a you full things the all on number in margin and we us line, ourselves opportunities strong, we And to and synergies we'll based, explore can must of critical And then and make continue opportunity if capital, it. got around when real sheet accretive or sense explore make assure about regulatory environments makes materiality, capture to resiliency forms are In metrics, and synergies, delivered. cycle synergy balance sense

prefer Fayetteville, its we And work. generation continue just We'd company sold scale opportunities we the look you of for the will told it's the expand the on to that. I capability, through economic details, we said evaluate now. keep we'll to and we ourselves front, comment those and up as not to scope When world, to how

Holly Stewart

we this, just repurchases quarter. Understood. then Julian think do Good debt as repo? on proceed then, into quarter and the for on we fourth Julian, how into color. the head about in kind And, the of maybe XXXX one debt further

Julian Bott

Yes. it to opportunity I done trading mean, is made on our There and it. goals. ways consider where to the any some was evaluating and assets of always balance the lot look focused like where obviously the opportunities on a investments find we it appropriate We're and make. an sheet. market repurchases. we We've We'd continually Holly, with improve was to and to to debt seems are non-core based make repurchases an some always consistent with that step might along it other sales so we get

I given and But So, do, know, the would what we a business. is give maintaining think are, to clear color the as I you can't principles any time. which our at sheet again, you what progressing balance

Holly Stewart

Great. Thanks guys.

Operator

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

Arun Jayaram

you've morning. been Yes. off Good I that able reductions to generate. wanted to start first on the costs well

you for if foot in costs. do more with much you here, was on could were service are, can commentary per we the you quarter. think the just you provide thoughts cost wondering well how thoughts how lateral go you vertically in push any I And some maybe integrated, at I front? thoughts on know year? partially Bill, could this If particularly sustaining CapEx $XXX think I requirements well at more on we on XXX or lower XXXX. come number costs some but do think for on these next

Clay Carrell

discussion. start the cost will I on reduction Arun,

with course sourcing from seen over coupled taken improvements can find lateral. now, are keep and our those then benefited all we being dramatically is right example cost of And an cost efficiency system. longer the the us figuring we the and environment where the sand water you've gains in results, to continue self how out teams we As of on the more efficient over

when spud at per the under to of look wells you sales XXX, online in of full close where number's only lateral at XXX coming cost foot. the that all XX is what will pull that continuing. the we're we'll wells then saying numbers, beat year look be you we're reporting XXXX down the that when numbers and in were structure 'XX, spud out that to So, the And are and

directionally, then gains realized XXXX that to we're budget raising we've more. already go the to all for So, efficiency in the and bar factoring going find

Arun Jayaram

some CapEx requirements. Got on just and you, Clay your maybe thoughts sustaining

required went If 'XX CapEx what you to production theoretically keep to a flat?

Bill Way

part Yes. This where I reinforce $XXX call every million. the CapEx the is million cost is I'll at, that to Again, Bill. drilling $XXX only Clay this make something look piece company improvements. When is it we of said. every It's as can we not maintenance of

programs kind of any that even off exclusively are [indiscernible]. $XXX One sustainable And is improvements improvements to of more million and all exciting, built is form million $XXX of next in the great, the years costs. are into

Arun Jayaram

Right.

D&C the that's So component.

Bill Way

right. That's

Arun Jayaram

wondering Okay. if production My XX some that was done. million follow-up, could shed It the you by like work boost light help compression that a on day. you've sounded more I

about talk mean a sugar from you on thoughts compression go get high a or sustainable do this, is could a forward this mean, I basis? and on this Just what

Clay Carrell

number So there at production that the flush pressures because benefit, look line modeled is decline the twenties decline, When at those decline to full shallows upper how at. lowering help we're it's improve going the to -- to have pads. base where able down us around see we've a already that mid twenties been the but benefit we an you're we our initial we the as a the XX% base at the trends look and from

Bill Way

Yes.

Let this. me on side a put top

way out things of the to of the trying of do is One reservoir. we're get

transmission or this of gathering quite lot wells at different areas a doing across and it we and the to at perform choice and a have the acreage well continues that got location have level We system. robust of pad pressures. pads either entire higher Well, doing

maintain areas back It's Very in individual efficient we the gathering on practice in started the well pressure that the we pads target more where higher but into we the and can a down residue pressures draw successful. So, Fayetteville. system.

You the We the have reservoir out anything it's time. is, from goal And and pipe same production performance the continue economic way to sustained -- base The the it. and allow are of all perform. do any optimizing reservoir great to midstream of thing projects. whether restrictions same improvements or kind with at get looking that else, of

the of up these they list the because capital generate. And of come our about life. top talk it to stems You the allocation, return to

Arun Jayaram

Yes.

yet into the production Bill, one Any estimates quarter? on it the moving that did in maybe things for housekeeping or some question, just conservatism beat the did thoughts the you year just full consensus a third reflect Just kept you quarter same.

Clay Carrell

overall going to fourth volumes. that which value focus forward occur Arun, on our at there certain could aspect we've continue some XQ, the through are the periods to possibility effect the as XQ of done rejection quarter, production move we like the in added and ethane on of that Yes. equivalent we an we as has move is

day-to-day to it some to going there's from variables production, value little maximize looking So, the the that we're keep but bit. a could swing

Arun Jayaram

Fair Clay a lot, enough. Thanks

Operator

Please The go with next from Harrison ahead. Simmons Kashy Energy. question comes

Kashy Harrison

taking everyone and you my for morning thank Good questions.

drilled, the lower? the but were that So, improvements What and completed CapEx the for marked efficiency it be that XX% costs the adjusted activity, would number guess guess or the et on capital if just rough sales, that how I fine. the budget and edge guesstimates in not would experienced would easy QX. you've turned be would XXXX question Julian, QX. to XXXX? current answer, change of I took be my one be we know in it just for are we to surrounds Just Like Clay cetera, any What wells discussing. first and might of And great. pace This a seen an leading would for question it's

Clay Carrell

maybe about in from you point, come that cost account impact a of X% higher the into if the the that -- adjustment online structure wells 'XX. to take a came in 'XX think have I guess compared I starting least when at solely

Kashy Harrison

you Okay. really the might costs, think larger as here low do field in efficiency this sounds you oil form. across benefits do change potential industry? advantage it be further entire generating the then to of and positive seen monetizing reduce services of there then, look a just And helpful. And and that's service segment more like taking a Permian it's We've pricing a the operator of rate capital recently

service So, monetizing I if business. wondering on perhaps was thought there's just the process a

Bill Way

Yes.

infrastructure at things got take of got our to of it's our any those think water of across I a services to you've it's what look side, you've is, the they really the business, kinds or look whether any at parts value whether could We these all capital the the what do time. we around. of we that flexibility this provide create moving it the company. doing create for ourselves analysis in the in by versus take And do outside. Rigorous we the value businesses

we it. it to all And If way, look balance valuable. economics. drives you if the will that to what you've or things back these might sense it be do we that commitments to that's way, to sense take do have makes one want how come that's with commitments you at multiples on get other it do another And any If of so got and on other these of to of project drilling to that. makes

point that's have is is we and we're economic not, how and lot does if economic making is all, supposed of an if -- the that at that. pricing, that doing economic sure it you strip we route to get look they that then look that the that route we all objective a whatever And questions value at of from route view, an the alternative that is have delivering to to asked,

Kashy Harrison

belief at your question, take I initial that If just prices, price thought investing the great segue price last eventually using are a comment care to I the for in with with just the sneak process will And more we pretty was you. if was we I generating the implied wondering NGL bad. expenses metric just to land included at of sufficient itself natural correct projects one could look but forward closer is curious, your the these using you And that corporate million look countercyclical was the proceeds, they're to of gas, and the strip $XXX preferred XXX the Fayetteville in. XXXX Got returns, returns budget. from will or the

Bill Way

we put whether projects in cash already those against the we invest to individual take plan as which to take Okay. about of capital, it the going project look it's we're in capital invest was your fact whatever table, expenses, supported question, When a economics. in, operating we've but whatever, on the case before rank the talked to there's at and or we each proceeds, by every and that flow

up I'm done in strip off we them the all they order don't then in. doesn't fully current up differentials know all through economic And load we current with so the and the burdened. was costs And and might the be which carve Then that three again, return, they if add projected period. with year generate that go them We at we in return required about. it's you work. package it. relook back at rooted projects, And a And speak

to years. drill if forward a the of want going So, you look to three curve kind well, at for you're

the So, bulk the And year to in over of one that's three from and over. that where comes that period. we return run

because of we stack And basis because is or how off areas said if if in the we they're and and you invest. as those a that we end higher we the will that then, adjust change there price of peel then that's earlier, lower commodity work, a bottom or any economics where prioritized we

way make, value the investment It's earn generating crystal clear wells, of got we to shareholders. to that And we integration, for vertical the drilling whether it's any returns creating its on so run company. investment to it's and be how kind

Kashy Harrison

you questions. Thank for my you. Got taking

Bill Way

Thank you.

Operator

question comes Parks with from Palmer. Coker ahead. The Noel & next Please go

Noel Parks

morning. Good

always on because length. was lateral How Where's a drilled? of lateral out us region you this length far sort by your your give at average wondering of have I Just the does point things, longest an couple now. update release

Clay Carrell

an Yes. foot West in Virginia We've completed got Pennsylvania. and XX,XXX in foot successfully lateral XX,XXX

Noel Parks

I with that process size length. in accumulating nearing returns the data And Any still diminishing out that you're great. that Okay, is the of know it. signs for going

Clay Carrell

those, standpoint, that's benefit the then, more room is probably there's gave There's set far you we not that looking longer for data current laterals a laterals. to but longest flip on flops. well there, the technology. out continuing relative to nearing as so one watch those from of mechanical get those, big is far. little a with everything a probably good so pretty And we're performance go to I continue a From but one

XX,XXX. Pennsylvania. XX,XXX is Pennsylvania is Appalachia Southwest

Noel Parks

in renegotiate just off point, opportunities this I'm And maybe where to great. in thinking environment? point. what to the at infrastructure general this in vintage transportation this rolling sort about oldest you is have way thinking you terms And agreements. anything might Okay, there agreements At the more place or on of about have

Bill Way

cetera. anything I if the that it built West have else. is and of us very is the built contracts for the where color way the that of It's time anywhere that and or to company. to investing, Virginia lot the right-sized flexibility for that the we that below Pennsylvania, asset say in capacity it's I'll portfolio take part And our built. that's necessary. of this of would Jason highly pace really portfolio add can company. was market It some appropriately flexible gives at well in for a newest oldest our an being et today, of long-term priced we have All flexible transportation is market are a operating

development the we a in even and discount to we're managed around able So, at how had a that and you a that time haven't transportation to that and future we lot at program this that into add flexibility [indiscernible]. through point continue overcome don't purchase as proof have transportation a we've is moderate enables And we growing of that it the for that move is, need. to strategy

Noel Parks

Great. Thanks a lot.

Operator

Biju next ahead. comes Please with The from question go Susquehanna. Perincheril

Biju Perincheril

Hi. Good question. Thanks for morning. taking my

do upward have on your systems excellence it be that? going works the like So, offset that's mix or and gathering more something projects will to the towards in that's wondering put some sounds to well you pressure operating if shifting you going or area else these rich are super

Clay Carrell

Yes.

think, me I just let front of check in it. comment one the

rich liquids whatever majority portions in years, -- we've of West Pennsylvania. want it. super drive running the rich the to you two-thirds, the in one-third-ish the and Virginia, activities couple area, rich been the a Commodity that. prices smaller last super of area in In of For the activity call

get bit in that curves, little because of be bounces if a three, from So, one, and towards But, biased right it place and -- the now, towards and as that you that that forward all look value we three two condensate liquid even we put the other have the or four or investment. you'll five in back one you and forth. rigs them the of and in

look we constantly rates. that or can the that. keep pie expand get renegotiate So, agreements at can where or, doing we we'll so ways to we And better

has impact lines the Our is greater. the on higher revenues, the but but it it great part a LOE, have is may which higher means that of LOE, margin

And to take those. so, we're happy

Biju Perincheril

rest back going in Devonian the the test move you actually was fault perhaps and sounded like area, either Devonian of the the into it's the the when And rich saw of to the between of upper you geology interaction window, over -- minimizing the upper have completing if being simply rich the with anything you intensity super some on zones makes my And changing Marseilles. definitely. a the previous to that Yes, independent test, or it the completions. two sort

Clay Carrell

Yes.

A the super XXX to a overall economics we're area, apart rich XXX XXX bit to then economically. and the super the little elevate seeing design So, foot apart, a intervals but two but of XXX communication. in completion co-production dealing It's to a we're two project thicker are it the dual further rich maximizing in adds completion, foot little matter with intervals. between so that of the rich, the a value

Biju Perincheril

Got it.

have ruling So, viable the upper Devonian that you as in not out still zone? could a area rich you're

Clay Carrell

not to we out going us. to It's anywhere. from I is for the an in like discussion made Yes, continuing early and rich continue rich it progress adjust to opportunity really ruling designs super think I'm completion be to the the

Biju Perincheril

Got it. helpful. you. It's Thank

Operator

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

Jeffrey Campbell

rich bar? the did higher super well morning Good where Was done test. way, Devonian and the to Let's results? so, that condensate test rich if cut I'm high the up the at that put upper in back upper going Marcellus this show on region super the offsets and the quarter. Devonian to initial it in congratulations of the

Clay Carrell

Yes, Wells. Devonian. of all condensate All most part Marcellus we it and doing. super of the that's upper well had below super testing two rich There's exact this lower upper the definitely, Wells that the brought on And the which test. is we're characteristics and rich our right Devonian, how plan the in we acreage, rich lower Marcella liquids first same

Jeffrey Campbell

asking Okay, And could worth gas is to end where I is, miss, a and the enough might cash that don't strip neutrality flow year be great. XXXX there have leak good ask think downer question, I color. nat it's that I a Bill, XXXX. the want That's XXXX low but scenario achieving into to

Julian Bott

we would what indeed. I plan you in Yes. that accomplish it where not and upon a there's obviously just, cases here, be to mean it's I get mean all Julian cash Jeff, mean, works you invest to this environment, flow, from dependent and but the I goal. clearly able there's

Bill Way

that have with the preference, has And And for but between and rigorous not shareholder. some of a will the our It's think in and growth that's question price answer the is, duty the were activity. real We're where laid value XXXX it this the or the to the When condensate commodities and our the will Pennsylvania production you it reaches fortunate did middle to about Virginia clear. creation. production activity high about which that have that answer And a value We what, not asking and price cannot and two. follow drilling? be very to in I acreage again. we the stop in affect answer. stop some we of reduce same question or economic it's protect on in acreage flow reason we'll be might combination in is create is company's where the do the the is, you'll richest me meet a West there it's threshold, for we And is point terrific

our question, so but, yes, to but economic that And robust stay

Jeffrey Campbell

really that's now Well, Right. helpful.

that you is a So it's do I but mean, rigid the not goal. goal, point a have

Bill Way

always and with to make being returns eye able going on You're conditions fundamental. to to an respond

Jeffrey Campbell

it. Thank you. Great. Appreciate Okay.

Operator

ahead. Harold The next go with from RBC. Please question comes Scott

Scott Harold

I dropped so on or But what question a of to the line reask hear follow Is first pre-cash you thanks. certain at? is with size efficiency the Yes, a if free I a here, level well hit I'm I've And flow? cash twenties. of need here. to is do looking is, full pre-prior full, you the a should to base a set of that, what cost? question. few the to you we it going times off production by questions the that achieve of hit, a Sustainable be capital neutrality Is year apologize been need of to production what didn't it level sort end know, your flow but get

Clay Carrell

of operational a Yes. industry the hit we goal all we've that is been mean, continue really these I despite efficiency And changed. the to combination And Scott, which mean, say things, have the to the I able conditions all lot certainly can why fact it's a the capital of what's talked contributing about of driving productivity gains lowering call, the the on we've frankly, had, to that. cost gains, we've that structure. our that's things And it. this

Scott Harold

that? can like base like I you is flow So, Where pre more ask production if of of sort that that cash break directly, level? sort is is level that feel what even

Clay Carrell

going It's EBITDA, different on it's there's commodity going to got, mean off I really I cash it's different levels. production right? different mean to mean prices it's, commodity not, a spit depend prices, are at level. flow, I not

everything all to that. cost and the chasing production together with So it, we're combined number a there's not deliver It's structure else.

So…

Scott Harold

talking how in those that? CapEx. have out on on you compression it, that big know Is have y'all well like could what kind I improvements pads reducing how their And of that? much, been impact your roll Okay. how, mean is could to, you then, about maintenance that reaching

Bill Way

impact the and handle is Yes, further the base forth. declines mean has helps has so resilience and that that I it just the

it mean, rolling I as far out, As Clay.

Clay Carrell

Yes.

we then, in into in going plans of Greenwich the have And we majority continuation XXXX So, Bradford doing we're finalizing our our in area are is it Pennsylvania, work the that in XXXX. of County. for

Scott Harold

like like did can what X% be? a by impact how reduce maintenance cap? on it Like big have an or And that Okay. Does it that XX%?

Bill Way

Yes.

I things. it's again, think of this combination

we have improved a come or based shallowing to higher little have bit now, We Right decline. exit of of year. rate we the view the end a as

Yes. we're kind of $XXX those million of So, type in number. all that things, balancing

all different those think That's get like I multiple a campus you'll we the that model, tweak question in a you've your at just company. and look run how variables. off, of got levers can answer. We you

prices basis You and can can have can even commodity commodity the price. It negate be lower lower awesome.

got just then, there. for one of go them You every And a into That produces for cost. them to path we glide for model. and the from feed investment at look revenue,

and And we if the have neutral to so we're and free as that's we be at a look very clear. can We it right really just holistically. that model cash flow you for so stop, thing today not but do

Scott Harold

Thanks. Understood. Okay.

Operator

Due to to concludes our conference for now over to the time remarks. session. constraints, any closing like would question-and-answer I turn back this Way Bill

Bill Way

got or commodity out of and way it we've playing the kind the other a kind that we year's to a today as this several an -- face the thesis ensure term. that in read company This get. fundamentally the running over investment impacts the environment industry this well We're to positioned and years with the last compelling might of long over business volatile environment any as in

we it's the quality, Energy that organization to actions taken we've intentional think after the and continued execute they quality to example, mindset of divestitures, in make gotten and reshape and over whether from liquids for innovate; people talented and performance share across of to improve acreage with hope the strong portfolio I advance a that proven a order quarter. the teams to prove the we've resilient you time today. very Appalachia whether lot out continue our we've the Southwestern diversification who The strategic earnings, to it's through compensate continue

thank your a weekend. great questions. your you And we Thank you So, interest. will have for for you

Operator

Southwestern the call. earnings Energy concludes This XQ

You may now disconnect.

Southwestern Energy (SWN) 25 Oct 192019 Q3 Earnings call transcript