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NEWS RELEASE



SOUTHWESTERN ENERGY ANNOUNCES THIRD QUARTER 2018 RESULTS



Operational outperformance captures increasing value from high quality liquids portfolio



Spring, Texas – October 25, 2018...Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the quarter ended September 30, 2018. Unless noted, results are compared to the third quarter of 2017.



Highlights

·

Generated positive net cash flow after capital investment; full year capital guidance unchanged

·

Reported net cash provided by operating activities of $307 million and net cash flow of $355 million, 45% and 43% higher, respectively

·

Produced 252 Bcfe, including a 22% increase in Appalachia to 187 Bcfe

·

Achieved record liquids production of 67.1 MBbls per day including 56.3 MBbls per day of NGLs and 10.8 MBbls per day of oil

·

Captured $2.51 per Mcfe weighted average realized price, excluding hedges, with a 37% increase in Appalachia to $2.63 per Mcfe

·

Drilled two record laterals of 15,559 feet in West Virginia and 16,272 feet in Pennsylvania

·

Initiated share repurchase program, spending $25 million for 4.8 million shares

·

Credit facility confirmed at $2.0 billion after Fayetteville sale

·

Reported net loss attributable to common stock of $29 million, or $0.05 per diluted share, and adjusted net income attributable to common stock of $146 million, or $0.25 per diluted share



Bill Way, President and Chief Executive Officer of Southwestern Energy said, “This quarter’s cash flow was more than 40% higher than the same period last year. Results benefited from our returns focused growth of liquids as prices improved,  from our leading low cost gas transportation portfolio as regional basis tightened and from operational achievements made by our leading operational team. In addition to building on our operational and financial momentum, we took another deliberate step in our strategy to reposition the Company by signing an agreement to sell the Fayetteville Shale assets.



Way continued, In addition to delivering strong quarterly results, we  initiated the share repurchase program with an initial $25 million repurchase of shares and we completed  a conditional $900MM debt tender that will significantly reduce near term debt maturities and leverage. Clearly, our team is executing and our strategy is working.    





 

 


 

 

Third Quarter 2018 Financial Results







 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

FINANCIAL STATISTICS (Unaudited)

For the three months ended

 

For the nine months ended



September 30,

 

September 30,



2018

 

2017

 

2018

 

2017

Financial Results (in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stock

$

(29)

 

$

43 

 

$

229 

 

$

548 

Adjusted net income attributable to common stock (non-GAAP)

$

146 

 

$

29 

 

$

414 

 

$

156 

Adjusted EBITDA (non-GAAP)

$

377 

 

$

269 

 

$

1,090 

 

$

899 

Net cash provided by operating activities

$

307 

 

$

211 

 

$

971 

 

$

789 

Net cash flow (non-GAAP)

$

355 

 

$

248 

 

$

993 

 

$

816 

Total capital investments

$

298 

 

$

331 

 

$

1,039 

 

$

946 



Southwestern Energy generated record Appalachia production and benefited from higher realized pricing from gas, liquids and oil compared to the prior year. Including a non-cash impairment of $161 million, related to Fayetteville assets, primarily midstream, which were reclassified as held for sale, the Company reported a net loss attributable to common stock of $29 million or $0.05 per diluted share.



Adjusted net income attributable to common stock was $146 million, or $0.25 per diluted share for the quarter. Adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) was $377 million, a 40% increase compared to 2017, primarily due to a 9% increase in production along with stronger realized gas, oil and NGL prices.  The primary components of adjusted EBITDA included $276 million from Appalachia operations, $59 million from Fayetteville operations and $49 million from Midstream operations.



Improved Appalachia gas basis differentials and higher NGL prices drove Company-wide weighted average realized price 24% higher to $2.51 per Mcfe, compared to NYMEX gas price of $2.90 per MMbtu, excluding a hedging loss of $0.03 per Mcfe. Weighted average realized price includes transportation costs and basis differentials for gas, liquids and oil.



Increasing demand and tight fractionation capacity drove realized NGL prices 34% higher to $19.43 per barrel, including the impact of ethane and propane hedges. Realized oil price, including financial derivatives, of $59.96 per barrel was 48% higher and includes transportation costs, which remain in line with original guidance. Realized natural gas price for the Company, including hedges, was 10% higher at $2.16 per Mcf reflecting a 32% improvement in basis differentials, which were $0.76 per Mcf in the quarter compared to $1.11 per Mcf for the same period a year ago.



During the quarter, the Company announced the sale of Fayetteville Shale E&P and midstream assets for $1.865 billion subject to customary closing adjustments. Proceeds from the Fayetteville Shale will be used to reduce debt, continue a share repurchase program and continue development of its liquids-rich Appalachia assets. Upon the completion of the transaction, which is expected by year end 2018, the Company will retire $900 million in senior notes, as previously announced, reduce borrowings under the credit facility and will hold the remainder of proceeds in cash and short-term equivalents.

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The investments in Appalachia assets will be made in accordance with the Company’s strict capital allocation and internal return metrics.



Pursuant to the previously announced $200 million share repurchase program, the Company repurchased 4.8 million shares during the quarter at an average price of $5.18 per share.



At September 30, 2018, the Company reported liquidity of $1.5 billion including unused revolver capacity net of outstanding revolver borrowings and letters of credit. In October 2018, the Company’s bank group confirmed the borrowing base, adjusted for the sale of the Fayetteville assets, will be in excess of the Company’s $2.0 billion commitment under its credit facility.



A summary of the Company’s hedging position is provided in the attached financial tables. Additional information on physical basis sales, natural gas liquids and oil financial derivatives can be found in the 10-Q.



E&P Operational Review



Southwestern Energy’s net production for the third quarter was 9% higher at 252 Bcfe.



Appalachia Basin production was 22% higher at 187 Bcfe and was comprised of 20% liquids or 6,169 MBbls (67.1 MBbls per day) and 80% or 150 Bcf of natural gas (1.6 Bcf per day). 



The Company invested $295 million in E&P capital, including $26 million related to the Southwest Appalachia water project, and drilled 22 wells, completed 23 wells and placed 35 wells to sales.







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

OPERATING STATISTICS

For the three months

ended

 

For the nine months ended

 



September 30,

 

September 30,

 



2018

 

2017

 

2018

 

2017

 

Production

 

 

 

 

 

 

 

 

 

 

 

 

Gas production (Bcf)

 

215 

 

 

205 

 

 

613 

 

 

587 

 

Oil production (MBbls)

 

998 

 

 

663 

 

 

2,334 

 

 

1,747 

 

NGL production (MBbls)

 

5,181 

 

 

3,810 

 

 

14,272 

 

 

10,134 

 

Total production (Bcfe)

 

252 

 

 

232 

 

 

712 

 

 

658 

 



 

 

 

 

 

 

 

 

 

 

 

 

Division Production

 

 

 

 

 

 

 

 

 

 

 

 

Northeast Appalachia (Bcf)

 

121 

 

 

101 

 

 

341 

 

 

285 

 

Southwest Appalachia (Bcfe)

 

66 

 

 

52 

 

 

172 

 

 

131 

 

Fayetteville Shale (Bcf)

 

65 

 

 

78 

 

 

199 

 

 

241 

 



 

 

 

 

 

 

 

 

 

 

 

 

Average unit costs per Mcfe

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

$

0.92 

 

$

0.91 

 

$

0.93 

 

$

0.90 

 

General & administrative expenses (1)

$

0.18 

 

$

0.23 

(2)

$

0.19 

(3)

$

0.22 

(2)

Taxes, other than income taxes  (1)

$

0.09 

 

$

0.10 

 

$

0.08 

 

$

0.10 

 

Full cost pool amortization

$

0.52 

 

$

0.48 

 

$

0.50 

 

$

0.44 

 

(1)

Excludes restructuring charges.

(2)

Excludes $11 million of legal settlement charges for the three and nine months ended September 30, 2017.

(3)

Excludes $8 million of legal settlement charges for the nine months ended September 30, 2018

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COMMODITY PRICES

For the three months ended

 

For the nine months ended



September 30,

 

September 30,



2018

 

2017

 

2018

 

2017

Natural Gas Price:

 

 

 

 

 

 

 

 

 

 

 

NYMEX Henry Hub Price ($/MMBtu) (1)

$

2.90 

 

$

3.00 

 

$

2.90 

 

$

3.17 

Discount to NYMEX (2)

 

(0.76)

 

 

(1.11)

 

 

(0.62)

 

 

(0.86)

Average realized gas price per Mcf, excluding derivatives

$

2.14 

 

$

1.89 

 

$

2.28 

 

$

2.31 

Gain (loss) on settled financial basis derivatives ($/Mcf)

 

(0.03)

 

 

0.05 

 

 

(0.04)

 

 

(0.04)

Gain (loss) on settled commodity derivatives ($/Mcf)

 

0.05 

 

 

0.03 

 

 

0.07 

 

 

(0.05)

Average realized gas price per Mcf, including derivatives

$

2.16 

 

$

1.97 

 

$

2.31 

 

$

2.22 

Oil Price:

 

 

 

 

 

 

 

 

 

 

 

WTI oil price ($/Bbl)

$

69.50 

 

$

48.20 

 

$

66.75 

 

$

49.47 

Discount to WTI

 

(8.30)

 

 

(7.71)

 

 

(7.24)

 

 

(7.99)

Average oil price per Bbl, excluding derivatives

$

61.20 

 

$

40.49 

 

$

59.51 

 

$

41.48 

Average oil price per Bbl, including derivatives

$

59.96 

 

$

40.49 

 

$

58.69 

 

$

41.48 

NGL Price:

 

 

 

 

 

 

 

 

 

 

 

Average net realized NGL price per Bbl, excluding derivatives

$

21.60 

 

$

14.45 

 

$

17.65 

 

$

13.04 

Average net realized NGL price per Bbl, including derivatives

$

19.43 

 

$

14.47 

 

$

16.75 

 

$

13.06 

Percentage of WTI

 

31% 

 

 

30% 

 

 

26% 

 

 

26% 

Average net realized C3+ price per Bbl, excluding derivatives

$

36.94 

 

$

27.82 

 

$

35.43 

 

$

26.53 

Average net realized C3+ price per Bbl, including derivatives

$

34.43 

 

$

27.82 

 

$

34.21 

 

$

26.53 

Percentage of WTI

 

53% 

 

 

58% 

 

 

53% 

 

 

54% 

Total Weighted Average Realized Price:

 

 

 

 

 

 

 

 

 

 

 

Excluding derivatives ($/Mcfe)

$

2.51 

 

$

2.03 

 

$

2.51 

 

$

2.37 

Including derivatives ($/Mcfe)

$

2.48 

 

$

2.09 

 

$

2.51 

 

$

2.29 

(1)

Based on last day monthly futures settlement prices.

(2)

This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges and excludes financial basis derivatives.







 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018 E&P Division Results

Appalachia

 

Fayetteville



Northeast

 

Southwest

 

Shale

Production (Bcfe)

 

121 

 

 

66 

 

 

65 

Gas Production (Bcf)

 

121 

 

 

29 

 

 

65 

Liquids Production (MBbls)

 

–  

 

 

6,169 

 

 

–  

 NGL (MBbls)

 

–  

 

 

5,180 

 

 

–  

 Oil (MBbls)

 

–  

 

 

989 

 

 

–  

Gross operated production as of September 2018 (MMcfe/d)

 

1,534 

 

 

1,191 

 

 

1,036 

Net operated production as of September 2018 (MMcfe/d)

 

1,261 

 

 

739 

 

 

707 



 

 

 

 

 

 

 

 

Capital investments ($ in millions)

 

 

 

 

 

 

 

 

Exploratory and development drilling, including workovers

$

85 

 

$

112 

 

$

Acquisition and leasehold

 

 

 

 

 

–  

Seismic and other

 

 

 

 

 

Capitalized interest and expense

 

 

 

38 

 

 

Total capital investments

$

100 

 

$

156 

 

$



 

 

 

 

 

 

 

 

Gross operated well activity summary

 

 

 

 

 

 

 

 

Drilled

 

 

 

13 

 

 

–  

Completed

 

10 

 

 

13 

 

 

–  

Wells to sales

 

18 

 

 

17 

 

 

–  



 

 

 

 

 

 

 

 

Average completed well cost (in millions)

$

7.0 

(1)

$

8.6 

 

$

 –  

Average lateral length (in ft)

 

6,960 

 

 

6,994 

(2)

 

–  



 

 

 

 

 

 

 

 

Realized Natural Gas Price

 

 

 

 

 

 

 

 

NYMEX Henry Hub Price ($/MMBtu)

$

2.90 

 

$

2.90 

 

$

2.90 

Discount to NYMEX (3)

 

(0.81)

 

 

(0.62)

 

 

(0.75)

Average realized gas price per Mcf, excluding derivatives

$

2.09 

 

$

2.28 

 

$

2.15 

Total weighted average realized price per Mcfe, excluding derivatives

$

2.09 

 

$

3.62 

 

$

2.15 

(1)

Average completed well cost includes Marcellus wells only and amounts for delineation and science.  

(2)

Average lateral length includes Marcellus wells only.

(3)

This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.

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Southwest Appalachia – Total net production of 66 Bcfe, was 27% higher than the prior year quarter and was comprised of 52% liquids. NGL and oil production averaged 56.3 MBbls per day and 10.8 MBbls per day, totaling 67.1 MBbls per day liquids.



Weighted average realized price on a natural gas equivalent basis was $3.62 per Mcf, a $0.72 per Mcfe uplift compared to a NYMEX gas price of $2.90 per Mcf.



The Company placed 16 Marcellus wells to sales with an average lateral length of 6,994 feet. Fourteen wells were located in the super rich acreage and online for at least 30 days, had an average 30-day rate of 7.9 MMcfe per day with a 43% NGL, 23% oil and 34% gas mix. Two wells in the rich acreage were online for at least 30 days and had an average 30-day rate of 13.4 MMcfe per day with a 44% NGL and 56% gas mix.



During the quarter, the Company drilled a West Virginia state record well lateral of 15,559 feet in the super rich area, which is expected to be online early next year.



The first Upper Devonian well was drilled in the Company’s liquids-rich acreage and brought online in the third quarter. This well continues to show encouraging, early results with 45% liquids. The Company plans to bring additional Upper Devonian wells online in the fourth quarter to support its ongoing delineation program.



Northeast Appalachia – Total net production of 121 Bcf, or 1.3 Bcf per day, was 20% higher than the third quarter of 2017. The Company placed 18 wells to sales with an average lateral length of 6,960 feet, 14 of which were online for 30 days and had an average 30-day rate of 13.7 MMcf per day. This includes four short laterals associated with a “wine rack” test.



The longest lateral in the Company’s history, the Mitchell South 2H well, was successfully drilled at 16,272 feet, and is expected to be online in the fourth quarter.



Realized price, which includes transportation costs, was $2.09 per Mcf, a 30% improvement due to tightening basis differentials driven by takeaway capacity going in-service to markets outside of the area. In addition to the ongoing benefit of regional basis improvements, the Company maintains a leading low cost firm transportation portfolio to premium markets that supply low cost natural gas to northeast US markets. 



Conference Call

Southwestern Energy will host a conference call and webcast on Friday, October 26, 2018 at 9:00 a.m. Central to discuss third quarter 2018 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6505 and enter access code 3794459. The conference call will webcast live at www.swn.com.



To listen to a replay of the call, dial 877-344-7529, International 412-317-0088, or Canada Toll Free 855-669-9658. Enter replay access code 10124794. The replay will be available until November 20, 2018.



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About Southwestern Energy

Southwestern Energy Company is an independent energy company whose wholly-owned subsidiaries are engaged in natural gas and oil exploration, development and production, natural gas gathering and marketing. Additional information on the Company can be found on our website: www.swn.com.



Contact

Paige Penchas

Vice President, Investor Relations

(832) 796-4068



Forward Looking Statement

This news release contains forward-looking statements. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. In many cases you can identify forward-looking statements by terminology such as “anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,” “potential,” “should,” “could,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “forecast,” “target” or similar words. Statements may be forward looking even in the absence of these particular words. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that such expectation or belief will result or be achieved. The actual results of operations can and will be affected by a variety of risks and other matters including, but not limited to, changes in commodity prices (including geographic basis differentials); changes in expected levels of natural gas and oil reserves or production, or the Company’s ability to consummate the closing of the sale of its Fayetteville Shale assets; operating hazards, drilling risks, unsuccessful exploratory activities; natural disasters; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; international monetary conditions; unexpected cost increases in service or other costs related to drilling and completion activities; potential liability for remedial actions under existing or future environmental regulations; failure to obtain necessary regulatory approvals; potential liability resulting from pending or future litigation; and general domestic and international economic and political conditions; as well as changes in tax, environmental and other laws, including court rulings, applicable to our business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. Unless legally required, Southwestern Energy Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



 

For the three months ended

 

For the nine months ended



 

September 30,

 

September 30,



 

2018

 

2017

 

2018

 

2017

(in millions, except share/per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Gas sales

 

$

465 

 

$

394 

 

$

1,412 

 

$

1,368 

Oil sales

 

 

62 

 

 

27 

 

 

141 

 

 

73 

NGL sales

 

 

112 

 

 

55 

 

 

252 

 

 

132 

Marketing

 

 

287 

 

 

233 

 

 

805 

 

 

736 

Gas gathering

 

 

25 

 

 

28 

 

 

73 

 

 

85 

Other

 

 

–  

 

 

–  

 

 

 

 

–  



 

 

951 

 

 

737 

 

 

2,687 

 

 

2,394 

Operating Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Marketing purchases

 

 

288 

 

 

236 

 

 

808 

 

 

740 

Operating expenses

 

 

206 

 

 

170 

 

 

588 

 

 

481 

General and administrative expenses

 

 

51 

 

 

62 

 

 

165 

 

 

170 

Restructuring charges

 

 

 

 

–  

 

 

20 

 

 

–  

Depreciation, depletion and amortization

 

 

151 

 

 

135 

 

 

436 

 

 

364 

Impairments

 

 

161 

 

 

–  

 

 

161 

 

 

–  

Taxes, other than income taxes

 

 

26 

 

 

24 

 

 

64 

 

 

75 



 

 

885 

 

 

627 

 

 

2,242 

 

 

1,830 

Operating Income

 

 

66 

 

 

110 

 

 

445 

 

 

564 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest on debt

 

 

56 

 

 

58 

 

 

180 

 

 

175 

Other interest charges

 

 

 

 

 

 

 

 

Interest capitalized

 

 

(29)

 

 

(29)

 

 

(86)

 

 

(85)



 

 

29 

 

 

31 

 

 

100 

 

 

97 



 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) on Derivatives

 

 

(65)

 

 

45 

 

 

(108)

 

 

295 

Loss on Early Extinguishment of Debt

 

 

 –  

 

 

(59)

 

 

(8)

 

 

(70)

Other Income (Loss), Net

 

 

 –  

 

 

(2)

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

(29)

 

 

63 

 

 

230 

 

 

698 

Provision (Benefit) for Income Taxes

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

–  

 

 

(10)

 

 

–  

 

 

(10)

Deferred

 

 

–  

 

 

(4)

 

 

–  

 

 

(4)



 

 

–  

 

 

(14)

 

 

–  

 

 

(14)

Net Income

 

$

(29)

 

$

77 

 

$

230 

 

$

712 

Mandatory convertible preferred stock dividend

 

 

–  

 

 

27 

 

 

–  

 

 

81 

Participating securities - mandatory convertible preferred stock

 

 

–  

 

 

 

 

 

 

83 

Net Income Attributable to Common Stock

 

$

(29)

 

$

43 

 

$

229 

 

$

548 



 

 

 

 

 

 

 

 

 

 

 

 

Income Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.05)

 

$

0.09 

 

$

0.40 

 

$

1.11 

Diluted

 

$

(0.05)

 

$

0.09 

 

$

0.39 

 

$

1.10 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

581,171,753 

 

499,812,926 

 

577,912,421 

 

496,458,435 

Diluted

581,171,753 

 

502,290,779 

 

579,828,858 

 

498,527,671 









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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



 

September 30,
2018

 

December 31,
2017

ASSETS

 

(in millions)

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

$

916 

Accounts receivable, net

 

 

397 

 

 

428 

Derivative assets

 

 

104 

 

 

130 

Other current assets

 

 

41 

 

 

35 

Current assets held for sale

 

 

64 

 

 

–  

Total current assets

 

 

615 

 

 

1,509 

Natural gas and oil properties, using the full cost method, including $1,767 million as of September 30, 2018 and $1,817 million as of December 31, 2017 excluded from amortization

 

 

24,880 

 

 

23,890 

Gathering systems

 

 

38 

 

 

1,315 

Other

 

 

479 

 

 

564 

Less: Accumulated depreciation, depletion and amortization

 

 

(19,928)

 

 

(19,997)

Total property and equipment, net

 

 

5,469 

 

 

5,772 

Other long-term assets

 

 

194 

 

 

240 

Long-term assets held for sale

 

 

780 

 

 

–  

TOTAL ASSETS

 

$

7,058 

 

$

7,521 



 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

563 

 

$

533 

Taxes payable

 

 

32 

 

 

62 

Interest payable

 

 

60 

 

 

70 

Dividends payable

 

 

–  

 

 

27 

Derivative liabilities

 

 

111 

 

 

64 

Other current liabilities

 

 

10 

 

 

24 

Current liabilities held for sale

 

 

116 

 

 

–  

Total current liabilities

 

 

892 

 

 

780 

Long-term debt

 

 

3,572 

 

 

4,391 

Pension and other postretirement liabilities

 

 

50 

 

 

58 

Other long-term liabilities

 

 

162 

 

 

313 

Long-term liabilities held for sale

 

 

177 

 

 

–  

Total long-term liabilities

 

 

3,961 

 

 

4,762 

Equity:

 

 

 

 

 

 

Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 586,195,162 shares as of September 30, 2018 and 512,134,311 as of December 31, 2017

 

 

 

 

Preferred stock, $0.01 par value, 10,000,000 shares authorized, 6.25% Series B Mandatory Convertible, $1,000 per share liquidation preference, 1,725,000 shares issued and outstanding as of December 31, 2017, converted to common stock on January 12, 2018

 

 

–  

 

 

–  

Additional paid-in capital

 

 

4,714 

 

 

4,698 

Accumulated deficit

 

 

(2,449)

 

 

(2,679)

Accumulated other comprehensive loss

 

 

(40)

 

 

(44)

Common stock in treasury; 4,860,280 shares as of September 30, 2018 and 31,269 shares as of December 31, 2017

 

 

(26)

 

 

(1)

Total equity

 

 

2,205 

 

 

1,979 

TOTAL LIABILITIES AND EQUITY

 

$

7,058 

 

$

7,521 







 

 

 

 

 

 



 

 

 

 

 

 

8

 


 

 

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



 

For the nine months ended



 

September 30,



 

2018

 

2017



 

(in millions)

Cash Flows From Operating Activities:

 

 

 

 

 

 

Net income

 

$

230 

 

$

712 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

436 

 

 

364 

Amortization of debt issuance costs

 

 

 

 

Impairments

 

 

161 

 

 

– 

Deferred income taxes

 

 

  

 

 

(4)

(Gain) loss on derivatives, unsettled

 

 

113 

 

 

(350)

Stock-based compensation

 

 

12 

 

 

19 

Loss on early extinguishment of debt

 

 

 

 

70 

Other

 

 

 

 

(2)

Change in assets and liabilities

 

 

(2)

 

 

(27)

Net cash provided by operating activities

 

 

971 

 

 

789 



 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

 

 

Capital investments

 

 

(1,008)

 

 

(943)

Proceeds from sale of property and equipment

 

 

 

 

17 

Other

 

 

 

 

Net cash used in investing activities

 

 

(995)

 

 

(921)



 

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

 

 

Payments on short-term debt

 

 

–  

 

 

(287)

Payments on long-term debt

 

 

(1,191)

 

 

(1,139)

Payments on revolving credit facility

 

 

(1,122)

 

 

–  

Borrowings under revolving credit facility

 

 

1,482 

 

 

–  

Change in bank drafts outstanding

 

 

10 

 

 

–  

Proceeds from issuance of long-term debt

 

 

–  

 

 

1,150 

Debt issuance costs

 

 

(9)

 

 

(18)

Purchase of treasury stock

 

 

(25)

 

 

–  

Preferred stock dividend

 

 

(27)

 

 

(8)

Cash paid for tax withholding

 

 

(1)

 

 

–  

Net cash used in financing activities

 

 

(883)

 

 

(302)



 

 

 

 

 

 

Decrease in cash and cash equivalents

 

 

(907)

 

 

(434)

Cash and cash equivalents at beginning of year

 

 

916 

 

 

1,423 

Cash and cash equivalents at end of period

 

$

 

$

989 



9

 


 

 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)



 

Exploration and Production

 

Midstream Services

 

Other

 

Eliminations

 

Total



 

(in millions)

Three months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

633 

 

$

912 

 

$

–  

 

$

(594)

 

$

951 

Marketing purchases

 

 

–  

 

 

833 

 

 

–  

 

 

(545)

 

 

288 

Operating expenses

 

 

232 

 

 

23 

 

 

–  

 

 

(49)

 

 

206 

General and administrative expenses

 

 

44 

 

 

 

 

–  

 

 

–  

 

 

51 

Restructuring charges

 

 

 

 

–  

 

 

–  

 

 

–  

 

 

Depreciation, depletion and amortization

 

 

140 

 

 

11 

 

 

–  

 

 

–  

 

 

151 

Impairments

 

 

15 

 

 

145 

 

 

 

 

–  

 

 

161 

Taxes, other than income taxes

 

 

25 

 

 

 

 

–  

 

 

–  

 

 

26 

Operating income (loss)

 

 

175 

 

 

(108)

 

 

(1)

 

 

–  

 

 

66 

Capital investments (1)

 

 

295 

 

 

–  

 

 

 

 

–  

 

 

298 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

470 

 

$

734 

 

$

–  

 

$

(467)

 

$

737 

Marketing purchases

 

 

–  

 

 

645 

 

 

–  

 

 

(409)

 

 

236 

Operating expenses

 

 

210 

 

 

18 

 

 

–  

 

 

(58)

 

 

170 

General and administrative expenses

 

 

54 

(2)

 

 

 

–  

 

 

–  

 

 

62 

Depreciation, depletion and amortization

 

 

120 

 

 

15 

 

 

–  

 

 

–  

 

 

135 

Taxes, other than income taxes

 

 

22 

 

 

 

 

–  

 

 

–  

 

 

24 

Operating income

 

 

64 

 

 

46 

 

 

–  

 

 

–  

 

 

110 

Capital investments (1)

 

 

320 

 

 

 

 

 

 

–  

 

 

331 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,790 

 

$

2,605 

 

$

–  

 

$

(1,708)

 

$

2,687 

Marketing purchases

 

 

–  

 

 

2,368 

 

 

–  

 

 

(1,560)

 

 

808 

Operating expenses

 

 

660 

 

 

76 

 

 

–  

 

 

(148)

 

 

588 

General and administrative expenses

 

 

145 

(2)

 

20 

 

 

–  

 

 

–  

 

 

165 

Restructuring charges

 

 

18 

 

 

 

 

–  

 

 

–  

 

 

20 

Depreciation, depletion and amortization

 

 

383 

 

 

53 

(3)

 

–  

 

 

–  

 

 

436 

Impairments

 

 

15 

 

 

145 

 

 

 

 

 

 

 

161 

Taxes, other than income taxes

 

 

59 

 

 

 

 

–  

 

 

–  

 

 

64 

Operating income (loss)

 

 

510 

 

 

(64)

 

 

(1)

 

 

–  

 

 

445 

Capital investments (1)

 

 

1,025 

 

 

 

 

 

 

–  

 

 

1,039 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,559 

 

$

2,414 

 

$

–  

 

$

(1,579)

 

$

2,394 

Marketing purchases

 

 

–  

 

 

2,141 

 

 

–  

 

 

(1,401)

 

 

740 

Operating expenses

 

 

591 

 

 

68 

 

 

–  

 

 

(178)

 

 

481 

General and administrative expenses

 

 

147 

(2)

 

23 

 

 

–  

 

 

–  

 

 

170 

Depreciation, depletion and amortization

 

 

317 

 

 

47 

 

 

–  

 

 

–  

 

 

364 

Taxes, other than income taxes

 

 

69 

 

 

 

 

–  

 

 

–  

 

 

75 

Operating income

 

 

435 

 

 

129 

 

 

–  

 

 

–  

 

 

564 

Capital investments (1)

 

 

921 

 

 

21 

 

 

 

 

–  

 

 

946 

(1)

Capital investments include decreases of $31 million and $2 million for the three months ended September 30, 2018 and 2017, respectively, and an increase of $21 million and a decrease of $13 million for the nine months ended September 30, 2018 and 2017, respectively, relating to the change in capital accruals between periods.