Welcome!

.NET Authors: Trevor Parsons, Peter Silva, Yeshim Deniz, Pat Romanski, Adine Deford

News Feed Item

Southwestern Energy Announces Capital Program And Guidance For 2013

Company Provides Update on Operations

HOUSTON, Dec. 18, 2012 /PRNewswire/ -- Southwestern Energy Company (NYSE: SWN) today announced its total capital investment program in 2013 is planned to be approximately $2.0 billion, compared to approximately $2.1 billion in 2012, consisting of approximately $1.8 billion for its exploration and production segment, $160 million for its midstream segment and $40 million for corporate purposes.

Southwestern is targeting total net gas and oil production of 628 to 640 Bcfe in 2013, up approximately 11 to 13% over the company's expected 2012 level. Gross operated production is expected to grow approximately 4% in the Fayetteville Shale in 2013, however the company's net revenue interest is expected to change from approximately 64% in 2012 to 61% in 2013. As a result, total net production from the Fayetteville Shale in 2013 is expected to be 475 to 480 Bcf, compared to 484 to 486 Bcf in 2012. The change in net revenue interest in 2013 reflects the move to increased drilling on the eastern side of the field however, longer term, the company's average net revenue interest is expected to be approximately 64%. In the Marcellus Shale, the company expects its average net revenue interest to remain the same in 2013, resulting in both gross and net production more than doubling from 63 to 65 gross Bcf (53 to 55 net Bcf) in 2012 to 160 to 165 gross Bcf (134 to 139 net Bcf) in 2013.

"2013 will be an exciting year for Southwestern Energy," stated Steve Mueller, President and Chief Executive Officer of Southwestern Energy. "In the Fayetteville Shale, we will continue to drive our costs and drilling time down as our newly acquired frac fleets become operational and our target is to invest within cash flow. In the Marcellus Shale, the infrastructure build over the past two years will enable a significant ramp in production from all of our acreage holdings in this highly economic project. In our New Ventures, we will continue to pursue the commerciality of our Brown Dense project, plus you will see us drill additional wells in our Colorado and Montana projects and in at least one more new project in 2013. Finally, our focus remains on delivering strong returns through both building on our operational strengths and developing a portfolio of projects that provide an ongoing platform for growth."

The following tables provide annual forecast information for 2013, as compared to projected 2012 results, for capital investments and the gross and net well counts (including wells operated by others) for each of the company's operating areas.


Capital Investments


Projected

2012


Forecast

2013


(in millions)

Fayetteville Shale Play

$       1,020


$          830

Appalachia

540


705

New Ventures

335


235

Ark-La-Tex

10


15

Midstream Services

160


160

Corporate & Other

40


40

Total Capital Investments 

$       2,105


$       1,985




Gross Well Count


Net Well Count


Projected

2012


Forecast

2013


Projected

2012


Forecast

2013









Fayetteville Shale Play

481


385-390


308


236-241

Appalachia

63


86-88


52


72-74

Ark-La-Tex

2


2-3


1


1-2

New Ventures

7


7-9


6


6-8

Total Well Count

553


480-490


367


315-325

Southwestern expects to participate in approximately 480 to 490 total gross wells (100% will be operated) in 2013, compared to an estimated 553 total gross wells in 2012 (approximately 538 operated). The company's 2013 net well count is expected to be approximately 315-325 wells compared to approximately 367 net wells in 2012.

In the Fayetteville Shale, Southwestern plans to drill approximately 385 to 390 gross wells in 2013, all of which will be operated. Southwestern expects that the average time to drill its operated horizontal wells to total depth from re-entry to re-entry will continue to decrease in 2013 to approximately 6.5 days from approximately 6.8 days projected for 2012. The company's average 2013 completed well cost is estimated to be $2.7 million per well with a 5,100 average horizontal lateral, compared to an estimated $2.8 million well cost with an average horizontal lateral length of 4,600 feet in 2012.

In the Marcellus Shale, Southwestern plans to manage its production increase to available capacity and drill a total of 86 to 88 gross wells, all of which will be operated. Of these, approximately 35 wells will be located in Bradford County, 40 wells will be in Susquehanna County and 12 wells will be in Lycoming County. The company expects that the average time to drill its operated horizontal wells to total depth from re-entry to re-entry will be approximately 13.0 days, compared to approximately 13.1 days projected for 2012. Southwestern's average 2013 completed well cost is estimated to be $7.1 million per well with a 4,700 average horizontal lateral with 15.0 completed stages, compared to an estimated $6.3 million well cost with an average horizontal lateral length of 4,100 feet and 12.7 completed stages in 2012.

In the company's New Ventures, including its Lower Smackover Brown Dense project, Southwestern plans to drill up to 7 to 9 gross wells.

Of the approximate $1.8 billion E&P capital budget for 2013, $1.3 billion (or 75%) will be invested in development and exploratory drilling, $14 million in seismic and other geological and geophysical (G&G) expenditures, $109 million in leasehold and $318 million in capitalized interest and expenses and other equipment and costs.

Southwestern Issues Guidance for 2013

The company's projected results for 2013 are as follows:

Estimated Production by Quarter in 2013

                                                                              


1st Quarter

2nd Quarter

3rd Quarter

 4th Quarter

Full-Year 2013

Total Production (Bcfe)

150 - 153

153 - 156

159 - 162

166 - 169

628 - 640

Estimated E&P Pricing Deductions in 2013 ($ per Mcfe, except for fuel charges)

Average Basis Differential and Transportation Charge   

$0.50 - $0.55

Average Fuel Charge                                                  

0.50% - 1.00%

Estimated E&P Operating Expenses in 2013 (assumes $3.50 per Mcf gas price)

Lease Operating Expenses                                            

$0.84 - $0.89

General & Administrative Expense

$0.26 - $0.30

Taxes, Other Than Income Taxes      

$0.09 - $0.11

Other Operating Income and Expenses in 2013 (assumes $3.50 per Mcf gas price)

Midstream Operating Income ($ in millions)                

$300 - $310

Net Interest Expense ($ in millions)

$26 - $28

Income Tax Rate (95% Deferred)                         

40.0%

Weighted Average Diluted Shares Outstanding (in millions)         

350

As of December 18, 2012, the company had NYMEX hedges in place on notional volumes of 185 Bcf of its 2013 projected natural gas production hedged through fixed price swaps and collars at a weighted average floor price of $5.06 per Mcf.

Assuming a NYMEX commodity price of $3.50 per Mcf of gas for 2013, the company is targeting net income of $525 to $535 million and net cash provided by operating activities before changes in operating assets and liabilities (a non-GAAP measure; see "Explanation and Reconciliation of Non-GAAP Financial Measures" below) of $1,750 to $1,760 million in 2013. The company expects net income plus interest, income tax expense, depreciation, depletion and amortization (also known as EBITDA, a non-GAAP measure; see "Explanation and Reconciliation of Non-GAAP Financial Measures" below) to be approximately $1,780 to $1,790 million in 2013. The company has also provided additional price scenarios and their corresponding estimated financial results for 2013 in the table below:

NYMEX

Commodity Prices

Net Income

Net

Cash Flow (1)

EBITDA (1)

$3.25 Gas

$460 - $470

Million

$1,650 - $1,660

Million

$1,680 - $1,690 Million

$3.50 Gas

$525 - $535

Million

$1,750 - $1,760

Million

$1,780 - $1,790 Million

$3.75 Gas

$585 - $595

Million

$1,850 - $1,860

Million

$1,880 - $1,890 Million

(1)   Net cash provided by operating activities before changes in operating assets and liabilities (net cash flow) and EBITDA are non-GAAP measures; see Explanation and Reconciliation of Non-GAAP Financial Measures below.

Current Update on Operations

In the Fayetteville Shale, Southwestern expects to place approximately 100 wells on production during the fourth quarter of 2012. Current estimates of completed well costs for wells placed on production during the fourth quarter of 2012 are approximately $2.5 million per well with average lateral lengths of approximately 4,300 feet. Average initial production rates for these wells are currently estimated at approximately 3.8 to 4.0 MMcf per day.

In the Marcellus Shale, the Bluestone Pipeline was placed into service into the TGP 300 Pipeline on November 28. Since that point, approximately 9 of the company's operated wells have been placed on production from its Range Trust area in Susquehanna County. The company expects that an additional 5 wells will be placed on production from Susquehanna County by the end of the year. On November 20, the company placed 4 wells on production in Lycoming County and expects to place 2 more wells on production by year-end. On December 17, 2012, the company's gross operated production rate from the Marcellus Shale reached approximately 290 MMcf per day.

In the company's Lower Smackover Brown Dense project, Southwestern tied two wells into a new gas pipeline on November 29. Daily production of both oil and gas from the company's third and sixth wells, the BML #31-22 #1-1H and the Doles 30-22-1H #1, respectively, continues to increase as flowback fluids are recovered. The company's fifth well, the vertical Dean 31-22-1E #1, is also currently producing oil at relatively stable rates after 70 days.

Explanation and Reconciliation of Non-GAAP Financial Measures

Net cash provided by operating activities before changes in operating assets and liabilities (net cash flow) is presented because of its acceptance as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. The company has also included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Net cash provided by operating activities before changes in operating assets and liabilities should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles. The table below reconciles 2013 forecasted net cash provided by operating activities before changes in operating assets and liabilities with 2013 forecasted net cash provided by operating activities.


 2013 Guidance 


 NYMEX Commodity Price Assumption 


 $3.25 Gas 


 $3.50 Gas 


 $3.75 Gas 


$85.00 Oil


$85.00 Oil


$85.00 Oil




($ in millions)



Net cash provided by operating activities

 $1,650-$1,660 


 $1,750-$1,760 


 $1,850-$1,860 

Add back (deduct):






   Assumed change in operating assets and liabilities

--


--


--







Net cash flow

 $1,650-$1,660 


 $1,750-$1,760 


 $1,850-$1,860 

EBITDA is defined as net income plus interest expense, income tax expense, depreciation, depletion and amortization. Southwestern has included information concerning EBITDA because it is used by certain investors as a measure of the ability of a company to service or incur indebtedness and because it is a financial measure commonly used in the energy industry. EBITDA should not be considered in isolation or as a substitute for net income, net cash provided by operating activities or other income or cash flow data prepared in accordance with generally accepted accounting principles or as a measure of the company's profitability or liquidity. EBITDA as defined above may not be comparable to similarly titled measures of other companies. Net income is a financial measure calculated and presented in accordance with generally accepted accounting principles. The table below reconciles 2013 forecasted EBITDA with 2013 forecasted net income.


  2013 Guidance  


  NYMEX Commodity Price Assumption  


 $3.25 Gas 


 $3.50 Gas 


 $3.75 Gas 


$85.00 Oil


$85.00 Oil


$85.00 Oil




($ in millions)



Net income attributable to SWN

 $460-$470 


 $525-$535 


 $585-$595 

Add back:






   Provision for income taxes

 306-313 


 350-357 


 390-397 

   Interest expense

 27-29 


 26-28 


 25-27 

   Depreciation, depletion and amortization

 880-890 


 880-890 


 880-890 

EBITDA

 $1,680-$1,690 


 $1,780-$1,790 


 $1,880-$1,890 

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

All statements, other than historical facts and financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements that address activities, outcomes and other matters that should or may occur in the future, including, without limitation, statements regarding the financial position, business strategy, production and reserve growth and other plans and objectives for the company's future operations, are forward-looking statements. Although the company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The company has no obligation and makes no undertaking to publicly update or revise any forward-looking statements, other than to the extent set forth below. You should not place undue reliance on forward-looking statements. They are subject to known and unknown risks, uncertainties and other factors that may affect the company's operations, markets, products, services and prices and cause its actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with forward-looking statements, risks, uncertainties and factors that could cause the company's actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas and oil (including regional basis differentials); the company's ability to transport its production to the most favorable markets or at all; the timing and extent of the company's success in discovering, developing, producing and estimating reserves; the economic viability of, and the company's success in drilling, the company's large acreage position in the Fayetteville Shale play, overall as well as relative to other productive shale gas areas; the company's ability to fund the company's planned capital investments; the impact of federal, state and local government regulation, including any legislation relating to hydraulic fracturing, the climate or over the counter derivatives; the company's ability to determine the most effective and economic fracture stimulation for the Fayetteville Shale play and the Marcellus Shale play; the costs and availability of oil field personnel services and drilling supplies, raw materials, and equipment and services; the company's future property acquisition or divestiture activities; increased competition; the financial impact of accounting regulations and critical accounting policies; the comparative cost of alternative fuels; conditions in capital markets, changes in interest rates and the ability of the company's lenders to provide it with funds as agreed; credit risk relating to the risk of loss as a result of non-performance by the company's counterparties and any other factors listed in the reports the company has filed and may file with the Securities and Exchange Commission (SEC). For additional information with respect to certain of these and other factors, see the reports filed by the company with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

SOURCE Southwestern Energy Company

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, phone and digital TV services to consumers primarily in rural areas.
"There is a natural synchronization between the business models, the IoT is there to support ,” explained Brendan O'Brien, Co-founder and Chief Architect of Aria Systems, in this SYS-CON.tv interview at the 15th International Cloud Expo®, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com), moderated by Ashar Baig, Research Director, Cloud, at Gigaom Research, Nate Gordon, Director of T...
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's platform-as-a-service. The new platform enables developers to build ap...

Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
Technology is enabling a new approach to collecting and using data. This approach, commonly referred to as the "Internet of Things" (IoT), enables businesses to use real-time data from all sorts of things including machines, devices and sensors to make better decisions, improve customer service, and lower the risk in the creation of new revenue opportunities. In his General Session at Internet of @ThingsExpo, Dave Wagstaff, Vice President and Chief Architect at BSQUARE Corporation, discuss the real benefits to focus on, how to understand the requirements of a successful solution, the flow of ...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Focused on this fast-growing market’s needs, Vitesse Semiconductor Corporation (Nasdaq: VTSS), a leading provider of IC solutions to advance "Ethernet Everywhere" in Carrier, Enterprise and Internet of Things (IoT) networks, introduced its IStaX™ software (VSC6815SDK), a robust protocol stack to simplify deployment and management of Industrial-IoT network applications such as Industrial Ethernet switching, surveillance, video distribution, LCD signage, intelligent sensors, and metering equipment. Leveraging technologies proven in the Carrier and Enterprise markets, IStaX is designed to work ac...
C-Labs LLC, a leading provider of remote and mobile access for the Internet of Things (IoT), announced the appointment of John Traynor to the position of chief operating officer. Previously a strategic advisor to the firm, Mr. Traynor will now oversee sales, marketing, finance, and operations. Mr. Traynor is based out of the C-Labs office in Redmond, Washington. He reports to Chris Muench, Chief Executive Officer. Mr. Traynor brings valuable business leadership and technology industry expertise to C-Labs. With over 30 years' experience in the high-tech sector, John Traynor has held numerous...
Bit6 today issued a challenge to the technology community implementing Web Real Time Communication (WebRTC). To leap beyond WebRTC’s significant limitations and fully leverage its underlying value to accelerate innovation, application developers need to consider the entire communications ecosystem.
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada. Our partner network encompasses some 300 of the world's leading systems integrators and security s...
IoT is still a vague buzzword for many people. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. He also discussed how IoT is perceived by investors and how venture capitalist access this space. Other topics discussed were barriers to success, what is new, what is old, and what the future may hold. Mike Kavis is Vice President & Principal Cloud Architect at Cloud Technology Pa...
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world. The next @ThingsExpo will take place November 4-6, 2014, at the Santa Clara Convention Center, in Santa Clara, California. Since its launch in 2008, Cloud Expo TV commercials have been aired and CNBC, Fox News Network, and Bloomberg TV. Please enjoy our 2014 commercial.