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Southwestern Energy Announces First Quarter 2017 Financial And Operating Results

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HOUSTON, April 27, 2017 /PRNewswire/ -- Southwestern Energy Company (NYSE: SWN) today announced its financial and operating results for the quarter ended March 31, 2017, along with other recent developments. Highlights include:

  • Net cash provided by operating activities of $312 million and net cash flow of $318 million, compared to total capital investments of $290 million;
  • Net income attributable to common stock of $281 million, or $0.57 per diluted share, and adjusted net income attributable to common stock of $87 million, or $0.18 per diluted share;
  • Total net production of 204 Bcfe, including 123 Bcfe from the Appalachian Basin where the exit rate for the quarter grew 12% from December 31, 2016;
  • Proved reserves as of March 31, 2017 (unaudited) of over 10 Tcfe with approximately $3 billion in PV10, nearly doubling from year-end 2016 reserves;
  • Susquehanna County initial EUR increase of over 25% from historical well results driven by recent changes to completion intensity and flowback methods;
  • Enhanced economics and de-risked inventory resulting from successful delineation results in Tioga, Wyoming and Susquehanna including:
    • ­Two wells placed to sales in Tioga County with an average 30-day rate of 13 MMcf per day per well with compression to be installed later in 2017;
    • ­Continued strong performance from the Company's southern-most pad in Wyoming County with the Dimmig 2H averaging over 15 MMcf per day in its first six months of production;
    • First sales from the western portion of our Susquehanna acreage, which was acquired in 2015, with the two producing wells currently producing at an average rate of 15 MMcf per day per well after almost one month of initial production;
  • Seven-well Moorefield pad confirmed the productivity of the targeted zone and exceeded the Company's expectations with an estimated EUR of 6.5 Bcf per well;
  • Initial results from the first Company-drilled Utica well indicates a top quartile well with early EUR estimates of 2.5 to 3.0 Bcf per thousand lateral feet;
  • Improving guidance for full year 2017 natural gas discount to NYMEX including transportation to  $0.80 - $0.90 per Mcf due to improving basis differentials in the Appalachian basin associated with pipeline construction progress and expected in-service dates;
  • Realized C3+ NGL prices of $30.91 per barrel, or 60% of West Texas Intermediate (WTI), and realized total NGL prices of $13.28 per barrel, or 26% of WTI (all net of transportation costs); and
  • Today announced the call of its bonds due in 2018 utilizing cash on hand, reducing total debt by $316 million when combined with debt retired during the first quarter of 2017 and the expected retirement of its bonds due in the fourth quarter of 2017 as they mature.

"We are off to a very strong start in 2017, building upon the momentum from 2016 and continuing our practice of delivering on commitments," said Bill Way, President and Chief Executive Officer of Southwestern Energy.  "We invested well within cash flow during the first quarter and delivered value-adding production growth within our guidance range.  The results achieved this quarter demonstrate our position as a market leader, and we anticipate providing additional highlights of our operational excellence throughout the remainder of the year as we progress our development plan and multiple innovative initiatives being tested throughout the portfolio." 







First Quarter 2017 Financial Results






Southwestern Energy Company and Subsidiaries







For the three months ended


March 31,


2017


2016

(in millions, except per share amounts)






Operating income (loss)

$

266


$

(1,100)

Adjusted operating income (loss) (non-GAAP measure)

$

266


$

(2)







Net earnings (loss) attributable to common stock

$

281


$

(1,159)

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

$

87


$

(32)







Earnings (loss) per diluted share

$

0.57


$

(3.03)

Adjusted earnings (loss) per diluted share (non-GAAP measure)

$

0.18


$

(0.08)







Net cash provided by operating activities

$

312


$

92

Net cash flow (non-GAAP measure)

$

318


$

147









Exploration and Production First Quarter 2017 Financial Results

For the three months ended


March 31,


2017


2016

Production






Fayetteville (Bcf)


81



103

Northeast Appalachia (Bcf)


87



94

Southwest Appalachia (Bcfe)


36



40

   Total production (Bcfe)


204



237

   % Natural Gas


90%



90%







Average unit costs per Mcfe






Lease operating expenses

$

0.89


$

0.88

General & administrative expenses

$

0.21


$

0.19

Taxes, other than income taxes

$

0.12


$

0.08

Full cost pool amortization

$

0.40


$

0.49









Realized Prices

For the three months ended


March 31,


2017


2016

Natural Gas Price:






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

$

3.32


$

2.09

Discount to NYMEX(2)

$

(0.59)


$

(0.65)

Average realized gas price per Mcf, excluding hedges

$

2.73


$

1.44

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

$

(0.01)


$

0.02

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

$

(0.15)


$

0.02

Average realized gas price per Mcf, including hedges

$

2.57


$

1.48







Oil Price:






WTI Oil Price ($/Bbl)

$

51.91


$

33.45

Discount to WTI

$

(8.17)


$

(14.80)

Average oil price per Bbl

$

43.74


$

18.65







NGL Price:






Average net realized NGL price per Bbl(3)

$

13.28


$

4.98

Percentage of WTI


26%



15%



(1)

Based on last day settlement prices from monthly futures contracts.

(2)

This discount includes a basis differential, physical basis sales, third-party transportation charges and fuel charges and excludes financial basis hedges.

(3)

Includes $0.02 per Bbl of realized hedge gains for the first quarter of 2017 and the impact of transportation costs

First Quarter of 2017 Financial Results

E&P Segment – The operating income from the Company's E&P segment improved to $225 million for the first quarter of 2017, compared to an operating loss of $1.2 billion during the first quarter of 2016, primarily due to a $1.0 billion impairment of natural gas and oil properties and $61 million in restructuring charges during this period last year.  Beside the lack of impairments or restructuring charges in the first quarter of 2017, the increase in operating income was primarily due to higher realized natural gas and liquids pricing and lower operating costs partially offset by decreased production.  The average price realized for our NGL production, including the effects of derivatives, increased 167% to $13.28 per barrel, or 26% of NYMEX WTI, for the three months ended March 31, 2017, compared to $4.98 per barrel, or 15% of NYMEX WTI, for the same period in 2016.  The Company expects NGL prices to remain strong with additional ethane cracker demand and incremental export capacity over the next three years.     

Midstream Segment – Operating income for the Company's Midstream segment, comprised of gathering and marketing activities, was $41 million for the first quarter of 2017, compared to $60 million for the same period in 2016, which included $3 million in restructuring charges.  The decrease in operating income was largely due to a decrease in volumes gathered, resulting from lower production volumes in the Fayetteville Shale. 

Capital Structure and Investments – At March 31, 2017, the Company had total debt of approximately $4.6 billion and $3.2 billion in net debt.  In the first quarter, the Company repurchased $25 million of its 7.50% Senior Notes due February 2018.  Additionally, the Company today announced its plans to retire the remainder of the 2018 notes and also expects to pay the $40 million outstanding of its notes due in October 2017 when they mature.

During the first quarter of 2017, Southwestern invested a total of $290 million.  This included approximately $283 million invested in its E&P business, $6 million invested in its Midstream segment and $1 million invested for corporate and other purposes.  Of the $290 million, approximately $28 million was associated with capitalized interest and $25 million was associated with capitalized expenses.

Hedging Update

As of April 25, 2017, the Company had approximately 429 Bcf of its remaining 2017 forecasted gas production protected at an average swap or purchased put strike price of $3.03 per Mcf.  Including the protected volumes, the Company retained upside exposure on approximately half of its remaining forecasted 2017 volumes.  Additionally, the Company had approximately 336 Bcf of its 2018 forecasted gas production protected at an average swap or purchased put strike price of $2.98 per Mcf, with upside exposure on approximately 80%, or 268 Bcf, of those protected volumes up to $3.38 per Mcf. The Company also had approximately 99 Bcf of its 2019 forecasted gas production protected at an average purchased put strike price of $2.95 with upside exposure up to $3.31 per Mcf.

A detailed breakdown of the Company's natural gas derivative financial instruments as of April 25, 2017 is shown below.  Please refer to our quarterly report on Form 10-Q filed with the Securities and Exchange Commission for complete information on the Company's commodity, basis and interest rate protection.


















Weighted Average Price per MMBtu


Volume
(Bcf)


Swaps


Sold Puts


Purchased
Puts


Sold Calls

Financial protection on production














2017














   Fixed price swaps

262


$

3.07


$


$


$

   Two-way costless collars

65







2.92



3.34

   Three-way costless collars

102





2.29



2.97



3.30

Total

429













2018














   Fixed price swaps

68


$

3.02


$


$


$

   Two-way costless collars

23







2.97



3.56

   Three-way costless collars

245





2.39



2.97



3.37

Total

336













2019














   Three-way costless collars

99


$


$

2.50


$

2.95


$

3.31

Total

99



























Sold call options














2017(1)

64


$


$


$


$

3.54

2018

63









3.50

2019

52









3.50

2020

32









3.75

Total

211














Note: Amounts may not sum due to rounding.

(1)

Excludes $5 million in premiums paid related to certain call options recognized as a component of derivative assets within current assets on the unaudited condensed consolidated balance sheet.  As certain call options settle, the premium will be amortized and recognized as a component of gain (loss) on derivatives on the unaudited condensed consolidated statement of operations.

As of April 25, 2017, the Company had also taken steps to mitigate the volatility of basis differentials by protecting basis on approximately 296 Bcf of its 2017 forecasted natural gas production at a basis differential to NYMEX natural gas prices of approximately ($0.73) per Mcf, which includes the impact of both physical and financial basis hedges.  A detailed breakdown of the Company's financial basis positions as of April 25, 2017 is shown below:











Financial basis positions

(excludes physical positions)


Dominion South


TETCO M3


Total


Volume
(Bcf)

Basis Diff
($/MMBTU)


Volume
(Bcf)

Basis Diff
($/MMBTU)


Volume
(Bcf)

Basis Diff
($/MMBTU)











2017


85

($1.13)


53

($0.90)


138

($1.04)

2018


18

($1.19)


2

$0.79


20

($0.95)

E&P Operational Review

The Company's proved reserves (unaudited) increased to over 10 Tcf in the first quarter of 2017 based on average prices from the first day of each month from the previous 12 months for Henry Hub natural gas of $2.73 per MMBtu for natural gas, West Texas Intermediate oil of $44.10 per barrel of oil and $10.17 per barrel of total NGLs, adjusted for differentials.  Proved undeveloped reserves accounted for approximately 35% of total reserves compared to 1% at December 31, 2016.  Additionally, Appalachian reserves attributed to approximately 67% of total reserves compared to approximately 43% at year-end 2016.  Proved reserves as of March 31, 2017 had a PV10 value of approximately $3.0 billion and are projected to increase throughout the year based on forward strip pricing.  

During the first quarter of 2017, Southwestern invested a total of approximately $283 million in our E&P business, and participated in drilling 33 wells, completed 49 wells, and placed 49 wells to sales. 










First Quarter 2017 E&P Division Results

Appalachia


Fayetteville


Northeast


Southwest


Shale

Production (Bcfe)


87



36



81

Gross operated production as of March 31, 2017 (MMcfe/d)


1,273



668



1,342










Capital investments ($ in millions)









Exploratory and development drilling, including workovers

$

97


$

73


$

33

Acquisition and leasehold


4



16



Seismic and other


1





Capitalized interest and expense


10



32



6

   Total capital investments

$

112


$

121


$

39










Gross operated well count summary









Drilled


17



8



8

Completed


20



16



13

Wells to sales


24



13



12










Realized Price









NYMEX Henry Hub Price ($/MMBtu)

$

3.32


$

3.32


$

3.32

Discount to NYMEX ($/Mcf) (1)

$

(0.42)


$

(0.46)


$

(0.80)

Average realized gas price, excluding hedges ($/Mcf)

$

2.90


$

2.86


$

2.52



(1)

This discount includes a basis differential, physical basis sales, third-party transportation charges and fuel charges and excludes financial basis hedges.

Northeast Appalachia – In the first quarter of 2017, the Company placed 24 wells to sales that had an average lateral length of 5,836 feet and an average cost of $5.6 million per well.  The average rate for the first 30 days for the 15 of these wells that were online for at least 30 days was 14.8 MMcf per day.  In Susquehanna County, the 5-well TNT pad was placed to sales using tighter stage spacing and, after 60 days of production, the average EUR of these wells is expected to be approximately 40% higher than offset wells.  To date, the Company has placed 39 wells to sales using increased completion intensity and optimized flow techniques which have resulted in a cumulative production increase of over 200% in the first 30 days over offset wells.  In addition to the acceleration of volumes resulting from these completion and production method changes, the Company also believes these changes are improving the average EUR by over 25% compared to historical well results in Susquehanna County, creating significant incremental value for shareholders. 

In the first quarter of 2017, the Company placed 7 delineation wells to sales in Susquehanna, Tioga, and Wyoming Counties.  In Susquehanna County, the Company placed the Webster 4H and Webster 5H to sales with an average lateral length of 10,110 feet and combined maximum rate of 38.2 MMcf per day.  These wells are the first wells drilled on the acreage previously acquired in 2015 and are outperforming offset production by over 100%.  Based on these results, the Company plans to drill three additional wells which are expected to come online in the third quarter of 2017.  Additionally, the Company continued its delineation efforts in Tioga County, where it holds over 20,000 net acres, placing two wells to sales in the first quarter of 2017 and drilling three additional wells. The Lepley pad, placed to sales in January, continues to exhibit strong results.  The two Lepley wells had an average rate for the first 30 days online of 13.3 MMcf per day and are expected to continue to improve as compression is added later in the year.  The Company also continues to test its acreage in Wyoming County by placing three wells to sales in first quarter of 2017, observing encouraging results on its southern-most pad in the area.  Due to the successful results in each of these delineation areas, the Company plans to continue its delineation efforts throughout the year.    

Southwest Appalachia – In the first quarter of 2017, Southwestern brought online 13 wells in Southwest Appalachia with an average lateral length of 7,819 feet and an average cost of $7.2 million per well.

The Company continues to perform additional analysis on the O.E. Burge 501H, but early results indicate that this well is in the top quartile of the industry for wells targeting the deep Upper Point Pleasant formation.  Based on current assumptions, the EUR is estimated to be in the range of 2.5 to 3.0 Bcf per thousand feet of lateral completed.  The O.E. Burge is currently flowing flat at 17 MMcf per day with 8,531 psi of casing pressure and the Company plans to hold the well at this rate to continue its pressure management program.

Additionally, Southwestern placed 5 wells to sales at the end of January that tested tighter stage spacing and increased proppant loading.  Three of these test wells were on the GW Rentals pad with two completed at 140' stage spacing and 3,500 pounds of proppant per foot and one completed at 100' stage spacing and 5,000 pounds of proppant per foot.  The other two test wells were on the William Ritchea pad and were tested with 140' stage spacing and 3,500 pounds of proppant per foot.  Early indications show all five wells performing better than their closest offsets completed with a wider stage spacing and lower pounds of proppant per foot.  To date, the well results show the 140' and 100' stage spaced wells performing similarly and the Company will continue to monitor these wells to determine if there are long-term performance enhancements at the tighter stage spacing.  The completion testing program and the accelerated learnings from these tests are expected to create significant value for future development activity.

Fayetteville Shale – During the first quarter of 2017, the Company placed 12 wells to sales, which included 7 wells from a Moorefield pad.  These seven wells had an average lateral length of 6,442 feet and estimated average EUR of 6.5 Bcf with an average cost of $3.8 million per well.  These wells had an average initial production rate of 6.8 MMcf per day and an average 30th day rate of 5.1 MMcf per day.  These results confirm the Company's understanding of the play and demonstrate the Moorefield's potential to improve economics in the play.  The Company plans to place an additional 8 Moorefield wells to sales through the remainder of 2017.

Explanation and Reconciliation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, management believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and of prior periods. 

One such non-GAAP financial measure is net cash flow. Management presents this measure because (i) it is accepted 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, (ii) changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the Company may not control and (iii) changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

Additional non-GAAP financial measures the Company may present from time to time are net debt, adjusted net income, adjusted diluted earnings per share, adjusted EBITDA and its E&P and Midstream segment operating income, all which exclude certain charges or amounts. Management presents these measures because (i) they are consistent with the manner in which the Company's position and performance are measured relative to the position and performance of its peers, (ii) these measures are more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the Company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP.

See the reconciliations throughout this release of GAAP financial measures to non-GAAP financial measures for the three months ended March 31, 2017 and March 31, 2016, as applicable. Non-GAAP financial measures should not be considered in isolation or as a substitute for the Company's reported results prepared in accordance with GAAP.








3 Months Ended March 31,


2017


2016


(in millions)

Net income (loss) attributable to common stock:






Net income (loss) attributable to common stock

$

281


$

(1,159)

Add back:






Participating securities – mandatory convertible preferred stock


30



Impairment of natural gas and oil properties




1,034

Restructuring charges




64

(Gain) loss on certain derivatives


(146)



21

(Gain) loss on sale of assets


(1)



Loss on early extinguishment of debt


1



Adjustments due to inventory valuation




3

Adjustments due to discrete tax items(1)


(134)



431

Tax impact on adjustments


56



(426)

Adjusted net income (loss) attributable to common stock

$

87


$

(32)







(1)

Primarily relates to the exclusion of certain discrete tax adjustments associated with the valuation allowance against deferred tax assets.  The Company expects its 2017 income tax rate to be 38.0% before the impacts of any valuation allowance.








3 Months Ended March 31,


2017


2016







Diluted earnings (loss) per share:






Diluted earnings (loss) per share

$

0.57


$

(3.03)

Add back:






Participating securities - mandatory convertible preferred stock


0.06



Impairment of natural gas and oil properties




2.70

Restructuring charges




0.17

(Gain) loss on certain derivatives


(0.30)



0.05

(Gain) loss on sale of assets


(0.00)



Loss on early extinguishment of debt


0.00



Adjustments due to inventory valuation




0.01

Adjustments due to discrete tax items(1)


(0.27)



1.13

Tax impact on adjustments


0.12



(1.11)

Adjusted diluted earnings (loss) per share

$

0.18


$

(0.08)



(1)

Primarily relates to the exclusion of certain discrete tax adjustments associated with the valuation allowance against deferred tax assets.  The Company expects its 2017 income tax rate to be 38.0% before the impacts of any valuation allowance.

 








3 Months Ended March 31,


2017


2016


(in millions)

Cash flow from operating activities:






Net cash provided by operating activities

$

312


$

92

Add back:






Changes in operating assets and liabilities


6



33

Restructuring charges




22

   Net Cash Flow

$

318


$

147








3 Months Ended March 31,


2017


2016


(in millions)

Operating income (loss):






Operating income (loss)

$

266


$

(1,100)

Add back:






Impairment of natural gas and oil properties




1,034

Restructuring charges




64

   Adjusted operating income (loss)

$

266


$

(2)








3 Months Ended March 31,


2017


2016


(in millions)

E&P segment operating income (loss):






E&P segment operating income (loss)

$

225


$

(1,160)

Add back:






Impairment of natural gas and oil properties




1,034

Restructuring charges




61

   Adjusted E&P segment operating income (loss)

$

225


$

(65)








March 31,


December 31,


2017


2016


(in millions)

Net debt:






Total debt

$

4,630


$

4,653

Subtract:






Cash and cash equivalents


(1,382)



(1,423)

Net debt

$

3,248


$

3,230

 

Southwestern management will host a teleconference call on Friday, April 28, 2017 at 10:00 a.m. Eastern to discuss its first quarter 2017 results. The toll-free number to call is 877-407-8035 and the international dial-in number is 201-689-8035. The teleconference can also be heard "live" on the Internet at http://www.swn.com.

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 the Internet at http://www.swn.com.

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; changes in expected levels of natural gas and oil reserves or production; operating hazards, drilling risks, unsuccessful exploratory activities; 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; potential liability for remedial actions under existing or future environmental regulations; 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 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.

Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We use the term "EUR" in this release that the SEC's guidelines prohibit us from including in filings with the SEC.  The quarterly reserves data included in this release are estimates we prepared that have not been audited by our independent reserve engineers.  U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the Southwestern Energy Company website.







OPERATING STATISTICS (Unaudited)


Southwestern Energy Company and Subsidiaries












For the three months ended


March 31,


2017


2016

Exploration & Production






Production






Gas production (Bcf)


183



213

Oil production (MBbls)


519



607

NGL production (MBbls)


3,008



3,376

   Total production (Bcfe)


204



237

Commodity Prices






Average realized gas price per Mcf, including derivatives

$

2.57


$

1.48

Average realized gas price per Mcf, excluding derivatives

$

2.73


$

1.44

Average realized oil price per Bbl

$

43.74


$

18.65

Average realized NGL price per Bbl

$

13.28


$

4.98

Summary of Derivative Activity in the Statement of Operations






Settled commodity amounts included in  "Gain (Loss) on Derivatives" (in millions)

$

(30)


$

8

Unsettled commodity amounts included in "Gain (Loss) on Derivatives" (in millions)

$

145


$

(18)

Average unit costs per Mcfe






Lease operating expenses

$

0.89


$

0.88

General & administrative expenses (1)

$

0.21


$

0.19

Taxes, other than income taxes (2)

$

0.12


$

0.08

Full cost pool amortization

$

0.40


$

0.49

Midstream






Volumes marketed (Bcfe)


245



279

Volumes gathered (Bcf)


129



165



(1)

Excludes $58 million of restructuring charges in 2016.

(2)

Excludes $3 million of restructuring charges in 2016.

 







STATEMENTS OF OPERATIONS (Unaudited)


Southwestern Energy Company and Subsidiaries













For the three months ended


March 31,


2017


2016







Operating Revenues






Gas sales

$

503


$

315

Oil sales


23



11

NGL sales


40



17

Marketing


253



198

Gas gathering


27



38



846



579

Operating Costs and Expenses






Marketing purchases


251



196

Operating expenses


147



165

General and administrative expenses


50



54

Restructuring charges




64

Depreciation, depletion and amortization


106



143

Impairment of natural gas and oil properties




1,034

Taxes, other than income taxes


26



23



580



1,679

Operating Income (Loss)


266



(1,100)

Interest Expense






Interest on debt


58



53

Other interest charges


2



2

Interest capitalized


(28)



(41)



32



14







Gain (Loss) on Derivatives


116



(14)

Loss on Early Extinguishment of Debt


(1)



Other Income (Loss), Net


2



(3)







Income (Loss) Before Income Taxes


351



(1,131)

Provision for Income Taxes






Deferred




1





1

Net Income (Loss)


351



(1,132)

Mandatory convertible preferred stock dividend


27



27

Participating securities - mandatory convertible preferred stock


43



Net Income (Loss) Attributable to Common Stock

$

281


$

(1,159)







Income (Loss) Per Common Share






Basic

$

0.57


$

(3.03)

Diluted

$

0.57


$

(3.03)

Weighted Average Common Shares Outstanding

Basic


493,068,000



382,870,847

Diluted


494,494,995



382,870,847

 








BALANCE SHEETS (Unaudited)


Southwestern Energy Company and Subsidiaries















March 31,

2017


December 31,

2016



(in millions)

ASSETS







Current assets


$

1,789


$

1,872

Property and equipment



24,784



24,489

Less: Accumulated depreciation, depletion and amortization



(19,641)



(19,534)

   Total property and equipment, net



5,143



4,955

Other long-term assets



264



249

   Total assets



7,196



7,076








LIABILITIES AND EQUITY







Current liabilities



1,121



1,064

Long-term debt



4,364



4,612

Pension and other postretirement liabilities



47



49

Other long-term liabilities



386



434

   Total liabilities



5,918



6,159

Equity:







Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 502,497,469 shares as of March 31, 2017 (does not include 3,346,865 shares issued on April 17, 2017 on account of a dividend declared on March 21, 2017) and 495,248,369 as of December 31, 2016



5



5

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 March 31, 2017 and December 31, 2016, conversion in January 2018





Additional paid-in capital



4,687



4,677

Accumulated deficit



(3,374)



(3,725)

Accumulated other comprehensive loss



(39)



(39)

Common stock in treasury, 31,269 shares as of March 31, 2017 and December 31, 2016



(1)



(1)

   Total equity



1,278



917

   Total liabilities and equity


$

7,196


$

7,076

 








STATEMENTS OF CASH FLOWS (Unaudited)


Southwestern Energy Company and Subsidiaries








For the three months ended



March 31,



2017


2016



(in millions)

Cash Flows From Operating Activities:







Net income (loss)


$

351


$

(1,132)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:







   Depreciation, depletion and amortization



106



143

   Impairment of natural gas and oil properties





1,034

   Amortization of debt issuance costs



2



2

   Deferred income taxes





1

   (Gain) Loss on derivatives, net of settlement



(146)



21

   Stock-based compensation



6



9

   Restructuring charges





42

   Loss on early extinguishment of debt



1



   Other



(2)



5

Change in assets and liabilities



(6)



(33)

Net cash provided by operating activities



312



92








Cash Flows From Investing Activities:







Capital investments



(340)



(196)

Proceeds from sale of property and equipment



2



Other



4



Net cash used in investing activities



(334)



(196)








Cash Flows From Financing Activities:







Payments on short-term debt



(25)



Payments on revolving credit facility





(864)

Borrowings under revolving credit facility





2,600

Payments on commercial paper





(242)

Borrowings under commercial paper





242

Change in bank drafts outstanding



6



(19)

Preferred stock dividend





(27)

Other





(4)

Net cash provided by (used in) financing activities



(19)



1,686








Increase (decrease) in cash and cash equivalents



(41)



1,582

Cash and cash equivalents at beginning of year



1,423



15

Cash and cash equivalents at end of period


$

1,382


$

1,597

 

















SEGMENT INFORMATION (Unaudited)


Southwestern Energy Company and Subsidiaries
















Exploration
and
Production


Midstream Services


Other


Eliminations


Total



(in millions)

Three months ended March 31, 2017
















Revenues


$

563


$

858


$


$

(575)


$

846

Marketing purchases





765





(514)



251

Operating expenses



181



27





(61)



147

General and administrative expenses



43



7







50

Depreciation, depletion and amortization



90



16







106

Taxes, other than income taxes



24



2







26

Operating income



225



41







266

Capital investments (1)



283



6



1





290

















Three months ended March 31, 2016
















Revenues


$

336


$

621


$


$

(378)


$

579

Marketing purchases





503





(307)



196

Operating expenses



209



27





(71)



165

General and administrative expenses



45



9







54

Restructuring charges



61



3







64

Depreciation, depletion and amortization



127



16







143

Impairment of natural gas and oil properties



1,034









1,034

Taxes, other than income taxes



20



3







23

Operating income (loss)



(1,160)



60







(1,100)

Capital investments (1)



120



2







122



(1)

Capital investments includes decreases of $52 million and $78 million for the three months ended March 31, 2017 and 2016, respectively, relating to the change in accrued expenditures between periods.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/southwestern-energy-announces-first-quarter-2017-financial-and-operating-results-300447635.html

SOURCE Southwestern Energy Company

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