Market Overview

Southwestern Energy to Sell Fayetteville Shale Business for Cash of $1.865 Billion Plus Assumption of Contractual Obligations


Strategic and transformative action repositions the Company to
deliver greater value from higher return Appalachia assets

Announces debt reduction plan, share repurchase program and
supplemental investment to drive liquids and value growth

Southwestern Energy Company (NYSE:SWN) (the "Company") today announced
that it has entered into a definitive agreement with Flywheel Energy,
LLC, a private company backed by Kayne Private Energy Income Funds, to
sell its Fayetteville Shale E&P and related midstream gathering assets
for $1.865 billion in cash, subject to adjustments and customary closing
conditions. In addition, the buyer will assume approximately $438
million of future contractual liabilities after taking into account
certain obligations retained by the Company. The transaction, which was
unanimously approved by Southwestern Energy's directors, has an
effective date of July 1, 2018, and is expected to close in December

The Company also announced:

  • A conditional tender offer for up to $900 million of its Senior Notes,
    as described in a separate press release also issued today;
  • A share repurchase program of up to $200 million; and
  • Allocation of up to $600 million over the next two years, in
    aggregate, supplementing cash flow to further develop the Company's
    liquids-rich Appalachia assets and accelerate the path to
    self-funding. Until investments are made, these funds will be used to
    repay credit facility borrowings.

Bill Way, President and CEO of Southwestern Energy, said, "The sale of
Fayetteville represents a pivotal and deliberate step towards fulfilling
our promise to reposition Southwestern Energy to capture greater returns
from our higher margin Appalachia assets. We are pleased with the
process, the outcome and the resulting valuation of this significant
asset. I'd like to thank the employees of Fayetteville for their years
of extraordinary service to the Company and its shareholders,
particularly during this process.

"This transaction is a significant milestone in advancing our strategic
plan. Our shareholders will benefit from an optimized portfolio,
stronger balance sheet including improved financial flexibility and the
return of capital to all shareholders through a share repurchase
program. I am grateful for the tireless work of our entire dedicated and
talented SWN team that sets the stage for a stronger future."

Financial Impact

Following the closing, the Company will have pro-forma debt of
approximately $2.3 billion. A portion of proceeds will be used to
replace cash flow that would otherwise have been generated by the
Fayetteville assets and reinvested into SWN's liquids-rich assets in
West Virginia. The resulting increase in activity in West Virginia is
expected to accelerate the Company's path to self-funded growth in
production and shareholder value. The Company targets a long-term
sustainable debt/EBITDA ratio of 2x by 2020.

The commitments under the Company's revolving credit facility are
expected to remain at approximately $2.0 billion following the close of
the transaction.

As a result of the transaction, Southwestern Energy expects additional
annualized interest and organizational cost reductions of $60-75
million. This is incremental to the $110 million in annualized interest
and G&A savings announced in the second quarter. The Company expects to
offset federal taxes using existing net operating losses.

Company Outlook

Subject to its rigorous capital allocation philosophy, the Company
anticipates deploying up to six rigs in 2019, generating total
production growth of 8-12% and liquids growth of 15-25%. For 2020, the
Company anticipates total production growth in the mid-teens and liquids
growth in the mid-twenties. These expected outcomes are dependent upon
market conditions and subject to completion of the Company's annual
budget processes.

Activity will be weighted toward Southwest Appalachia's high margin,
liquids-rich inventory. The Company continues to develop its premium
acreage, with total production growing over 60% since 2016.

Southwestern Energy has over 475,000 (net) acres in the Appalachia Basin
prospective for Upper and Lower Marcellus, Upper Devonian and
Utica/Upper Point Pleasant development. Within Appalachia, Southwestern
Energy has identified over 40 Tcfe of resource, which includes more than
1,800 economic drilling locations below $2.75/Mcf gas and $50/Bbl oil.
The Company's year-end 2017 Appalachia reserves were 11.1 Tcfe, 33% of
which were condensate and natural gas liquids.

Transaction Details

Under the terms of the transaction, Southwestern Energy will exit
Fayetteville. These assets include approximately 915,000 net acres,
4,033 operated producing wells, 3.7 Tcf of proved reserves as of
year-end 2017, anticipated 2019 production of 225-230 Bcf and associated
midstream gathering infrastructure and compression. The Company will
transfer to the buyer at closing certain natural gas hedge positions
that the Company has or will put in place on behalf of the buyer. The
buyer will assume $564 million of contractual obligations, with the
Company responsible for certain of these potential obligations of up to
$126 million related to unused transportation through 2020.


J.P. Morgan Securities LLC is serving as financial advisor to
Southwestern Energy, and Latham & Watkins LLP is serving as legal
advisor. Houlihan Lokey Capital, Inc. provided certain evaluation
services to the Company's Board of Directors.

About Southwestern Energy Company

Southwestern Energy Company (NYSE:SWN) is an independent energy company
whose wholly-owned subsidiaries are engaged in natural gas, natural gas
liquids and oil exploration, development, production, gathering and
marketing. Additional information about the Company is available at

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; 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

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