Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the second quarter ended June 30, 2023.
- Generated $231 million net income, $95 million adjusted net income (non-GAAP), $484 million adjusted EBITDA (non-GAAP) and $425 million net cash provided by operating activities
- Reported total net production of 423 Bcfe, or 4.6 Bcfe per day, including 4.0 Bcf per day of gas and 106 MBbls per day of liquids
- Invested $595 million of capital and placed 50 wells to sales, including 28 in Appalachia and 22 in Haynesville
- Reduced full-year capital investment guidance $200 million, or approximately 10%, due to activity reductions, moderating inflation, and operational efficiencies
- Closed divestiture of non-core Pennsylvania Utica assets, applying $123 million of net proceeds to debt reduction
“Southwestern Energy continues to improve the resilience and free cash flow generation capacity of our business. With our successes mitigating inflationary pressures and driving operational efficiencies, we expect to deliver our 2023 plan with less activity and corresponding investment. Debt reduction remains our top capital allocation priority, which we accelerated with a non-core asset sale. Our disciplined strategy to manage through the commodity price cycle maintains the Company’s financial strength and productive capacity. We are well positioned to increase shareholder value in the supportive longer-term natural gas environment,” said Bill Way, Southwestern Energy President and Chief Executive Officer.
Financial Results
For the three months ended | For the six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(in millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net income (loss) | $ | 231 | $ | 1,173 | $ | 2,170 | $ | (1,502 | ) | ||||||
Adjusted net income (non-GAAP) | $ | 95 | $ | 368 | $ | 441 | $ | 815 | |||||||
Diluted earnings (loss) per share | $ | 0.21 | $ | 1.05 | $ | 1.97 | $ | (1.35 | ) | ||||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.09 | $ | 0.33 | $ | 0.40 | $ | 0.73 | |||||||
Adjusted EBITDA (non-GAAP) | $ | 484 | $ | 822 | $ | 1,283 | $ | 1,727 | |||||||
Net cash provided by operating activities | $ | 425 | $ | 427 | $ | 1,562 | $ | 1,399 | |||||||
Net cash flow (non-GAAP) | $ | 453 | $ | 754 | $ | 1,217 | $ | 1,615 | |||||||
Total capital investments (1) | $ | 595 | $ | 585 | $ | 1,260 | $ | 1,129 | |||||||
Free cash flow (deficit) (non-GAAP) | $ | (142 | ) | $ | 169 | $ | (43 | ) | $ | 486 | |||||
(1) | Capital investments include a decrease of $22 million and an increase of $34 million for the three months ended June 30, 2023 and 2022, respectively, and a decrease of $28 million and an increase of $77 million for the six months ended June 30, 2023 and 2022, respectively, relating to the change in capital accruals between periods. |
For the quarter ended June 30, 2023, Southwestern Energy recorded net income of $231 million, or $0.21 per diluted share, including a gain on mark-to-market of unsettled derivatives. Excluding this and other one-time items, adjusted net income (non-GAAP) was $95 million, or $0.09 per diluted share, and adjusted EBITDA (non-GAAP) was $484 million. Net cash provided by operating activities was $425 million, net cash flow (non-GAAP) was $453 million and total capital investments were $595 million.
As of June 30, 2023, Southwestern Energy had total debt of $4.05 billion and net debt to adjusted EBITDA (non-GAAP) of 1.4x. At the end of the quarter, the Company had $310 million of borrowings under its revolving credit facility and $25 million in outstanding letters of credit.
As indicated in the table below, second quarter 2023 weighted average realized price was $1.84 per Mcfe, excluding the impact of derivatives and net of $0.25 per Mcfe of transportation expenses. Including derivatives, weighted average realized price for the second quarter was down 23% from $3.04 per Mcfe in 2022 to $2.33 per Mcfe in 2023 primarily due to lower commodity prices including a 71% decrease in NYMEX Henry Hub and a 32% decrease in WTI.
Realized Prices | For the three months ended | For the six months ended | ||||||||||||||
(includes transportation costs) | June 30, | June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Natural Gas Price: | ||||||||||||||||
NYMEX Henry Hub price ($/MMBtu)(1) | $ | 2.10 | $ | 7.17 | $ | 2.76 | $ | 6.06 | ||||||||
Discount to NYMEX (2) | (0.63 | ) | (0.69 | ) | (0.43 | ) | (0.56 | ) | ||||||||
Average realized gas price, excluding derivatives ($/Mcf) | $ | 1.47 | $ | 6.48 | $ | 2.33 | $ | 5.50 | ||||||||
Gain (loss) on settled financial basis derivatives ($/Mcf) | (0.02 | ) | 0.06 | (0.05 | ) | 0.04 | ||||||||||
Gain (loss) on settled commodity derivatives ($/Mcf) | 0.57 | (3.86 | ) | 0.17 | (2.70 | ) | ||||||||||
Average realized gas price, including derivatives ($/Mcf) | $ | 2.02 | $ | 2.68 | $ | 2.45 | $ | 2.84 | ||||||||
Oil Price: | ||||||||||||||||
WTI oil price ($/Bbl) (3) | $ | 73.78 | $ | 108.41 | $ | 74.96 | $ | 101.35 | ||||||||
Discount to WTI (4) | (10.58 | ) | (8.12 | ) | (10.41 | ) | (7.81 | ) | ||||||||
Average realized oil price, excluding derivatives ($/Bbl) | $ | 63.20 | $ | 100.29 | $ | 64.55 | $ | 93.54 | ||||||||
Average realized oil price, including derivatives ($/Bbl) | $ | 56.82 | $ | 56.94 | $ | 57.49 | $ | 53.73 | ||||||||
NGL Price: | ||||||||||||||||
Average realized NGL price, excluding derivatives ($/Bbl) | $ | 18.63 | $ | 40.07 | $ | 21.51 | $ | 39.72 | ||||||||
Average realized NGL price, including derivatives ($/Bbl) | $ | 20.85 | $ | 29.23 | $ | 22.71 | $ | 28.22 | ||||||||
Percentage of WTI, excluding derivatives | 25 | % | 37 | % | 29 | % | 39 | % | ||||||||
Total Weighted Average Realized Price: | ||||||||||||||||
Excluding derivatives ($/Mcfe) | $ | 1.84 | $ | 6.69 | $ | 2.65 | $ | 5.80 | ||||||||
Including derivatives ($/Mcfe) | $ | 2.33 | $ | 3.04 | $ | 2.75 | $ | 3.14 | ||||||||
(1) | Based on last day settlement prices from monthly futures contracts. | |
(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. | |
(3) | Based on the average daily settlement price of the nearby month futures contract over the period. | |
(4) | This discount primarily includes location and quality adjustments. |
Operational Results
Total net production for the quarter ended June 30, 2023 was 423 Bcfe, of which 86% was natural gas, 12% NGLs and 2% oil. Capital investments totaled $595 million for the second quarter of 2023 with 38 wells drilled, 46 wells completed and 50 wells placed to sales.
For the three months ended | For the six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Production | ||||||||||||||||
Natural gas production (Bcf) | 365 | 383 | 718 | 759 | ||||||||||||
Oil production (MBbls) | 1,441 | 1,363 | 2,859 | 2,633 | ||||||||||||
NGL production (MBbls) | 8,247 | 7,738 | 16,487 | 14,657 | ||||||||||||
Total production (Bcfe) | 423 | 438 | 834 | 863 | ||||||||||||
Average unit costs per Mcfe | ||||||||||||||||
Lease operating expenses (1) | $ | 1.00 | $ | 0.97 | $ | 1.03 | $ | 0.96 | ||||||||
General & administrative expenses (2) | $ | 0.09 | $ | 0.07 | $ | 0.09 | $ | 0.08 | ||||||||
Taxes, other than income taxes | $ | 0.14 | $ | 0.15 | $ | 0.15 | $ | 0.14 | ||||||||
Full cost pool amortization | $ | 0.77 | $ | 0.65 | $ | 0.76 | $ | 0.64 | ||||||||
(1) | Includes post-production costs such as gathering, processing, fractionation and compression. | |
(2) | Excludes $2 million and $27 million in merger-related expenses for the three and six months ended June 30, 2022, respectively. |
Appalachia– In the second quarter, total production was 257 Bcfe, with NGL production of 90 MBbls per day and oil production of 16 MBbls per day. The Company drilled 20 wells, completed 28 wells and placed 28 wells to sales with an average lateral length of 17,304 feet.
Haynesville– In the second quarter, total production was 166 Bcf. There were 18 wells drilled, 18 wells completed and 22 wells placed to sales in the quarter with an average lateral length of 8,527 feet.
E&P Division Results |
For the three months ended
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For the six months ended
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Appalachia | Haynesville | Appalachia | Haynesville | ||||||||||||
Natural gas production (Bcf) | 199 | 166 | 392 | 326 | |||||||||||
Liquids production | |||||||||||||||
Oil (MBbls) | |||||||||||||||
