Southwestern Energy Announces Second Quarter 2023 Results
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. 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:
$ 2.10 $ 7.17 $ 2.76 $ 6.06
NYMEX Henry Hub price ($/MMBtu)(1)
(0.63 ) (0.69 ) (0.43 ) (0.56 )
Discount to NYMEX (2)
------------ -------------------- ------------ -------------------- ------------ -------------------- ------------ --------------------
$ 1.47 $ 6.48 $ 2.33 $ 5.50
Average realized gas price, excluding derivatives ($/Mcf)
(0.02 ) 0.06 (0.05 ) 0.04
Gain (loss) on settled financial basis derivatives ($/Mcf)
0.57 (3.86 ) 0.17 (2.70 )
Gain (loss) on settled commodity derivatives ($/Mcf)
------------ -------------------- ------------ -------------------- ------------ -------------------- ------------ --------------------
$ 2.02 $ 2.68 $ 2.45 $ 2.84
Average realized gas price, including derivatives ($/Mcf)
Oil Price:
$ 73.78 $ 108.41 $ 74.96 $ 101.35
WTI oil price ($/Bbl) (3)
(10.58 ) (8.12 ) (10.41 ) (7.81 )
Discount to WTI (4)
------------ -------------------- ------------ -------------------- ------------ -------------------- ------------ --------------------
$ 63.20 $ 100.29 $ 64.55 $ 93.54
Average realized oil price, excluding derivatives ($/Bbl)
$ 56.82 $ 56.94 $ 57.49 $ 53.73
Average realized oil price, including derivatives ($/Bbl)
NGL Price:
$ 18.63 $ 40.07 $ 21.51 $ 39.72
Average realized NGL price, excluding derivatives ($/Bbl)
$ 20.85 $ 29.23 $ 22.71 $ 28.22
Average realized NGL price, including derivatives ($/Bbl)
25 % 37 % 29 % 39 %
Percentage of WTI, excluding derivatives
Total Weighted Average Realized Price:
$ 1.84 $ 6.69 $ 2.65 $ 5.80
Excluding derivatives ($/Mcfe)
(1) Based on last day settlement prices from monthly futures contracts. 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. 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. Based on the average daily settlement price of the nearby month futures contract over the period.
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
365 383 718 759
Natural gas production (Bcf)
1,441 1,363 2,859 2,633
Oil production (MBbls)
8,247 7,738 16,487 14,657
NGL production (MBbls)
------------ -------------------- ------------ -------------------- ------------ -------------------- ------------ --------------------
423 438 834 863
Total production (Bcfe)
Average unit costs per Mcfe
$ 1.00 $ 0.97 $ 1.03 $ 0.96
Lease operating expenses (1)
$ 0.09 $ 0.07 $ 0.09 $ 0.08
General & administrative expenses (2)
$ 0.14 $ 0.15 $ 0.15 $ 0.14
Taxes, other than income taxes
(1) Includes post-production costs such as gathering, processing, fractionation and compression. Includes post-production costs such as gathering, processing, fractionation and compression.
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 For the six months ended
June 30, 2023 June 30, 2023
------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------
Appalachia Haynesville Appalachia Haynesville
---------------------------------------- ---------------------------------------- ---------------------------------------- ----------------------------------------
Natural gas production (Bcf) 199 166 392 326
Liquids production
1,434 7 2,843 15
Oil (MBbls)
8,240 5 16,480 5
NGL (MBbls)
-------------------- -------------------- -------------------- --------------------
Production (Bcfe) 257 166 508 326
Capital investments (in millions)
$ 219 $ 292 $ 438 $ 651
Drilling and completions, including workovers
27 1 53 3
Land acquisition and other
29 19 60 39
Capitalized interest and expense
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
$ 275 $ 312 $ 551 $ 693
Total capital investments
Gross operated well activity summary
20 18 39 30
Drilled
28 18 43 39
Completed
28 22 41 45
Wells to sales
Wells to sales summary For the three months ended June 30, 2023 For the three months ended June 30, 2023
---------------------------------------- --------------------------------------------------------------
Gross wells to sales Average lateral length
-------------------- ----------------------
Appalachia
11 15,445
Super Rich Marcellus
8 16,822
Rich Marcellus
3 19,740
Dry Gas Utica(1)
6 20,136
Dry Gas Marcellus
Haynesville 22 8,527
--------------------
50
Total
(1) Ohio Utica Ohio Utica
2023 Guidance
In the table below, the Company provides third quarter and updated full year 2023 guidance reflecting current market conditions. Bold indicates updated full year guidance.
3rd Quarter Total Year
PRODUCTION
-------------------------------------------------------------------------- ------------------------------------ -------------------- ------------------------------------
360 - 380 1,425 - 1,465
Gas production (Bcf)
13.5% 13.5 - 14.0%
Liquids (% of production)
419 - 439 1,650 - 1,705
Total (Bcfe)
CAPITAL BY DIVISION (in millions)
-------------------------------------------------------------------------- ------------------------------------ -------------------- ------------------------------------
45%
Appalachia
55%
Haynesville
$1,750 - $2,020
Total D&C capital (includes land)
$50 - $70
Other
$200 - $210
Capitalized interest and expense
Total capital investments $2,000 - $2,300
PRICING
-------------------------------------------------------------------------- ------------------------------------ -------------------- ------------------------------------
Natural gas discount to NYMEX including transportation (1) $0.75 - $0.87 per Mcf $0.55 - $0.70 per Mcf
Oil discount to West Texas Intermediate (WTI) including transportation $12.50 - $14.50 per Bbl $12.00 - $15.00 per Bbl
Natural gas liquids realization as a % of WTI including transportation (2) 20% - 28% 27% - 35%
EXPENSES
-------------------------------------------------------------------------- ------------------------------------ -------------------- ------------------------------------
Lease operating expenses $1.05 - $1.11 per Mcfe
General & administrative expense $0.08 - $0.12 per Mcfe
Taxes, other than income taxes $0.16 - $0.20 per Mcfe
GROSS OPERATED WELL COUNT (3) Drilled Completed Wells To Sales Ending DUC Inventory ----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- Appalachia 53 - 57 59 - 63 62 - 66 13 - 17 Haynesville 52 - 56 55 - 59 61 - 65 17 - 21 ----------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(1) Includes impact of transportation costs and expected $0.08 -- $0.12 per Mcf and $0.02 -- $0.04 per Mcf impact from financial basis hedges for the third quarter and full year of 2023, respectively. Includes impact of transportation costs and expected $0.08 -- $0.12 per Mcf and $0.02 -- $0.04 per Mcf impact from financial basis hedges for the third quarter and full year of 2023, respectively. (2) Annual guidance based on $74 per Bbl WTI. Annual guidance based on $74 per Bbl WTI.
Conference Call
Southwestern Energy will host a conference call and webcast on Friday, August 4, 2023 at 9:30 a.m. Central to discuss second quarter 2023 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6506 and enter access code 6394673. The conference call will webcast live at www.swn.com.
A replay will also be available on SWN's website at www.swn.com following the call.
About Southwestern Energy
Southwestern Energy Company (NYSE: SWN) is a leading U.S. producer and marketer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the nation's most prolific shale gas basins. SWN's returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. For additional information, please visit www.swn.com and www.swncrreport.com.
Forward Looking Statement
This news release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. These statements are based on current expectations. The words "anticipate," "intend," "plan," "project," "estimate," "continue," "potential," "should," "could," "may," "will," "objective," "guidance," "outlook," "effort," "expect," "believe," "predict," "budget," "projection," "goal," "forecast," "model," "target", "seek", "strive," "would," "approximate," and similar words are intended to identify forward-looking statements. Statements may be forward looking even in the absence of these particular words.
Examples of forward-looking statements include, but are not limited to, the expectations of plans, business strategies, objectives and growth and anticipated financial and operational performance, including guidance regarding our strategy to develop reserves, drilling plans and programs (including the number of rigs and frac crews to be used), estimated reserves and inventory duration, projected production and sales volume and growth rates, projected commodity prices, basis and average differential, impact of commodity prices on our business, projected average well costs, generation of free cash flow, our return of capital strategy, including the amount and timing of any redemptions, repayments or repurchases of our common stock, outstanding debt securities or other debt instruments, leverage targets, our ability to maintain or improve our credit ratings, our ability to achieve our debt reduction plan, leverage levels and financial profile, our hedging strategy, our environmental, social and governance (ESG) initiatives and our ability to achieve anticipated results of such initiatives, expected benefits from acquisitions, potential acquisitions, divestitures, potential divestitures and strategic transactions, the timing thereof and our ability to achieve the intended operational, financial and strategic benefits of any such transactions or other initiatives. These forward-looking statements are based on management's current beliefs, based on currently available information, as to the outcome and timing of future events. All forward-looking statements speak only as of the date of this news release. The estimates and assumptions upon which forward-looking statements are based are inherently uncertain and involve a number of risks that are beyond our control. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Therefore, you should not place undue reliance on any of the forward-looking statements contained herein.
Factors that could cause our actual results to differ materially from those indicated in any forward-looking statement are subject to all of the risks and uncertainties incident to the exploration for and the development, production, gathering and sale of natural gas, NGLs and oil, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, the costs and results of drilling and operations, lack of availability of drilling and production equipment and services, the ability to add proved reserves in the future, environmental risks, drilling and other operating risks, legislative and regulatory changes, the uncertainty inherent in estimating natural gas and oil reserves and in projecting future rates of production, the quality of technical data, cash flow and access to capital, the timing of development expenditures, a change in our credit rating, an increase in interest rates, our ability to achieve our debt reduction plan, our ability to increase commitments under our revolving credit facility, our hedging and other financial contracts, our ability to maintain leases that may expire if production is not established or profitably maintained, our ability to transport our production to the most favorable markets or at all, any increase in severance or similar taxes, the impact of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally, the effects of weather or power outages, increased competition, the financial impact of accounting regulations and critical accounting policies, the comparative cost of alternative fuels, credit risk relating to the risk of loss as a result of non-performance by our counterparties, including as a result of financial or banking failures, impacts of world health events, including the COVID-19 pandemic, cybersecurity risks, geopolitical and business conditions in key regions of the world, our ability to realize the expected benefits from acquisitions, divestitures, and strategic transactions, our ability to achieve our GHG emission reduction goals and the costs associated therewith, and any other factors described or referenced under Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and under Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2022.
We have no obligation and make no undertaking to publicly update or revise any forward-looking statements, except as required by applicable law. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.
SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended For the six months ended
June 30, June 30,
---------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------
(in millions, except share/per share amounts) 2023 2022 2023 2022
---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Operating Revenues:
$ 551 $ 2,485 $ 1,696 $ 4,177
Gas sales
92 138 187 249
Oil sales
153 310 354 582
NGL sales
475 1,207 1,154 2,073
Marketing
(2 ) (2 ) (4 ) --
Other
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
1,269 4,138 3,387 7,081
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
Operating Costs and Expenses:
481 1,215 1,148 2,077
Marketing purchases
418 402 836 783
Operating expenses
41 35 87 79
General and administrative expenses
-- 2 -- 27
Merger-related expenses
328 288 641 563
Depreciation, depletion and amortization
58 65 126 122
Taxes, other than income taxes
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
1,326 2,007 2,838 3,651
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
Operating Income (Loss) (57 ) 2,131 549 3,430
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
Interest Expense:
60 73 123 141
Interest on debt
3 4 6 7
Other interest charges
(29 ) (29 ) (59 ) (59 )
Interest capitalized
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
34 48 70 89
Gain (Loss) on Derivatives 317 (879 ) 1,718 (4,806 )
Loss on Early Extinguishment of Debt -- (4 ) (19 ) (6 )
Other Loss, Net -- (1 ) (1 ) (1 )
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
Income (Loss) Before Income Taxes 226 1,199 2,177 (1,472 )
Provision (Benefit) for Income Taxes:
-- 26 -- 30
Current
(5 ) -- 7 --
Deferred
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
(5 ) 26 7 30
-------------- -------------------- -------------- -------------------- -------------- -------------------- -------------- --------------------
Net Income (Loss) $ 231 $ 1,173 $ 2,170 $ (1,502 )
======= ======= ==================== ======= ======= ==================== ======= ======= ==================== ======= ======= ====================
Earnings (Loss) Per Common Share:
$ 0.21 $ 1.05 $ 1.97 $ (1.35 )
Basic
======= ======= ==================== ======= ======= ==================== ======= ======= ==================== ======= ======= ====================
$ 0.21 $ 1.05 $ 1.97 $ (1.35 )
Diluted
======= ======= ==================== ======= ======= ==================== ======= ======= ==================== ======= ======= ====================
Weighted Average Common Shares Outstanding:
1,101,167,082 1,116,175,758 1,100,725,127 1,115,456,855
Basic
============== ==================== ============== ==================== ============== ==================== ============== ====================
SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2023 2022
-------------------------------- --------------------------------
ASSETS (in millions)
Current assets:
$ 25 $ 50
Cash and cash equivalents
598 1,401
Accounts receivable, net
423 145
Derivative assets
74 68
Other current assets
------------ -------------------- ------------ --------------------
1,120 1,664
Total current assets
Natural gas and oil properties, using the full cost method 36,899 35,763
Other 545 527
Less: Accumulated depreciation, depletion and amortization (26,039 ) (25,387 )
------------ -------------------- ------------ --------------------
11,405 10,903
Total property and equipment, net
Operating lease assets 168 177
Long-term derivative assets 205 72
Other long-term assets 103 110
------------ -------------------- ------------ --------------------
476 359
Total long-term assets
------------ -------------------- ------------ --------------------
TOTAL ASSETS $ 13,001 $ 12,926
====== ====== ==================== ====== ====== ====================
LIABILITIES AND EQUITY
Current liabilities:
$ 1,381 $ 1,835
Accounts payable
116 136
Taxes payable
77 86
Interest payable
270 1,317
Derivative liabilities
44 42
Current operating lease liabilities
22 65
Other current liabilities
------------ -------------------- ------------ --------------------
1,910 3,481
Total current liabilities
Long-term debt 4,036 4,392
Long-term operating lease liabilities 121 133
Long-term derivative liabilities 205 378
Other long-term liabilities 240 218
------------ -------------------- ------------ --------------------
4,602 5,121
Total long-term liabilities
Commitments and contingencies
Equity:
12 12
Common stock, $0.01 par value; 2,500,000,000 shares authorized; issued 1,163,077,745 shares as of June 30, 2023 and 1,161,545,588 shares as of December 31, 2022
7,182 7,172
Additional paid-in capital
(369 ) (2,539 )
Accumulated deficit
(9 ) 6
Accumulated other comprehensive income (loss)
(327 ) (327 )
Common stock in treasury, 61,614,693 shares as of June 30, 2023 and December 31, 2022
------------ -------------------- ------------ --------------------
6,489 4,324
Total equity
------------ -------------------- ------------ --------------------
SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended
June 30,
----------------------------------------------------------------------------------------------------
(in millions) 2023 2022
---------------------------------------- ----------------------------------------
Cash Flows From Operating Activities:
$ 2,170 $ (1,502 )
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
641 563
Depreciation, depletion and amortization
4 6
Amortization of debt issuance costs
7 --
Deferred income taxes
(1,631 ) 2,510
Gain (loss) on derivatives, unsettled
5 3
Stock-based compensation
19 6
Loss on early extinguishment of debt
2 2
Other
Change in assets and liabilities:
803 (621 )
Accounts receivable
(363 ) 433
Accounts payable
(20 ) 4
Taxes payable
(5 ) 7
Interest payable
(25 ) (5 )
Inventories
(45 ) (7 )
Other assets and liabilities
-------------------- -------------------- -------------------- --------------------
1,562 1,399
Net cash provided by operating activities
Cash Flows From Investing Activities:
(1,286 ) (1,050 )
Capital investments
123 1
Proceeds from sale of property and equipment
-------------------- -------------------- -------------------- --------------------
(1,163 ) (1,049 )
Net cash used in investing activities
Cash Flows From Financing Activities:
-- (204 )
Payments on current portion of long-term debt
(437 ) (71 )
Payments on long-term debt
(1,946 ) (5,564 )
Payments on revolving credit facility
2,006 5,510
Borrowings under revolving credit facility
(43 ) 29
Change in bank drafts outstanding
-- 7
Proceeds from exercise of common stock options
-- (20 )
Purchase of treasury stock
-- (11 )
Debt issuance/amendment costs
(4 ) (4 )
Cash paid for tax withholding
-------------------- -------------------- -------------------- --------------------
(424 ) (328 )
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents (25 ) 22
Cash and cash equivalents at beginning of year 50 28
-------------------- -------------------- -------------------- --------------------
Hedging Summary
A detailed breakdown of derivative financial instruments and financial basis positions as of June 30, 2023, including the remainder of 2023 and excluding those positions that settled in the first and second quarters, is shown below. Please refer to the Company's quarterly report on Form 10-Q to be 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
-------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- ----------------------------------------
Natural gas
2023
-----------------------------
348 $ 3.25 $ -- $ -- $ --
Fixed price swaps
78 -- -- 2.83 3.21
Two-way costless collars
95 -- 2.08 2.50 2.91
Three-way costless collars
--------------------
521
Total
2024
-----------------------------
528 $ 3.54 $ -- $ -- $ --
Fixed price swaps
44 -- -- 3.07 3.53
Two-way costless collars
11 -- 2.25 2.80 3.54
Three-way costless collars
--------------------
583
Total
2025
-----------------------------
73 $ -- $ -- $ 3.50 $ 5.40
Two-way costless collars
106 -- 2.50 3.75 5.69
Three-way costless collars
--------------------
Natural gas financial basis positions Volume Basis Differential
(Bcf) ($/MMBtu)
---------------------------------------- ------------------------------------------------------------
Q3 2023
Dominion South 34 $ (0.75 )
TCO 22 $ (0.62 )
TETCO M3 16 $ (0.66 )
Trunkline Zone 1A 3 $ (0.29 )
-------------------- -------------------- -------------------- -------------------- --------------------
75 $ (0.67 )
Total
Q4 2023
Dominion South 33 $ (0.75 )
TCO 20 $ (0.61 )
TETCO M3 15 $ (0.18 )
Trunkline Zone 1A 3 $ (0.29 )
-------------------- -------------------- -------------------- -------------------- --------------------
71 $ (0.57 )
Total
2024
Dominion South 46 $ (0.71 )
2025
Call Options - Natural Gas (Net) Volume Weighted Average
Strike Price
(Bcf) ($/MMBtu)
----------------------- ---------------------------------------------
2023 25 $ 2.96
2024 82 6.56
2025 73 7.00
2026 73 7.00
--- --------------------
Weighted Average Price per Bbl
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Volume (MBbls) Swaps Sold Puts Purchased Sold Calls
Puts
-------------------- ---------------------------------------- ---------------------------------------- ---------------------------------------- ----------------------------------------
Oil
2023
--------------------------------
1,466 $ 67.34 $ -- $ -- $ --
Fixed price swaps
294 -- -- 70.00 80.58
Two-way costless collars
582 -- 34.36 46.05 55.96
Three-way costless collars
--------------------
2,342
Total
2024
--------------------------------
1,571 $ 71.06 $ -- $ -- $ --
Fixed price swaps
146 -- -- 70.00 78.25
Two-way costless collars
--------------------
1,717
Total
2025
--------------------------------
41 $ 77.66 $ -- $ -- $ --
Fixed price swaps
Ethane
2023
--------------------------------
4,499 $ 11.01 $ -- $ -- $ --
Fixed price swaps
2024
--------------------------------
1,305 $ 10.81 $ -- $ -- $ --
Fixed price swaps
Propane
2023
--------------------------------
3,601 $ 32.19 $ -- $ -- $ --
Fixed price swaps
2024
--------------------------------
1,460 $ 33.29 $ -- $ -- $ --
Fixed price swaps
Normal Butane
2023
--------------------------------
396 $ 40.96 $ -- $ -- $ --
Fixed price swaps
2024
--------------------------------
329 $ 40.74 $ -- $ -- $ --
Fixed price swaps
Natural Gasoline
2023
--------------------------------
342 $ 63.74 $ -- $ -- $ --
Fixed price swaps
2024
--------------------------------
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 the Company's 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 free cash flow (deficit), net debt, adjusted net income, adjusted diluted earnings per share, adjusted EBITDA and net debt to adjusted EBITDA, all of 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.
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------
2023 2022 2023 2022
------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------
Adjusted net income: (in millions)
Net income (loss) $ 231 $ 1,173 $ 2,170 $ (1,502 )
Add back (deduct):
-- 2 -- 27
Merger-related expenses
(107 ) (722 ) (1,631 ) 2,510
(Gain) loss on unsettled derivatives (1)
-- 4 19 6
Loss on early extinguishment of debt
4 1 7 1
Other (2)
(57 ) (263 ) (494 ) 385
Adjustments due to discrete tax items (3)
24 173 370 (612 )
Tax impact on adjustments
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(1) Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively. Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively. (2) Includes $4 million and $5 million for the three and six months ended June, 30, 2023, respectively, of G&A related to the development of enterprise resource technology, expensed in the period incurred per GAAP. Includes $4 million and $5 million for the three and six months ended June, 30, 2023, respectively, of G&A related to the development of enterprise resource technology, expensed in the period incurred per GAAP.
Three Months Ended Six Months Ended
June 30, June 30,
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2023 2022 2023 2022
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Adjusted diluted earnings per share:
Diluted earnings (loss) per share $ 0.21 $ 1.05 $ 1.97 $ (1.35 )
Add back (deduct):
-- 0.00 -- 0.03
Merger-related expenses
(0.10 ) (0.64 ) (1.48 ) 2.25
(Gain) loss on unsettled derivatives (1)
-- 0.00 0.02 0.00
Loss on early extinguishment of debt
0.00 0.00 0.00 0.00
Other (2)
(0.05 ) (0.23 ) (0.45 ) 0.34
Adjustments due to discrete tax items (3)
0.03 0.15 0.34 (0.54 )
Tax impact on adjustments
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
(1) Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively. Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively. (2) Includes $4 million and $5 million for the three and six months ended June, 30, 2023, respectively, of G&A related to the development of enterprise resource technology, expensed in the period incurred per GAAP. Includes $4 million and $5 million for the three and six months ended June, 30, 2023, respectively, of G&A related to the development of enterprise resource technology, expensed in the period incurred per GAAP.
Three Months Ended Six Months Ended
June 30, June 30,
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2023 2022 2023 2022
------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------
Net cash flow: (in millions)
Net cash provided by operating activities $ 425 $ 427 $ 1,562 $ 1,399
Add back (deduct):
28 325 (345 ) 189
Changes in operating assets and liabilities
-- 2 -- 27
Merger-related expenses
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Three Months Ended Six Months Ended
June 30, June 30,
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2023 2022 2023 2022
------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------
Free cash flow (deficit): (in millions)
Net cash flow $ 453 $ 754 $ 1,217 $ 1,615
Subtract:
(595 ) (585 ) (1,260 ) (1,129 )
Total capital investments
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Three Months Ended Six Months Ended
June 30, June 30,
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2023 2022 2023 2022
------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------
Adjusted EBITDA: (in millions)
Net income (loss) $ 231 $ 1,173 $ 2,170 $ (1,502 )
Add back (deduct):
34 48 70 89
Interest expense
(5 ) 26 7 30
Income tax expense (benefit)
328 288 641 563
Depreciation, depletion and amortization
-- 2 -- 27
Merger-related expenses
(107 ) (722 ) (1,631 ) 2,510
(Gain) loss on unsettled derivatives (1)
-- 4 19 6
Loss on early extinguishment of debt
(1 ) 1 2 1
Other
4 2 5 3
Stock-based compensation expense
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(1) Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively. Includes ($4) million of non-performance risk adjustment to derivative activities for the six months ended June 30, 2023, and $4 million and $9 million of non-performance risk adjustment to derivative activities for the three and six months ended June 30, 2022, respectively.
12 Months Ended
June 30, 2023
------------------------------------------------------------
Adjusted EBITDA: (in millions)
Net income $ 5,521
Add back (deduct):
165
Interest expense
28
Income tax expense
1,252
Depreciation, depletion and amortization
(4,165 )
Gain on unsettled derivatives (1)
27
Loss on early extinguishment of debt
6
Stock-based compensation expense
5
Other
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(1) Includes ($13) million of non-performance risk adjustment for the twelve months ended June 30, 2023. Includes ($13) million of non-performance risk adjustment for the twelve months ended June 30, 2023.
June 30, 2023
--------------------------------
Net debt: (in millions)
Total debt (1) $ 4,053
Subtract:
(25 )
Cash and cash equivalents
------------ --------------------
(1) Does not include $17 million of unamortized debt discount and issuance expense. Does not include $17 million of unamortized debt discount and issuance expense.
June 30, 2023
-----------------------------
Net debt to Adjusted EBITDA: (in millions)
Net debt $ 4,028
Adjusted EBITDA $ 2,839
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View source version on businesswire.com: https://www.businesswire.com/news/home/20230803628314/en/
SOURCE: Southwestern Energy Company
Brittany Raiford Director, Investor Relations (832) 796-7906 brittany_raiford@swn.com
COMTEX_437794944/1006/2023-08-03T16:21:02