View all news

Southwestern Energy Announces Second Quarter 2021 Results

07/29/2021

Strategically positioned to capture sustainable value from increasing scale and responsible development

SPRING, Texas--(BUSINESS WIRE)-- Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the second quarter ended June 30, 2021.

  • Integration planning for scale-enhancing acquisition and Haynesville entry ahead of schedule; shareholder vote set for August 27th;
  • Implemented basin-wide project to certify and continuously monitor potential emissions from all Appalachia unconventional wells;
  • Further reduced leverage ratio by 0.4x to 2.6x; sustainable 2x leverage expected in late 2021;
  • Generated $270 million net cash provided by operating activities; invested $259 million consistent with our maintenance capital plan; expect free cash flow to ramp in second half 2021;
  • Captured promised $100 per foot well costs savings on first three Ohio Utica wells;
  • Reported total production of 276 Bcfe, or 3.0 Bcfe per day, including 2.4 Bcf per day of gas and 104 MBbls per day of liquids;
  • Received weighted average realized price (excluding impact of transportation and hedges) of $2.92 per Mcfe; and
  • Approximately 90% of remaining 2021 Appalachia natural gas basis protected; annual differential guidance range remains unchanged.

“Southwestern Energy meaningfully advanced its strategic value-creation objectives during the quarter. The Company announced a significant acquisition that we believe is highly accretive across both equity and credit metrics. The addition of Indigo further positions SWN as a leading natural gas company; it expands our investment opportunities across the nation’s top two natural gas basins and enhances our margins while reducing basis volatility. Additionally, in alignment with our ESG strategy, we initiated the certification and continuous monitoring of all Appalachia unconventional wells. These two strategic actions enhance sustainable and responsible value creation for all stakeholders,” 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)

 

2021

 

2020

 

2021

 

2020

Net income (loss)

 

$

(609

)

 

$

(880

)

 

$

(529

)

 

$

(2,427

)

Adjusted net income (loss) (non-GAAP)

 

$

129

 

 

$

(1

)

 

$

325

 

 

$

55

 

Diluted earnings (loss) per share

 

$

(0.90

)

 

$

(1.63

)

 

$

(0.78

)

 

$

(4.49

)

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

 

$

0.19

 

 

$

(0.00

)

 

$

0.48

 

 

$

0.10

 

Adjusted EBITDA (non-GAAP)

 

$

300

 

 

$

106

 

 

$

682

 

 

$

312

 

Net cash provided by operating activities

 

$

270

 

 

$

94

 

 

$

617

 

 

$

254

 

Net cash flow (non-GAAP)

 

$

272

 

 

$

87

 

 

$

626

 

 

$

278

 

Total capital investments (1)

 

$

259

 

 

$

245

 

 

$

525

 

 

$

482

 

(1) Capital investments include a decrease of $9 million for the three months ended June 30, 2021, and increases of $29 million and $8 million for the six months ended June 30, 2021 and 2020, respectively, relating to the change in accrued expenditures between periods. There was no change in the capital accrual for the three months ended June 30, 2020.

For the quarter ended June 30, 2021, Southwestern Energy recorded net loss of $609 million, or ($0.90) per diluted share, compared to a net loss in 2020 of $880 million, or ($1.63) per diluted share. The quarter ended June 30, 2021 included a $772 million loss on unsettled derivatives and the same period for 2020 included a $655 million non-cash impairment and a $229 million loss on unsettled derivatives.

Adjusted net income was $129 million, or $0.19 per diluted share, in the second quarter of 2021, compared to a loss of $1 million, or ($0.00) per diluted share, for the prior year period. The increase was primarily related to a 33% increase in the weighted average realized price including derivatives and a 37% increase in production volumes, largely due to the Montage acquisition. Adjusted EBITDA (non-GAAP) was $300 million, net cash provided by operating activities was $270 million and net cash flow (non-GAAP) was $272 million.

As indicated in the table below, second quarter 2021 weighted average realized price, including $0.37 per Mcfe of transportation expenses, was $2.55 per Mcfe excluding the impact of derivatives. Including derivatives, weighted average realized price (including transportation) for the quarter was up 33% from $1.65 per Mcfe in 2020 to $2.20 per Mcfe in 2021 primarily due to higher commodity prices including a 65% increase in NYMEX Henry Hub and a 137% increase in WTI. Second quarter 2021 weighted average realized price before transportation expense and excluding the impact of derivatives was $2.92 per Mcfe.

At quarter end, the Company had hedges in place for 88% of its remaining 2021 expected natural gas production, 71% of its 2021 expected natural gas liquids (NGLs) production and 89% of its 2021 expected oil production. The Company also has approximately 90% of its remaining 2021 expected natural gas production protected from the impact of widening basis differentials through transportation capacity and basis hedges.

As of June 30, 2021, Southwestern Energy had total debt of $3.0 billion and a leverage ratio of 2.6x, an improvement of 0.4x compared to last quarter. At quarter end, the Company had $568 million of borrowings under its revolving credit facility with $233 million in letters of credit and ample liquidity of $1.2 billion.

Realized Prices

 

For the three months ended

 

For the six months ended

(includes transportation costs)

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Natural Gas Price:

 

 

 

 

 

 

 

 

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

 

$

2.83

 

 

$

1.72

 

 

$

2.76

 

 

$

1.83

 

Discount to NYMEX (2)

 

(0.91

)

 

(0.74

)

 

(0.74

)

 

(0.57

)

Realized gas price per Mcf, excluding derivatives

 

$

1.92

 

 

$

0.98

 

 

$

2.02

 

 

$

1.26

 

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

 

0.03

 

 

(0.05

)

 

0.11

 

 

0.03

 

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

 

(0.06

)

 

0.57

 

 

(0.02

)

 

0.43

 

Realized gas price, including derivatives ($/Mcf)

 

$

1.89

 

 

$

1.50

 

 

$

2.11

 

 

$

1.72

 

Oil Price:

 

 

 

 

 

 

 

 

WTI oil price ($/Bbl) (3)

 

$

66.07

 

 

$

27.85

 

 

$

61.96

 

 

$

37.01

 

Discount to WTI

 

(8.57

)

 

(12.16

)

 

(8.92

)

 

(9.46

)

Realized oil price, excluding derivatives ($/Bbl)

 

$

57.50

 

 

$

15.69

 

 

$

53.04

 

 

$

27.55

 

Realized oil price, including derivatives ($/Bbl)

 

$

38.37

 

 

$

41.64

 

 

$

37.70

 

 

$

44.08

 

NGL Price:

 

 

 

 

 

 

 

 

Realized NGL price, excluding derivatives ($/Bbl)

 

$

23.24

 

 

$

6.43

 

 

$

23.05

 

 

$

7.29

 

Realized NGL price, including derivatives ($/Bbl)

 

$

15.87

 

 

$

8.22

 

 

$

15.99

 

 

$

9.50

 

Percentage of WTI, excluding derivatives

 

35

%

 

23

%

 

37

%

 

20

%

Total Weighted Average Realized Price:

 

 

 

 

 

 

 

 

Excluding derivatives ($/Mcfe)

 

$

2.55

 

 

$

1.05

 

 

$

2.58

 

 

$

1.37

 

Including derivatives ($/Mcfe)

 

$

2.20

 

 

$

1.65

 

 

$

2.36

 

 

$

1.90

 

(1) Based on last day monthly futures settlement prices.

(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.

Operational Results
Total production for the quarter ended June 30, 2021 was 276 Bcfe, of which 79% was natural gas, 17% NGLs and 4% oil. Capital investments totaled $259 million for the second quarter, with 23 wells drilled, 19 wells completed and 31 wells placed to sales.

 

 

For the three months ended

 

For the six months ended

 

 

June 30,

 

June 30,

 

 

2021

 

2020

 

2021

 

2020

Production

 

 

 

 

 

 

 

 

Gas production (Bcf)

 

219

 

 

158

 

 

433

 

 

314

 

Oil production (MBbls)

 

1,831

 

 

1,083

 

 

3,493

 

 

2,482

 

NGL production (MBbls)

 

7,666

 

 

6,111

 

 

15,244

 

 

12,239

 

Total production (Bcfe)

 

276

 

 

201

 

 

545

 

 

402

 

Total production (Bcfe/day)

 

3.0

 

 

2.2

 

 

3.0

 

 

2.2

 

 

 

 

 

 

 

 

 

 

Average unit costs per Mcfe

 

 

 

 

 

 

 

 

Lease operating expenses (1)

 

$

0.94

 

 

$

0.91

 

 

$

0.94

 

 

$

0.94

 

General & administrative expenses (2,3)

 

$

0.11

 

 

$

0.14

 

 

$

0.12

 

 

$

0.13

 

Taxes, other than income taxes

 

$

0.10

 

 

$

0.05

 

 

$

0.09

 

 

$

0.06

 

Full cost pool amortization

 

$

0.34

 

 

$

0.38

 

 

$

0.34

 

 

$

0.46

 

(1) Includes post-production costs such as gathering, processing, fractionation and compression.

(2) Excludes $3 million and $4 million in merger-related expenses for the three and six months ended June 30, 2021, respectively, and $1 million and $7 million in restructuring charges for the three and six months ended June 30, 2021, respectively.

(3) Excludes $2 million and $12 million in restructuring charges for the three and six months ended June 30, 2020, respectively.

Southwest Appalachia – In the second quarter, total production was 153 Bcfe, with NGL production of 84 MBbls per day and oil production of 20 MBbls per day. The Company drilled 15 wells, completed 12 wells and placed 20 wells to sales with an average lateral length of 15,067 feet.

Nine of the wells to sales were located in the rich acreage with an average 30-day rate of 19 MMcfe per day, including 44% liquids, and eight of the wells to sales were located in the super rich acreage with an average 30-day rate of 13 MMcfe per day, including 67% liquids. The remaining three wells placed to sales this quarter were the Company’s first dry gas Ohio Utica wells. These wells had an average lateral length of 13,781 feet and each had an average 30-day rate of 25 MMcf per day.

Northeast Appalachia – Second quarter 2021 production was 123 Bcf. The Company drilled eight wells, completed seven wells and placed 11 wells to sales with an average lateral length of 11,568 feet and an average 30-day rate of 14 MMcf per day.

E&P Division Results

For the three months ended

June 30, 2021

 

For the six months ended

June 30, 2021

 

Northeast

 

Southwest

 

Northeast

 

Southwest

Gas production (Bcf)

 

123

 

 

 

96

 

 

 

241

 

 

 

192

 

Liquids production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil (MBbls)

 

 

 

 

1,826

 

 

 

 

 

 

3,484

 

NGL (MBbls)

 

 

 

 

7,665

 

 

 

 

 

 

15,242

 

Production (Bcfe)

 

123

 

 

 

153

 

 

 

241

 

 

 

304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross operated production June 2021 (MMcfe/d)

 

1,645

 

 

 

2,486

 

 

 

 

 

 

 

 

 

Net operated production June 2021 (MMcfe/d)

 

1,346

 

 

 

1,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital investments ($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling and completions, including workovers

$

75

 

 

$

127

 

 

$

146

 

 

$

269

 

Land acquisition and other

 

3

 

 

 

11

 

 

 

7

 

 

 

20

 

Capitalized interest and expense

 

7

 

 

 

31

 

 

 

12

 

 

 

63

 

Total capital investments

$

85

 

 

$

169

 

 

$

165

 

 

$

352

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross operated well activity summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilled

 

8

 

 

 

15

 

 

 

19

 

 

 

27

 

Completed

 

7

 

 

 

12

 

 

 

19

 

 

 

29

 

Wells to sales

 

11

 

 

 

20

 

 

 

19

 

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average well cost on wells to sales (millions)

$

6.1

 

 

$

10.0

 

 

$

7.2

 

 

$

9.4

 

Average lateral length (ft)

 

11,568

 

 

 

15,067

 

 

 

12,369

 

 

 

14,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total weighted average realized price per Mcfe, excluding derivatives

$

1.87

 

 

$

3.10

 

 

$

2.05

 

 

$

3.01

 

 
 

Third Quarter 2021 Price Guidance
Based on current market conditions, Southwestern expects third quarter price differentials to be within the following ranges before the impact of the Indigo acquisition. The Company maintains its full year 2021 price differential guidance before the impact of the Indigo acquisition.

Natural gas discount to NYMEX including transportation (1)

$0.90 – $1.00 per Mcf

Natural gas liquids realization as a % of WTI including transportation

38% – 44%

(1)

 

Includes the impact of basis hedges.

 
 

Conference Call
Southwestern Energy will host a conference call on Friday, July 30, 2021 at 9:30 a.m. Central to discuss second quarter 2021 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6506 and enter access code 3889842. A live webcast will be available at ir.swn.com.

About Southwestern Energy
Southwestern Energy Company (NYSE: SWN) is a leading U.S. producer 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.swn.com/responsibility.

Forward Looking Statement
Certain statements and information in this news release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The words “believe,” “expect,” “anticipate,” “plan,” "predict," “intend,” "seek," “foresee,” “should,” “would,” “could,” “attempt,” “appears,” “forecast,” “outlook,” “estimate,” “project,” “potential,” “may,” “will,” “likely,” “guidance,” “goal,” “model,” “target,” “budget” and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Statements may be forward looking even in the absence of these particular words. Examples of forward-looking statements include, but are not limited to, statements regarding the proposed acquisition of Indigo Natural Resources LLC (the “Proposed Transaction”), expected synergies and other benefits from and costs in connection with the Proposed Transaction, estimated financial metrics giving effect to the Proposed Transaction, our financial position, business strategy, production, reserve growth and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained in this document are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management’s assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see “Risk Factors” in our most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements contained herein 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. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas, oil and natural gas liquids (“NGLs”), including regional basis differentials and the impact of reduced demand for our production and products in which our production is a component due to governmental and societal actions taken in response to COVID-19 or other public health crises and any related company or governmental policies and actions to protect the health and safety of individuals or governmental policies or actions to maintain the functioning of national or global economies and markets; our ability to fund our planned capital investments; a change in our credit rating, an increase in interest rates and any adverse impacts from the discontinuation of the London Interbank Offered Rate; the extent to which lower commodity prices impact our ability to service or refinance our existing debt; the impact of volatility in the financial markets or other global economic factors; difficulties in appropriately allocating capital and resources among our strategic opportunities; the timing and extent of our success in discovering, developing, producing and estimating reserves; our ability to maintain leases that may expire if production is not established or profitably maintained; our ability to realize the expected benefits from recent acquisitions or the Proposed Transaction; costs in connection with the Proposed Transaction; the consummation of or failure to consummate the Proposed Transaction and the timing thereof; costs in connection with the Proposed Transaction; integration of operations and results subsequent to the Proposed Transaction; our ability to transport our production to the most favorable markets or at all; the impact of government regulation, including changes in law, the ability to obtain and maintain permits, any increase in severance or similar taxes, and legislation or regulation relating to hydraulic fracturing, climate and over-the-counter derivatives; 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; 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; and any other factors listed in the reports we have filed and may file with the SEC that are incorporated by reference herein. 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)

 

2021

 

2020

 

2021

 

2020

Operating Revenues:

 

 

 

 

 

 

 

 

Gas sales

 

$

433

 

 

$

164

 

 

$

897

 

 

$

412

 

Oil sales

 

106

 

 

19

 

 

187

 

 

71

 

NGL sales

 

179

 

 

40

 

 

352

 

 

90

 

Marketing

 

332

 

 

187

 

 

684

 

 

426

 

Other

 

 

 

 

 

2

 

 

3

 

 

 

1,050

 

 

410

 

 

2,122

 

 

1,002

 

Operating Costs and Expenses:

 

 

 

 

 

 

 

 

Marketing purchases

 

333

 

 

201

 

 

689

 

 

449

 

Operating expenses

 

259

 

 

182

 

 

509

 

 

375

 

General and administrative expenses

 

34

 

 

32

 

 

72

 

 

58

 

Merger-related expenses

 

3

 

 

 

 

4

 

 

 

Restructuring charges

 

1

 

 

2

 

 

7

 

 

12

 

Depreciation, depletion and amortization

 

100

 

 

84

 

 

196

 

 

197

 

Impairments

 

 

 

655

 

 

 

 

2,134

 

Taxes, other than income taxes

 

27

 

 

10

 

 

51

 

 

23

 

 

 

757

 

 

1,166

 

 

1,528

 

 

3,248

 

Operating Income (Loss)

 

293

 

 

(756

)

 

594

 

 

(2,246

)

Interest Expense:

 

 

 

 

 

 

 

 

Interest on debt

 

48

 

 

40

 

 

98

 

 

80

 

Other interest charges

 

3

 

 

3

 

 

6

 

 

5

 

Interest capitalized

 

(21

)

 

(21

)

 

(43

)

 

(44

)

 

 

30

 

 

22

 

 

61

 

 

41

 

 

 

 

 

 

 

 

 

 

Gain (Loss) on Derivatives

 

(871

)

 

(109

)

 

(1,062

)

 

230

 

Gain on Early Extinguishment of Debt

 

 

 

7

 

 

 

 

35

 

Other Income (Loss), Net

 

(1

)

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(609

)

 

(880

)

 

(529

)

 

(2,021

)

Provision (Benefit) for Income Taxes:

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

(2

)

Deferred

 

 

 

 

 

 

 

408

 

 

 

 

 

 

 

 

 

406

 

Net Income (Loss)

 

$

(609

)

 

$

(880

)

 

$

(529

)

 

$

(2,427

)

 

 

 

 

 

 

 

 

 

Earnings (Loss) Per Common Share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.90

)

 

$

(1.63

)

 

$

(0.78

)

 

$

(4.49

)

Diluted

 

$

(0.90

)

 

$

(1.63

)

 

$

(0.78

)

 

$

(4.49

)

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

676,722,999

 

 

541,079,192

 

 

676,057,534

 

 

540,693,841

 

Diluted

 

676,722,999

 

 

541,079,192

 

 

676,057,534

 

 

540,693,841

 

 
 
 
 
 
 

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

2021

 

December 31,

2020

ASSETS

 

(in millions)

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

2

 

 

$

13

 

Accounts receivable, net

 

408

 

 

368

 

Derivative assets

 

132

 

 

241

 

Other current assets

 

51

 

 

49

 

Total current assets

 

593

 

 

671

 

Natural gas and oil properties, using the full cost method

 

27,796

 

 

27,261

 

Other

 

496

 

 

523

 

Less: Accumulated depreciation, depletion and amortization

 

(23,846

)

 

(23,673

)

Total property and equipment, net

 

4,446

 

 

4,111

 

Operating lease assets

 

147

 

 

163

 

Deferred tax assets

 

 

 

 

Other long-term assets

 

208

 

 

215

 

Total long-term assets

 

355

 

 

378

 

TOTAL ASSETS

 

$

5,394

 

 

$

5,160

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

207

 

 

$

 

Accounts payable

 

653

 

 

573

 

Taxes payable

 

62

 

 

74

 

Interest payable

 

57

 

 

58

 

Derivative liabilities

 

901

 

 

245

 

Current operating lease liabilities

 

41

 

 

42

 

Other current liabilities

 

23

 

 

20

 

Total current liabilities

 

1,944

 

 

1,012

 

Long-term debt

 

2,814

 

 

3,150

 

Long-term operating lease liabilities

 

104

 

 

117

 

Long-term derivative liabilities

 

355

 

 

183

 

Pension and other postretirement liabilities

 

33

 

 

45

 

Other long-term liabilities

 

162

 

 

156

 

Total long-term liabilities

 

3,468

 

 

3,651

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 721,372,443 shares as of June 30, 2021 and 718,795,700 shares as of December 31, 2020

 

7

 

 

7

 

Additional paid-in capital

 

5,104

 

 

5,093

 

Accumulated deficit

 

(4,892

)

 

(4,363

)

Accumulated other comprehensive loss

 

(35

)

 

(38

)

Common stock in treasury, 44,353,224 shares as of June 30, 2021 and December 31, 2020

 

(202

)

 

(202

)

Total equity

 

(18

)

 

497

 

TOTAL LIABILITIES AND EQUITY

 

$

5,394

 

 

$

5,160

 

 
 
 
 
 

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

For the six months ended

 

 

June 30,

(in millions)

 

2021

 

2020

Cash Flows From Operating Activities:

 

 

 

 

Net loss

 

$

(529

)

 

$

(2,427

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

Depreciation, depletion and amortization

 

196

 

 

197

 

Amortization of debt issuance costs

 

4

 

 

4

 

Impairments

 

 

 

2,134

 

Deferred income taxes

 

 

 

408

 

(Gain) loss on derivatives, unsettled

 

941

 

 

(17

)

Stock-based compensation

 

2

 

 

2

 

Gain on early extinguishment of debt

 

 

 

(35

)

Other

 

1

 

 

 

Change in assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

(40

)

 

94

 

Accounts payable

 

75

 

 

(121

)

Taxes payable

 

(12

)

 

(11

)

Interest payable

 

 

 

(1

)

Inventories

 

3

 

 

6

 

Other assets and liabilities

 

(24

)

 

21

 

Net cash provided by operating activities

 

617

 

 

254

 

 

 

 

 

 

Cash Flows From Investing Activities:

 

 

 

 

Capital investments

 

(493

)

 

(472

)

Proceeds from sale of property and equipment

 

2

 

 

2

 

Other

 

(1

)

 

 

Net cash used in investing activities

 

(492

)

 

(470

)

 

 

 

 

 

Cash Flows From Financing Activities:

 

 

 

 

Payments on long-term debt

 

 

 

(72

)

Payments on revolving credit facility

 

(1,782

)

 

(919

)

Borrowings under revolving credit facility

 

1,650

 

 

1,221

 

Change in bank drafts outstanding

 

 

 

(8

)

Debt issuance/amendment costs

 

(1

)

 

 

Cash paid for tax withholding

 

(3

)

 

(1

)

Net cash provided by (used in) financing activities

 

(136

)

 

221

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(11

)

 

5

 

Cash and cash equivalents at beginning of year

 

13

 

 

5

 

Cash and cash equivalents at end of period

$

2

$

10

 
 
 
 

Hedging Summary
A detailed breakdown of derivative financial instruments and financial basis positions as of June 30, 2021, including the remainder of 2021 and excluding those positions that settled in the first and second quarter, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

103

 

$

2.80

 

$

 

$

 

$

Two-way costless collars

140

 

 

 

 

 

 

2.62

 

 

2.97

Three-way costless collars

153

 

 

 

 

2.18

 

 

2.51

 

 

2.86

Total

396

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

268

 

$

2.72

 

$

 

$

 

$

Two-way costless collars

125

 

 

 

 

 

 

2.65

 

 

3.04

Three-way costless collars

333

 

 

 

 

2.06

 

 

2.51

 

 

2.94

Total

726

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

23

 

$

2.70

 

$

 

$

 

$

Two-way costless collars

34

 

 

 

 

 

 

2.50

 

 

2.72

Three-way costless collars

215

 

 

 

 

2.09

 

 

2.54

 

 

3.00

Total

272

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-way costless collars

11

 

$

 

$

2.25

 

$

2.80

 

$

3.54

 

Natural gas financial basis positions

 

Volume

 

Basis Differential

 

 

(Bcf)

 

($/MMBtu)

Q3 2021

 

 

 

 

 

 

 

Dominion South

 

40

 

 

$

(0.65

)

TCO

 

28

 

 

$

(0.51

)

TETCO M3

 

27

 

 

$

(0.47

)

Total

 

95

 

 

$

(0.55

)

Q4 2021

 

 

 

 

Dominion South

 

28

 

 

$

(0.63

)

TCO

 

18

 

 

$

(0.49

)

TETCO M3

 

25

 

 

$

0.06

 

Total

 

71

 

 

$

(0.36

)

2022

 

 

 

 

 

 

 

Dominion South

 

118

 

 

$

(0.59

)

TCO

 

71

 

 

$

(0.49

)

TETCO M3

 

72

 

 

$

0.01

 

Total

 

261

 

 

$

(0.40

)

 

 

 

 

Weighted Average Price per Bbl

 

Volume (MBbls)

 

Swaps

 

Sold Puts

 

Purchased Puts

 

Sold Calls

Oil

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

1,739

 

$

50.10

 

$

 

$

 

$

Two-way costless collars

92

 

 

 

 

 

 

37.50

 

 

45.50

Three-way costless collars

1,152

 

 

 

 

39.22

 

 

49.05

 

 

54.35

Total

2,983

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

3,203

 

$

53.54

 

$

 

$

 

$

Three-way costless collars

1,380

 

 

 

 

39.89

 

 

50.23

 

 

57.05

Total

4,583

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

846

 

$

55.98

 

$

 

$

 

$

Three-way costless collars

1,268

 

 

 

 

33.97

 

 

45.51

 

 

56.12

Total

2,114

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

54

 

$

53.15

 

$

 

$

 

$

Ethane

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

3,284

 

$

7.64

 

$

 

$

 

$

Two-way costless collars

294

 

 

 

 

 

 

7.14

 

 

10.40

Total

3,578

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

2,362

 

$

8.97

 

$

 

$

 

$

Two-way costless collars

135

 

 

 

 

 

 

7.56

 

 

9.66

Total

2,497

 

 

 

 

 

 

 

 

 

 

 

 

Propane

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

4,261

 

$

24.00

 

$

 

$

 

$

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

4,092

 

$

25.90

 

$

 

$

 

$

Three-way costless collars

305

 

 

 

 

16.80

 

 

21.00

 

 

31.92

Total

4,397

 

 

 

 

 

 

 

 

 

 

 

 

Normal Butane

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

1,245

 

$

29.04

 

$

 

$

 

$

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

1,295

 

$

29.16

 

$

 

$

 

$

Natural Gasoline

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

1,281

 

$

43.58

 

$

 

$

 

$

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed price swaps

1,201

 

$

45.76

 

$

 

$

 

$

 
 
 

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 and adjusted EBITDA, 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.

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Adjusted net income (loss):

(in millions)

Net income (loss)

$

(609

)

 

$

(880

)

 

$

(529

)

 

$

(2,427

)

Add back (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related expenses

 

3

 

 

 

 

 

 

4

 

 

 

 

Restructuring charges

 

1

 

 

 

2

 

 

 

7

 

 

 

12

 

Impairments

 

 

 

 

655

 

 

 

 

 

 

2,134

 

(Gain) loss on unsettled derivatives

 

772

 

 

 

229

 

 

 

941

 

 

 

(17

)

Gain on early extinguishment of debt

 

 

 

 

(7

)

 

 

 

 

 

(35

)

Other (gain) loss

 

1

 

 

 

(1

)

 

 

 

 

 

(1

)

Adjustments due to discrete tax items (1)

 

141

 

 

 

207

 

 

 

123

 

 

 

881

 

Tax impact on adjustments

 

(180

)

 

 

(206

)

 

 

(221

)

 

 

(492

)

Adjusted net income (loss)

$

129

 

 

$

(1

)

 

$

325

 

 

$

55

 

(1) 2020 primarily relates to the recognition of a valuation allowance. The Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

 
 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Adjusted diluted earnings (loss) per share:

 

Diluted earnings (loss) per share

$

(0.90

)

 

$

(1.63

)

 

$

(0.78

)

 

$

(4.49

)

Add back (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merger-related expenses

 

0.00

 

 

 

 

 

 

0.01

 

 

 

 

Restructuring charges

 

0.00

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

Impairments

 

 

 

 

1.21

 

 

 

 

 

 

3.95

 

(Gain) loss on unsettled derivatives

 

1.14

 

 

 

 

0.42

 

 

 

1.38

 

 

 

(0.03

)

Gain on early extinguishment of debt

 

 

 

 

(0.01

)

 

 

 

 

 

(0.07

)

Other (gain) loss

 

0.00

 

 

 

(0.00

)

 

 

 

 

 

(0.00

)

Adjustments due to discrete tax items (1)

 

0.21

 

 

 

0.38

 

 

 

0.18

 

 

 

1.63

 

Tax impact on adjustments

 

(0.26

)

 

 

(0.38

)

 

 

(0.32

)

 

 

(0.91

)

Adjusted diluted earnings (loss) per share

$

0.19

 

 

$

(0.00

)

 

$

0.48

 

 

$

0.10

 

(1) 2020 primarily relates to the recognition of a valuation allowance. The Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

 
 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Net cash flow:

(in millions)

Net cash provided by operating activities

$

270

 

 

$

94

 

 

$

617

 

 

$

254

 

Add back (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities

 

(2

)

 

 

(9

)

 

 

(2

)

 

 

12

 

Merger-related expenses

 

3

 

 

 

 

 

 

4

 

 

 

 

Restructuring charges

 

1

 

 

 

2

 

 

 

7

 

 

 

12

 

Net cash flow

$

272

 

 

$

87

 

 

$

626

 

 

$

278

 

 
 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Adjusted EBITDA:

(in millions)

Net income (loss)

$

(609

)

 

$

(880

)

 

$

(529

)

 

$

(2,427

)

Add back (deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

30

 

 

 

22

 

 

 

61

 

 

 

41

 

Provision (benefit) for income taxes

 

 

 

 

 

 

 

 

 

 

406

 

Depreciation, depletion and amortization

 

100

 

 

 

84

 

 

 

196

 

 

 

197

 

Merger-related expenses

 

3

 

 

 

 

 

 

4

 

 

 

 

Restructuring charges

 

1

 

 

 

2

 

 

 

7

 

 

 

12

 

Impairments

 

 

 

 

655

 

 

 

 

 

 

2,134

 

(Gain) loss on unsettled derivatives

 

772

 

 

 

229

 

 

 

941

 

 

 

(17

)

Gain on early extinguishment of debt

 

 

 

 

(7

)

 

 

 

 

 

(35

)

Other (gain) loss

 

1

 

 

 

 

 

 

 

 

 

(1

)

Stock-based compensation expense

 

2

 

 

 

1

 

 

 

2

 

 

 

2

 

Adjusted EBITDA

$

300

 

 

$

106

 

 

$

682

 

 

$

312

 

 
 

 

 

June 30, 2021

Net debt:

 

(in millions)

Total debt (1)

 

$

3,039

 

Subtract:

 

 

Cash and cash equivalents

 

(2

)

Net debt

 

$

3,037

 

(1)

 

Does not include $19 million of unamortized debt discount and issuance expense.

 

 

June 30, 2021

Net debt to Adjusted EBITDA:

 

(in millions)

Net debt

 

$

3,037

 

Adjusted EBITDA (1)

 

$

1,169

 

Net debt to Adjusted EBITDA

 

2.6x

 

(1) Adjusted EBITDA of $1,169 million for the twelve months ended June 30, 2021 includes $57 million of adjusted EBITDA generated by Montage Resources prior to November 2020 acquisition.

 

Investor Contact
Brittany Raiford
Director, Investor Relations
(832) 796-7906
brittany_raiford@swn.com

Bernadette Butler
Investor Relations Advisor
(832) 796-6079
bernadette_butler@swn.com

Source: Southwestern Energy Company


View all news