Southwestern Energy Announces Third Quarter 2022 Results
Southwestern Energy Company (NYSE: SWN) reported strong financial results for Q3 2022, generating $797 million in net cash from operations and a net income of $450 million. With an adjusted EBITDA of $824 million, the company reduced its total debt by $227 million, achieving a leverage ratio of 1.4x net debt to adjusted EBITDA. Share repurchases totaled $80 million, now at 10% of the authorized amount. The company plans to enhance its firm transportation capacity by 500 MMcf per day for LNG access starting in 2024, while aiming for a 50% reduction in GHG emissions by 2035.
- Generated $797 million net cash from operating activities.
- Achieved $450 million net income, compared to a loss of $1.857 billion in Q3 2021.
- Repurchased $80 million of common stock, totaling approximately $100 million year-to-date.
- Reduced total debt by $227 million, achieving a net debt to adjusted EBITDA ratio of 1.4x.
- Upgraded to BB+ by Fitch, nearing investment grade ratings from all three credit agencies.
- None.
Returned more than
-
Generated
$797 million $450 million $360 million
-$824 million $222 million -
Reduced total debt by
$227 million -
Repurchased
$80 million $100 million 10% of authorized amount - Total net production of 443 Bcfe, or 4.8 Bcfe per day, including 4.2 Bcf per day of natural gas and 97 MBbls per day of liquids
-
Invested
$543 million - Reinforced long-term flow assurance and marketing optionality by adding a total of 500 MMcf per day of new firm transportation starting in 2024 to LNG corridor on Momentum’s New Generation Gas Gathering system (NG3) and DT Midstream’s LEAP pipeline
- Upgraded to BB+ by Fitch in August; now rated one notch below investment grade by all three credit agencies
-
Established longer-term GHG emission reduction goal of
50% decrease by 2035, consistent with a path to net zero by 2050
“During the third quarter, the Company executed on its plan, progressed debt repayment and achieved our target leverage range. This was complemented by continued return of capital to our shareholders, bringing total share repurchases to date to
Financial Results
|
|
For the three months ended |
|
For the nine months ended |
||||||||||||
|
|
|
|
|
||||||||||||
(in millions) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
|
$ |
450 |
|
|
$ |
(1,857 |
) |
|
$ |
(1,052 |
) |
|
$ |
(2,386 |
) |
Adjusted net income (non-GAAP) |
|
$ |
360 |
|
|
$ |
188 |
|
|
$ |
1,175 |
|
|
$ |
513 |
|
Diluted earnings (loss) per share |
|
$ |
0.40 |
|
|
$ |
(2.36 |
) |
|
$ |
(0.94 |
) |
|
$ |
(3.34 |
) |
Adjusted diluted earnings per share (non-GAAP) |
|
$ |
0.32 |
|
|
$ |
0.24 |
|
|
$ |
1.05 |
|
|
$ |
0.72 |
|
Adjusted EBITDA (non-GAAP) |
|
$ |
824 |
|
|
$ |
426 |
|
|
$ |
2,551 |
|
|
$ |
1,108 |
|
Net cash provided by operating activities |
|
$ |
797 |
|
|
$ |
213 |
|
|
$ |
2,196 |
|
|
$ |
830 |
|
Net cash flow (non-GAAP) |
|
$ |
765 |
|
|
$ |
396 |
|
|
$ |
2,380 |
|
|
$ |
1,022 |
|
Total capital investments (1) |
|
$ |
543 |
|
|
$ |
291 |
|
|
$ |
1,672 |
|
|
$ |
816 |
|
Free cash flow (non-GAAP) |
|
$ |
222 |
|
|
$ |
105 |
|
|
$ |
708 |
|
|
$ |
206 |
|
| (1) |
Capital investments include a decrease of |
For the quarter ended
The Company primarily utilized free cash flow generated in the third quarter of 2022 to reduce the balance of its revolving credit facility. As of
During the third quarter, the Company repurchased approximately 10.8 million shares for a total cost of approximately
As indicated in the table below, third quarter 2022 weighted average realized price, including
Realized Prices |
|
For the three months ended |
|
For the nine months ended |
||||||||||||
(includes transportation costs) |
|
|
|
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Natural Gas Price: |
|
|
|
|
|
|
|
|
||||||||
NYMEX Henry Hub price ($/MMBtu) (1) |
|
$ |
8.20 |
|
|
$ |
4.01 |
|
|
$ |
6.77 |
|
|
$ |
3.18 |
|
Discount to NYMEX (2) |
|
(0.78 |
) |
|
(0.83 |
) |
|
(0.62 |
) |
|
(0.74 |
) |
||||
Average realized gas price, excluding derivatives ($/Mcf) |
|
$ |
7.42 |
|
|
$ |
3.18 |
|
|
$ |
6.15 |
|
|
$ |
2.44 |
|
Gain on settled financial basis derivatives ($/Mcf) |
|
0.10 |
|
|
0.11 |
|
|
0.06 |
|
|
0.11 |
|
||||
Loss on settled commodity derivatives ($/Mcf) |
|
(4.71 |
) |
|
(1.14 |
) |
|
(3.38 |
) |
|
(0.43 |
) |
||||
Average realized gas price, including derivatives ($/Mcf) |
|
$ |
2.81 |
|
|
$ |
2.15 |
|
|
$ |
2.83 |
|
|
$ |
2.12 |
|
Oil Price: |
|
|
|
|
|
|
|
|
||||||||
WTI oil price ($/Bbl) (3) |
|
$ |
91.56 |
|
|
$ |
70.56 |
|
|
$ |
98.09 |
|
|
$ |
64.82 |
|
Discount to WTI (4) |
|
(7.22 |
) |
|
(8.24 |
) |
|
(7.39 |
) |
|
(8.71 |
) |
||||
Average realized oil price, excluding derivatives ($/Bbl) |
|
$ |
84.34 |
|
|
$ |
62.32 |
|
|
$ |
90.70 |
|
|
$ |
56.11 |
|
Average realized oil price, including derivatives ($/Bbl) |
|
$ |
49.06 |
|
|
$ |
44.83 |
|
|
$ |
52.29 |
|
|
$ |
40.06 |
|
NGL Price: |
|
|
|
|
|
|
|
|
||||||||
Average realized NGL price, excluding derivatives ($/Bbl) |
|
$ |
33.33 |
|
|
$ |
31.76 |
|
|
$ |
37.50 |
|
|
$ |
26.05 |
|
Average realized NGL price, including derivatives ($/Bbl) |
|
$ |
26.55 |
|
|
$ |
19.31 |
|
|
$ |
27.64 |
|
|
$ |
17.13 |
|
Percentage of WTI, excluding derivatives |
|
36 |
% |
|
45 |
% |
|
38 |
% |
|
40 |
% |
||||
Total Weighted Average Realized Price: |
|
|
|
|
|
|
|
|
||||||||
Excluding derivatives ($/Mcfe) |
|
$ |
7.33 |
|
|
$ |
3.74 |
|
|
$ |
6.32 |
|
|
$ |
3.01 |
|
Including derivatives ($/Mcfe) |
|
$ |
3.06 |
|
|
$ |
2.49 |
|
|
$ |
3.11 |
|
|
$ |
2.41 |
|
| (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
|
|
For the three months ended |
|
For the nine months ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Production |
|
|
|
|
|
|
|
|
||||||||
Natural gas production (Bcf) |
|
389 |
|
|
251 |
|
|
1,148 |
|
|
684 |
|
||||
Oil production (MBbls) |
|
1,173 |
|
|
1,729 |
|
|
3,806 |
|
|
5,222 |
|
||||
NGL production (MBbls) |
|
7,788 |
|
|
8,011 |
|
|
22,445 |
|
|
23,255 |
|
||||
Total production (Bcfe) |
|
443 |
|
|
310 |
|
|
1,306 |
|
|
855 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Average unit costs per Mcfe |
|
|
|
|
|
|
|
|
||||||||
Lease operating expenses (1) |
|
$ |
1.02 |
|
|
$ |
0.95 |
|
|
$ |
0.98 |
|
|
$ |
0.94 |
|
General & administrative expenses (2,3) |
|
$ |
0.08 |
|
|
$ |
0.09 |
|
|
$ |
0.08 |
|
|
$ |
0.11 |
|
Taxes, other than income taxes |
|
$ |
0.17 |
|
|
$ |
0.11 |
|
|
$ |
0.15 |
|
|
$ |
0.10 |
|
Full cost pool amortization |
|
$ |
0.66 |
|
|
$ |
0.43 |
|
|
$ |
0.65 |
|
|
$ |
0.37 |
|
(1) |
Includes post-production costs such as gathering, processing, fractionation and compression. |
(2) |
Excludes |
(3) |
Excludes |
Appalachia – In the third quarter, total production was 267 Bcfe, with NGL production of 84 MBbls per day and oil production of 13 MBbls per day. The Company drilled 16 wells, completed 21 wells and placed 14 wells to sales with an average lateral length of 15,629 feet.
Haynesville – In the third quarter, total production was 176 Bcf. There were 15 wells drilled, 15 wells completed and 17 wells placed to sales in the quarter with an average lateral length of 9,332 feet.
E&P Division Results |
For the three months ended |
|
|
For the nine months ended |
|
||||||||||
|
Appalachia |
|
|
Haynesville |
|
|
Appalachia |
|
|
Haynesville |
|
||||
Natural gas production (Bcf) |
|
213 |
|
|
|
176 |
|
|
|
637 |
|
|
|
511 |
|
Liquids production |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls) |
|
1,169 |
|
|
|
4 |
|
|
|
3,786 |
|
|
|
15 |
|
NGL (MBbls) |
|
7,787 |
|
|
|
— |
|
|
|
22,444 |
|
|
|
— |
|
Production (Bcfe) |
|
267 |
|
|
|
176 |
|
|
|
795 |
|
|
|
511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital investments (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and completions, including workovers |
$ |
193 |
|
|
$ |
278 |
|
|
$ |
577 |
|
|
$ |
868 |
|
Land acquisition and other |
|
12 |
|
|
|
2 |
|
|
|
45 |
|
|
|
14 |
|
Capitalized interest and expense |
|
32 |
|
|
|
21 |
|
|
|
94 |
|
|
|
60 |
|
Total capital investments |
$ |
237 |
|
|
$ |
301 |
|
|
$ |
716 |
|
|
$ |
942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross operated well activity summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilled |
|
16 |
|
|
|
15 |
|
|
|
52 |
|
|
|
53 |
|
Completed |
|
21 |
|
|
|
15 |
|
|
|
55 |
|
|
|
53 |
|
Wells to sales |
|
14 |
|
|
|
17 |
|
|
|
48 |
|
|
|
57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total weighted average realized price per Mcfe, excluding derivatives |
$ |
7.03 |
|
|
$ |
7.78 |
|
|
$ |
6.26 |
|
|
$ |
6.41 |
|
Wells to sales summary |
For the three months ended |
||||
|
|
Gross wells to sales |
|
Average lateral length |
|
Appalachia |
|
|
|
|
|
Super |
|
8 |
|
15,425 |
|
Dry Gas Utica(1) |
|
3 |
|
11,989 |
|
Dry Gas Marcellus |
|
3 |
|
19,814 |
|
Haynesville |
|
17 |
|
9,332 |
|
Total |
|
31 |
|
|
|
(1) Ohio Utica |
|||||
Fourth Quarter 2022 Guidance
Based on current market conditions, Southwestern expects fourth quarter production and price differentials to be within the following ranges.
PRODUCTION |
For the quarter ended |
Gas production (Bcf) |
368 – 384 |
Liquids (% of production) |
~ |
Total (Bcfe) |
417 – 437 |
Total (Bcfe/day) |
~4.6 |
|
|
PRICING |
|
Natural gas discount to NYMEX including transportation (1) |
|
Oil discount to West Texas Intermediate (WTI) including transportation |
|
Natural gas liquids realization as a % of WTI including transportation |
|
| (1) |
Includes impact of transportation costs and expected |
Conference Call
A replay will also be available on SWN’s website at www.swn.com following the call.
About
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, estimated reserves and inventory duration, projected production and sales volume and growth rates, commodity prices, projected average well costs, generation of free cash flow, our return of capital, leverage targets and debt repayment, expected benefits from acquisitions, potential acquisitions 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, lack of availability of drilling and production equipment and services, 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, 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 increase commitments under our revolving credit facility, 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, 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, including our mergers with
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 nine months ended |
||||||||||||
|
|
|
|
|
||||||||||||
(in millions, except share/per share amounts) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Operating Revenues: |
|
|
|
|
|
|
|
|
||||||||
Gas sales |
|
$ |
2,884 |
|
|
$ |
811 |
|
|
$ |
7,061 |
|
|
$ |
1,708 |
|
Oil sales |
|
100 |
|
|
110 |
|
|
349 |
|
|
297 |
|
||||
NGL sales |
|
260 |
|
|
255 |
|
|
842 |
|
|
607 |
|
||||
Marketing |
|
1,298 |
|
|
418 |
|
|
3,371 |
|
|
1,102 |
|
||||
Other |
|
(1 |
) |
|
4 |
|
|
(1 |
) |
|
6 |
|
||||
|
|
4,541 |
|
|
1,598 |
|
|
11,622 |
|
|
3,720 |
|
||||
Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
||||||||
Marketing purchases |
|
1,289 |
|
|
420 |
|
|
3,366 |
|
|
1,109 |
|
||||
Operating expenses |
|
423 |
|
|
296 |
|
|
1,206 |
|
|
805 |
|
||||
General and administrative expenses |
|
41 |
|
|
32 |
|
|
120 |
|
|
104 |
|
||||
Merger-related expenses |
|
— |
|
|
35 |
|
|
27 |
|
|
39 |
|
||||
Restructuring charges |
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
||||
Depreciation, depletion and amortization |
|
298 |
|
|
138 |
|
|
861 |
|
|
334 |
|
||||
Impairments |
|
— |
|
|
6 |
|
|
— |
|
|
6 |
|
||||
Taxes, other than income taxes |
|
76 |
|
|
35 |
|
|
198 |
|
|
86 |
|
||||
|
|
2,127 |
|
|
962 |
|
|
5,778 |
|
|
2,490 |
|
||||
Operating Income |
|
2,414 |
|
|
636 |
|
|
5,844 |
|
|
1,230 |
|
||||
Interest Expense: |
|
|
|
|
|
|
|
|
||||||||
Interest on debt |
|
77 |
|
|
56 |
|
|
218 |
|
|
154 |
|
||||
Other interest charges |
|
3 |
|
|
3 |
|
|
10 |
|
|
9 |
|
||||
Interest capitalized |
|
(30 |
) |
|
(25 |
) |
|
(89 |
) |
|
(68 |
) |
||||
|
|
50 |
|
|
34 |
|
|
139 |
|
|
95 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on Derivatives |
|
(1,903 |
) |
|
(2,399 |
) |
|
(6,709 |
) |
|
(3,461 |
) |
||||
Loss on Early Extinguishment of Debt |
|
— |
|
|
(59 |
) |
|
(6 |
) |
|
(59 |
) |
||||
Other Loss, Net |
|
— |
|
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
||||
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) Before Income Taxes |
|
461 |
|
|
(1,857 |
) |
|
(1,011 |
) |
|
(2,386 |
) |
||||
Provision (Benefit) for Income Taxes: |
|
|
|
|
|
|
|
|
||||||||
Current |
|
11 |
|
|
— |
|
|
41 |
|
|
— |
|
||||
Deferred |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
11 |
|
|
— |
|
|
41 |
|
|
— |
|
||||
Net Income (Loss) |
|
$ |
450 |
|
|
$ |
(1,857 |
) |
|
$ |
(1,052 |
) |
|
$ |
(2,386 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Earnings (Loss) Per Common Share: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.41 |
|
|
$ |
(2.36 |
) |
|
$ |
(0.94 |
) |
|
$ |
(3.34 |
) |
Diluted |
|
$ |
0.40 |
|
|
$ |
(2.36 |
) |
|
$ |
(0.94 |
) |
|
$ |
(3.34 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Common Shares Outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
1,110,259,907 |
|
|
787,032,414 |
|
|
1,113,705,502 |
|
|
713,455,662 |
|
||||
Diluted |
|
1,112,522,861 |
|
|
787,032,414 |
|
|
1,113,705,502 |
|
|
713,455,662 |
|
||||
SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES |
|||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||
(Unaudited) |
|||||||||
|
|
|
|
|
|||||
ASSETS |
|
(in millions) |
|||||||
Current assets: |
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
11 |
|
|
$ |
28 |
|
|
Accounts receivable, net |
|
1,763 |
|
|
1,160 |
|
|||
Derivative assets |
|
176 |
|
|
183 |
|
|||
Other current assets |
|
52 |
|
|
42 |
|
|||
Total current assets |
|
2,002 |
|
|
1,413 |
|
|||
Natural gas and oil properties, using the full cost method |
|
35,293 |
|
|
33,631 |
|
|||
Other |
|
515 |
|
|
509 |
|
|||
Less: Accumulated depreciation, depletion and amortization |
|
(25,068 |
) |
|
(24,202 |
) |
|||
Total property and equipment, net |
|
10,740 |
|
|
9,938 |
|
|||
Operating lease assets |
|
183 |
|
|
187 |
|
|||
Long-term derivative assets |
|
77 |
|
|
226 |
|
|||
Other long-term assets |
|
102 |
|
|
84 |
|
|||
Total long-term assets |
|
362 |
|
|
497 |
|
|||
TOTAL ASSETS |
|
$ |
13,104 |
|
|
$ |
11,848 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|||||
Current liabilities: |
|
|
|
|
|||||
Current portion of long-term debt |
|
$ |
5 |
|
|
$ |
206 |
|
|
Accounts payable |
|
1,896 |
|
|
1,282 |
|
|||
Taxes payable |
|
121 |
|
|
93 |
|
|||
Interest payable |
|
43 |
|
|
75 |
|
|||
Derivative liabilities |
|
3,270 |
|
|
1,279 |
|
|||
Current operating lease liabilities |
|
43 |
|
|
42 |
|
|||
Other current liabilities |
|
73 |
|
|
75 |
|
|||
Total current liabilities |
|
5,451 |
|
|
3,052 |
|
|||
Long-term debt |
|
4,855 |
|
|
5,201 |
|
|||
Long-term operating lease liabilities |
|
138 |
|
|
142 |
|
|||
Long-term derivative liabilities |
|
1,009 |
|
|
632 |
|
|||
Pension and other postretirement liabilities |
|
27 |
|
|
23 |
|
|||
Other long-term liabilities |
|
210 |
|
|
251 |
|
|||
Total long-term liabilities |
|
6,239 |
|
|
6,249 |
|
|||
Commitments and contingencies |
|
|
|
|
|||||
Equity: |
|
|
|
|
|||||
Common stock, |
|
12 |
|
|
12 |
|
|||
Additional paid-in capital |
|
7,169 |
|
|
7,150 |
|
|||
Accumulated deficit |
|
(5,440 |
) |
|
(4,388 |
) |
|||
Accumulated other comprehensive loss |
|
(25 |
) |
|
(25 |
) |
|||
Common stock in treasury, 57,966,919 shares as of |
|
(302 |
) |
|
(202 |
) |
|||
Total equity |
|
1,414 |
|
|
2,547 |
|
|||
TOTAL LIABILITIES AND EQUITY |
|
$ |
13,104 |
|
|
$ |
11,848 |
|
|
SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
|
|
For the nine months ended |
||||||
|
|
|
||||||
(in millions) |
|
2022 |
|
2021 |
||||
Cash Flows From Operating Activities: |
|
|
|
|
||||
Net loss |
|
$ |
(1,052 |
) |
|
$ |
(2,386 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
||||
Depreciation, depletion and amortization |
|
861 |
|
|
334 |
|
||
Amortization of debt issuance costs |
|
8 |
|
|
6 |
|
||
Impairments |
|
— |
|
|
6 |
|
||
Loss on derivatives, unsettled |
|
2,524 |
|
|
2,952 |
|
||
Stock-based compensation |
|
4 |
|
|
2 |
|
||
Loss on early extinguishment of debt |
|
6 |
|
|
59 |
|
||
Other |
|
2 |
|
|
3 |
|
||
Change in assets and liabilities, excluding impact from acquisitions: |
|
|
|
|
|
|
||
Accounts receivable |
|
(602 |
) |
|
(147 |
) |
||
Accounts payable |
|
506 |
|
|
58 |
|
||
Taxes payable |
|
28 |
|
|
(10 |
) |
||
Interest payable |
|
(22 |
) |
|
(13 |
) |
||
Inventories |
|
(8 |
) |
|
(2 |
) |
||
Other assets and liabilities |
|
(59 |
) |
|
(32 |
) |
||
Net cash provided by operating activities |
|
2,196 |
|
|
830 |
|
||
|
|
|
|
|
||||
Cash Flows From Investing Activities: |
|
|
|
|
||||
Capital investments |
|
(1,623 |
) |
|
(747 |
) |
||
Proceeds from sale of property and equipment |
|
15 |
|
|
4 |
|
||
Cash acquired through acquisitions |
|
— |
|
|
55 |
|
||
Cash paid through acquisitions |
|
— |
|
|
(373 |
) |
||
Other |
|
— |
|
|
(1 |
) |
||
Net cash used in investing activities |
|
(1,608 |
) |
|
(1,062 |
) |
||
|
|
|
|
|
||||
Cash Flows From Financing Activities: |
|
|
|
|
||||
Payments on current portion of long-term debt |
|
(205 |
) |
|
(844 |
) |
||
Payments on long-term debt |
|
(71 |
) |
|
— |
|
||
Payments on revolving credit facility |
|
(10,341 |
) |
|
(3,401 |
) |
||
Borrowings under revolving credit facility |
|
10,061 |
|
|
3,366 |
|
||
Change in bank drafts outstanding |
|
62 |
|
|
33 |
|
||
Proceeds from exercise of common stock options |
|
7 |
|
|
— |
|
||
Purchase of treasury stock |
|
(100 |
) |
|
— |
|
||
Debt issuance/amendment costs |
|
(14 |
) |
|
(25 |
) |
||
Cash paid for tax withholding |
|
(4 |
) |
|
(3 |
) |
||
Repayment of Indigo revolving credit facility |
|
— |
|
|
(95 |
) |
||
Proceeds from issuance of long-term debt |
|
— |
|
|
1,200 |
|
||
Net cash provided by (used in) financing activities |
|
(605 |
) |
|
231 |
|
||
|
|
|
|
|
||||
Decrease in cash and cash equivalents |
|
(17 |
) |
|
(1 |
) |
||
Cash and cash equivalents at beginning of year |
|
28 |
|
|
13 |
|
||
Cash and cash equivalents at end of period |
|
$ |
11 |
|
|
$ |
12 |
|
Hedging Summary
A detailed breakdown of derivative financial instruments and financial basis positions as of
|
|
|
Weighted Average Price per MMBtu |
||||||||||
|
Volume (Bcf) |
|
Swaps |
|
Sold Puts |
|
Purchased Puts |
|
Sold Calls |
||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
207 |
|
$ |
3.04 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Two-way costless collars |
18 |
|
|
— |
|
|
— |
|
|
2.47 |
|
|
2.89 |
Three-way costless collars |
92 |
|
|
— |
|
|
2.03 |
|
|
2.48 |
|
|
2.88 |
Total |
317 |
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
504 |
|
$ |
3.08 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Two-way costless collars |
219 |
|
|
— |
|
|
— |
|
|
3.03 |
|
|
3.55 |
Three-way costless collars |
215 |
|
|
— |
|
|
2.09 |
|
|
2.54 |
|
|
3.00 |
Total |
938 |
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
224 |
|
$ |
2.96 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Two-way costless collars |
44 |
|
|
— |
|
|
— |
|
|
3.07 |
|
|
3.53 |
Three-way costless collars |
11 |
|
|
— |
|
|
2.25 |
|
|
2.80 |
|
|
3.54 |
Total |
279 |
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas financial basis positions |
|
Volume |
|
Basis Differential |
|
|||||
|
|
(Bcf) |
|
($/MMBtu) |
|
|||||
Q4 2022 |
|
|
|
|
|
|
|
|
||
Dominion South |
|
30 |
|
|
$ |
(0.65 |
) |
|
||
TCO |
|
26 |
|
|
$ |
(0.57 |
) |
|
||
TETCO M3 |
|
20 |
|
|
$ |
(0.16 |
) |
|
||
Columbia Gulf Mainline |
|
6 |
|
|
$ |
(0.25 |
) |
|
||
Total |
|
82 |
|
|
$ |
(0.48 |
) |
|
||
2023 |
|
|
|
|
|
|||||
Dominion South |
|
134 |
|
|
$ |
(0.75 |
) |
|
||
TCO |
|
72 |
|
|
$ |
(0.62 |
) |
|
||
TETCO M3 |
|
62 |
|
|
$ |
0.15 |
|
|
||
|
|
13 |
|
|
$ |
(0.29 |
) |
|
||
Total |
|
281 |
|
|
$ |
(0.50 |
) |
|
||
2024 |
|
|
|
|
|
|
|
|
||
Dominion South |
|
46 |
|
|
$ |
(0.71 |
) |
|
||
2025 |
|
|
|
|
|
|
|
|
||
Dominion South |
|
9 |
|
|
$ |
(0.64 |
) |
|
||
Call Options – Natural Gas (Net) |
|
Volume |
|
Weighted Average Strike Price |
|||
|
|
(Bcf) |
|
($/MMBtu) |
|||
2022 |
|
21 |
|
|
$ |
3.01 |
|
2023 |
|
46 |
|
|
$ |
2.94 |
|
2024 |
|
9 |
|
|
$ |
3.00 |
|
Total |
|
76 |
|
|
|
|
|
|
|
|
Weighted Average Price per Bbl |
||||||||||
|
Volume (MBbls) |
|
Swaps |
|
Sold Puts |
|
Purchased Puts |
|
Sold Calls |
||||
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
846 |
|
$ |
52.68 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Three-way costless collars |
344 |
|
|
— |
|
|
39.76 |
|
|
50.08 |
|
|
56.97 |
Total |
1,190 |
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
1,081 |
|
$ |
60.05 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Three-way costless collars |
1,268 |
|
|
— |
|
|
33.97 |
|
|
45.51 |
|
|
56.12 |
Total |
2,349 |
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
913 |
|
$ |
70.66 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
41 |
|
$ |
77.66 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Ethane |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
1,463 |
|
$ |
11.44 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
1,308 |
|
$ |
11.91 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Propane |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
1,536 |
|
$ |
31.22 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Three-way costless collars |
77 |
|
|
— |
|
|
16.80 |
|
|
21.00 |
|
|
31.92 |
Total |
1,613 |
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
1,925 |
|
$ |
36.79 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
73 |
|
$ |
42.32 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Normal Butane |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
464 |
|
$ |
36.22 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
347 |
|
$ |
41.24 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Natural Gasoline |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
501 |
|
$ |
55.78 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price swaps |
359 |
|
$ |
66.00 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
Explanation and Reconciliation of Non-GAAP Financial Measures
The Company reports its financial results in accordance with accounting principles generally accepted in
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, 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
|
|
Nine Months Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Adjusted net income: |
(in millions) |
||||||||||||||
Net income (loss) |
$ |
450 |
|
|
$ |
(1,857 |
) |
|
$ |
(1,052 |
) |
|
$ |
(2,386 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related expenses |
|
— |
|
|
|
35 |
|
|
|
27 |
|
|
|
39 |
|
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
Impairments |
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
6 |
|
Loss on unsettled derivatives (1) |
|
14 |
|
|
|
2,011 |
|
|
|
2,524 |
|
|
|
2,952 |
|
Loss on early extinguishment of debt |
|
— |
|
|
|
59 |
|
|
|
6 |
|
|
|
59 |
|
Other loss |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Adjustments due to discrete tax items (2) |
|
(100 |
) |
|
|
447 |
|
|
|
285 |
|
|
|
570 |
|
Tax impact on adjustments |
|
(4) |
|
|
|
(513 |
) |
|
|
(616 |
) |
|
|
(734 |
) |
Adjusted net income |
$ |
360 |
|
|
$ |
188 |
|
|
$ |
1,175 |
|
|
$ |
513 |
|
| (1) |
Includes |
| (2) |
The Company’s 2022 income tax rate is |
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Adjusted diluted earnings per share: |
|
||||||||||||||
Diluted earnings (loss) per share |
$ |
0.40 |
|
|
$ |
(2.36 |
) |
|
$ |
(0.94 |
) |
|
$ |
(3.34 |
) |
Add back (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related expenses |
|
— |
|
|
|
0.05 |
|
|
|
0.02 |
|
|
|
0.05 |
|
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
Impairments |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Loss on unsettled derivatives (1) |
|
0.01 |
|
|
|
2.54 |
|
|
|
2.27 |
|
|
|
4.12 |
|
Loss on early extinguishment of debt |
|
— |
|
|
|
0.08 |
|
|
|
0.00 |
|
|
|
0.08 |
|
Other loss |
|
— |
|
|
|
— |
|
|
|
0.00 |
|
|
|
— |
|
Adjustments due to discrete tax items (2) |
|
(0.09 |
) |
|
|
0.57 |
|
|
|
0.25 |
|
|
|
0.80 |
|
Tax impact on adjustments |
|
(0.00 |
) |
|
|
(0.65 |
) |
|
|
(0.55 |
) |
|
|
(1.01 |
) |
Adjusted diluted earnings per share |
$ |
0.32 |
|
|
$ |
0.24 |
|
|
$ |
1.05 |
|
|
$ |
0.72 |
|
| (1) |
Includes |
| (2) |
The Company’s 2022 income tax rate is |
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||||
Net cash flow: |
(in millions) |
|||||||||||||||||
Net cash provided by operating activities |
$ |
797 |
|
|
$ |
213 |
|
|
$ |
2,196 |
|
|
$ |
830 |
|
|||
Add back (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Changes in operating assets and liabilities |
|
(32 |
) |
|
|
148 |
|
|
|
157 |
|
|
|
146 |
|
|||
Merger-related expenses |
|
— |
|
|
|
35 |
|
|
|
27 |
|
|
|
39 |
|
|||
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|||
Net cash flow |
$ |
765 |
|
|
$ |
396 |
|
|
$ |
2,380 |
|
|
$ |
1,022 |
|
|||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||||
Free cash flow: |
(in millions) |
|||||||||||||||||
Net cash flow |
$ |
765 |
|
|
$ |
396 |
|
|
$ |
2,380 |
|
|
$ |
1,022 |
|
|||
Subtract: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total capital investments |
|
(543 |
) |
|
|
(291 |
) |
|
|
(1,672 |
) |
|
|
(816 |
) |
|||
Free cash flow |
$ |
222 |
|
|
$ |
105 |
|
|
$ |
708 |
|
|
$ |
206 |
|
|||
|
Three Months Ended
|
|
Nine Months Ended
|
|||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||||||||||
Adjusted EBITDA: |
(in millions) |
|||||||||||||||||
Net income (loss) |
$ |
450 |
|
|
$ |
(1,857 |
) |
|
$ |
(1,052 |
) |
|
$ |
(2,386 |
) |
|||
Add back (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
50 |
|
|
|
34 |
|
|
|
139 |
|
|
|
95 |
|
|||
Income tax expense (benefit) |
|
11 |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|||
Depreciation, depletion and amortization |
|
298 |
|
|
|
138 |
|
|
|
861 |
|
|
|
334 |
|
|||
Merger-related expenses |
|
— |
|
|
|
35 |
|
|
|
27 |
|
|
|
39 |
|
|||
Restructuring charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|||
Impairments |
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
6 |
|
|||
Loss on unsettled derivatives (1) |
|
14 |
b |
|
|
2,011 |
|
|
|
2,524 |
|
|
|
2,952 |
|
|||
Loss on early extinguishment of debt |
|
— |
|
|
|
59 |
|
|
|
6 |
|
|
|
59 |
|
|||
Other loss |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|||
Stock-based compensation expense |
|
1 |
|
|
|
— |
|
|
|
4 |
|
|
|
2 |
|
|||
Adjusted EBITDA |
$ |
824 |
|
|
$ |
426 |
|
|
$ |
2,551 |
|
|
$ |
1,108 |
|
|||
| (1) |
Includes |
|
|
12 Months Ended |
||
Adjusted EBITDA: |
|
(in millions) |
||
Net income |
|
$ |
1,309 |
|
Add back (deduct): |
|
|
|
|
Interest expense |
|
|
180 |
|
Income tax expense (benefit) |
|
|
41 |
|
Depreciation, depletion and amortization |
|
|
1,073 |
|
Merger-related expenses |
|
|
64 |
|
Loss on unsettled derivatives (1) |
|
|
516 |
|
Loss on early extinguishment of debt |
|
|
40 |
|
Stock-based compensation expense |
|
|
4 |
|
Other |
|
(5 |
) |
|
Adjusted EBITDA |
|
$ |
3,222 |
|
|
|
|
|
|
| (1) |
Includes |
||||
|
|
|
||
Net debt: |
|
(in millions) |
||
Total debt (1) |
|
$ |
4,890 |
|
Subtract: |
|
|
||
Cash and cash equivalents |
|
(11 |
) |
|
Net debt |
|
$ |
4,879 |
|
(1) |
Does not include |
||||
|
|
|
||
Net debt to Adjusted EBITDA: |
|
(in millions) |
||
Net debt |
|
$ |
4,879 |
|
Adjusted EBITDA (1) |
|
$ |
3,375 |
|
Net debt to Adjusted EBITDA |
|
|
1.4x |
|
(1) |
Adjusted EBITDA for the twelve months ended |
||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005879/en/
Investor Contact
Director, Investor Relations
(832) 796-7906
brittany_raiford@swn.com
Source:
FAQ
What were Southwestern Energy's Q3 2022 financial results?
How much debt did Southwestern Energy repay in Q3 2022?
What is the adjusted EBITDA for Southwestern Energy in Q3 2022?
What is Southwestern Energy's plan for GHG emissions?
When will Southwestern Energy host its conference call regarding Q3 results?
