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What to Expect from Southwestern Energy’s 3Q17 Earnings

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Part 3
What to Expect from Southwestern Energy’s 3Q17 Earnings PART 3 OF 8

Southwestern Energy’s Quarterly Production Growth in 3Q17

Southwestern Energy’s Production guidance

There is no specific production guidance issued by Southwestern Energy (SWN) for 3Q17 or fiscal 2017. However, during its 2016 earnings conference call, Southwestern Energy indicated that for 2017 and 2018, SWN’s production volume growth would be dependent on the level of its flexible capital expenditures program. 

As a base case for its production, SWN forecasts a compound annual growth rate (or CAGR) of 3%–5% with $1 billion in capital spending.

Southwestern Energy’s Quarterly Production Growth in 3Q17

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SWN’s 3Q17 minimum production expectations

Southwestern Energy (SWN) started to increase its drilling and completion activities in 1H16, the benefits of which would be seen in 2017. Southwestern Energy’s management is confident that its quarterly production growth trajectory has already started in 1Q17. This means SWN’s 3Q17 production could top 222 Bcfe (billion cubic feet equivalent).

Southwestern Energy’s 2Q17 production

For 2Q17, Southwestern Energy reported total production of 222 Bcfe. Southwestern Energy’s 2Q17 production was ~9% higher when compared with the production of 204 Bcfe in 1Q17. 

However, on a year-over-year basis, Southwestern Energy’s 2Q17 production was ~1% lower when compared with its 2Q16 production of 225 Bcfe.

Southwestern Energy’s 2Q17 production mix

In 2Q17, Southwestern Energy reported natural gas (UNG) (BOIL) production of 199 Bcf (billion cubic feet), natural gas liquids production of ~3.3 MMbbls (million barrels) and crude oil (USO) (SCO) production of 565 Mbbls (thousand barrels). 

SWN’s production mix contains ~89.6% natural gas, ~9.0% natural gas liquids, and ~1.4% crude oil. SWN’s peer Consol Energy (CNX) reported natural gas production of 83.2 Bcf in 2Q17, which was ~90% of its 2Q17 production mix. Consol Energy also operates in the Marcellus Shale.

SWN’s growth areas in 2017

In 2017, Southwestern Energy is expecting a strong production growth from its Appalachia assets. For 2017, SWN’s combined production from Northeast and Southwest Appalachia is expected to grow ~17%, compared with its 2016 production from the same region. 

The 4Q17 production exit rate from these regions is expected to grow ~40% when compared with its 4Q16 production exit rate.

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