Southwestern Energy’s 2Q16 Production Guidance, Management Strategies



Southwestern Energy’s production guidance

For 2Q16, Southwestern Energy (SWN) expects its total production to range from 210 Bcfe (billion cubic feet equivalent) to 215 Bcfe. The midpoint of the 2Q16 production guidance is 212.5 Bcfe, which is ~13% lower when compared with Southwestern Energy’s production volumes in 2Q15.

Sequentially, Southwestern Energy’s production guidance is lower by ~10%, when compared with 1Q16.

Southwestern Energy (SWN) is expecting its 2Q16 production growth to come mainly from the Fayetteville Shale and Northeast Appalachia.

For 2Q16, SWN expects its natural gas production to range from 193 Bcf (billion cubic feet) to 197 Bcf, crude oil production to range from 470 MBbls (thousand barrels) to 500 MBbls, and natural gas liquids to range from 2,300 MBbls to 2,375 MBbls.

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Other upstream players

Range Resources (RRC) and CONSOL Energy (CNX) also operate in the Marcellus Shale. Range Resources (RRC) has reported an ~4% sequential decrease and CONSOL Energy (CNX) has reported an ~2% sequential increase in their respective 1Q16 production numbers.

Exco Resources (XCO) and Chesapeake Energy (CHK) also operate in the Marcellus Shale. The ISE-Revere Natural Gas Index ETF (FCG) invests in natural gas producers, and the Vanguard Energy ETF (VDE) invests in the broader energy market.

SWN’s capex and cash flow guidance

With its focus on balance sheet strength and capital discipline, Southwestern Energy’s (SWN) activity levels in 2016 will be driven by the commodity price environment. For 2016, SWN expects total capex in a range of $350 million–$400 million, which is ~79% lower than its capex of ~$1.8 billion in 2015.

For 2016, SWN expects its total OCF (operating cash flow) to range from $450 million–$500 million, which is ~67% lower than its 2015 OCF. SWN provided the 2016 OCF guidance assuming a yearly average natural gas price of $2.35 per MMBtu (million British thermal units) and a yearly average crude oil price of $35 per barrel.


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