Southwestern Energy’s Production Costs and Margins for 3Q16



Southwestern Energy’s production costs and margins

Excluding hedges, in 3Q16, Southwestern Energy (SWN) reported positive cash margins as well as positive total margins, as you can see in Chart 1 below.

But a loss of ~$0.05 per Mcfe (thousand cubic feet equivalent) on natural gas (UNG) hedges reduced Southwestern Energy’s cash margin and total margin by ~$0.05 per Mcfe, as you can see in Chart 2 below.

For 3Q16, other upstream companies such as ConocoPhillips (COP), Marathon Oil (MRO), and EOG Resources (EOG) have also reported positive cash margins. Including a hedging benefit, ConocoPhillips reported a cash margin of ~$14 per boe (barrel of oil equivalent). Marathon Oil reported a cash margin of ~$13 per boe.

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  • production cash cost: LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administrative) cash expenses + interest expenses
  • total production cost: cash cost + DD&A (depletion, depreciation, and amortization)

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