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.
- 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)