Southwestern Energy Co. plans to delay certain dry gas-focused completions but has maintained its 2023 full-year guidance.
The delay includes releasing a frac fleet in the Haynesville shale beginning mid-May and the release of a frac fleet in Pennsylvania “earlier than planned,” said Clay Garrel, chief operating officer, in an earnings call Apr. 28.
The expected result is a flat quarterly production profile (4.6 bcfed net) versus a second-half increase noted in the company’s original guidance. Second-quarter 2023 production of 408-420 bcfe is expected.
At the same time, the company expects to maintain higher liquids-rich activity in West Virginia and Ohio, aligning capital investment with expected cash flow while maintaining the company’s productive capacity “to capitalize on the constructive longer-term natural gas outlook,” said Bill Way, president and chief executive officer.
The company expects to spend near the low end of its $2.2-2.5 billion annual capital guidance with most of the capital reduction occurring in the year’s second half, and with cost inflation and capital efficiency improvements complementing activity reductions, said Garrel.
The adjustments are expected to result in second-quarter capital spend slightly lower than first-quarter's $665 million, consistent with its front-end loaded program, the company said.
If the activity is not phased back in later in the year “should prices or [Southwestern's] expected cash flow improve,” the company expects 10-15 fewer dry gas completions and wells to sales than current well count guidance.
As noted in guidance shared in February, the company adjusted activity in response to lower near-term natural gas prices by removing capital from the program and adding liquids-rich activity to the development plan in Ohio this year.
First quarter
In this year’s first quarter, well performance and cycle time improvements in both Appalachia and the Haynesville shale drove production to the high end of guidance. The company had net production of 411 bcfe (4.6 bcfed), including 3.9 bcfd of natural gas and 107,000 b/d of liquids, said Garrel.
In the quarter, total Appalachia production was 251 bcfe, with NGL production of 91,000 bl/d and oil production of 16,000 b/d. The company drilled 19 wells, completed 15 wells, and placed 13 wells to sales including 11 wells in the super rich Marcellus and two in the dry gas Marcellus with an average lateral length of 14,916 ft.
Haynesville shale production for the quarter was 160 bcfe. There were 12 wells drilled, 21 wells completed, and 23 wells placed to sales including 15 in the Middle Bossier and eight in the Haynesville with an average lateral length of about 8,200 ft.
For the quarter, Southwestern Energy had net income of $1.9 billion including a gain on mark-to-market of unsettled derivatives. Excluding this and other one-time items, adjusted net income was $346 million. Net cash provided by operating activities was $1.1 billion.
As of Mar. 31, 2023, the company had total debt of $3.95 billion. At the end of the quarter, Southwestern had $210 million of borrowings under its revolving credit facility and $89 million in outstanding letters of credit.
