SWN(US:SWN)2023-08-04 18:00Financial Data and Key Metrics Changes - The company reported a production of 423 Bcfe for the quarter, consisting of 4 Bcf per day of natural gas and 106,000 barrels per day of liquids [26] - Capital guidance for 2023 has been lowered by approximately 10% or $200 million to a range of $2 billion to $2.3 billion, with only a modest impact on production [28] - Leverage increased modestly to 1.4x, still within the target leverage range of 1.5x to 1.0x, with expectations for year-end 2023 debt to be lower than at year-end 2022 [29] Business Line Data and Key Metrics Changes - The company placed 50 wells to sales during the quarter, with 28 in Appalachia and 22 in Haynesville, indicating strong operational performance [51] - Average lateral length for wells in Appalachia exceeded 17,300 feet, with some wells in Haynesville reaching over 14,000 feet [75][96] - The company expects well costs in 2024 to be 10% to 15% lower than in 2023, contributing to improved capital efficiency metrics [52] Market Data and Key Metrics Changes - There has been a nearly 20% reduction in gas-directed drilling activity year-to-date, with continued moderation expected [27] - The company anticipates that strong power burn and increased LNG imports will provide additional price support for natural gas [24] - The Northeast basis market has weakened due to mild winter conditions and increased storage levels, impacting pricing dynamics [81] Company Strategy and Development Direction - The company aims to strengthen its balance sheet through debt reduction and improved capital efficiency while maintaining productive capacity [47] - Southwestern Energy is positioned as the largest Haynesville producer and gas supplier to existing U.S. LNG facilities, with plans to leverage its scale and inventory depth to remain a key supplier to the LNG sector [49] - The company is focused on optimizing completions and drilling efficiencies to enhance production performance and reduce capital expenditures [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive outlook for natural gas, supported by supply and demand fundamentals, with expectations for moderating sector production heading into next year [48] - The company is actively managing its capital program to align with commodity price levels and is prepared to adjust activity based on market conditions [23][25] - Management noted that the execution of their strategy translates to greater economic returns and equity value for shareholders [11] Other Important Information - The company has captured savings across various operational areas, particularly in casing, track horsepower, and chemicals, leading to a decrease in inflation outlook from 10%-15% to low single digits for the year [16] - The company plans to return capital to shareholders as it approaches its target debt range of $2.5 billion to $3.0 billion [29] Q&A Session Summary Question: Regarding the completion schedule and potential for additional completions - Management indicated that they will not add incremental completions back in the fourth quarter unless there is a price surge, reflecting operational improvements and completion efficiency gains [32] Question: On the productivity of Bossier wells compared to Haynesville wells - Management confirmed that while both performed well, there are specific fault blocks where Middle Bossier outperforms Haynesville, but overall performance is similar [33] Question: On capital spending and efficiency improvements - Management acknowledged ongoing completion optimization efforts and confirmed that fluid loading has benefited production performance across both Appalachia and Haynesville [38] Question: On LNG contracts and market dynamics - Management is evaluating opportunities to leverage their position into attractive risk-adjusted globally priced supply agreements, emphasizing their scale and connectivity to the LNG corridor [79] Question: On the DUC inventory and market perception - Management clarified that the perceived backlog of uncompleted wells is overstated, with actual DUC counts being lower than public data suggests [90][91]