Profile: Southwestern Energy Co (SWN.N)
4 Dec 2013
Southwestern Energy Company, incorporated on February 24, 2006, is an independent energy company engaged in natural gas and oil exploration, development and production (E&P). The Company is focused on creating and capturing additional value through its natural gas gathering and marketing businesses, which it refers to as Midstream Services. Its primary business is the exploration for and production of natural gas and oil, with its operations being focused within the United States on development of an unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, which it refers to as the Fayetteville Shale play. It is also engaged in exploration and production activities in Pennsylvania, and Texas and in Arkansas and Oklahoma in the Arkoma Basin. The Company conducts its exploration and production operations through its wholly owned subsidiaries, SEECO, Inc. (SEECO), and Southwestern Energy Production Company (SEPCO). In May 2011, the Company sold the producing rights to the Haynesville and Middle Bossier Shale intervals in approximately 9,717 net acres. As of December 31, 2011, it had acquired approximately 1,324 square miles of three-dimensional (3-D) seismic data, which provides it with seismic data on approximately 65% of its net acreage position in the Fayetteville Shale, excluding its acreage in the traditional Fairway portion of the Arkoma Basin.
SEECO operates in Arkansas where it holds both developed and undeveloped gas reserves, and conducts the Fayetteville Shale drilling program and the conventional Arkoma Basin drilling program in the Arkoma Basin. SEPCO conducts development drilling and exploration programs in Pennsylvania, Oklahoma, Texas, Arkansas and Louisiana. DeSoto Drilling, Inc. (DDI), a wholly owned subsidiary of SEPCO, operates drilling rigs in Arkansas, Pennsylvania and Louisiana, as well as its other operating areas. Its Canadian operations are conducted by its subsidiary, SWN Resources Canada Inc. The Company has an exploration program for natural gas and crude oil under 32 licenses in New Brunswick, Canada. During the year ended December 31, 2011, 77% of its operating income were generated from its E&P business and 23% of its operating income from Midstream Services.
The Company engages in natural gas gathering activities in Arkansas, Texas and Pennsylvania through its gathering subsidiaries, DeSoto Gathering Company, L.L.C. (DeSoto Gathering), and Angelina Gathering Company, L.L.C. (Angelina Gathering). DeSoto Gathering and Angelina Gathering support its E&P operations and generate revenue from gathering fees associated with the transportation of its and third party gas to market. Its natural gas marketing subsidiary, Southwestern Energy Services Company (SES), captures downstream opportunities which arise through the marketing and transportation of the natural gas produced in its E&P operations. The Company’s operations are focused on the Fayetteville Shale, an unconventional reservoir located in the Arkoma Basin in Arkansas. In addition to its Arkansas operations, it is also continuing to expand its drilling program on its acreage in Pennsylvania targeting the Marcellus Shale and it conducts both conventional and unconventional operations targeting various formations as part of its New Ventures projects, which include the unconventional horizontal oil plays targeting the Brown Dense formation in Arkansas and Louisiana, and exploration activities in New Brunswick, Canada.
Fayetteville Shale Play
The Fayetteville Shale is an unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, ranging in thickness from 50 to 550 feet and ranging in depth from 1,500 to 6,500 feet. As of December 31, 2011, the Company held leases for approximately 925,842 net acres in the play area (360,473 net undeveloped acres, 440,313 net developed acres held by Fayetteville Shale production, 123,442 net developed acres held by conventional production and the remainder in the traditional Fairway portion of the Arkoma Basin). During 2011, approximately 5,104 billion cubic feet of its reserves were attributable to its Fayetteville Shale play. During 2011, its net production from the Fayetteville Shale play was 436.8 billion cubic feet. As of December 31, 2011, it had spud a total of 3,095 wells in the play. During 2011, 650 wells were spud. Of the wells spud during 2011, 649 were designated as horizontal wells.
As of December 31, 2011, 2,380 operated wells had been drilled and completed overall, including 2,290 horizontal wells. The operated wells it placed on production during 2011 averaged initial production rates of 3,330 million cubic feet per day. During 2011, the Company placed 51 operated wells on production with initial production rates that exceeded 5.0 million cubic feet per day, including six wells that exceeded 6.0 million cubic feet per day. During 2011, its total proved net reserves booked in the play were from a total of 4,376 locations, of which 2,735 were proved developed producing, 59 were proved developed non-producing and 1,582 were proved undeveloped.
Marcellus Shale Play
As of December 31, 2011, the Company had approximately 186,893 net acres in Pennsylvania under, which the Marcellus Shale is prospective (180,676 net undeveloped acres and 6,217 net developed acres held by production). As of December 31, 2011, it had spud 70 wells, 23 of which were on production and 67 of which were horizontal wells. Of these 45 wells, 18 were horizontal wells located in its Greenzweig area in Bradford County and the remaining 27 wells were located in its Price and Range Trust areas in Susquehanna County. At December 31, 2011, the Company had 22 operated horizontal wells on production which had an average completed well. Approximately 342 billion cubic feet of its total proved net reserves as of December 31, 2011 were attributable to the Marcellus Shale. It had a total of 22 operated horizontal wells and one operated vertical well, which were on production at December 31, 2011, resulting in net production from this area of 23.4 billion cubic feet during 2011. Its reserves booked in the Marcellus Shale included a total of 60 locations, of which 30 were proved developed producing, two were proved developed non-producing and 28 were proved undeveloped.
The Company’s Ark-La-Tex division includes its conventional assets in the Arkoma Basin in Arkansas and Oklahoma and its conventional and unconventional assets in East Texas. Production from these assets was 39.8 billion cubic feet during 2011. As of December 31, 2011, total proved net reserves from these areas were approximately 447 billion cubic feet.
Southwestern Energy Co
Suite 125, 2350 North Sam Housto
HOUSTON TX 77032