Business Wire | Jul 29, 2021 04:16PM EDT

Southwestern Energy Announces Second Quarter 2021 Results

Jul. 29, 2021

SPRING, Texas--(BUSINESS WIRE)--Jul. 29, 2021--Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the second quarter ended June 30, 2021.

* Integration planning for scale-enhancing acquisition and Haynesville entry ahead of schedule; shareholder vote set for August 27th; * Implemented basin-wide project to certify and continuously monitor potential emissions from all Appalachia unconventional wells; * Further reduced leverage ratio by 0.4x to 2.6x; sustainable 2x leverage expected in late 2021; * Generated $270 million net cash provided by operating activities; invested $259 million consistent with our maintenance capital plan; expect free cash flow to ramp in second half 2021; * Captured promised $100 per foot well costs savings on first three Ohio Utica wells; * Reported total production of 276 Bcfe, or 3.0 Bcfe per day, including 2.4 Bcf per day of gas and 104 MBbls per day of liquids; * Received weighted average realized price (excluding impact of transportation and hedges) of $2.92 per Mcfe; and * Approximately 90% of remaining 2021 Appalachia natural gas basis protected; annual differential guidance range remains unchanged.

"Southwestern Energy meaningfully advanced its strategic value-creation objectives during the quarter. The Company announced a significant acquisition that we believe is highly accretive across both equity and credit metrics. The addition of Indigo further positions SWN as a leading natural gas company; it expands our investment opportunities across the nation's top two natural gas basins and enhances our margins while reducing basis volatility. Additionally, in alignment with our ESG strategy, we initiated the certification and continuous monitoring of all Appalachia unconventional wells. These two strategic actions enhance sustainable and responsible value creation for all stakeholders," said Bill Way, Southwestern Energy President and Chief Executive Officer.

Financial Results

For the three months For the six months ended ended

June 30, June 30,

(in millions) 2021 2020 2021 2020

Net income (loss) $ (609 ) $ (880 ) $ (529 ) $ (2,427 )

Adjusted net income (loss) $ 129 $ (1 ) $ 325 $ 55 (non-GAAP)

Diluted earnings (loss) per $ (0.90 ) $ (1.63 ) $ (0.78 ) $ (4.49 )share

Adjusted diluted earnings $ 0.19 $ (0.00 ) $ 0.48 $ 0.10 (loss) per share (non-GAAP)

Adjusted EBITDA (non-GAAP) $ 300 $ 106 $ 682 $ 312

Net cash provided by operating $ 270 $ 94 $ 617 $ 254 activities

Net cash flow (non-GAAP) $ 272 $ 87 $ 626 $ 278

Total capital investments ^(1) $ 259 $ 245 $ 525 $ 482

(1)

Capital investments include a decrease of $9 million for the three months ended June 30, 2021, and increases of $29 million and $8 million for the six months ended June 30, 2021 and 2020, respectively, relating to the change in accrued expenditures between periods. There was no change in the capital accrual for the three months ended June 30, 2020.

For the quarter ended June 30, 2021, Southwestern Energy recorded net loss of $609 million, or ($0.90) per diluted share, compared to a net loss in 2020 of $880 million, or ($1.63) per diluted share. The quarter ended June 30, 2021 included a $772 million loss on unsettled derivatives and the same period for 2020 included a $655 million non-cash impairment and a $229 million loss on unsettled derivatives.

Adjusted net income was $129 million, or $0.19 per diluted share, in the second quarter of 2021, compared to a loss of $1 million, or ($0.00) per diluted share, for the prior year period. The increase was primarily related to a 33% increase in the weighted average realized price including derivatives and a 37% increase in production volumes, largely due to the Montage acquisition. Adjusted EBITDA (non-GAAP) was $300 million, net cash provided by operating activities was $270 million and net cash flow (non-GAAP) was $272 million.

As indicated in the table below, second quarter 2021 weighted average realized price, including $0.37 per Mcfe of transportation expenses, was $2.55 per Mcfe excluding the impact of derivatives. Including derivatives, weighted average realized price (including transportation) for the quarter was up 33% from $1.65 per Mcfe in 2020 to $2.20 per Mcfe in 2021 primarily due to higher commodity prices including a 65% increase in NYMEX Henry Hub and a 137% increase in WTI. Second quarter 2021 weighted average realized price before transportation expense and excluding the impact of derivatives was $2.92 per Mcfe.

At quarter end, the Company had hedges in place for 88% of its remaining 2021 expected natural gas production, 71% of its 2021 expected natural gas liquids (NGLs) production and 89% of its 2021 expected oil production. The Company also has approximately 90% of its remaining 2021 expected natural gas production protected from the impact of widening basis differentials through transportation capacity and basis hedges.

As of June 30, 2021, Southwestern Energy had total debt of $3.0 billion and a leverage ratio of 2.6x, an improvement of 0.4x compared to last quarter. At quarter end, the Company had $568 million of borrowings under its revolving credit facility with $233 million in letters of credit and ample liquidity of $1.2 billion.

Capital investments include a decrease of $9 million for the three months ended June 30, 2021, and increases of $29 million and $8 million for the(1) six months ended June 30, 2021 and 2020, respectively, relating to the change in accrued expenditures between periods. There was no change in the capital accrual for the three months ended June 30, 2020.

For the quarter ended June 30, 2021, Southwestern Energy recorded net loss of $609 million, or ($0.90) per diluted share, compared to a net loss in 2020 of $880 million, or ($1.63) per diluted share. The quarter ended June 30, 2021 included a $772 million loss on unsettled derivatives and the same period for 2020 included a $655 million non-cash impairment and a $229 million loss on unsettled derivatives.

Adjusted net income was $129 million, or $0.19 per diluted share, in the second quarter of 2021, compared to a loss of $1 million, or ($0.00) per diluted share, for the prior year period. The increase was primarily related to a 33% increase in the weighted average realized price including derivatives and a 37% increase in production volumes, largely due to the Montage acquisition. Adjusted EBITDA (non-GAAP) was $300 million, net cash provided by operating activities was $270 million and net cash flow (non-GAAP) was $272 million.

As indicated in the table below, second quarter 2021 weighted average realized price, including $0.37 per Mcfe of transportation expenses, was $2.55 per Mcfe excluding the impact of derivatives. Including derivatives, weighted average realized price (including transportation) for the quarter was up 33% from $1.65 per Mcfe in 2020 to $2.20 per Mcfe in 2021 primarily due to higher commodity prices including a 65% increase in NYMEX Henry Hub and a 137% increase in WTI. Second quarter 2021 weighted average realized price before transportation expense and excluding the impact of derivatives was $2.92 per Mcfe.

At quarter end, the Company had hedges in place for 88% of its remaining 2021 expected natural gas production, 71% of its 2021 expected natural gas liquids (NGLs) production and 89% of its 2021 expected oil production. The Company also has approximately 90% of its remaining 2021 expected natural gas production protected from the impact of widening basis differentials through transportation capacity and basis hedges.

As of June 30, 2021, Southwestern Energy had total debt of $3.0 billion and a leverage ratio of 2.6x, an improvement of 0.4x compared to last quarter. At quarter end, the Company had $568 million of borrowings under its revolving credit facility with $233 million in letters of credit and ample liquidity of $1.2 billion.

Realized Prices For the three months For the six months ended ended

(includes transportation costs) June 30, June 30,

2021 2020 2021 2020

Natural Gas Price:

NYMEX Henry Hub price ($/MMBtu) $ 2.83 $ 1.72 $ 2.76 $ 1.83 ^ ^(1)

Discount to NYMEX ^(2) (0.91 ) (0.74 ) (0.74 ) (0.57 )

Realized gas price per Mcf, $ 1.92 $ 0.98 $ 2.02 $ 1.26 excluding derivatives

Gain (loss) on settledfinancial basis derivatives ($/ 0.03 (0.05 ) 0.11 0.03 Mcf)

Gain (loss) on settled (0.06 ) 0.57 (0.02 ) 0.43 commodity derivatives ($/Mcf)

Realized gas price, including $ 1.89 $ 1.50 $ 2.11 $ 1.72 derivatives ($/Mcf)

Oil Price:

WTI oil price ($/Bbl) ^(3) $ 66.07 $ 27.85 $ 61.96 $ 37.01

Discount to WTI (8.57 ) (12.16 ) (8.92 ) (9.46 )

Realized oil price, excluding $ 57.50 $ 15.69 $ 53.04 $ 27.55 derivatives ($/Bbl)

Realized oil price, including $ 38.37 $ 41.64 $ 37.70 $ 44.08 derivatives ($/Bbl)

NGL Price:

Realized NGL price, excluding $ 23.24 $ 6.43 $ 23.05 $ 7.29 derivatives ($/Bbl)

Realized NGL price, including $ 15.87 $ 8.22 $ 15.99 $ 9.50 derivatives ($/Bbl)

Percentage of WTI, excluding 35 % 23 % 37 % 20 %derivatives

Total Weighted Average Realized Price:

Excluding derivatives ($/Mcfe) $ 2.55 $ 1.05 $ 2.58 $ 1.37

Including derivatives ($/Mcfe) $ 2.20 $ 1.65 $ 2.36 $ 1.90

(1)

Based on last day monthly futures settlement prices.

(2)

This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.

(3)

Based on the average daily settlement price of the nearby month futures contract over the period.

Operational ResultsTotal production for the quarter ended June 30, 2021 was 276 Bcfe, of which 79% was natural gas, 17% NGLs and 4% oil. Capital investments totaled $259 million for the second quarter, with 23 wells drilled, 19 wells completed and 31 wells placed to sales.

(1) Based on last day monthly futures settlement prices.

This discount includes a basis differential, a heating content(2) adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.

(3) Based on the average daily settlement price of the nearby month futures contract over the period.

Operational ResultsTotal production for the quarter ended June 30, 2021 was 276 Bcfe, of which 79% was natural gas, 17% NGLs and 4% oil. Capital investments totaled $259 million for the second quarter, with 23 wells drilled, 19 wells completed and 31 wells placed to sales.

For the three months For the six months ended ended

June 30, June 30,

2021 2020 2021 2020

Production

Gas production (Bcf) 219 158 433 314

Oil production (MBbls) 1,831 1,083 3,493 2,482

NGL production (MBbls) 7,666 6,111 15,244 12,239

Total production (Bcfe) 276 201 545 402

Total production (Bcfe/day) 3.0 2.2 3.0 2.2



Average unit costs per Mcfe

Lease operating expenses ^(1) $ 0.94 $ 0.91 $ 0.94 $ 0.94

General & administrative $ 0.11 $ 0.14 $ 0.12 $ 0.13 expenses ^(2,3)

Taxes, other than income taxes $ 0.10 $ 0.05 $ 0.09 $ 0.06

Full cost pool amortization $ 0.34 $ 0.38 $ 0.34 $ 0.46

(1)

Includes post-production costs such as gathering, processing, fractionation and compression.

(2)

Excludes $3 million and $4 million in merger-related expenses for the three and six months ended June 30, 2021, respectively, and $1 million and $7 million in restructuring charges for the three and six months ended June 30, 2021, respectively.

(3)

Excludes $2 million and $12 million in restructuring charges for the three and six months ended June 30, 2020, respectively.

Southwest Appalachia - In the second quarter, total production was 153 Bcfe, with NGL production of 84 MBbls per day and oil production of 20 MBbls per day. The Company drilled 15 wells, completed 12 wells and placed 20 wells to sales with an average lateral length of 15,067 feet.

Nine of the wells to sales were located in the rich acreage with an average 30-day rate of 19 MMcfe per day, including 44% liquids, and eight of the wells to sales were located in the super rich acreage with an average 30-day rate of 13 MMcfe per day, including 67% liquids. The remaining three wells placed to sales this quarter were the Company's first dry gas Ohio Utica wells. These wells had an average lateral length of 13,781 feet and each had an average 30-day rate of 25 MMcf per day.

Northeast Appalachia - Second quarter 2021 production was 123 Bcf. The Company drilled eight wells, completed seven wells and placed 11 wells to sales with an average lateral length of 11,568 feet and an average 30-day rate of 14 MMcf per day.

(1) Includes post-production costs such as gathering, processing, fractionation and compression.

Excludes $3 million and $4 million in merger-related expenses for the(2) three and six months ended June 30, 2021, respectively, and $1 million and $7 million in restructuring charges for the three and six months ended June 30, 2021, respectively.

(3) Excludes $2 million and $12 million in restructuring charges for the three and six months ended June 30, 2020, respectively.

Southwest Appalachia - In the second quarter, total production was 153 Bcfe, with NGL production of 84 MBbls per day and oil production of 20 MBbls per day. The Company drilled 15 wells, completed 12 wells and placed 20 wells to sales with an average lateral length of 15,067 feet.

Nine of the wells to sales were located in the rich acreage with an average 30-day rate of 19 MMcfe per day, including 44% liquids, and eight of the wells to sales were located in the super rich acreage with an average 30-day rate of 13 MMcfe per day, including 67% liquids. The remaining three wells placed to sales this quarter were the Company's first dry gas Ohio Utica wells. These wells had an average lateral length of 13,781 feet and each had an average 30-day rate of 25 MMcf per day.

Northeast Appalachia - Second quarter 2021 production was 123 Bcf. The Company drilled eight wells, completed seven wells and placed 11 wells to sales with an average lateral length of 11,568 feet and an average 30-day rate of 14 MMcf per day.

For the three months For the six monthsE&P Division Results ended ended

June 30, 2021 June 30, 2021

Northeast Southwest Northeast Southwest

Gas production (Bcf) 123 96 241 192

Liquids production

Oil (MBbls) - 1,826 - 3,484

NGL (MBbls) - 7,665 - 15,242

Production (Bcfe) 123 153 241 304



Gross operated production 1,645 2,486 June 2021 (MMcfe/d)

Net operated production June 1,346 1,691 2021 (MMcfe/d)



Capital investments ($ in millions)

Drilling and completions, $ 75 $ 127 $ 146 $ 269 including workovers

Land acquisition and other 3 11 7 20

Capitalized interest and 7 31 12 63 expense

Total capital investments $ 85 $ 169 $ 165 $ 352



Gross operated well activity summary

Drilled 8 15 19 27

Completed 7 12 19 29

Wells to sales 11 20 19 29



Average well cost on wells to $ 6.1 $ 10.0 $ 7.2 $ 9.4 sales (millions)

Average lateral length (ft) 11,568 15,067 12,369 14,311



Total weighted averagerealized price per Mcfe, $ 1.87 $ 3.10 $ 2.05 $ 3.01 excluding derivatives

Third Quarter 2021 Price GuidanceBased on current market conditions, Southwestern expects third quarter price differentials to be within the following ranges before the impact of the Indigo acquisition. The Company maintains its full year 2021 price differential guidance before the impact of the Indigo acquisition.

Natural gas discount to NYMEX including transportation ^(1) $0.90 - $1.00 per Mcf

Natural gas liquids realization as a % of WTI including 38% - 44%transportation

(1)

Includes the impact of basis hedges.

Conference CallSouthwestern Energy will host a conference call on Friday, July 30, 2021 at 9:30 a.m. Central to discuss second quarter 2021 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6506 and enter access code 3889842. A live webcast will be available at ir.swn.com.

About Southwestern EnergySouthwestern Energy Company (NYSE: SWN) is a leading U.S. producer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the nation's most prolific shale gas basins. SWN's returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. For additional information, please visit www.swn.com and www.swn.com/responsibility.

Forward Looking StatementCertain statements and information in this news release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The words "believe," "expect," "anticipate," "plan," "predict," "intend," "seek," "foresee," "should," "would," "could," "attempt," "appears," "forecast," "outlook," "estimate," "project," "potential," "may," "will," "likely," "guidance," "goal," "model," "target," "budget" and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Statements may be forward looking even in the absence of these particular words. Examples of forward-looking statements include, but are not limited to, statements regarding the proposed acquisition of Indigo Natural Resources LLC (the "Proposed Transaction"), expected synergies and other benefits from and costs in connection with the Proposed Transaction, estimated financial metrics giving effect to the Proposed Transaction, our financial position, business strategy, production, reserve growth and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained in this document are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management's assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see "Risk Factors" in our most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas, oil and natural gas liquids ("NGLs"), including regional basis differentials and the impact of reduced demand for our production and products in which our production is a component due to governmental and societal actions taken in response to COVID-19 or other public health crises and any related company or governmental policies and actions to protect the health and safety of individuals or governmental policies or actions to maintain the functioning of national or global economies and markets; our ability to fund our planned capital investments; a change in our credit rating, an increase in interest rates and any adverse impacts from the discontinuation of the London Interbank Offered Rate; the extent to which lower commodity prices impact our ability to service or refinance our existing debt; the impact of volatility in the financial markets or other global economic factors; difficulties in appropriately allocating capital and resources among our strategic opportunities; the timing and extent of our success in discovering, developing, producing and estimating reserves; our ability to maintain leases that may expire if production is not established or profitably maintained; our ability to realize the expected benefits from recent acquisitions or the Proposed Transaction; costs in connection with the Proposed Transaction; the consummation of or failure to consummate the Proposed Transaction and the timing thereof; costs in connection with the Proposed Transaction; integration of operations and results subsequent to the Proposed Transaction; our ability to transport our production to the most favorable markets or at all; the impact of government regulation, including changes in law, the ability to obtain and maintain permits, any increase in severance or similar taxes, and legislation or regulation relating to hydraulic fracturing, climate and over-the-counter derivatives; the impact of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally; the effects of weather; increased competition; the financial impact of accounting regulations and critical accounting policies; the comparative cost of alternative fuels; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other factors listed in the reports we have filed and may file with the SEC that are incorporated by reference herein. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

(1) Includes the impact of basis hedges.

Conference CallSouthwestern Energy will host a conference call on Friday, July 30, 2021 at 9:30 a.m. Central to discuss second quarter 2021 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6506 and enter access code 3889842. A live webcast will be available at ir.swn.com.

About Southwestern EnergySouthwestern Energy Company (NYSE: SWN) is a leading U.S. producer of natural gas and natural gas liquids focused on responsibly developing large-scale energy assets in the nation's most prolific shale gas basins. SWN's returns-driven strategy strives to create sustainable value for its stakeholders by leveraging its scale, financial strength and operational execution. For additional information, please visit www.swn.com and www.swn.com/responsibility.

Forward Looking StatementCertain statements and information in this news release may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The words "believe," "expect," "anticipate," "plan," "predict," "intend," "seek," "foresee," "should," "would," "could," "attempt," "appears," "forecast," "outlook," "estimate," "project," "potential," "may," "will," "likely," "guidance," "goal," "model," "target," "budget" and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Statements may be forward looking even in the absence of these particular words. Examples of forward-looking statements include, but are not limited to, statements regarding the proposed acquisition of Indigo Natural Resources LLC (the "Proposed Transaction"), expected synergies and other benefits from and costs in connection with the Proposed Transaction, estimated financial metrics giving effect to the Proposed Transaction, our financial position, business strategy, production, reserve growth and other plans and objectives for our future operations, and generation of free cash flow. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. The forward-looking statements contained in this document are largely based on our expectations for the future, which reflect certain estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions, operating trends, and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. As such, management's assumptions about future events may prove to be inaccurate. For a more detailed description of the risks and uncertainties involved, see "Risk Factors" in our most recently filed Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other SEC filings. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events, changes in circumstances, or otherwise. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. Management cautions you that the forward-looking statements contained herein are not guarantees of future performance, and we cannot assure you that such statements will be realized or that the events and circumstances they describe will occur. Factors that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements herein include, but are not limited to: the timing and extent of changes in market conditions and prices for natural gas, oil and natural gas liquids ("NGLs"), including regional basis differentials and the impact of reduced demand for our production and products in which our production is a component due to governmental and societal actions taken in response to COVID-19 or other public health crises and any related company or governmental policies and actions to protect the health and safety of individuals or governmental policies or actions to maintain the functioning of national or global economies and markets; our ability to fund our planned capital investments; a change in our credit rating, an increase in interest rates and any adverse impacts from the discontinuation of the London Interbank Offered Rate; the extent to which lower commodity prices impact our ability to service or refinance our existing debt; the impact of volatility in the financial markets or other global economic factors; difficulties in appropriately allocating capital and resources among our strategic opportunities; the timing and extent of our success in discovering, developing, producing and estimating reserves; our ability to maintain leases that may expire if production is not established or profitably maintained; our ability to realize the expected benefits from recent acquisitions or the Proposed Transaction; costs in connection with the Proposed Transaction; the consummation of or failure to consummate the Proposed Transaction and the timing thereof; costs in connection with the Proposed Transaction; integration of operations and results subsequent to the Proposed Transaction; our ability to transport our production to the most favorable markets or at all; the impact of government regulation, including changes in law, the ability to obtain and maintain permits, any increase in severance or similar taxes, and legislation or regulation relating to hydraulic fracturing, climate and over-the-counter derivatives; the impact of the adverse outcome of any material litigation against us or judicial decisions that affect us or our industry generally; the effects of weather; increased competition; the financial impact of accounting regulations and critical accounting policies; the comparative cost of alternative fuels; credit risk relating to the risk of loss as a result of non-performance by our counterparties; and any other factors listed in the reports we have filed and may file with the SEC that are incorporated by reference herein. All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the three months ended For the six months ended

June 30, June 30,

(in millions,except share/ 2021 2020 2021 2020per shareamounts)

Operating Revenues:

Gas sales $ 433 $ 164 $ 897 $ 412

Oil sales 106 19 187 71

NGL sales 179 40 352 90

Marketing 332 187 684 426

Other - - 2 3

1,050 410 2,122 1,002

Operating Costs and Expenses:

Marketing 333 201 689 449 purchases

Operating 259 182 509 375 expenses

General andadministrative 34 32 72 58 expenses

Merger-related 3 - 4 - expenses

Restructuring 1 2 7 12 charges

Depreciation,depletion and 100 84 196 197 amortization

Impairments - 655 - 2,134

Taxes, otherthan income 27 10 51 23 taxes

757 1,166 1,528 3,248

Operating 293 (756 ) 594 (2,246 )Income (Loss)

Interest Expense:

Interest on 48 40 98 80 debt

Other interest 3 3 6 5 charges

Interest (21 ) (21 ) (43 ) (44 )capitalized

30 22 61 41



Gain (Loss) on (871 ) (109 ) (1,062 ) 230 Derivatives

Gain on EarlyExtinguishment - 7 - 35 of Debt

Other Income (1 ) - - 1 (Loss), Net



Income (Loss)Before Income (609 ) (880 ) (529 ) (2,021 )Taxes

Provision(Benefit) for Income Taxes:

Current - - - (2 )

Deferred - - - 408

- - - 406

Net Income $ (609 ) $ (880 ) $ (529 ) $ (2,427 )(Loss)



Earnings (Loss)Per Common Share:

Basic $ (0.90 ) $ (1.63 ) $ (0.78 ) $ (4.49 )

Diluted $ (0.90 ) $ (1.63 ) $ (0.78 ) $ (4.49 )



WeightedAverage Common SharesOutstanding:

Basic 676,722,999 541,079,192 676,057,534 540,693,841

Diluted 676,722,999 541,079,192 676,057,534 540,693,841

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30,

2021

December 31,

2020

ASSETS

(in millions)

Current assets:

Cash and cash equivalents

$

2

$

13

Accounts receivable, net

408

368

Derivative assets

132

241

Other current assets

51

49

Total current assets

593

671

Natural gas and oil properties, using the full cost method

27,796

27,261

Other

496

523

Less: Accumulated depreciation, depletion and amortization

(23,846

)

(23,673

)

Total property and equipment, net

4,446

4,111

Operating lease assets

147

163

Deferred tax assets

-

-

Other long-term assets

208

215

Total long-term assets

355

378

TOTAL ASSETS

$

5,394

$

5,160

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt

$

207

$

-

Accounts payable

653

573

Taxes payable

62

74

Interest payable

57

58

Derivative liabilities

901

245

Current operating lease liabilities

41

42

Other current liabilities

23

20

Total current liabilities

1,944

1,012

Long-term debt

2,814

3,150

Long-term operating lease liabilities

104

117

Long-term derivative liabilities

355

183

Pension and other postretirement liabilities

33

45

Other long-term liabilities

162

156

Total long-term liabilities

3,468

3,651

Commitments and contingencies

Equity:

Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 721,372,443 shares as of June 30, 2021 and 718,795,700 shares as of December 31, 2020

7

7

Additional paid-in capital

5,104

5,093

Accumulated deficit

(4,892

)

(4,363

)

Accumulated other comprehensive loss

(35

)

(38

)

Common stock in treasury, 44,353,224 shares as of June 30, 2021 and December 31, 2020

(202

)

(202

)

Total equity

(18

)

497

TOTAL LIABILITIES AND EQUITY

$

5,394

$

5,160

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



June 30, December 31, 2021 2020

ASSETS (in millions)

Current assets:

Cash and cash equivalents $ 2 $ 13

Accounts receivable, net 408 368

Derivative assets 132 241

Other current assets 51 49

Total current assets 593 671

Natural gas and oil properties, using the full cost 27,796 27,261 method

Other 496 523

Less: Accumulated depreciation, depletion and (23,846 ) (23,673 )amortization

Total property and equipment, net 4,446 4,111

Operating lease assets 147 163

Deferred tax assets - -

Other long-term assets 208 215

Total long-term assets 355 378

TOTAL ASSETS $ 5,394 $ 5,160

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt $ 207 $ -

Accounts payable 653 573

Taxes payable 62 74

Interest payable 57 58

Derivative liabilities 901 245

Current operating lease liabilities 41 42

Other current liabilities 23 20

Total current liabilities 1,944 1,012

Long-term debt 2,814 3,150

Long-term operating lease liabilities 104 117

Long-term derivative liabilities 355 183

Pension and other postretirement liabilities 33 45

Other long-term liabilities 162 156

Total long-term liabilities 3,468 3,651

Commitments and contingencies

Equity:

Common stock, $0.01 par value; 1,250,000,000 sharesauthorized; issued 721,372,443 shares as of June 30, 7 7 2021 and 718,795,700 shares as of December 31, 2020

Additional paid-in capital 5,104 5,093

Accumulated deficit (4,892 ) (4,363 )

Accumulated other comprehensive loss (35 ) (38 )

Common stock in treasury, 44,353,224 shares as of June (202 ) (202 )30, 2021 and December 31, 2020

Total equity (18 ) 497

TOTAL LIABILITIES AND EQUITY $ 5,394 $ 5,160

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the six months ended

June 30,

(in millions)

2021

2020

Cash Flows From Operating Activities:

Net loss

$

(529

)

$

(2,427

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, depletion and amortization

196

197

Amortization of debt issuance costs

4

4

Impairments

-

2,134

Deferred income taxes

-

408

(Gain) loss on derivatives, unsettled

941

(17

)

Stock-based compensation

2

2

Gain on early extinguishment of debt

-

(35

)

Other

1

-

Change in assets and liabilities

Accounts receivable

(40

)

94

Accounts payable

75

(121

)

Taxes payable

(12

)

(11

)

Interest payable

-

(1

)

Inventories

3

6

Other assets and liabilities

(24

)

21

Net cash provided by operating activities

617

254

Cash Flows From Investing Activities:

Capital investments

(493

)

(472

)

Proceeds from sale of property and equipment

2

2

Other

(1

)

-

Net cash used in investing activities

(492

)

(470

)

Cash Flows From Financing Activities:

Payments on long-term debt

-

(72

)

Payments on revolving credit facility

(1,782

)

(919

)

Borrowings under revolving credit facility

1,650

1,221

Change in bank drafts outstanding

-

(8

)

Debt issuance/amendment costs

(1

)

-

Cash paid for tax withholding

(3

)

(1

)

Net cash provided by (used in) financing activities

(136

)

221

Increase (decrease) in cash and cash equivalents

(11

)

5

Cash and cash equivalents at beginning of year

13

5

Cash and cash equivalents at end of period

$

2

$

10

Hedging SummaryA detailed breakdown of derivative financial instruments and financial basis positions as of June 30, 2021, including the remainder of 2021 and excluding those positions that settled in the first and second quarter, is shown below. Please refer to the Company's quarterly report on Form 10-Q to be filed with the Securities and Exchange Commission for complete information on the Company's commodity, basis and interest rate protection.

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the six months ended

June 30,

(in millions) 2021 2020

Cash Flows From Operating Activities:

Net loss $ (529 ) $ (2,427 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, depletion and amortization 196 197

Amortization of debt issuance costs 4 4

Impairments - 2,134

Deferred income taxes - 408

(Gain) loss on derivatives, unsettled 941 (17 )

Stock-based compensation 2 2

Gain on early extinguishment of debt - (35 )

Other 1 -

Change in assets and liabilities

Accounts receivable (40 ) 94

Accounts payable 75 (121 )

Taxes payable (12 ) (11 )

Interest payable - (1 )

Inventories 3 6

Other assets and liabilities (24 ) 21

Net cash provided by operating activities 617 254



Cash Flows From Investing Activities:

Capital investments (493 ) (472 )

Proceeds from sale of property and equipment 2 2

Other (1 ) -

Net cash used in investing activities (492 ) (470 )



Cash Flows From Financing Activities:

Payments on long-term debt - (72 )

Payments on revolving credit facility (1,782 ) (919 )

Borrowings under revolving credit facility 1,650 1,221

Change in bank drafts outstanding - (8 )

Debt issuance/amendment costs (1 ) -

Cash paid for tax withholding (3 ) (1 )

Net cash provided by (used in) financing activities (136 ) 221



Increase (decrease) in cash and cash equivalents (11 ) 5

Cash and cash equivalents at beginning of year 13 5

Cash and cash equivalents at end of period $ 2 $ 10

Hedging SummaryA detailed breakdown of derivative financial instruments and financial basis positions as of June 30, 2021, including the remainder of 2021 and excluding those positions that settled in the first and second quarter, is shown below. Please refer to the Company's quarterly report on Form 10-Q to be filed with the Securities and Exchange Commission for complete information on the Company's commodity, basis and interest rate protection.

Weighted Average Price per MMBtu

Volume Swaps Sold Purchased Sold (Bcf) Puts Puts Calls

Natural gas

2021

Fixed price swaps 103 $ 2.80 $ - $ - $ -

Two-way costless 140 - - 2.62 2.97collars

Three-way costless 153 - 2.18 2.51 2.86collars

Total 396

2022

Fixed price swaps 268 $ 2.72 $ - $ - $ -

Two-way costless 125 - - 2.65 3.04collars

Three-way costless 333 - 2.06 2.51 2.94collars

Total 726

2023

Fixed price swaps 23 $ 2.70 $ - $ - $ -

Two-way costless 34 - - 2.50 2.72collars

Three-way costless 215 - 2.09 2.54 3.00collars

Total 272

2024

Three-way costless 11 $ - $ 2.25 $ 2.80 $ 3.54collars

Natural gas financial basis positions

Volume

Basis Differential

(Bcf)

($/MMBtu)

Q3 2021

Dominion South

40

$

(0.65

)

TCO

28

$

(0.51

)

TETCO M3

27

$

(0.47

)

Total

95

$

(0.55

)

Q4 2021

Dominion South

28

$

(0.63

)

TCO

18

$

(0.49

)

TETCO M3

25

$

0.06

Total

71

$

(0.36

)

2022

Dominion South

118

$

(0.59

)

TCO

71

$

(0.49

)

TETCO M3

72

$

0.01

Total

261

$

(0.40

)

Natural gas financial basis positions Volume Basis Differential

(Bcf) ($/MMBtu)

Q3 2021

Dominion South 40 $ (0.65 )

TCO 28 $ (0.51 )

TETCO M3 27 $ (0.47 )

Total 95 $ (0.55 )

Q4 2021

Dominion South 28 $ (0.63 )

TCO 18 $ (0.49 )

TETCO M3 25 $ 0.06

Total 71 $ (0.36 )

2022

Dominion South 118 $ (0.59 )

TCO 71 $ (0.49 )

TETCO M3 72 $ 0.01

Total 261 $ (0.40 )

Weighted Average Price per Bbl

Volume (MBbls)

Swaps

Sold Puts

Purchased Puts

Sold Calls

Oil

2021

Fixed price swaps

1,739

$

50.10

$

-

$

-

$

-

Two-way costless collars

92

-

-

37.50

45.50

Three-way costless collars

1,152

-

39.22

49.05

54.35

Total

2,983

2022

Fixed price swaps

3,203

$

53.54

$

-

$

-

$

-

Three-way costless collars

1,380

-

39.89

50.23

57.05

Total

4,583

2023

Fixed price swaps

846

$

55.98

$

-

$

-

$

-

Three-way costless collars

1,268

-

33.97

45.51

56.12

Total

2,114

2024

Fixed price swaps

54

$

53.15

$

-

$

-

$

-

Ethane

2021

Fixed price swaps

3,284

$

7.64

$

-

$

-

$

-

Two-way costless collars

294

-

-

7.14

10.40

Total

3,578

2022

Fixed price swaps

2,362

$

8.97

$

-

$

-

$

-

Two-way costless collars

135

-

-

7.56

9.66

Total

2,497

Propane

2021

Fixed price swaps

4,261

$

24.00

$

-

$

-

$

-

2022

Fixed price swaps

4,092

$

25.90

$

-

$

-

$

-

Three-way costless collars

305

-

16.80

21.00

31.92

Total

4,397

Normal Butane

2021

Fixed price swaps

1,245

$

29.04

$

-

$

-

$

-

2022

Fixed price swaps

1,295

$

29.16

$

-

$

-

$

-

Natural Gasoline

2021

Fixed price swaps

1,281

$

43.58

$

-

$

-

$

-

2022

Fixed price swaps

1,201

$

45.76

$

-

$

-

$

-

Explanation and Reconciliation of Non-GAAP Financial Measures The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, management believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and of prior periods.

One such non-GAAP financial measure is net cash flow. Management presents this measure because (i) it is accepted as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt, (ii) changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the Company may not control and (iii) changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

Additional non-GAAP financial measures the Company may present from time to time are net debt, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, all which exclude certain charges or amounts. Management presents these measures because (i) they are consistent with the manner in which the Company's position and performance are measured relative to the position and performance of its peers, (ii) these measures are more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the Company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP.

Weighted Average Price per Bbl

Volume Swaps Sold Purchased Sold (MBbls) Puts Puts Calls

Oil

2021

Fixed price swaps 1,739 $ 50.10 $ - $ - $ -

Two-way costless 92 - - 37.50 45.50collars

Three-way costless 1,152 - 39.22 49.05 54.35collars

Total 2,983

2022

Fixed price swaps 3,203 $ 53.54 $ - $ - $ -

Three-way costless 1,380 - 39.89 50.23 57.05collars

Total 4,583

2023

Fixed price swaps 846 $ 55.98 $ - $ - $ -

Three-way costless 1,268 - 33.97 45.51 56.12collars

Total 2,114

2024

Fixed price swaps 54 $ 53.15 $ - $ - $ -

Ethane

2021

Fixed price swaps 3,284 $ 7.64 $ - $ - $ -

Two-way costless 294 - - 7.14 10.40collars

Total 3,578

2022

Fixed price swaps 2,362 $ 8.97 $ - $ - $ -

Two-way costless 135 - - 7.56 9.66collars

Total 2,497

Propane

2021

Fixed price swaps 4,261 $ 24.00 $ - $ - $ -

2022

Fixed price swaps 4,092 $ 25.90 $ - $ - $ -

Three-way costless 305 - 16.80 21.00 31.92collars

Total 4,397

Normal Butane

2021

Fixed price swaps 1,245 $ 29.04 $ - $ - $ -

2022

Fixed price swaps 1,295 $ 29.16 $ - $ - $ -

Natural Gasoline

2021

Fixed price swaps 1,281 $ 43.58 $ - $ - $ -

2022

Fixed price swaps 1,201 $ 45.76 $ - $ - $ -

Explanation and Reconciliation of Non-GAAP Financial Measures The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, management believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and of prior periods.

One such non-GAAP financial measure is net cash flow. Management presents this measure because (i) it is accepted as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt, (ii) changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the Company may not control and (iii) changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

Additional non-GAAP financial measures the Company may present from time to time are net debt, adjusted net income, adjusted diluted earnings per share and adjusted EBITDA, all which exclude certain charges or amounts. Management presents these measures because (i) they are consistent with the manner in which the Company's position and performance are measured relative to the position and performance of its peers, (ii) these measures are more comparable to earnings estimates provided by securities analysts, and (iii) charges or amounts excluded cannot be reasonably estimated and guidance provided by the Company excludes information regarding these types of items. These adjusted amounts are not a measure of financial performance under GAAP.

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Adjusted net income (loss): (in millions)

Net income (loss) $ (609 ) $ (880 ) $ (529 ) $ (2,427 )

Add back (deduct):

Merger-related expenses 3 - 4 -

Restructuring charges 1 2 7 12

Impairments - 655 - 2,134

(Gain) loss on unsettled derivatives 772 229 941 (17 )

Gain on early extinguishment of debt - (7 ) - (35 )

Other (gain) loss 1 (1 ) - (1 )

Adjustments due to discrete tax items 141 207 123 881 ^(1)

Tax impact on adjustments (180 ) (206 ) (221 ) (492 )

Adjusted net income (loss) $ 129 $ (1 ) $ 325 $ 55

(1)

2020 primarily relates to the recognition of a valuation allowance. The Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

2020 primarily relates to the recognition of a valuation allowance. The(1) Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Adjusted diluted earnings (loss) per share:

Diluted earnings (loss) per share

$

(0.90

)

$

(1.63

)

$

(0.78

)

$

(4.49

)

Add back (deduct):

Merger-related expenses

0.00

-

0.01

-

Restructuring charges

0.00

0.01

0.01

0.02

Impairments

-

1.21

-

3.95

(Gain) loss on unsettled derivatives

1.14

0.42

1.38

(0.03

)

Gain on early extinguishment of debt

-

(0.01

)

-

(0.07

)

Other (gain) loss

0.00

(0.00

)

-

(0.00

)

Adjustments due to discrete tax items (1)

0.21

0.38

0.18

1.63

Tax impact on adjustments

(0.26

)

(0.38

)

(0.32

)

(0.91

)

Adjusted diluted earnings (loss) per share

$

0.19

$

(0.00

)

$

0.48

$

0.10

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Adjusted diluted earnings (loss) per share:

Diluted earnings (loss) per share $ (0.90 ) $ (1.63 ) $ (0.78 ) $ (4.49 )

Add back (deduct):

Merger-related expenses 0.00 - 0.01 -

Restructuring charges 0.00 0.01 0.01 0.02

Impairments - 1.21 - 3.95

1.14(Gain) loss on unsettled derivatives 0.42 1.38 (0.03 )

Gain on early extinguishment of debt - (0.01 ) - (0.07 )

Other (gain) loss 0.00 (0.00 ) - (0.00 )

Adjustments due to discrete tax items 0.21 0.38 0.18 1.63 ^(1)

Tax impact on adjustments (0.26 ) (0.38 ) (0.32 ) (0.91 )

Adjusted diluted earnings (loss) per $ 0.19 $ (0.00 ) $ 0.48 $ 0.10 share

(1)

2020 primarily relates to the recognition of a valuation allowance. The Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

2020 primarily relates to the recognition of a valuation allowance. The(1) Company expects its 2021 income tax rate to be 23.2% before the impacts of any valuation allowance.

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Net cash flow:

(in millions)

Net cash provided by operating activities

$

270

$

94

$

617

$

254

Add back (deduct):

Changes in operating assets and liabilities

(2

)

(9

)

(2

)

12

Merger-related expenses

3

-

4

-

Restructuring charges

1

2

7

12

Net cash flow

$

272

$

87

$

626

$

278

Three Months Six Months Ended Ended June 30, June 30,

2021 2020 2021 2020

Net cash flow: (in millions)

Net cash provided by operating activities $ 270 $ 94 $ 617 $ 254

Add back (deduct):

Changes in operating assets and (2 ) (9 ) (2 ) 12 liabilities

Merger-related expenses 3 - 4 -

Restructuring charges 1 2 7 12

Net cash flow $ 272 $ 87 $ 626 $ 278

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Adjusted EBITDA:

(in millions)

Net income (loss)

$

(609

)

$

(880

)

$

(529

)

$

(2,427

)

Add back (deduct):

Interest expense

30

22

61

41

Provision (benefit) for income taxes

-

-

-

406

Depreciation, depletion and amortization

100

84

196

197

Merger-related expenses

3

-

4

-

Restructuring charges

1

2

7

12

Impairments

-

655

-

2,134

(Gain) loss on unsettled derivatives

772

229

941

(17

)

Gain on early extinguishment of debt

-

(7

)

-

(35

)

Other (gain) loss

1

-

-

(1

)

Stock-based compensation expense

2

1

2

2

Adjusted EBITDA

$

300

$

106

$

682

$

312

Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Adjusted EBITDA: (in millions)

Net income (loss) $ (609 ) $ (880 ) $ (529 ) $ (2,427 )

Add back (deduct):

Interest expense 30 22 61 41

Provision (benefit) for income taxes - - - 406

Depreciation, depletion and 100 84 196 197 amortization

Merger-related expenses 3 - 4 -

Restructuring charges 1 2 7 12

Impairments - 655 - 2,134

(Gain) loss on unsettled derivatives 772 229 941 (17 )

Gain on early extinguishment of debt - (7 ) - (35 )

Other (gain) loss 1 - - (1 )

Stock-based compensation expense 2 1 2 2

Adjusted EBITDA $ 300 $ 106 $ 682 $ 312

June 30, 2021

Net debt:

(in millions)

Total debt (1)

$

3,039

Subtract:

Cash and cash equivalents

(2

)

Net debt

$

3,037

June 30, 2021

Net debt: (in millions)

Total debt ^(1) $ 3,039

Subtract:

Cash and cash equivalents (2 )

Net debt $ 3,037

(1)

Does not include $19 million of unamortized debt discount and issuance expense.

(1) Does not include $19 million of unamortized debt discount and issuance expense.

June 30, 2021

Net debt to Adjusted EBITDA:

(in millions)

Net debt

$

3,037

Adjusted EBITDA (1)

$

1,169

Net debt to Adjusted EBITDA

2.6x

June 30, 2021

Net debt to Adjusted EBITDA: (in millions)

Net debt $ 3,037

Adjusted EBITDA ^(1) $ 1,169

Net debt to Adjusted EBITDA 2.6x

(1)

Adjusted EBITDA of $1,169 million for the twelve months ended June 30, 2021 includes $57 million of adjusted EBITDA generated by Montage Resources prior to November 2020 acquisition.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006138/en/

CONTACT: Investor Contact Brittany Raiford Director, Investor Relations (832) 796-7906 brittany_raiford@swn.com

CONTACT: Bernadette Butler Investor Relations Advisor (832) 796-6079 bernadette_butler@swn.com