Southwestern Energy Company (SWN)

SWN 
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Industry: Energy
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Southwestern Energy Company (SWN)

Barclays Capital CEO Energy-Power Conference

September 12, 2013 08:25 AM ET

Executives

Steve Mueller - President and Chief Executive Officer

Analysts

Thomas Driscoll - Barclays Capital

Presentation

Thomas Driscoll - Barclays Capital

I feel very pleased to have as our second speaker today, the folks from Southwestern Energy. Steve Mueller became President and CEO in 2009. Steve runs with what I’m going to call the best gas company I cover and some people think I mean the term gas in a pejorative manner, but no, I don't really mean it that way. But there is challenge looking out in the best asset. I think Southwestern is in some of the best dry gas assets in the country.

With that let me let Steve talk about the company.

Steve Mueller

Thank you. What, I want to talk about is what I talk about every time when we come up in these discussions. It's kind of the way we do our work and the way we go about what we are doing. It started in the Fayetteville Shale with just having a little bit of an anomaly. And then that anomaly went to learning. That learning went to discovery. That discovery then went to innovation and then that added value plus and this is the year we said we are going to add some considerable value plus to our investors, and I think the whole presentation is just to give you an example of how we have gone through that cycle several times in several different ways, in different areas and have continued to grow our business and add significant value to our overall customer and customer base.

We will have some forward-looking statements. I will actually talk a little about 2014. I know we haven't given any kind of guidance in that direction. I'll certainly talk about what can happen, has happened in 2013, what's going to happen through the rest of 2013. I mentioned before value plus. To just remind everyone that we have a formula that we have out there that's what we want to do is take the right people and we worked hard to getting right people. We think we've got some right people I think that’s shown in some if projects that I’ll talk through today. What we want to do is right people do the right things and he mentioned we are in some of the best gas areas of our country probably some of the world in the case of Marcellus. Then what we want to do is wisely invest those with underlying assets and I am very proud of what we've done.

This next slide just shows what going on in the second quarter. What I want to do very quickly here is, at the end of every quarter we take a look at our peer group that we use for our proxy and one of our financial people who does that was a little bit surprised by what happened in second quarter for us and it's easy to say you had a record, but what does that mean compared to your peers, so he just wrote me a little note and what he said was, that from an operating cost standpoint we’re the lowest operating cost of our peer groups we’re in the 100 percentile with $2.34, lowest production taxes of any one in our group, lowest DD&A of any one in our group, lowest interest expense of any one in our group, third lowest G&A of any one of anyone in our group, fourth lowest production costs of any one in our group.

Then this becomes significant. 15% cash flow growth quarter-over-quarter that was 89 percentile in our group, third lowest debt-to-cap in our group. That was 89 percentile, so that goes back to [inaudible] investing cash flow I mentioned before. Then from a gas production standpoint, we grew 8% quarter-over-quarter, which puts us in 86 percentile.

Now, our peer group is a group of many companies. Over half of them are oil companies and we were able to continue to with the gas projects match up against the oil companies any way you want to measures as we go through there. This just shows that in a graphical format. We will produce somewhere just sort of 650 Bcf this year, which is about between 14%, 15% growth. We are doing that in the face of the gas price that's the second part of the slide you see there.

Last year, from 2011-2012, we went down almost half in the gas price and this year we are back up about halfway back to where we were in 2011. What's interesting about that, if you look at the second one from far right, the EBITDA graph, we are just missed setting the record EBITDA even though we had our gas price cut in half and we did that with those costs I just talked about and we did it with the growth in production that we had overall.

Then those middle two graphs talk a little bit about what we've done from our reserve standpoint, the middle graphs reserve standpoint, the far right hand graphs, the F&D we did have significant price related revisions last year. You will see a lot of those come back this year as gas prices start to come back.

One of the ways that we can do this is, we are very focused and we continue to be very focused. I said this probably a thousand times.

Read the rest of this transcript for free on seekingalpha.com