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Southwestern Idles Last Two Fayetteville Rigs Through End of 2015

Southwestern Energy Co. has idled its Fayetteville Shale drilling program for the remainder of 2015.

Spokeswoman Christina Fowler confirmed to NGI’s Shale Daily that the Houston-based exploration and production (E&P) company “did idle our last two rigs in the Fayetteville Shale through the end of 2015.”

Fowler said she couldn’t comment beyond that, saying additional details will be released in the company’s 2016 capital guidance early next year.

Southwestern has been the dominant player in the Fayetteville, producing 747.5 Bcf -- 73.2% of total production from the play -- in 2014, according to the Arkansas Oil & Gas Commission and NGI calculations. The company discovered the play and held 888,000 net acres there as of October.

But Southwestern has recently shifted much of its focus to Appalachia, striking a deal last year to acquire 413,000 net acres in southern Pennsylvania and northern West Virginia from Chesapeake Energy Corp. (see Shale Daily, Oct. 16).

In its 2015 capital guidance, Southwestern reduced its allocation to the Fayetteville to $755 million from $900 million in 2014. The Fayetteville accounted for 32% of Southwestern’s investment in E&P activities in 2015, with 63% of total investments going to the company’s Southwest and Northeast Appalachia acreage, according to a December update provided to investors.

In August, Southwestern laid off 102 workers, with most of those coming from its Fayetteville operations (see Shale Daily, Aug. 7).

Speaking to investors during the company’s third quarter earnings call, Southwestern CEO Steven Mueller hinted that spending in the Fayetteville might be cut as the company looks to prioritize during the downturn. He said the Arkansas play “has been a swing area for us and will probably be a swing area in the future” and that Southwestern “will invest in the very best wells, wherever those are at.”

Last week’s Baker Hughes Inc. rig count had the Fayetteville at three rigs, down from nine in the year-ago period (see Shale Daily, Dec. 18).

Southwestern achieved gross operated production of just under 1.9 Bcf/d in the Fayetteville as of Sept.30, according to the company. The E&P placed 50 Fayetteville wells into production during 3Q2015 at an average initial production rate of 3.8 MMcf/d.

Like many E&Ps, Southwestern has struggled with low commodity prices in 2015. For 3Q2015, the company reported a net loss of $1.766 billion (minus $4.62/share), driven largely by $1.746 billion in impairments on its oil and gas properties (see Shale Daily, Oct. 23).

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