Southwestern Energy Co. said it would spend less this year compared to last, while lower well costs and longer laterals are expected to help drive a healthy gain in production as it embarks on its first full year as an Appalachian pure-play operator.

The company unveiled its 2019 guidance late Tuesday, revealing plans for the Marcellus and Utica shales about two months after it closed the $1.9 billion sale of its Fayetteville Shale assets in Arkansas. As other Northeast operators have done, Southwestern readjusted its vision for the year as the gas outlook has weakened. It reduced 2019 capital investment plans for Appalachia by about $200 million from levels forecasted when the Fayetteville sale was announced last September. Year/year spending is projected to be $120 million lower.

Southwestern expects to spend $1.08-1.18 billion this year, with production anticipated to be 750-785 Bcfe. Before it became a pure-play, the company guided for 955-970 Bcfe for 2018, when the Fayetteville was expected to account for about 260 Bcfe of that. Southwestern produced 702 Bcfe in Appalachia last year, implying about a 10% year/year growth rate at the midpoint of its 2019 guidance.

The bulk of this year’s spending is set for the Southwest Appalachia division, where assets in southwestern Pennsylvania and northern West Virginia are to receive $570-600 million. Acreage there is wetter, and Southwestern is guiding for 75,600 b/d of liquids production, or a 20% year/year increase. Overall, production from the division is forecast at 295-313 Bcfe, compared with last year’s guidance range of 236-242 Bcfe.

Production from the Northeast Appalachia division is projected to come in at 455-472 Bcfe, roughly flat with last year as the company said assets there would continue to generate cash flow.

The year’s plans contemplate a 25% reduction in average wells costs, which are expected to be $875/lateral foot. A 35% increase in the average lateral length to more than 10,000 feet is expected to aid production growth.

“The company expects to generate free cash flow by the end of 2020,” said CEO Bill Way. “...We continue to demonstrate returns-focused capital discipline while leveraging our flexibility and adjusting capital allocation decisions with market conditions.”

With budget season in full swing, Appalachian operators are announcing plans to scale back now that the region’s pipeline boom is slowing along with demand. To date, all of the basin’s leading operators have announced plans to reduce activity or pare spending. The trend also comes in response to sustained pressure from investors expecting better returns.

Southwestern has been increasingly focused on its wetter Appalachian acreage, increasing NGL guidance last year and noting at the time that those volumes have improved its economics. The company plans to turn 90-110 wells to sales this year, with up to 65 set to come online in Southwest Appalachia. Southwestern reports year-end results March 1.