Southwestern Energy Co., one of Appalachia’s largest natural gas producers, expects Northeast basis differentials to improve now that the Federal Energy Regulatory Commission quorum has been restored and a path has been cleared to get more pipeline projects approved and built, management said.

“In addition to the encouraging outlook for natural gas prices, the basis differential outlook also continues to improve due to the momentum on pipeline infrastructure in the northeast United States,” CEO Bill Way said. “We now have a quorum at FERC and this quorum should facilitate the approval of certificates to initiate construction on approximately 10 Bcf/d of new takeaway capacity in addition to the 5 Bcf/d of capacity that is currently under construction, increasing total takeaway from the Northeast by 15 Bcf/d between now and 2020.”

Way also said a wave of natural gas-fired power plant investments, coupled with new opportunities to increase exports to Mexico and liquefied natural gas overseas, have the company more optimistic about demand in the coming years.

The company added 140 MMcf/d of new firm takeaway capacity in the second quarter to facilitate growth in Northeast Pennsylvania, where it’s among just a handful of dominant producers still operating. Those volumes would be indexed to Dominion South pricing, which the company has improved this year as new infrastructure has come online.

Way said while the company will continue to monitor commodity prices and adjust capital spending plans accordingly, he expects the outlook for benchmark and spot natural gas prices to improve over the next three years.

Pre-hedge gas prices improved for the company during the second quarter to $2.35/Mcf from $1.21/Mcf in the year-ago period. Since then, however, the company has taken steps to mitigate basis volatility, locking in 210 Bcf of this year’s second half production at a differential to New York Mercantile Exchange prices of 69 cents.

Better commodity prices in the second quarter helped the company’s Southwest Appalachia division achieve record production, when it surpassed 500 MMcfe/d in June. Improved liquids pricing this year has renewed the company’s focus on wet gas in southwest Pennsylvania and West Virginia. As a result, the division’s cash flow increased by more than $35 million compared to 2Q2016.

Second quarter production declined slightly, though, to 222 Bcfe from 225 Bcfe in 2Q2016. It was up 9% from 1Q2017 when the company produced 204 Bcfe. Southwestern’s operations were impacted during the second quarter when a third party failed to install a gathering line on time after a permit delay. A third-party compressor station was also unexpectedly taken offline in June. Those issues are expected to be resolved by the end of the year.

Southwestern continued to test new horizons during the quarter. In its legacy Fayetteville Shale operations, eight wells were brought online, including two deeper Moorefield Shale wells in an ongoing test to see if it can compete for capital with core assets. The wells have an average lateral length of 6,519 feet and cost $4.3 million each. The Moorefield sits below the Fayetteville in Arkansas.

One of the wells has a 30-day rate of 5 MMcf/d and an initial estimated ultimate recovery of 5.2 Bcf, validating other successful tests in the play so far. But the second well encountered a fault during drilling and the company hit water that impacted results.

“Back in the early days, when we were trying to figure out how to do Moorefield, one of the big question marks was how — where is the landing zone? How far do you stay away from that so we don’t encounter the water?” Way told analysts during the second quarter earnings call. “We think we got a bit too close, so we just go back and validate the model and continue forward.” Way characterized the incident as a minor snag and said the company would release additional results about the Moorefield program later this year.

The first Utica Shale well, the O.E. Burge 501H, in Marshall County, WV, continued to perform at expectations during the quarter. After its first six flowing months, the well has cumulative production of more than 2 Bcf and is flowing at a normalized rate of 15 MMcf/d as part of the company’s pressure management program. Southwestern also recently drilled and completed its second Utica well in Washington County, PA, and expects to place it to sales later this year.

Better commodity prices helped lift revenue significantly in the second quarter to $811 million from $522 million in the year-ago period. The company reported net income of $224 million (45 cents/share), compared to a net loss of $620 million (minus $1.61) in 2Q2016.