Southwestern Energy Co. said Friday that it was reinforcing its long term flow assurance to U.S. LNG facilities by adding 500 MMcf/d of new firm transportation starting in 2024.
The transport to the Gulf Coast liquefied natural gas corridor would be on Momentum Midstream LLC’s 1.7 Bcf/d New Generation Gas Gathering system and DT Midstream Inc.’s LEAP pipeline, which is expanding 70% from 1 Bcf/d to 1.7 Bcf/d.
“With 1.5 Bcf/d of sales under Henry Hub-based agreements, we are assessing further LNG gas supply opportunities to capture advantaged pricing on a risk-adjusted approach,” CEO Bill Way said during a conference call with investors. “Based on this, we plan to target international pricing exposure for up to 500 MMcf/d or up to 10% of our overall daily gross gas production. Given the importance of flow assurance and marketing gas optionality, we’ve secured additional capacity on future takeaway projects to the Gulf Coast.”
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Southwestern holds 768,000 net acres in the Appalachian Basin and 257,000 net acres in the Haynesville Shale of Louisiana. With volumes of 4.21 Bcf/d, the company was ranked ninth in NGI’s 2Q North American Natural Gas Marketer Ranking. It is one of the nation’s major suppliers to LNG export facilities.
Total net production for the third quarter was 443 Bcfe, of which 88% was natural gas. This is compared to 310 Bcfe in the year-ago quarter. Through the first nine months of the year, production was 1,306 Bcfe, compared to 855 Bcfe in the same period last year.
For the fourth quarter, the company anticipates production of 417-437 Bcfe.
In Appalachia, total production was 267 Bcfe in the quarter. The company drilled 16 wells, completed 21 wells, and placed 14 wells to sales with an average lateral length of 15,629 feet.
Meanwhile, in the Haynesville, total production was 176 Bcf in 3Q2022. There were 15 wells drilled, 15 wells completed, and 17 wells placed to sales in the quarter with an average lateral length of 9,332 feet.
CFO Carl Giesler said the company is seeing higher inflation in the Haynesville than in Appalachia. “We are well on our way to securing the necessary goods and services to deliver our 2023 program, and based on our contracting work to date we anticipate 2023 inflation in the 15% to 20% range, consistent with industry estimates,” he added.
During the third quarter, the company repurchased 10.8 million shares for a total cost of $80 million. Third quarter weighted average realized prices were $7.33/Mcfe, excluding the impact of derivatives.
Southwestern has established an emission reduction goal of a 50% decrease by 2035, with net zero achieved by 2050. The exploration and production (E&P) firm sees 70% of forecasted reductions to be achieved through direct operational abatements.
The company finished certifying all its Appalachian production earlier this year and expects its Haynesville assets to be certified by the end of 2022. It has worked with Project Canary on the certifications. It is also working with the North American subsidiary of Uniper SE to supply independently certified natural gas for domestic and international distribution.
Southwestern also seeks “to be the first and only E&P company to return more fresh water back to the environment than we consume in our business,” CEO Day said. He added the company was also considering carbon sequestration projects.
Southwestern reported net income of $450 million (40 cents/share) in the third quarter, compared to a loss of $1.8 billion (minus $2.36) in the same period last year.
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