Southwestern Energy Co., anchored by its massive natural gas production machine in the Fayetteville Shale, on Friday said gas and crude oil output reached 90 Bcfe in the first three months of this year, a 41% jump from the year-ago period.
Profits also were strong, with reported net income of $171.8 million (49 cents/share), compared with a loss of $432.8 million (minus $1.26) in the prior year period.
However, the Houston-based independent was expecting better operating goals, said CEO Steve Mueller.
“Our financial results for the quarter were excellent, however, we did not meet all of our operating goals,” Mueller told financial analysts during a conference call. “Our earnings and cash flow growth were outstanding…Although our production grew by 41% during the first quarter, we did experience operational and weather-related delays in our Fayetteville Shale play, which impacted our production volumes.
“As a result, 26 fewer wells were placed on production at March 31 than originally projected, impacting our production for the first quarter. We currently expect to catch up to our original well count schedule in the third quarter.”
Mueller said his company’s gas machine won’t be slowing down for low natural gas prices.
“It looks like today that there will be an extended period of low gas prices,” said the CEO. And “as we start to get cash flow neutral, we’ll put [capital] to work. We’re not going to try by ourselves to solve the gas problem that the nation’s got. If we’ve got the dollars to do it and a strong financial situation, we’re going to do it,” he said of the company’s drilling program.
In March Southwestern announced that it had submitted the winning bids to launch a new exploration program in New Brunswick (see Daily GPI, March 30).
The expanded portfolio is “exciting,” said Mueller, but “we are keeping a watchful eye on natural gas prices, however.”
Southwestern, he said, “makes a lot of money” at $5/Mcf prices “and above. We put in hedges when we can. We’re not going to hedge our entire program but we’ll hedge enough to make good money and head on down the road.”
Asked if a joint venture (JV), like other onshore gas producers have opted to do, might be a possibility for Southwestern, Mueller was quick to answer.
“It’s not high on our list, anywhere,” he said. “There’s a lot of operations and people issues that go with that. We are interested in what’s going on and when it sends our acreage [prices] higher.
“We’re not looking at JVs at this time and we’re not buyers at those prices either. We like what we have and we’ll put our dollars someplace else.”
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