Southwestern Energy (SWN) Offers Fiscal 2012 Outlook and Announces Capital Program
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Southwestern Energy Company (NYSE: SWN) today announced its planned capital investment program and guidance for 2012. The company's total capital investment program in 2012 is planned to be approximately $2.3 billion, compared to approximately $2.1 billion in 2011. The company's 2012 capital program includes approximately $2.0 billion for its exploration and production segment, $210 million for its midstream segment and $90 million for corporate purposes.
"I am excited about what lies ahead for Southwestern Energy in 2012. Our low-cost operations and financial flexibility, along with our significant positions in two world-class shale plays and our drilling in several New Ventures plays, give us the ability to create significant value for our stockholders," stated Steve Mueller, President and Chief Executive Officer of Southwestern Energy.
"Our 2012 capital investments in the Fayetteville Shale will be slightly lower when compared to 2011, while our capital program in the Marcellus Shale in Pennsylvania will almost double and our New Ventures investments will increase due to additional exploratory drilling activities. We plan to be drilling in at least three of our New Ventures ideas during the year including the Brown Dense play in Arkansas and Louisiana, New Brunswick, Canada and a new oil play in 2012. As a result of our planned activities, our 2012 production is expected to be in a range of 570 to 580 Bcfe, which is an increase of approximately 15% compared to our expected 2011 level."
Southwestern expects to participate in approximately 670 to 680 total gross wells (580 to 590 operated) in 2012, compared to an estimated 681 total gross wells in 2011 (approximately 600 operated). The company's 2012 net well count is expected to be approximately 440 to 450 wells compared to approximately 479 net wells in 2011.
In 2012, Southwestern plans to participate in approximately 580 to 590 gross wells in the Fayetteville Shale play, 490 to 500 of which will be operated. Nearly all of the company's drilling in the Fayetteville Shale in 2012 will be on multi-well pads, which should result in faster drilling times and other efficiencies. The company expects that the average time to drill its operated horizontal wells to total depth from re-entry to re-entry will decrease in 2012 to approximately 7.4 days from approximately 8.0 days projected for 2011.
In the Marcellus Shale, Southwestern has increased its acreage position to approximately 181,500 net acres located in northeastern Pennsylvania. The company plans to begin the year drilling with two operated rigs and end the year with four operated rigs and plans to participate in a total of 80 to 85 gross wells, all of which will be operated. In New Ventures, the company plans to participate in up to 10 gross wells, all of which will be operated.
Of the approximate $2.0 billion E&P capital budget for 2012, $1.6 billion (or 78%) will be invested in development and exploratory drilling, $30 million in seismic and other geological and geophysical (G&G) expenditures, $105 million in leasehold and $340 million in capitalized interest and expenses and other equipment, facilities and technology-related expenditures.
Southwestern is targeting total gas and oil production of 570 to 580 Bcfe, up approximately 15% over the company's expected 2011 level. Approximately 475 to 480 Bcf of the 2012 targeted gas production is projected to come from the company's activities in the Fayetteville Shale play, up from the 2011 projected production of approximately 433 to 435 Bcf. Approximately 60 to 65 Bcf of the 2012 targeted gas production is projected to come from the company's activities in the Marcellus Shale, up from the 2011 projected production of approximately 20 to 22 Bcf.
As of December 19, 2011, the company had NYMEX hedges in place on notional volumes of 265.7 Bcf of its 2012 projected natural gas production hedged through fixed price swaps and collars at a weighted average floor price of $5.16 per Mcf.
"I am excited about what lies ahead for Southwestern Energy in 2012. Our low-cost operations and financial flexibility, along with our significant positions in two world-class shale plays and our drilling in several New Ventures plays, give us the ability to create significant value for our stockholders," stated Steve Mueller, President and Chief Executive Officer of Southwestern Energy.
"Our 2012 capital investments in the Fayetteville Shale will be slightly lower when compared to 2011, while our capital program in the Marcellus Shale in Pennsylvania will almost double and our New Ventures investments will increase due to additional exploratory drilling activities. We plan to be drilling in at least three of our New Ventures ideas during the year including the Brown Dense play in Arkansas and Louisiana, New Brunswick, Canada and a new oil play in 2012. As a result of our planned activities, our 2012 production is expected to be in a range of 570 to 580 Bcfe, which is an increase of approximately 15% compared to our expected 2011 level."
Southwestern expects to participate in approximately 670 to 680 total gross wells (580 to 590 operated) in 2012, compared to an estimated 681 total gross wells in 2011 (approximately 600 operated). The company's 2012 net well count is expected to be approximately 440 to 450 wells compared to approximately 479 net wells in 2011.
In 2012, Southwestern plans to participate in approximately 580 to 590 gross wells in the Fayetteville Shale play, 490 to 500 of which will be operated. Nearly all of the company's drilling in the Fayetteville Shale in 2012 will be on multi-well pads, which should result in faster drilling times and other efficiencies. The company expects that the average time to drill its operated horizontal wells to total depth from re-entry to re-entry will decrease in 2012 to approximately 7.4 days from approximately 8.0 days projected for 2011.
In the Marcellus Shale, Southwestern has increased its acreage position to approximately 181,500 net acres located in northeastern Pennsylvania. The company plans to begin the year drilling with two operated rigs and end the year with four operated rigs and plans to participate in a total of 80 to 85 gross wells, all of which will be operated. In New Ventures, the company plans to participate in up to 10 gross wells, all of which will be operated.
Of the approximate $2.0 billion E&P capital budget for 2012, $1.6 billion (or 78%) will be invested in development and exploratory drilling, $30 million in seismic and other geological and geophysical (G&G) expenditures, $105 million in leasehold and $340 million in capitalized interest and expenses and other equipment, facilities and technology-related expenditures.
Southwestern is targeting total gas and oil production of 570 to 580 Bcfe, up approximately 15% over the company's expected 2011 level. Approximately 475 to 480 Bcf of the 2012 targeted gas production is projected to come from the company's activities in the Fayetteville Shale play, up from the 2011 projected production of approximately 433 to 435 Bcf. Approximately 60 to 65 Bcf of the 2012 targeted gas production is projected to come from the company's activities in the Marcellus Shale, up from the 2011 projected production of approximately 20 to 22 Bcf.
As of December 19, 2011, the company had NYMEX hedges in place on notional volumes of 265.7 Bcf of its 2012 projected natural gas production hedged through fixed price swaps and collars at a weighted average floor price of $5.16 per Mcf.
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