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Southwestern Energy Announces Quarterly and 2018 Results

SPRING, Texas--(BUSINESS WIRE)--

Continued outperformance, advantaged balance sheet, foundation set for value growth

Southwestern Energy Company (SWN) today announced financial and operating results for the fourth quarter and year-end December 31, 2018. Fiscal year 2018 highlights, compared to prior year include:

  • Reported net cash provided by operating activities of $1.22 billion and net cash flow of $1.35 billion, generating $100 million in free cash flow above capital investment of $1.25 billion;
  • Total Company production of 946 Bcfe, above midpoint of guidance, adjusted for Fayetteville sale;
  • Grew Appalachia production 21 percent to 702 Bcfe and liquids production 40 percent to 63,100 barrels per day;
  • 23 percent higher weighted average realized price in Appalachia of $2.82 per Mcfe, net of transportation;
  • Generated a $1.66 per Mcfe margin in Appalachia, an increase of 43 percent;
  • Total Company proved reserves of 11.9 Tcfe, including 33 percent liquids, and pre-tax PV-10 value of $6.5 billion;
  • Restructured G&A and reduced interest costs resulting in estimated future annual savings of $155 million;
  • Closed Fayetteville sale on December 3rd receiving net proceeds of $1.65 billion;
  • Reduced senior notes and bank debt by $2.1 billion;
  • Repurchased 44 million shares of common stock for $199 million at an average price of $4.53 per share, as of February 28, 2019.

“The Company’s continued outperformance, the resulting advantaged balance sheet and impressive operational execution have set a solid foundation for further value growth,” said Bill Way, President and Chief Executive Officer, Southwestern Energy. “We carry strong momentum into 2019, refocused, reengineered and reenergized as a leading Appalachia basin operator, with a flexible, high value natural gas and natural gas liquids portfolio, supported by a net debt/EBITDA ratio of less than 2X.”

       
FINANCIAL STATISTICS For the three months ended For the year ended
December 31, December 31,
2018 2017 2018 2017
Financial Results (in millions, except per share amounts)
Net income attributable to common stock $ 307 $ 267 $ 535 $ 815
Adjusted net income attributable to common stock (non-GAAP) $ 176 $ 63 $ 590 $ 219
Adjusted EBITDA (non-GAAP) $ 394 $ 345 $ 1,484 $ 1,247
Net cash provided by operating activities $ 252 $ 308 $ 1,223 $ 1,097
Net cash flow (non-GAAP) $ 359 $ 322 $ 1,352 $ 1,138
Total Capital Investments $ 209 $ 347 $ 1,248 $ 1,293
 
OPERATING STATISTICS For the three months ended For the year ended
December 31, December 31,
2018 2017 2018 2017
Production
Gas production (Bcf) 194 210 807 797
Oil production (MBbls) 1,073 580 3,407 2,327
NGL production (MBbls) 5,434 4,111 19,706 14,245
Total production (Bcfe) 234 239 946 897
 
Division Production
Northeast Appalachia (Bcf) 118 110 459 395
Southwest Appalachia (Bcfe) 71 52 243 183
Fayetteville Shale (Bcf) (1) 44 75 243 316
 
Average unit costs per Mcfe
Lease operating expenses $ 0.93 $ 0.91 $ 0.93 $ 0.90
General & administrative expenses $ 0.18

(2)

$ 0.23 $ 0.19

(3)

$ 0.22

(4)

Taxes, other than income taxes $ 0.10 $ 0.07 $ 0.09

(5)

$ 0.10
Full cost pool amortization $ 0.53 $ 0.48 $ 0.51 $ 0.45
(1)   The Fayetteville Shale assets and associated reserves were sold on December 3, 2018.
(2) Excludes $18 million restructuring charges (including severance) and $1 million of legal settlement charges.
(3) Excludes $36 million restructuring charges (including severance) and $9 million legal settlement charges.
(4) Excludes $5 million of legal settlement charges.
(5) Excludes $1 million of restructuring charges.
 
   
COMMODITY PRICES For the three months ended For the year ended
December 31, December 31,
2018   2017 2018   2017
Natural Gas Price:
NYMEX Henry Hub Price ($/MMBtu) (1) $ 3.64 $ 2.93 $ 3.09 $ 3.11
Discount (Differential) to NYMEX (2)   (0.66 )   (0.93 )   (0.64 )   (0.88 )
Average realized gas price per Mcf, excluding derivatives $ 2.98 $ 2.00 $ 2.45 $ 2.23
Gain (loss) on settled financial basis derivatives ($/Mcf) (0.02 ) 0.07 (0.04 ) (0.01 )
Gain (loss) on settled commodity derivatives ($/Mcf)   (0.48 )   0.05     (0.06 )   (0.03 )
Average realized gas price per Mcf, including derivatives $ 2.48 $ 2.12 $ 2.35 $ 2.19
Oil Price:
WTI oil price ($/Bbl) $ 58.81 $ 55.40 $ 64.77 $ 50.96
Discount (Differential) to WTI   (7.94 )   (7.35 )   (7.98 )   (7.84 )
Average oil price per Bbl, excluding derivatives $ 50.87 $ 48.05 $ 56.79 $ 43.12
Average oil price per Bbl, including derivatives $ 50.37 $ 48.05 $ 56.07 $ 43.12
NGL Price:
Average net realized NGL price per Bbl, excluding derivatives $ 18.59 $ 17.97 $ 17.91 $ 14.46
Average net realized NGL price per Bbl, including derivatives $ 18.49 $ 17.99 $ 17.23 $ 14.48
Percentage of WTI oil price 32 % 32 % 28 % 28 %
Average net realized C3+ price per Bbl, excluding derivatives $ 32.26 $ 39.38 $ 34.46 $ 30.08
Average net realized C3+ price per Bbl, including derivatives $ 32.75 $ 39.38 $ 33.77 $ 30.08
Percentage of WTI oil price 55 % 71 % 53 % 59 %
Total Weighted Average Realized Price:
Appalachian Basin, excluding derivatives ($/Mcfe) $ 3.31 $ 2.17 $ 2.82 $ 2.30
Total Company
Excluding derivatives ($/Mcfe) $ 3.15 $ 2.19 $ 2.66 $ 2.32
Including derivatives ($/Mcfe) $ 2.72 $ 2.30 $ 2.57 $ 2.29
(1)   Based on last day monthly futures settlement prices.
(2) This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.
 

Financial Results
Southwestern Energy recorded net income attributable to common stock of $307 million or $0.54 per diluted share and $535 million or $0.93 per diluted share for the fourth quarter and year ended December 31, 2018, respectively. For full year 2018, net income reflects stronger operating performance driven by 78 percent higher liquids revenue of $548 million, which was partially offset by impairments associated with the Fayetteville sale, restructuring charges and unsettled derivative losses of $24 million in 2018 compared to an unsettled derivative gain of $451 million in 2017. Excluding the impact of unsettled derivatives, net income attributable to common stock was 54 percent higher for 2018 compared to the prior year. For the fourth quarter of 2018, net income was higher than 2017, due to higher natural gas and liquids revenue, offset by a settled derivative loss of $99 million in the fourth quarter and the impact of restructuring charges.

For the full year 2018, adjusted net income was $590 million, more than $370 million above the prior year. For the fourth quarter of 2018, adjusted net income attributable to common stock was $176 million, a 179 percent increase compared to the same quarter last year. Adjusted net income incorporates the impact of an assumed corporate tax rate of 24.5 percent, and excludes unsettled derivatives, as well as other one-time charges.

For the fiscal year 2018, adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) was $1,484 million, 19 percent above 2017 due to improved realized prices, increased production and reduced general and administrative expenses, partially offset by higher operating expenses related to a shift to more liquids-rich production in Southwest Appalachia. The primary components of adjusted EBITDA included $1,168 million from Appalachia operations and $377 million from Fayetteville operations, including Fayetteville Midstream. Adjusted EBITDA was $49 million higher in the fourth quarter of 2018 compared to a year ago, and includes two months of Fayetteville ownership.

For the full year 2018, weighted average realized price excluding derivatives was $2.66 per Mcfe, 15 percent or 34 cents higher than the prior year. Including derivatives, weighted average realized pricing was $2.57 per Mcfe, 12 percent above the prior year. For fiscal year 2018, Appalachia weighted average realized pricing was $2.82 per Mcfe, a $0.52 per Mcfe improvement compared to the prior year due to natural gas basis improvement, higher liquids production and improved liquids pricing.

For the fourth quarter of 2018, weighted average realized pricing, excluding derivatives was $3.15 per Mcfe, which was 44 percent higher than the prior period, driven primarily by the impact of higher NGL and oil production and price realizations. Including the impact of derivative settlement losses of $99 million, weighted average realized pricing was $2.72 per Mcfe, 18 percent higher than the prior year. Appalachia weighted average realized pricing was $3.31 per Mcfe in the fourth quarter, 53 percent above the prior year.

Total debt reduction for 2018 was $2.1 billion, including credit facility refinancing and the repurchase of senior notes. During the fourth quarter of 2018, the Company closed on the sale of its Fayetteville Shale assets and used the net proceeds received of $1.65 billion to repurchase $900 million of senior notes, repurchase shares of common stock and repay all outstanding borrowings under its revolving credit facility, pending additional investments. Cash on hand at year-end was $201 million.

Pursuant to the Company’s $200 million authorized share repurchase program, during the fourth quarter of 2018, the Company invested $156 million to repurchase 34 million shares of common stock at an average price of $4.55 per share. In total, as of February 28, 2019, the Company has repurchased 44 million shares for a cumulative total of $199 million at an average price of $4.53 per share.

Southwestern Energy continues to execute a disciplined hedging program with physical, financial and basis derivatives on its forecasted natural gas, natural gas liquids and oil production. A summary of the Company’s financial derivative position is provided in the attached financial tables. Additional information on physical and financial derivatives can be found in the Company’s 2018 Form 10-K.

Operational Review
In 2018, the Company invested $1.23 billion in E&P operations which includes $1.11 billion in Appalachia and $60 million on the Southwest Appalachia water project. Southwestern Energy drilled 106 wells, completed 119 wells and placed 138 wells to sales.

During the fourth quarter of 2018, Southwestern invested a total of approximately $175 million in its Appalachia operations and $21 million on the water project. The Company drilled 15 wells, completed 11 wells and placed 25 wells to sales.

Southwest Appalachia – In 2018, Southwest Appalachia’s total net production increased 33 percent to 243 Bcfe and included 63,100 barrels per day of liquids. Liquids comprised 57 percent of production volumes. The Company brought 76 wells online, with approximately 80 percent of the wells located in the super rich acreage. The Company drilled and completed 71 Marcellus wells.

In the fourth quarter, the Company drilled nine wells, completed five and placed 17 to sales. These included two Upper Devonian wells with initial liquids production of 49 percent. Delineation of the Upper Devonian will continue in 2019.

On a full year basis, weighted average realized price on a natural gas equivalent basis was $3.34 per Mcfe, a $0.25 per Mcfe uplift compared to the NYMEX gas price of $3.09 per MMBtu. For the fourth quarter, weighted average realized price was $3.62 per Mcfe. The uplift is directly related to higher liquids production and premium pricing received from the sale of natural gas liquids and oil.

Northeast Appalachia – Northeast Appalachia’s 2018 total net production increased to 459 Bcf, up 16 percent. The increase in production was mainly due to Tioga well outperformance, gathering capacity expansion and cycle time improvements. The Company drilled 41 wells, completed 54 wells and placed 60 wells to sales.

Well activity in the fourth quarter of 2018 included six drilled wells, six completions and eight wells to sales. One of the eight wells brought online was a Company record, ultra-long lateral of 16,272 feet that met all timing, cost and initial production forecasts. The Company continues to increase its lateral lengths and plans to drill and complete more ultra-long laterals in 2019.

     
Three Months Ended December 31, 2018 E&P Division Results Appalachia Fayetteville
Northeast Southwest Shale (1)
Gas Production (Bcf) 118 32 44
Liquids Production
NGL (MBbls) 5,431
Oil (MBbls) 1,065
Production (Bcfe) 118 71 44
Gross operated production (MMcfe/d) 1,536 1,213
Net operated production (MMcfe/d) 1,256 752
 
Capital investments ($ in millions)
Exploratory and development drilling, including workovers $ 51 $ 75 $
Acquisition and leasehold 4 1
Seismic and other 1
Capitalized interest and expense   7     37     2  
Total capital investments $ 62 $ 113 $ 3
 
Gross operated well activity summary
Drilled 6 9
Completed 6 5
Wells to sales 8 17
 
Average completed well cost (in millions) $ 9.7

(2)

$ 9.0

(2)

$
Average lateral length (in ft) 9,119 6,992

(3)

 
Realized Natural Gas Price
NYMEX Henry Hub Price ($/MMBtu) $ 3.64 $ 3.64 $ 3.64
Discount to NYMEX (4)   (0.51 )   (0.48 )   (1.22 )
Average realized gas price per Mcf, excluding derivatives $ 3.13 $ 3.16 $ 2.42
Total weighted average realized price per Mcfe, excluding derivatives $ 3.13 $ 3.62 $ 2.42
(1)   The Fayetteville Shale assets and associated reserves were sold on December 3, 2018.
(2) Average completed well cost includes Marcellus wells only and amounts for delineation and science.
(3) Average lateral length includes Marcellus wells only.
(4) This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.
 
     
Year Ended December 31, 2018 E&P Division Results Appalachia Fayetteville
Northeast Southwest Shale (1)
Gas Production (Bcf) 459 105 243
Liquids Production
NGL (MBbls) 19,679
Oil (MBbls) 3,355
Production (Bcfe) 459 243 243
Gross operated production (MMcfe/d) 1,536 1,213
Net operated production (MMcfe/d) 1,256 752
 
Capital investments ($ in millions)
Exploratory and development drilling, including workovers $ 370 $ 502 $ 15
Acquisition and leasehold 14 37
Seismic and other 3 4 5
Capitalized interest and expense   35     148     13  
Total capital investments $ 422 $ 691 $ 33
 
Gross operated well activity summary
Drilled 41 63 2
Completed 54 63 2
Wells to sales 60 76 2
 
Average completed well cost (in millions) $ 7.5

(2)

$ 9.2

(2)

$
Average lateral length (in ft) 7,584 7,267

(3)

 
Realized Natural Gas Price
NYMEX Henry Hub Price ($/MMBtu) $ 3.09 $ 3.09 $ 3.09
Discount to NYMEX (4)   (0.55 )   (0.51 )   (0.88 )
Average realized gas price per Mcf, excluding derivatives $ 2.54 $ 2.58 $ 2.21
Total weighted average realized price per Mcfe, excluding derivatives $ 2.54 $ 3.34 $ 2.21
(1)   The Fayetteville Shale assets and associated reserves were sold on December 3, 2018.
(2) Average completed well cost includes Marcellus wells only and amounts for delineation and science.
(3) Average lateral length includes Marcellus wells only.
(4) This discount includes a basis differential, a heating content adjustment, physical basis sales, third-party transportation charges and fuel charges, and excludes financial basis derivatives.
 

2018 Proved Reserves
The Company’s estimated proved natural gas, natural gas liquids and oil reserves, audited by an independent petroleum engineering firm, were 11.9 Tcfe as of December 31, 2018. The reserve life index was approximately 17 years at year-end 2018, excluding production associated with Fayetteville. The following tables detail additional information relating to reserve estimates as of and for the year ended December 31, 2018:

Proved Reserves Summary   For the years ended December 31,
2018   2017
Proved reserves (in Bcfe) 11,921 14,775
Prices used
Natural gas (per Mcf) $ 3.10 $ 2.98
Oil (per Bbl) $ 65.56 $ 47.79
Natural Gas Liquids (per Bbl) $ 17.64 $ 14.41
 
PV-10:
Pre-Tax (millions) $ 6,524 $ 5,784
PV of Taxes (millions)   (525 )   (222 )
After-Tax (millions) $ 5,999   $ 5,562  
 
Percent of estimated proved reserves that are:
Natural gas 67 % 75 %
Natural gas liquids and oil 33 % 25 %
Proved developed 47 % 54 %
 

2018 Proved Reserves by Commodity

  Natural Gas   Oil   NGL   Total
(Bcf) (MBbls) (MBbls) (Bcfe)
 
Proved reserves, beginning of year 11,126 65,636 542,455 14,775
Revisions of previous estimates due to price 96 788 8,912 154
Revisions of previous estimates other than price 316 410 8,855 372
Extensions, discoveries and other additions 753 5,830 36,823 1,009
Production (807 ) (3,407 ) (19,706 ) (946 )
Acquisition of reserves in place
Disposition of reserves in place (1) (3,440 ) (250 ) (276 ) (3,443 )
Proved reserves, end of year 8,044   69,007   577,063   11,921  
 
Proved developed reserves:
Beginning of year 6,979 14,513 142,213 7,920
End of year 4,395 18,037 175,480 5,557

Note: Amounts may not add due to rounding

(1) The 2018 disposition is primarily associated with the Fayetteville Shale sale.

 
         
2018 Proved Reserves by Division Appalachia Fayetteville
Northeast Southwest

Shale (1)

Other (2) Total
Estimated Proved Reserves (Bcfe):
Reserves, beginning of year 4,126 6,962 3,679 8 14,775
Revisions of previous estimates due to price 41 106 6 1 154
Revisions of previous estimates other than price 107 272 (6 ) (1 ) 372
Extensions, discoveries and other additions 551 457 1 1,009
Production (459 ) (243 ) (243 ) (1 ) (946 )
Acquisition of reserves in place
Disposition of reserves in place     (3,437 ) (6 ) (3,443 )
Reserves, end of year 4,366   7,554     1   11,921  

(1) The Fayetteville Shale E&P assets and associated reserves were divested December 3, 2018.

(2) Other includes properties outside of the Appalachian Basin and Fayetteville Shale.

 

 

       
2018 PROVED RESERVES BY CATEGORY AND SUMMARY OPERATING DATA (1)
 
Appalachia
Northeast Southwest Other (2) Total
Estimated proved reserves:
Natural gas (Bcf):
Developed 3,327 1,068 4,395
Undeveloped   1,039     2,610         3,649  
4,366 3,678 8,044
Crude oil (MMBbls):
Developed 17.9 0.1 18.0
Undeveloped       51.0         51.0  
68.9 0.1 69.0
Natural gas liquids (MMBbls):
Developed 175.5 175.5
Undeveloped       401.6           401.6  
577.1 577.1
Total proved reserves (Bcfe) (3):
Developed 3,327 2,229 1 5,557
Undeveloped   1,039     5,325         6,364  
  4,366     7,554     1     11,921  
Percent of total 37 % 63 % 0 % 100 %
 
Percent proved developed 76 % 30 % 100 % 47 %
Percent proved undeveloped 24 % 70 % 0 % 53 %
 
Production (Bcfe) 459 243 244

(4)

946
Capital investments (in millions) $ 422 $ 691 $ 118

(5)

$ 1,231
Total gross producing wells (6) 666 466 17 1,149
Total net producing wells (6) 592 333 14 939
 
Total net acreage 184,024 297,445 166,120

(7)

647,589
Net undeveloped acreage 73,174 220,331 153,159

(7)

446,664
 
PV-10:
Pre-tax (in millions) (8) $ 3,054 $ 3,470 $ $ 6,524
PV of taxes (in millions) (8)   (245 )   (280 )       (525 )
After-tax (in millions) (8) $ 2,809   $ 3,190   $   $ 5,999  
Percent of total 47 % 53 % 0 % 100 %
Percent operated (9) 99 % 100 % 100 % 99 %
(1)   The Fayetteville Shale E&P assets and associated reserves were divested on December 3, 2018.
(2) Other reserves and acreage consists primarily of properties in Colorado. Production and capital investing includes Fayetteville Shale.
(3) We have no reserves from synthetic gas, synthetic oil or nonrenewable natural resources intended to be upgraded into synthetic gas or oil. We used standard engineering and geoscience methods, or a combination of methodologies in determining estimates of material properties, including performance and test date analysis offset statistical analogy of performance data, volumetric evaluation, including analysis of petrophysical parameters (including porosity, net pay, fluid saturations (i.e., water, oil and gas) and permeability) in combination with estimated reservoir parameters (including reservoir temperature and pressure, formation depth and formation volume factors), geological analysis, including structure and isopach maps and seismic analysis, including review of 2-D and 3-D data to ascertain faults, closure and other factors.
(4) Includes 243 Bcf of natural gas production related to our Fayetteville Shale operations which were sold on December 3, 2018.
(5) Other capital investments includes $33 million related to our Fayetteville Shale operations which were sold on December 3, 2018, $60 million related to our water infrastructure project, $16 million related to our E&P service companies and $9 million related to our exploration activities.
(6) Represents producing wells, including 394 wells in which we only have an overriding royalty interest in Northeast Appalachia, used in the December 31, 2018 reserves calculation.
(7) Excludes exploration licenses for 2,518,519 net acres in New Brunswick, Canada, which have been subject to a moratorium since 2015.
(8) Pre-tax PV-10 (a non-GAAP measure) is one measure of the value of a company’s proved reserves that we believe is used by securities analysts to compare relative values among peer companies without regard to income taxes. The reconciling difference in pre-tax PV-10 and the after-tax PV-10, or standardized measure, is the discounted value of future income taxes on the estimated cash flows from our proved natural gas, oil and NGL reserves.
(9) Based upon pre-tax PV-10 of proved developed producing activities.
 

The Company’s 2018 and three-year average proved developed finding and development (PD F&D) costs were $0.70 and $0.72 per Mcfe, respectively, when excluding the impact of capitalizing interest and portions of capitalized G&A costs in accordance with the full cost method of accounting.

       
Total Company PD F&D Three-Year
12 Months Ended December 31, Total
2018 2017 2016 2018
Total PD Adds (Bcfe):
New PD adds 177 1,258 257 1,692
PUD conversions   1,139  

(2)

  46     220     1,405  
Total PD Adds   1,316     1,304     477     3,097  
 
Costs Incurred (in millions):
Unproved property acquisition costs $ 164 $ 194 $ 171 $ 529
Exploration costs 5 22 17 44
Development costs   1,014     1,024     433     2,471  
Capitalized Costs Incurred $ 1,183   $ 1,240   $ 621   $ 3,044  
 
Subtract (in millions):
Proved property acquisition costs $ $ $ $
Unproved property acquisition costs (164 ) (194 ) (171 ) (529 )
Capitalized interest and expense associated with development and exploration (1)   (93 )   (103 )   (91 )   (287 )
PD Costs Incurred $ 926   $ 943   $ 359   $ 2,228  
               
PD F&D $ 0.70   $ 0.72   $ 0.75   $ 0.72  

Note: Amounts may not add due to rounding
(1) Adjusting for the impacts of the full cost accounting method for comparability.
(2) Includes increased reserve estimates of 43 Bcfe in the Appalachian Basin, associated with productivity enhancements for newly developed PUD locations.

Conference Call
Southwestern Energy will host a conference call and webcast on Friday, March 1, 2019 at 9:30 a.m. Central to discuss fourth quarter and year-end 2018 results. To participate, dial US toll-free 877-883-0383, or international 412-902-6505 and enter access code 9372440. The conference call will webcast live at www.swn.com.

To listen to a replay of the call, dial 877-344-7529, International 412-317-0088, or Canada Toll Free 855-669-9658. Enter replay access code 10128185. The replay will be available until March 20, 2019.

About Southwestern Energy
Southwestern Energy Company is an independent energy company engaged in natural gas, natural gas liquids and oil exploration, development, production and marketing. For additional information, visit our website www.swn.com.

Forward Looking Statement
This news release contains forward-looking statements. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. In many cases you can identify forward-looking statements by terminology such as “anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,” “potential,” “should,” “could,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “forecast,” “target” or similar words. Statements may be forward looking even in the absence of these particular words. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that such expectation or belief will result or be achieved. The actual results of operations can and will be affected by a variety of risks and other matters including, but not limited to, changes in commodity prices (including geographic basis differentials); changes in expected levels of natural gas and oil reserves or production; operating hazards, drilling risks, unsuccessful exploratory activities; natural disasters; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; international monetary conditions; the risks related to the discontinuation of LIBOR and/or other reference rates that may be introduced following the transition, including increased expenses and litigation and the effectiveness of interest rate hedge strategies; unexpected cost increases; potential liability for remedial actions under existing or future environmental regulations; failure or delay in obtaining necessary regulatory approvals; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions; the impact of a prolonged federal, state or local government shutdown and threats not to increase the federal government’s debt limit; as well as changes in tax, environmental and other laws, including court rulings, applicable to our business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. Unless legally required, Southwestern Energy Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

...
       
STATEMENTS OF OPERATIONS
Southwestern Energy Company and Subsidiaries
 
For the three months ended For the years ended
December 31, December 31,
2018 2017 2018 2017
(in millions, except share/per share amounts)
Operating Revenues
Gas sales $ 586 $ 425 $ 1,998 $ 1,793
Oil sales 55 29 196 102
NGL sales 100 74 352 206
Marketing 417 236 1,222 972
Gas gathering 16 41 89 126
Other   1     4     5     4  
  1,175     809     3,862     3,203  
Operating Costs and Expenses
Marketing purchases 421 236 1,229 976
Operating expenses 197 190 785 671
General and administrative expenses 44 63 209 233
Restructuring charges 19 39
Depreciation, depletion and amortization 134 140 560 504
Impairments 171
Gain on sale of assets, net (17 ) (6 ) (17 ) (6 )
Taxes, other than income taxes   25     19     89     94  
  823     642     3,065     2,472  
Operating Income   352     167     797     731  
Interest Expense
Interest on debt 51 64 231 239
Other interest charges 2 2 8 9
Interest capitalized   (29 )   (28 )   (115 )   (113 )
24 38 124 135
 
Gain (Loss) on Derivatives (10 ) 127 (118 ) 422
Loss on Early Extinguishment of Debt (9 ) (17 ) (70 )
Other Income (Loss), Net   (1 )   (1 )       5  
 
Income Before Income Taxes 308 255 538 953
Provision (Benefit) for Income Taxes
Current 1 (12 ) 1 (22 )
Deferred       (67 )       (71 )
  1     (79 )   1     (93 )
Net Income 307 334 537