Southwestern Energy Company (NYSE: SWN) today announced
financial and operating results for the first quarter ended March
31, 2024.
- Generated $496 million net cash provided by operating
activities, $1.5 billion net loss, $131 million adjusted net income
(non-GAAP), and adjusted EBITDA (non-GAAP) of $472 million
- Reported total net production of 376 Bcfe, or 4.1 Bcfe per day,
including 3.6 Bcf per day of gas and 93 MBbls per day of
liquids
- Invested $538 million of capital in the quarter, consistent
with the Company’s planned front-end loaded development
program
- Placed 18 wells to sales, including 6 in Appalachia and 12 in
Haynesville; Haynesville well cost averaged $1,816 per lateral
foot, a 13% decrease from 2023 average
- For full-year 2024, the Company plans to align activity and
capital investment with expected annual cash flow, resulting in an
expected consistent production profile throughout the year at
current strip prices
Financial Results
For the three months ended
March 31,
(in millions)
2024
2023
Net income (loss)
$
(1,535
)
$
1,939
Adjusted net income (non-GAAP)
$
131
$
346
Diluted earnings (loss) per share
$
(1.39
)
$
1.76
Adjusted diluted earnings per share
(non-GAAP)
$
0.12
$
0.31
Adjusted EBITDA (non-GAAP)
$
472
$
799
Net cash provided by operating
activities
$
496
$
1,137
Net cash flow (non-GAAP)
$
439
$
764
Total capital investments (1)
$
538
$
665
Free cash flow (deficit) (non-GAAP)
$
(99)
$
99
(1)
Capital investments includes an increase
of $14 million and a decrease of $6 million for the three months
ended March 31, 2024 and 2023, respectively, relating to the change
in accrued expenditures between periods.
For the quarter ended March 31, 2024, Southwestern Energy
recorded a net loss of $1.5 billion, or ($1.39) per diluted share.
Adjusting for the impact of the Company’s full cost ceiling test
impairment and other one-time items, adjusted net income (non-GAAP)
was $131 million, or $0.12 per diluted share, and adjusted EBITDA
(non-GAAP) was $472 million. Net cash provided by operating
activities was $496 million, net cash flow (non-GAAP) was $439
million and free cash flow (deficit) (non-GAAP) was ($99)
million.
As of March 31, 2024, Southwestern Energy had total debt of $4.0
billion and net debt to adjusted EBITDA (non-GAAP) of 1.9x. At the
end of the quarter, the Company had $270 million of borrowings
under its revolving credit facility and no outstanding letters of
credit.
As indicated in the table below, first quarter 2024 weighted
average realized price was $2.20 per Mcfe, excluding the impact of
derivatives and net of $0.27 per Mcfe of transportation expenses.
Including derivatives, weighted average realized price for the
first quarter was down 18% from $3.18 per Mcfe in 2023 to $2.61 per
Mcfe in 2024 primarily due to lower commodity prices, including a
35% decrease in NYMEX Henry Hub.
Realized Prices
For the three months ended
March 31,
2024
2023
Natural Gas Price:
NYMEX Henry Hub price ($/MMBtu) (1)
$
2.24
$
3.42
Discount to NYMEX (2)
(0.48
)
(0.20
)
Average realized gas price, excluding
derivatives ($/Mcf)
$
1.76
$
3.22
Loss on settled financial basis
derivatives ($/Mcf)
(0.01
)
(0.08
)
Gain (loss) on settled commodity
derivatives ($/Mcf)
0.50
(0.24
)
Average realized gas price, including
derivatives ($/Mcf)
$
2.25
$
2.90
Oil Price:
WTI oil price ($/Bbl) (3)
$
76.96
$
76.13
Discount to WTI (4)
(10.89
)
(10.21
)
Average realized oil price, excluding
derivatives ($/Bbl)
$
66.07
$
65.92
Average realized oil price, including
derivatives ($/Bbl)
$
63.09
$
58.17
NGL Price:
Average realized NGL price, excluding
derivatives ($/Bbl)
$
23.88
$
24.39
Average realized NGL price, including
derivatives ($/Bbl)
$
23.76
$
24.58
Percentage of WTI, excluding
derivatives
31
%
32
%
Total Weighted Average Realized
Price:
Excluding derivatives ($/Mcfe)
$
2.20
$
3.48
Including derivatives ($/Mcfe)
$
2.61
$
3.18
(1)
Based on last day settlement prices from
monthly futures contracts.
(2)
This discount includes a basis
differential, a heating content adjustment, physical basis sales,
third-party transportation and fuel charges, and excludes financial
basis derivatives.
(3)
Based on the average daily settlement
price of the nearby month futures contract over the period.
(4)
This discount primarily includes location
and quality adjustments.
Operational Results
Total net production for the quarter ended March 31, 2024, was
376 Bcfe, of which 86% was natural gas, 12% NGLs and 2% oil.
Capital investments totaled $538 million for the first quarter of
2024, consistent with the Company’s moderately front-end loaded
capital program, with 29 wells drilled, 27 wells completed, and 18
wells placed to sales.
For the three months ended
March 31,
Production
2024
2023
Natural gas production (Bcf)
325
353
Oil production (MBbls)
1,231
1,418
NGL production (MBbls)
7,261
8,240
Total production (Bcfe)
376
411
Average unit costs per Mcfe
Lease operating expenses (1)
$
1.12
$
1.05
General & administrative expenses
(2)
$
0.13
$
0.10
Taxes, other than income taxes
$
0.13
$
0.16
Full cost pool amortization
$
0.68
$
0.75
(1)
Includes post-production costs such as
gathering, processing, fractionation and compression.
(2)
Excludes $9 million of merger-related
expenses for the three months ended March 31, 2024.
Appalachia – In the first quarter, total production was
238 Bcfe, with NGL production of 80 MBbls per day and oil
production of 13 MBbls per day. The Company drilled 15 wells,
completed 15 wells, and placed 6 wells to sales with an average
lateral length of 16,378 feet and average well cost of $824 per
lateral foot.
Haynesville – In the first quarter, total production was
138 Bcfe. There were 14 wells drilled, 12 wells completed, and 12
wells placed to sales in the quarter with an average lateral length
of 10,458 feet and average well cost of $1,816 per lateral
foot.
E&P Division Results
For the three months ended
March 31, 2024
Appalachia
Haynesville
Gas production (Bcf)
187
138
Liquids production
Oil (MBbls)
1,226
5
NGL (MBbls)
7,260
1
Production (Bcfe)
238
138
Capital investments (in
millions)
Drilling and completions, including
workovers
$
198
$
233
Land acquisition and other
46
—
Capitalized interest and expense
35
20
Total capital investments
$
279
$
253
Gross operated well activity
summary
Drilled
15
14
Completed
15
12
Wells to sales
6
12
Total weighted average realized price
per Mcfe, excluding derivatives
$
2.34
$
1.95
Wells to sales summary
For the three months ended March
31, 2024
Gross wells to sales
Average lateral length (ft)
Appalachia
Super Rich Marcellus
6
16,378
Haynesville
12
10,458
Total
18
Guidance
Due to the pending merger with Chesapeake Energy Corporation
(“Chesapeake”), Southwestern Energy has discontinued providing
guidance. Accordingly, investors are cautioned not to rely on
historical forward-looking statements as those forward-looking
statements were the estimates of management only as of the date
provided and were subject to the specific risks and uncertainties
that accompanied such forward-looking statements.
Conference Call
Due to the pending merger with Chesapeake, Southwestern Energy
will not host a conference call or webcast to discuss first quarter
2024 results.
About Southwestern Energy
Southwestern Energy Company (NYSE: SWN) is a leading U.S.
producer and marketer of natural gas and natural gas liquids
focused on responsibly developing large-scale energy assets in the
nation’s most prolific shale gas basins. The Company’s
returns-driven strategy strives to create sustainable value for its
stakeholders by leveraging its scale, financial strength and
operational execution. For additional information, please visit
www.swn.com and www.swncrreport.com.
Forward Looking Statement
This news release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act of 1934, as amended.
These statements are based on current expectations. The words
“anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,”
“potential,” “should,” “could,” “may,” “will,” “objective,”
“guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,”
“budget,” “projection,” “goal,” “forecast,” “model,” “target”,
“seek”, “strive,” “would,” “approximate,” and similar words are
intended to identify forward-looking statements. Statements may be
forward looking even in the absence of these particular words.
Examples of forward-looking statements include, but are not
limited to, the expectations of plans, business strategies,
objectives and growth and anticipated financial and operational
performance, including guidance regarding our strategy to develop
reserves, drilling plans and programs (including the number of rigs
and frac crews to be used), estimated reserves and inventory
duration, projected production and sales volume and growth rates,
projected commodity prices, basis and average differential, impact
of commodity prices on our business, projected average well costs,
generation of free cash flow, our return of capital strategy,
including the amount and timing of any redemptions, repayments or
repurchases of our common stock, outstanding debt securities or
other debt instruments, leverage targets, our ability to maintain
or improve our credit ratings, leverage levels and financial
profile, our hedging strategy, our environmental, social and
governance (ESG) initiatives and our ability to achieve anticipated
results of such initiatives, expected benefits from acquisitions,
potential acquisitions and strategic transactions, the timing
thereof and our ability to achieve the intended operational,
financial and strategic benefits of any such transactions or other
initiatives and statements regarding the proposed transaction
between Southwestern Energy and Chesapeake. These forward-looking
statements are based on management’s current beliefs, based on
currently available information, as to the outcome and timing of
future events. All forward-looking statements speak only as of the
date of this news release. The estimates and assumptions upon which
forward-looking statements are based are inherently uncertain and
involve a number of risks that are beyond our control. Although we
believe the expectations expressed in such forward-looking
statements are based on reasonable assumptions, such statements are
not guarantees of future performance, and we cannot assure you that
such statements will be realized or that the events and
circumstances they describe will occur. Therefore, you should not
place undue reliance on any of the forward-looking statements
contained herein.
Factors that could cause our actual results to differ materially
from those indicated in any forward-looking statement are subject
to all of the risks and uncertainties incident to the exploration
for and the development, production, gathering and sale of natural
gas, NGLs and oil, most of which are difficult to predict and many
of which are beyond our control, as well as all of the risks and
uncertainties associated with the proposed transaction between the
Company and Chesapeake. These risks include, but are not limited
to, commodity price volatility, inflation, the costs and results of
drilling and operations, lack of availability of drilling and
production equipment and services, the ability to add proved
reserves in the future, environmental risks, drilling and other
operating risks, legislative and regulatory changes, the
uncertainty inherent in estimating natural gas and oil reserves and
in projecting future rates of production, the quality of technical
data, cash flow and access to capital, the timing of development
expenditures, a change in our credit rating, an increase in
interest rates, our ability to increase commitments under our
revolving credit facility, our hedging and other financial
contracts, our ability to maintain leases that may expire if
production is not established or profitably maintained, our ability
to transport our production to the most favorable markets or at
all, any increase in severance or similar taxes, the impact of the
adverse outcome of any material litigation against us or judicial
decisions that affect us or our industry generally, the effects of
weather or power outages, increased competition, the financial
impact of accounting regulations and critical accounting policies,
the comparative cost of alternative fuels, credit risk relating to
the risk of loss as a result of non-performance by our
counterparties, including as a result of financial or banking
failures, impacts of world health events, cybersecurity risks,
geopolitical and business conditions in key regions of the world,
our ability to realize the expected benefits from acquisitions,
divestitures, and strategic transactions, our ability to achieve
our GHG emission reduction goals and the costs associated
therewith, the risk that the Company’s and Chesapeake’s businesses
will not be integrated successfully, the risk that cost savings,
synergies and growth from the proposed transaction may not be fully
realized or may take longer to realize than expected, the risk that
the credit ratings of the combined company or its subsidiaries may
be different from what the companies expect, the possibility that
stockholders of Chesapeake may not approve the issuance of new
shares of Chesapeake common stock in the proposed transaction or
that stockholders of Chesapeake or stockholders of the Company may
not approve the proposed transaction, the risk that a condition to
closing of the proposed transaction may not be satisfied, that
either party may terminate the Merger Agreement or that the closing
of the proposed transaction might be delayed or not occur at all,
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the proposed transaction, the risk the parties do not
receive regulatory approval of the proposed transaction, the
occurrence of any other event, change or other circumstances that
could give rise to the termination of the Merger Agreement, the
risk that changes in Chesapeake’s capital structure and governance
could have adverse effects on the market value of its securities,
the ability of the Company and Chesapeake to retain customers and
retain and hire key personnel and maintain relationships with their
suppliers and customers and on the Company’s and Chesapeake’s
operating results and business generally, the risk the proposed
transaction could distract management from ongoing business
operations or cause the Company and/or Chesapeake to incur
substantial costs, the risk of any litigation relating to the
proposed transaction, the risk that Chesapeake may be unable to
reduce expenses or access financing or liquidity, and any other
factors described or referenced under Item 7. “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” and under Item 1A. “Risk Factors” of our Annual Report
on Form 10-K for the year ended December 31, 2023.
We have no obligation and make no undertaking to publicly update
or revise any forward-looking statements, except as required by
applicable law. All written and oral forward-looking statements
attributable to us are expressly qualified in their entirety by
this cautionary statement.
Important Additional Information Regarding the Transaction
Will Be Filed with the SEC and Where to Find It
In connection with the proposed transaction between Southwestern
Energy and Chesapeake, Chesapeake filed with the SEC a Registration
Statement on Form S-4 (the “Registration Statement”) to register
the shares of Chesapeake’s common stock to be issued in connection
with the proposed transaction. The Registration Statement includes
a document that serves as a prospectus of Chesapeake and joint
proxy statement of Southwestern Energy and Chesapeake (the “joint
proxy statement/prospectus”), and each party will file other
documents regarding the proposed transaction with the SEC.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION
STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS, AS EACH MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT
DOCUMENTS FILED BY SOUTHWESTERN ENERGY AND CHESAPEAKE WITH THE SEC
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SOUTHWESTERN
ENERGY AND CHESAPEAKE, THE PROPOSED TRANSACTION, THE RISKS RELATED
THERETO AND RELATED MATTERS.
The Registration Statement is not yet effective. After the
Registration Statement has been declared effective, a definitive
joint proxy statement/prospectus will be mailed to stockholders of
Southwestern Energy and stockholders of Chesapeake as of the record
date. Investors will be able to obtain free copies of the
Registration Statement and the joint proxy statement/prospectus, as
each may be amended from time to time, and other relevant documents
filed by Southwestern Energy and Chesapeake with the SEC through
the website maintained by the SEC at http://www.sec.gov. Copies of
documents filed with the SEC by Southwestern Energy, including the
joint proxy statement/prospectus (when available), will be
available free of charge from Southwestern Energy’s website at
www.swn.com under the “Investors” tab. Copies of documents filed
with the SEC by Chesapeake, including the joint proxy
statement/prospectus (when available), will be available free of
charge from Chesapeake’s website at www.chk.com under the
“Investors” tab.
Participants in the Solicitation
Southwestern Energy and certain of its directors, executive
officers and other members of management and employees, Chesapeake,
and certain of its directors, executive officers and other members
of management and employees may be deemed to be participants in the
solicitation of proxies from Southwestern Energy’s stockholders and
the solicitation of proxies from Chesapeake’s stockholders, in each
case with respect to the proposed transaction. Information about
Southwestern Energy’s directors and executive officers is available
in Southwestern Energy’s Annual Report on Form 10-K for the 2023
fiscal year filed with the SEC on February 22, 2024 and its
definitive proxy statement for the 2023 annual meeting of
stockholders filed with the SEC on April 5, 2023, and in the joint
proxy statement/prospectus (when available). Information about
Chesapeake’s directors and executive officers is available in its
Annual Report on Form 10-K for the 2023 fiscal year filed with the
SEC on February 21, 2024 and its definitive proxy statement for the
2023 annual meeting of stockholders filed with the SEC on April 28,
2023, and the joint proxy statement/prospectus (when available).
Other information regarding the participants in the solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the
Registration Statement, the joint proxy statement/prospectus and
other relevant materials to be filed with the SEC regarding the
proposed transaction when they become available. Stockholders of
Southwestern Energy, stockholders of Chesapeake, potential
investors and other readers should read the joint proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation, or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act.
###
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
For the three months ended
March 31,
(in millions, except share/per share
amounts)
2024
2023
Operating Revenues:
Gas sales
$
584
$
1,145
Oil sales
82
95
NGL sales
174
201
Marketing
579
679
Other
(2
)
(2)
1,417
2,118
Operating Costs and Expenses:
Marketing purchases
588
667
Operating expenses
417
418
General and administrative expenses
56
46
Merger-related expenses
9
—
Depreciation, depletion and
amortization
262
313
Impairments
2,093
—
Taxes, other than income taxes
49
68
3,474
1,512
Operating Income (Loss)
(2,057
)
606
Interest Expense:
Interest on debt
59
63
Other interest charges
3
3
Interest capitalized
(27
)
(30
)
35
36
Gain on Derivatives
126
1,401
Loss on Early Extinguishment of
Debt
—
(19
)
Other Income (Loss), Net
1
(1
)
Income (Loss) Before Income
Taxes
(1,965
)
1,951
Provision (Benefit) for Income
Taxes:
Current
—
—
Deferred
(430
)
12
(430
)
12
Net Income (Loss)
$
(1,535
)
$
1,939
Earnings (Loss) Per Common
Share:
Basic
$
(1.39
)
$
1.76
Diluted
$
(1.39
)
$
1.76
Weighted Average Common Shares
Outstanding:
Basic
1,101,824,856
1,100,278,261
Diluted
1,101,824,856
1,102,396,636
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2024
December 31, 2023
ASSETS
(in millions)
Current assets:
Cash and cash equivalents
$
29
$
21
Accounts receivable, net
491
680
Derivative assets
640
614
Other current assets
91
100
Total current assets
1,251
1,415
Natural gas and oil properties, using the
full cost method
38,308
37,772
Other
573
566
Less: Accumulated depreciation, depletion
and amortization
(30,784
)
(28,425
)
Total property and equipment, net
8,097
9,913
Operating lease assets
144
154
Long-term derivative assets
131
175
Deferred tax assets
674
238
Other long-term assets
101
96
Total long-term assets
1,050
663
TOTAL ASSETS
$
10,398
$
11,991
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt
$
389
$
—
Accounts payable
1,299
1,384
Taxes payable
123
128
Interest payable
26
77
Derivative liabilities
116
79
Current operating lease liabilities
43
44
Other current liabilities
28
17
Total current liabilities
2,024
1,729
Long-term debt
3,609
3,947
Long-term operating lease liabilities
100
107
Long-term derivative liabilities
75
100
Other long-term liabilities
224
220
Total long-term liabilities
4,008
4,374
Commitments and contingencies
Equity:
Common stock, $0.01 par value;
2,500,000,000 shares authorized; issued 1,164,459,599 shares as of
March 31, 2024 and 1,163,077,745 shares as of December 31, 2023
12
12
Additional paid-in capital
7,199
7,188
Accumulated deficit
(2,517
)
(982
)
Accumulated other comprehensive loss
(1
)
(3
)
Common stock in treasury, 61,614,693
shares as of March 31, 2024 and December 31, 2023
(327
)
(327
)
Total equity
4,366
5,888
TOTAL LIABILITIES AND EQUITY
$
10,398
$
11,991
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
For the three months ended
March 31,
(in millions)
2024
2023
Cash Flows From Operating
Activities:
Net income (loss)
$
(1,535
)
$
1,939
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation, depletion and
amortization
262
313
Amortization of debt issuance costs
2
2
Impairments
2,093
—
Deferred income taxes
(430
)
12
(Gain) loss on derivatives, unsettled
30
(1,524)
Stock-based compensation
7
1
Loss on early extinguishment of debt
—
19
Other
1
2
Change in assets and liabilities:
Accounts receivable
190
734
Accounts payable
(94
)
(257
)
Taxes payable
(5
)
(27
)
Interest payable
(29
)
(33
)
Inventories
(1
)
(14
)
Other assets and liabilities
5
(30
)
Net cash provided by operating
activities
496
1,137
Cash Flows From Investing
Activities:
Capital investments
(521
)
(670
)
Net cash used in investing activities
(521
)
(670
)
Cash Flows From Financing
Activities:
Payments on long-term debt
—
(437
)
Payments on revolving credit facility
(981
)
(1,357
)
Borrowings under revolving credit
facility
1,031
1,317
Change in bank drafts outstanding
(12
)
(33
)
Cash paid for tax withholding
(5
)
(4
)
Net cash provided by (used in) financing
activities
33
(514
)
Increase (decrease) in cash and cash
equivalents
8
(47
)
Cash and cash equivalents at beginning of
year
21
50
Cash and cash equivalents at end of
period
$
29
$
3
Hedging Summary
A detailed breakdown of derivative financial instruments and
financial basis positions as of March 31, 2024, including the
remainder of 2024 and excluding those positions that settled in the
first quarter, is shown below. Please refer to the Company’s
quarterly report on Form 10-Q to be filed with the Securities and
Exchange Commission for complete information on the Company’s
commodity, basis and interest rate protection.
Weighted Average Price per
MMBtu
Volume (Bcf)
Swaps
Sold Puts
Purchased Puts
Sold Calls
Natural gas
2024
Fixed price swaps
409
$
3.58
$
—
$
—
$
—
Two-way costless collars
33
—
—
3.07
3.53
Three-way costless collars
60
—
2.50
3.25
4.19
Total
502
2025
Fixed price swaps
33
$
3.47
$
—
$
—
$
—
Two-way costless collars
73
—
—
3.50
5.40
Three-way costless collars
161
—
2.59
3.66
5.88
Total
267
Call Options – Natural Gas
(Net)
Volume
Weighted Average Strike
Price
(Bcf)
($/MMBtu)
2024
55
$
7.00
2025
73
$
7.00
2026
73
7.00
Total
201
Natural gas financial basis
positions
Volume
Basis Differential
(Bcf)
($/MMBtu)
2024
Dominion South
34
$
(0.71
)
TCO
28
$
(0.74
)
TETCO M3
32
(0.70
)
Total
94
$
(0.71
)
2025
Dominion South
9
$
(0.64
)
Weighted Average Price per
Bbl
Volume (MBbls)
Swaps
Sold Puts
Purchased Puts
Sold Calls
Oil
2024
Fixed price swaps
1,057
$
71.62
$
—
$
—
$
—
Two-way costless collars
348
—
—
70.00
86.40
Three-way costless collars
534
—
56.72
66.72
88.26
Total
1,939
2025
Fixed price swaps
41
$
77.66
$
—
$
—
$
—
Three-way costless collars
1,278
—
58.92
68.92
92.83
Total
1,319
—
Ethane
2024
Fixed price swaps
5,335
$
10.05
$
—
$
—
$
—
2025
Fixed price swaps
2,190
$
10.19
$
—
$
—
$
—
Propane
2024
Fixed price swaps
4,483
$
31.23
$
—
$
—
$
—
2025
Fixed price swaps
1,341
$
30.25
$
—
$
—
$
—
Normal Butane
2024
Fixed price swaps
1,073
$
39.42
$
—
$
—
$
—
2025
Fixed price swaps
548
$
35.28
$
—
$
—
$
—
Natural Gasoline
2024
Fixed price swaps
1,210
$
61.45
$
—
$
—
$
—
2025
Fixed price swaps
730
$
56.44
$
—
$
—
$
—
Explanation and Reconciliation of Non-GAAP
Financial Measures
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”). However, management believes certain non-GAAP
performance measures may provide financial statement users with
additional meaningful comparisons between current results, the
results of the Company’s peers and of prior periods.
One such non-GAAP financial measure is net cash flow. Management
presents this measure because (i) it is accepted as an indicator of
an oil and gas exploration and production company’s ability to
internally fund exploration and development activities and to
service or incur additional debt, (ii) changes in operating assets
and liabilities relate to the timing of cash receipts and
disbursements which the Company may not control and (iii) changes
in operating assets and liabilities may not relate to the period in
which the operating activities occurred.
Additional non-GAAP financial measures the Company may present
from time to time are free cash flow, net debt, adjusted net
income, adjusted diluted earnings per share, adjusted EBITDA and
net debt to adjusted EBITDA, all of which exclude certain charges
or amounts. Management presents these measures because (i) they are
consistent with the manner in which the Company’s position and
performance are measured relative to the position and performance
of its peers, (ii) these measures are more comparable to earnings
estimates provided by securities analysts, and (iii) charges or
amounts excluded cannot be reasonably estimated and guidance
provided by the Company excludes information regarding these types
of items. These adjusted amounts are not a measure of financial
performance under GAAP.
3 Months Ended March
31,
2024
2023
Adjusted net income:
(in millions)
Net income (loss)
$
(1,535
)
$
1,939
Add back (deduct):
Merger-related expenses
9
—
Impairments
2,093
—
(Gain) loss on unsettled derivatives
(1)
30
(1,524
)
Loss on early extinguishment of debt
—
19
Other (2)
2
3
Adjustments due to discrete tax items
(3)
9
(437
)
Tax impact on adjustments
(477
)
346
Adjusted net income
$
131
$
346
(1)
Includes $1 million and ($4) million of
non-performance risk adjustment related to our derivative
activities for the three months ended March 31, 2024 and 2023,
respectively.
(2)
Includes $1 million of development costs
for our enterprise resource technology for the three months ended
March 31, 2024 and 2023, respectively.
(3)
The Company’s 2024 income tax rate is
22.4%.
3 Months Ended March
31,
2024
2023
Adjusted diluted earnings per
share:
Diluted earnings (loss) per share
$
(1.39
)
$
1.76
Add back (deduct):
Merger-related expenses
0.01
—
Impairments
1.89
—
(Gain) loss on unsettled derivatives
(1)
0.03
(1.38
)
Loss on early extinguishment of debt
—
0.02
Other (2)
0.00
0.00
Adjustments due to discrete tax items
(3)
0.01
(0.40
)
Tax impact on adjustments
(0.43
)
0.31
Adjusted diluted earnings per share
$
0.12
$
0.31
(1)
Includes $1 million and ($4) million of
non-performance risk adjustment related to our derivative
activities for the three months ended March 31, 2024 and 2023,
respectively.
(2)
Includes $1 million of development costs
for our enterprise resource technology for the three months ended
March 31, 2024 and 2023, respectively.
(3)
The Company’s 2024 income tax rate is
22.4%.
3 Months Ended March
31,
2024
2023
Net cash flow:
(in millions)
Net cash provided by operating
activities
$
496
$
1,137
Add back (deduct):
Changes in operating assets and
liabilities
(66
)
(373
)
Merger-related expenses
9
—
Net cash flow
$
439
$
764
3 Months Ended March
31,
2024
2023
Free cash flow:
(in millions)
Net cash flow
$
439
$
764
Subtract:
Total capital investments
(538
)
(665
)
Free cash flow (deficit)
$
(99
)
$
99
3 Months Ended March
31,
2024
2023
Adjusted EBITDA:
(in millions)
Net income (loss)
$
(1,535
)
$
1,939
Add back (deduct):
Interest expense
35
36
Income tax expense
(430
)
12
Depreciation, depletion and
amortization
262
313
Merger-related expenses
9
—
Impairments
2,093
—
(Gain) loss on unsettled derivatives
(1)
30
(1,524
)
Loss on early extinguishment of debt
—
19
Other
1
3
Stock-based compensation expense
7
1
Adjusted EBITDA
$
472
$
799
(1)
Includes $1 million and ($4) million of
non-performance risk adjustment related to our derivative
activities for the three months ended March 31, 2024 and 2023,
respectively.
12 Months Ended March 31,
2024
Adjusted EBITDA:
(in millions)
Net income (loss)
$
(1,917
)
Add back (deduct):
Interest expense
141
Income tax expense
(699
)
Depreciation, depletion and
amortization
1,256
Merger-related expenses
9
Impairments
3,803
Gain on unsettled derivatives
(534
)
Other
6
Stock-based compensation expense
15
Adjusted EBITDA
$
2,080
March 31, 2024
Net debt:
(in millions)
Total debt (1)
$
4,013
Subtract:
Cash and cash equivalents
(29
)
Net debt
$
3,984
(1)
Does not include $15 million of
unamortized debt premium/discount and issuance expense.
March 31, 2024
Net debt to Adjusted EBITDA:
(in millions)
Net debt
$
3,984
Adjusted EBITDA
$
2,080
Net debt to Adjusted EBITDA
1.9x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502864308/en/
Investor Contact Brittany Raiford Vice President,
Investor Relations (832) 796-7906 brittany_raiford@swn.com
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