Southwestern Energy’s (SWN) second-quarter net income fell 80% year-over-year as the E&P continued to cut back on operations and focus on strengthening its balance sheet and debt reduction.
“Progress we are making on these objectives continues to improve the resilience and strategic positioning of the business through the commodity price cycle,” Bill Way, the company’s president and CEO, said during its second quarter earnings call on Aug. 4. “This quarter demonstrates the positive trajectory of our capital efficiency.”
Southwestern said during the call it had directed the $123 million it received in net proceeds from its sale of Utica assets toward debt reduction. Total debt as of June 30 was $4.05 billion, down from $5.12 billion the same time in 2022.
A 3.4% dip in quarterly total production was attributed to lower natural gas output, but oil and NGL production both rose year-over-year. Appalachian natural gas assets delivered 199 Bcf in the quarter, down from 214 Bcf in second quarter 2022. Haynesville gas output of 166 Bcf was little changed from 169 Bcf a year ago.
Along with the rest of the sector, the company took a hit in commodity prices. The average Henry Hub price in the quarter tumbled to $2.10/MMBtu from $7.17/MMBtu in second quarter 2022. WTI fell to $73.78/bbl from $108.41/bbl, and NGL to $18.63/bbl from $40.07/bbl.
“Our updated guidance reflects both our production outperformance year-to-date and the ongoing optimization and inflation-reduction efforts that have allowed us to invest less capital to generate that production,” Way said.
Southwestern drilled 38 wells, completed 46 and placed 50 into sales during the quarter.
“In Appalachia, we placed 28 wells to sales with an average lateral length of more than 17,300 ft, 19 of those were in our liquids-rich acreage in West Virginia and nine wells were across our dry gas areas in Ohio and Pennsylvania,” said Clay Carrell, SWN executive vice president and COO, during the call. “In Haynesville, we placed 22 wells to sales with an average lateral length of 8,500 ft, 16 of the wells were in the Haynesville interval and six were in the Middle Bossier.”
Carrell pointed to a combination of lower sector activity and an improved supply chain to combat inflationary cost pressures. Improved cost analysis enabled a more effective horsepower and chemical tracking strategy to reduce needless spending, he said.
“As we shift into the back half of the year, we are formally updating our full-year guidance,” Carrell said. Southwestern is lowering its 2023 capital guidance by approximately 10%, or $200 million, to a range of $2 billion to $2.3 billion. Carrell said the cuts would have only a modest impact on production.