Southwestern Energy (SWN) 24 Feb 232022 Q4 Earnings call transcript

Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Southwestern Energy’s Fourth Quarter 2022 Earnings Call. [Operator Instructions] The call is being recorded. I will now turn the call over to Brittany Raiford, Southwestern Energy’s Director of Investor Relations.

You may begin.

you. Thank welcome fourth and call. XXXX Southwestern to morning quarter Energy’s earnings Good

Officer. me Chief and Operating Financial Way, are Carl Officer; Chief Joining Bill Chief Executive today Clay Carrell, Giesler, Officer;

point Before are out we we beyond during and are and involve call discussed factors statements this I’d of Many uncertainties and get like affecting are Exchange make in reports that report of outcomes. the started, and many comments that our risks forward-looking forward-looking to of control in and risk more filed our the is sections the statements annual Securities with these quarterly and detail the Commission.

may facilitate the measure obligation measures, they peers. expressed corresponding reconciliation of Actual financial GAAP We non-GAAP guarantees Earning some on update release found our website. differ we based measures on we available developments them. refer performance. which to expectations we are non-GAAP under materially are with to believe to across may a and no can not reasonable assumptions, also our future in use, help Although periods or are earnings and nearest be the comparisons results

turn to over the now Bill Way. will I call

high-quality XXXX, integrated our repurchases in transformative this We everyone. position. $X base completed continued Southwestern X.Xx. which and the We acquisitions over to debt leverage morning. reduction of successfully Brittany complement Haynesville joining $XXX both and strategy results, year to asset financially second by of on lowering debt the Thank you, repayment, debt billion half expanded the XXXX our operationally. and prioritized defining Thanks into during and Appalachia our Energy with for a good executing million morning was year. reducing we us We complemented share for we as delivering strong

as longevity and optionality. improve these large-scale We of integration the extend will the our business do continue operational drive to further high-quality our enable and inventory, efficiencies acquisitions We Appalachia. expanded believe economics expertise development that cost us with we deepened and just to that expect in resilience scale

now Coast at LNG importantly, supplier where the direct Bcf gas more exporters LNG to per access the already we including largest day. growing are Gulf Most to corridor, X.X we of have the natural market,

positioned energy demand and as strategically well. supply natural longer to gas are term We on increasing capitalize fundamentals

Over demand storage has and and the flat supply means than more in pricing. U.S. gas demand the quicker doubled. significant gas market decade, last changes The has for U.S. can more natural drive in contraction capacity gas that remained relative balancing smaller supply changes and natural in mechanism natural relative this while

Over increased also our expect hedging with forward core reflects the practice. in our enterprise the we gas gas last hedge in demand few going volatility strength, recent With during prices hot structurally market. remains in management improved months, sharp pullback financial to run-up unseasonably Similar warm reducing to greater have the we of ‘XX, at summer fallen gas believe due part natural in supply. the This our moderately framework. the weather, line natural volatility in natural highlights gas more to why materially prices least below risk

in the reducing scale by average near-term, year full recent X XXXX. guidance. capital of rigs the to proactive we result X% drilling resilient With to current by and activity X% market at fund planned cash cash flow prices, XXXX through on the our program we is a in flow planned company’s activity strip levels and longer productive to term. Given production deliver preserve associated expect decline taken This at the free the moderate to capital to expected and program steps have versus midpoint our net

on for optionality, objectives. vertical rather will quickly. what ultimately, a activity Any will further multiyear we business and flexibility outlook rest believe through progress financial integration incorporate and our additional longer business adjustment term prices adjust our have We including to best and commodity

Consistent our target with – we to debt generated LNG growth. and constructive range remains Longer approach this our cash we long-term shareholder core reduction, burn gas billion global dynamics proposition supply Returning debt to remain capital $X of energy year flow demand core billion. continued strong gas direct security to value natural shareholders and free to plan capital natural allocation power prioritizing $X.X as a export to strategy, structurally remains term, should our drive debt repayment. as and decarbonization

facilities U.S. anticipated as the with service day soon to Bcf of returned late service, per Freeport as XXXX. an additional dates is export imminent construction Beyond LNG under X capacity

to our business. positioned the taken through have developments value from across the corridor our commodity the actions natural We years positioned we from to navigate current the over to SWN shareholders. and our volatility firm of Coast Gulf SWN is for few delivery differentially the believe these have better and direct grow benefit enabling portfolio, long-term growing past transportation LNG proposition proximity well U.S. the to with our gas access price

over me now call the Let turn Clay update. operational for an to

XXXX, and we good delivered the combined on track the Haynesville standpoint integrated assets business plan performance consistent with our Bill established the record company. team in from of is and morning. In successfully you, This objectives Thank and Appalachia. the a cultural

and expect performance XXXX momentum that drive and further forward improvements. carrying are execution We to into

of approximately impacts December XXX the Haynesville over cost placed mitigated just per during and of we with $X,XXX to XX approximately proactively minimal to of XXX,XXX the quarter. sales in During average average We cost of with feet and Bcfe, X,XXX wells safely and including weather We downtime fourth winter XX over foot. with includes lateral feet midstream day per unplanned per liquids. in This of lateral XX barrels $XXX Appalachia and foot produced lengths lengths production. of and well approximately effect the quarter, XX,XXX the well

we invested capital, spend million consistent During our guidance. bringing year capital billion, to quarter, of the full the $XXX $X.X with

producing hit year some during time the the more and accelerated early ground third-parties, operational by lines. wins. The stacked above confirming and running, delivering per results first XX% comprised importantly, in Bcfe in the resulted the August of early the across production position. gas issued end data original achieving or X.X February. Middle and above midpoint execution our delivered Tcfe driven we year evidenced our of guidance outperformance X.X our of Haynesville, from above in updated and as of our turn-in Bossier was that full published in strong the year, strength was day and Haynesville we well performance In by natural the days the guidance operational top production portfolio results For by Most which liquids, we produced issued XX% basin-leading well expectations

upon extending improved by lateral the also to approximately feet. cycle operators nearly We times drilling prior XX% lengths while X,XXX

long-term additional that million day agreements feet changes treating value On which This side, we the X.X the combined that with on and across extensions X-year PVXX momentum transport. XXXX. online development proved Tcfe the of year-end cubic and The of agreements performance These of pricing. revisions, access of pipelines more gathering, end executed the Tcfe flow and associated with optionality X.X using per is several come our evident SEC and of discoveries in of pre-tax billion plan. and assets XXX and included assurance LNG commercial and an bolstered of offset reserves long-haul LEAP GX $XX.X production positive than Tcfe the key XX.X reinforced by transportation our in

our quality of that believe the company. of commodity XXXX, to is Updated environment continue strip reserves reserves end $XX and differentiator We for year a current our PVXX pre-tax using for billion. inventory X-year at the underlying the the price prices was

program capital expected to X% mentioned, $X.X a of to Turning moderation that our in production. a as XXXX, billion billion activity Bill in X% reflects to to proactive result $X.X is decline

is less include expect rigs X in XX than rigs, XX in X Appalachia. which Haynesville we and year, X to will XXXX. the average For X rigs to to This

fleets in intend With to with in strength volumes We barrels of to and and This into expected of than acreage we portfolio Haynesville XX,XXX activity pricing, X XX,XXX X our an shifted wells run day. Appalachia. more more to last XXXX grow to average continued approximately X X the sales to X also optionality liquids per liquids-rich oil to throughout placed year. is to our frac

The the efficiencies. efforts focused on development operating and delivering further team impacts and supply cost strategic our leveraging inflationary chain by offsetting remains highly

as targeting and cycle ongoing are drilling further optimization. completion improvements as completion well design time We and flow-back

in We results delivered the continuing are forward in XXXX. XXXX team look and deliver proud of to to the

Now I will turn Carl. the to call over

revolver XXXX, repay more shareholders. Clay. Thank capital flow billion We generated a of our In X.Xx of $X December, the the down $X.X $XXX at also and free Term debt, year than you, ended to returning that billion helped of debt with and the year. but $XXX with million supplemented the cash X.Xx, cash million At inflows leverage company retired working approximately we end B from Loan on hand. beginning using of the of

capital remains recall and April that transition facility investment the to component credit unsecured Our amended to only in in of facility achieving structure upon we last grade. year, our unsecured that

also at notes, call the end notice we month. to issued We of recently redemption for intend a which XXXX this

free on hand and to in majority fund balance will cash of expect higher redemption these for sheet to the increased coupon which We use cash result strengthen further that flow. notes,

target holistic Reducing balance strong to enterprise risk a approach a is our debt to range foundational to $X.X remains billion to $X.X billion A sheet priority. management.

we month, reflects which S&P resilient more price to the few notch better one trajectory years, outlook steps improved makes We below remained grade all Earlier have the undertaken us Additionally, positive through lower strategic navigate over our at cycles. the three the to positioned ratings business our volatility. and believe debt agencies. current have we commodity price past this investment commodity

inflation scale, core have well balance structure, quality as cost as We sheet. and stronger deeper the enterprise greater adjusted lower inventory higher a

questions. to that, please the open With call

you. Rice. first ahead. Please with go Meade Thank Johnson comes The question [Operator from Instructions] Charles

little XQ I to can’t over it going XQ I Carl – how implies volume about one whole course Clay, kind I guide way is to But the of Good and why drop better is team XQ am and And or to at maybe want of grow ask the this rigs dips below because Bill – the to of your understand a year? pace over course Southwestern of the you is and year. you. morning, are quite activity the ‘XX of the those for approach there. the it is Bill, the the from guide looking rest to Clay, the going guide, overall first a

activity So some whether help that it’s dynamics you specific perhaps picture think way some right fill XQ. Can in on explain us? however, is going to or you whether for – the from in

Certainly.

as we there as you then then and drop we full move into production that’s the with the front-end of of activity activity to end our off lowest little quarter typically and the there the we to a or from is the tied year, some backed traditionally, have go QX. loading the a bit that first we have So year year the quarter profiles, strong of up there is production then new some for little start and recovery. the And and year the there dip

outperformed QX we efficiency the accelerated within Additionally, updated and to and general, guidance. and when to lines on continue in we about production turn-in due live XXXX had think XXXX we the we gains

the So, of in end there wasn’t accelerated QX. to turn-in QX bolster lines the at year

not that So we as past a we’re consistent move two, us pace but closer we to levels, two similar that back the at moving is first little of the in the program. surprise profiles and and there level shape, quarters some The typical higher to with getting to the into then, forward XXXX we than loading XXXX, look activity a as have. kind bit

it. Got

understand back So right, of the to more the you going more, year, rig guess, Clay? be I drops half if the to I weighted are

start showing will up. it Well,

in We occur the have in there be March. that that of got will in a the the half quarter couple year. one run-rate and the lower And second will then second late happened is then

on equity of but guys Got then Carl. you. made ask important, us And perhaps, lot one say look set on investment more Southwestern, of not the kind if investment as front, refresher – investors, I the investors if And it. Carl, change there of going LNG shift I towards a a think equity progress agencies any aren’t achieving the lot has Can that’s that what give is the to at opportunity leading a of Thank have follow-up rating lot to for How posture you been financial of particularly a lagging them a grade. can customers? on for grade? indication. could give you indicator you us

happy Yes, most benefits The a buckets, to. financial. directly following few is

just we important, obviously to cost You important capital. and I when and lower a grade access least most compared non-investment sit, you It’s could be where to debt that need even it. much grade bigger your expand investment of more our at market,

investment be point in which constructs. commercial. right a sheet. it love think upon perspective. to side people shows third balance a differentiator grade really being is understate touched as long-term from producers engage the We you of just LNG I the Secondarily, durability And want the don’t from with hand is market to will then It

you increasingly gas marginal invest sector, look distinguish the generalist is a that becoming As in know, us peers. where market from as to our the well in the we will being investment grade help they dollar positive way believe and

helpful you, Carl. it. Thank Got commentary. That’s

You bet.

The Choudhary ahead. next Please Umang go question with from comes Sachs. Goldman

for taking and thank morning questions. good you Hi, my

you the see gas would question and your look like You further growth changes the like, highlighted profile do more sounds with your cut half prices what guess do weighted. completions back in to prices? at sheet in a balance have that half? focus gas vein, price I derating is those its to flexibility on respond conserving if and non-operated rigs back we what on you a to And your crews

Sure.

So of first. in side think it mainly non-op Haynesville. as about hit the – I’ll we the That’s

a we as the Difficulty] moderated see there forward Haynesville in move [Technical activity drop-off that non-op program to view line the with expect across We drilling in will in our be

have yourself mistake. think muted you might I by

the And Some would how and decisions, the choice did to economics there. corresponding of in stack, participate going of all they participate on the and our whether and value will around rack capital the make we forward, we allocation the wells. if those we compete of we have like based of appropriate

first on got question two your own space our maybe we’ve think we fleets. it frac frac some optionality in I on we would – activity, own where that starts delay good of because with the

be month to and are – Secondly, have we current perspective both watching out, in needed. be able we and prices mapped at, fundamental the decisions, to those will will in steadily we and we think a commodity where the year what are from scenarios those make if

top of inventory plan, performance. improved to only efficiency market And that. drive to intend program, that invest flow. to to couple inventories the objective. certainly build try We add that be within that to are doing to we pricing. is need for would achieve And points to cash overall so, to and on if build adjustments in operational there We to them a to DUC we don’t And anticipate made on DUC the be of make the able

the I you activity, Got of think it. That’s not, have helpful. terms you conserve your I a the I in of will to the will see further option lost you rig but you that you you part choose and side, some you are allow take we early can call from non-operated if or non-op them do to – follow in seeing response, drops which – participate in capital. to

You right. got that

Perfect.

integration process how mean the have have these the assets how then what with you for thinking now, – the that operated I successful a are gleaned I – highlighted to that Haynesville, you on date? year asset capital are what and And specifically, guess to the Okay. further about you then opportunities which asset? from of improve learnings efficiency year-to-date the are that And you

Yes.

had learnings we’ve gone good through So as the year. full definitely we’ve

staying and program challenges continuing well service done asset. has a team the think being really job, year performance with on see improved to the throughout that on new a good I track and

we it and move we get cuts days the and have is cost. the again from enhance times. learnings track brings. design by to that progress each the delay We side. changing not proppant with the the the all side we And those so time. doing well range and wells most think way hydraulic to that we’re are forward. that adds in so that as older non-productive that further got on. we facility when the which the cycle worth loading go potential are that and the whole our with improvement on all connection more back reduces development clean backing is outs get if opportunities shrink on well additionally, some the capability any benefit, that sure – There on the we some that more then and have we on around made wells capture benefit of when cycle of efficient design, together bring away many you there is time, continue coil, screen not And put we’ve of the things also to effectively providers modeling learnings those, there time job the we designs that improvement we’re we out we’re that are drilling the the how the full seeing on, step-up facilities are across bring full Some – to and the are a having trip that off around program or that new eliminating and when causes And to production as outperform time, and when do appropriate, to time, broader there make the full We our completion on facility putting there we proppant where we completion we and midstream around not other

those a are few So examples.

one. Yes. other I’ll And one just add

it And run in. work high-spec out contracted the learning us complete more try us that more As the the drill cost they to the of a enables drive and who our lot have might. gives negotiating fleet gives them. drilling know, to as And in well as to teams us performance you we Haynesville, our wells flexibility, rigs to and into importantly, we well seven happened, seven that for rigs, have teams transitioned people ability

that’s we broad that delighted we’re it’s – team So delivered. the a broader I benefit a anticipated think that happening

Very helpful. you. Thank

comes Leggate The ahead. Bank next Doug with go question from America. Please of

on. I around you It frame I generally. the cliff I market would question thoughts don’t this. it have know management, talked a my for gas I Hi, Bill, love speaks, thoughts earlier, guys. Thanks price want anymore, on but you the but your having like to to to get guess, there about and your risk

We little currently. above-normal have storage a bit

storage. just is you’ve We to colors of over if of say lost Bcf forward And swaps why Freeport. XX% dynamics market slightly which got curve, above gas XXX shifted? higher, have only think I’ll than ERM? you and exports have from the so, a this But we rather do again, Do in your continue

I market dynamics the think shifted. have

ability have a the provide of hedge, tools. opportunity market measured also greater upside want of we’re It it’s we management. we converted shorter-term And do need our perspective structural – year. that will we we some of risk providing much is We recently the are from meet. the to because trying of the count. that The when to to hedging to putting remain – use perspective number proposition of swaps impacts position implemented pricing will to consider and investor had at a than colors. to handle dynamic, for reach certain protect, dynamics. are we’ve tools believe sheet risk that We depends growth the more it’s our but You the week the And a the risk market. a volatility high, And a shape, of that previously. need part every of have the the framework, certain how protection the we and believe perceived hedge a we time we’ve to the the a with high appropriate meaning But that. trying pricing that to of number on access then to do in in getting we is were in cost thresholds a look – on that pull much trying value a back cost-effective from of in hedging. lock number major done tend drivers collars a this volatility. higher lot the hedging and we should our markets process we’re transformational of gain whole concern things concern from on some higher our by enterprise time – depends they the much on fundamentals we a markets a how our we’re variety we in whether defensive see numbers there It and what company other stronger circumstances, that that objectives shape around want and in to to these how factors or to we is enterprise where both where when from – the are balance had to hedging And we commodities, to economic part to particular meet hedges We’ve

to ready to my since I a market of my return I the prospective appreciate I mean, the believe is, last in of And I have seem you curve, me that. the follow-up guess, cash. page for Thank on Bill. that, the the terms guess best use of value answer, full which given I I now, on X% but forward same we the is, the X%, we’re quarter, kind yet cash. think guess brings question doesn’t

but a net debt, have XX% still which capital buyback You program. is you a structure, share have

market I building be equity mean? to buybacks, isn’t be going cash if currently value, seems value recognition as accelerate to a started it to helped So of the enterprise versus is way faster it

approach cash the undervalued capital. think equity believe We And but returning our net – to I’m our Doug, we billion evaluate year. look, relative consider target direct sure near-term, we to I range range, debt this also billion. to rows as least we With $X.X cash value mean, $X to will is target our fair in building as a of Bill enterprise, question. $X.X billion well. stock free And of get then we to do noted, we value that flow at inherent to to of as our have I debt, it’s some the how will intend repaying both

sort option lower you And of has benefits of a both. really overall As of you not volatility lowering stock, the cost which of debt, capital. where it’s know, structure, has net the do all to false choice. capital lowering There parts is of the including our benefit there can debt, of equity an the including we our think

considerations those very center front progress capital will So be our and we strategy. as allocation

Carl much answer. for thanks [indiscernible]. so that

question next Jayaram JPMorgan. from The comes Arun ahead. with go Please

you. Yes. how just had levels. Thank Bill, question activity I you’re approaching broader on a

I see program, think market of rigs to completing your to the happy the was plans be to shave off DUCs are a year. you XX going this couple yet

not to XXXX thinking like strip holds the DUCs strip back? until would Just rigs about those in why potentially plan save the XXXX, if And the when XXX? bring you is

Sure. Arun, the of on part maybe I’ll first hit that.

in of liquids-rich a a and those of liquids portion up greater volumes is to and liquids they tied As of those quite to shift volumes are DUCs know, on that show the value, pricing into going greater you Appalachia, stronger less. the which that’s view represent few equivalent a of

is where we XXXX, sets that’s Haynesville of the When that price. this relatively part quality the short-term our at us market. the I downturn the those and that inventory think online, where more gas and at prices going view – there think are nicely we cycle now, constructive So times into Haynesville we right of bringing look is wells the a decline with believe in with a up

the capital has look changed. fact structurally conscious dynamics we very market of we’re overall at the if program, And that

as that a we would high to flow the capital even And the net versus fund maintenance like the that of that conscious of cash our that conscious growing we’re cash fact strategy, very flow. off investing when in program were cash you very fact generate We’re think lead of the flow. about free was our capital prices to capital and allocation with

maintenance down prices cash go excuse get and But in is where very the expect will to to go it right we spike, did additional to dimensions like different me, if which – we in would rigs we sight or the capital time deliberate up Following program, economics another go and at taking on point, it support the this the in some we we clear were, ourselves and will then ‘XX $X was being investing If and back paying debt, maintenance more of capital, when line and we about future. in look to and to one to and off we billion the then so we shareholders. did return of with setting And that some forward contracted we the right debt and within – do one back we returns. evaluate a that, type from effort. where capital all form go back rejoin fleet to of

Great.

to, things happens. balance suppose timing All everybody current dynamic supply/demand of is never often of which of all it that of of exactly like and I the those pricing wants and materialize probably that those owned ramping LNG all and

and forward we capital it watch forward. phase free down going company capacity productive flow continue with to we return the along the paying So deliver to of we cash move will sustainable and it to keep resilient in, as with along debt will of

My – environment. guys production dynamic look if or a more footage follow-up down, your guide, it, using going at are is natural complete Certainly, the call midpoints, year gas you this X% so. we your X.X% about Great. midpoint is, versus to of last

peg? a SWN? sustaining to sustaining level would you’d production at tolls so. you support an be a Clay, CapEx and activity XXX cut think of or perspective, level at where From I where

Yes.

at production. of inflation a billion to how guidance day was of to the a get to we in to deliver line cost can lot I net do XX% has had XXXX. with Bcf XX% in equivalent $X.X that think program another That our with coming current back structure inflation X.X midpoint in. the quickly of got We a the XX% price of the We’ve environment. modeled XX%

gas that to getting lower think of that – where But are environment, price quickly a puts wide think needs that the inflation and on – so lot number. the side on that the $X how by that the in evidenced in guidance kind lower way down But midpoint more we of us the program average And needs of capital, – as where to efficient I range a as LOE and built cost annual production. have of I that rate a believe, we capital away. would we come it’s goes

And more Clay? Appalachia, versus a comment is that Haynesville specific

in So in what we yes, saw XXXX.

starts with So – Haynesville and capital. higher

we inflation and see Appalachia into a chain an through big as Haynesville standpoint. supply between things don’t XXXX, As see from our we delta moving work of

Super helpful. Thanks a lot, guys.

Thank you.

Please Dingmann ahead. Securities. with next from Truist Your comes go Neal question

Good morning, My Thanks I sensitivity. on rig rig everyone. what question time. plant, your first is for plant the really call

all wondering, think prices. Specifically guess of there is, plan put you a adjustments saw what do recently declines of the more likely on when pure historically about I your been the rig peers versus gas one gas just your down for has Appalachian goes Haynesville in I’m the asking had activity slide, modifying is most out how suggesting Haynesville.

call even So notably Appalachia your high you I’d margins gas that or guess, I of in low versus think do what prices? way, maybe sort about ask just another Haynesville notably how

Yes.

core whole we’re performance X-month on got the the part this higher core across that. And there is of resilience there and indicative Haynesville, have of kind in not with of to we our public liquids-rich have think of corresponding our I of breakeven clear of the acreage average higher southeast some the is try environment. made only script where those on adjustment about [indiscernible], when the the in have play. comments, commented what price [indiscernible] sure I the program But lower that you’re much at average you look EURs X-month that data we but talking direction in assets we and than make we the versus some that the the Haynesville pretty

our our stack solid across why program, did. that’s towards So the with still is rack a and in what a is mix which but leaning up more liquids we picking portfolio,

quite the have we flexibility move And good. to

can the getting they Clay that So, and begin can comments materialize results makes, quickly. we very

to think I that’s Yes. No, understand. important

question, you think Clay, second a the And in for I just you. have do then Haynesville. maybe maybe, that

seen cost in am as to you. you have in reduction all and Just very what share cost Thank more given have by on just there? specifically, and in of you the wondering, could others, you I far OFS rigs OFS or seen as other anything place recent something services you recently,

going start believe we the movement to as quarter, am seeing start relate quarter of openers Yes, it and in to in I will And know the different private that come there. move what March better first and we It’s quarter. further a sorry, more space. to that early about really in the are Haynesville comment in to that. to services, We from that some I We we and fourth earnings second a some for companies’ needs I two of feel conversation we down. the going already down mean we the I can into have calls rigs get are in know other happen. tangible earlier, made – the with proactive through starting then

all using a active I So, the that think they in we procurement we tools to stay going really from should are space that standpoint. and have hand-in-hand, go

Clay. good. Sounds Thanks

question with from Pickering, go Jeoffrey Tudor, next The comes Holt. Lambujon ahead. Please

everyone. my Good Appreciate morning taking questions.

morning. Good

XXXX a on to about Haynesville budget, the don’t for that count would obviously the and I spoke you about on curious the to year there. you and behind bit moving by earlier. little But well pieces I compares I know with are as I guidance appreciate about shoots low that the on just high on it’s low one you the what there first improvements is got I asset the the what as green would inflation your range bit But if region. how by be range this we contemplates the well to cost know, of and a And you be mean end saying, the ranges how My you far as could talk seeing side. Appalachia, there? thinking speak are cost today earlier early commentary in helpful. think

Sure.

of where starts activity but thought those target do hold my of results areas fourth that we were inflation to quarter kind some And the script in and seen reduction. to costs, that fourth of mid-XXXs in are it we – in quarter we and those indicate all closer I seeing represented is of around in can XXXX, that the So, with is both that kind the Appalachia our bulk do there well our in inflation Haynesville. about would had we that X,XXX talked in to our cost the

So, higher costs, in wells I those the in think like those Appalachia. which And also on XXX basin. well matters in lot we with performance. for areas are from anywhere wells increases have the well is your it hole to best the pressure, bottom a XXX range but in you an And performing wells a and matters talked costs, about deeper have Haynesville, well where drill we

some X,XXX improvements part our range a little would we I anywhere that little different to So, Haynesville from bit improvements. than But that over working are say and of asset. range a but efficiency shallower, the X,XXX, is the of core is on inflation older

maybe that. added quick And hedge a XXXX. That’s protection then helpful. referencing Perfect. on just coverage, the for follow-up Appreciate

you coverage percent conversion to that wanted moved further. of level should as strengthen or that XXXX think tempers balance that the the kind to today could production. for you if sheet book on towards that about Just what a the get If where reminder of a on hedge see getting to we we appetite as see

when that particular, would would we flow good free we Yes. thinking regarded suggest factors cash for flow to that think look in we to in further obviously remarks, two will That debt. opportunities free lock cash about think to It’s And lower goal. lead priority the curing revenues to or a of and that will one, I it’s a level, say question. prepared that the dominate as about in ‘XX,

then current then to year, created significant have willingness ‘XX funded the with for ‘XX, you hedge XX%-plus as and saw at the that Bill prepared we limits risk us. to loss Another some that with in XX%-plus us higher seeing structural that in factor, is our increases are for Long volatility gas in exposure by remarks, effectively rise And market. hedge of and their the believe volatility noted ‘XX we story and short, again, some would last that, higher increased point opportunity participate we $X.X created hedge locking and ‘XX. levels, acquisitions cost we reasonably year the have leverage of now due had well as the in quite entered in much the being able debt as environment, largely of in as pandemic in levels. billion is we during as liked high. those not the about prices the counterparties gas to that last And as with high XXXX unrealized We we are higher XXXX to high seeing

in sheet, addition stronger to this the volatility. So, increased balance

I to think levels. we us our will – hedge net-net caused temper

Appreciate it. Got the detail. Thanks.

question comes from Paul next Citi. with Please The Diamond go ahead.

to call. Thank LNG taking about my currently quickly take term LNG kind thoughts of standing at or just you. on I all. rate X.X morning wanted guys’ on for Good your the longer billion. capacity, touch Thanks

wanted how in going conversations capture expected around Just to potential increase to be pull demand that any the further be ‘XX? if ‘XX, late see were that to – was will

they of of sort concentration contracts. a providers a and a subtract And opportunity quantity, of have set. We Today, in that billion in price, again we at day, us various on in add are a portfolio broader much lets and picture that links number with of X.X contracts of of that. management broad tenure, risk kind build range a of LNG all

looking Bcf day. have a X internally We near target been as a somewhere

that sense. total of strategically economically analyze Bcf, our it Given as we X seems that some makes

I international particularly liquefaction, is that how you actually you or means have with to going going all that fiscal, access market, whatever talked low-cost I liquefaction, we think cost thing you the careful protect think political dynamics, shipping get what and potentially of about other to last from of that to understand And are enhanced to higher high periods extended the the it margins turning hasn’t. things be lot that to where has you seems been used on it the high. been potentially, time the there different it’s to would word XX at time take months, periods look time over a quite And want of – priced then commodity. of

continue will so And we to that. study

contracted ideas all And those to with have proximity, Our it screen and have transportation of already also risk as our worked space of to players, we of talked might we we gives some we sort kinds in – mitigates we entering basin advantages, firm the of are our of associated work speak. type who agreements. that with, some a conversation but to the number us of want having

commodity agreement. price we have what kind with of certain get a Henry opportunity set telegraphed So, is, the you Hub-based

have will a with more – that bode company, have higher going things with we much and other risks about on You those have a price this together talked and smartly. position to investment lot forward. put Certainly, that for additional come certainly the call we different it set want a into we well a all risks and want we how the reading that grade, of higher certainly, we say that just the of to contract understand, opportunities to and about and materials go we

the for follow-up. quick Understood. had a I just clarity. Thanks

volatility, is that? around or think the that XX-rolling-month you that question have quarter-to-quarter? is, or that guys about more on But view – a cash we more like spend I you wanted basis, structure You to is guys we do thinking within of given the as more that flow. should guess talked – be should

manage environment, We My comments even macro certainly much and particular – even are in more it’s that annual I around an tighter, can you. this basis. tighter, assure

that we yes, as on move the but will well basis – as So an we annual manage as long-term forward.

for time. Thanks the Understood.

for you Thank questions. your

with comes from ahead. Your Tuohy next question Noel Brothers. go Please Parks

Good Hi. morning.

Hi morning. Noel. Good

advocate. are kind to environment this keeping event playing clear. I is say, your cause to gas does sort chain the And in incremental cost thinking cycle the could just And the anything your instead challenges the many or own more resources wanted low of shift and So, on constraint fleets. to cost, price about frac sort bit parts and about that, shifting you a of in favor vendor Thinking rig towards, that low the little an there persistent of fleet? it was inventory on of prove in supply of those of of and there, wondering rig of in-house pretty maintenance, I touch devil’s parts the so advantages and topic drilling just and different

performance pass And discussion, two when nice have mix with the those the day use part we that the we where hand-in-hand you think about frac and Maybe third-party providers that as biggest done, pumping comes of the utilization, the learnings have has got which a what vertical owning from are both, bigger rates, company-owned we never, costs you seven rates, have performance company-owned own. low-price of rigs look total our integration the the by good program we and to And of to if then with that never when that drilling optionality able and get scale have equipment. that we improved inflation a the I is our our increased fleets from is pressure our drop cutting of acquisitions between think pretty both third-parties own. where The worked to than the base environment, company-owned it continue to really in activity for us materially where third-party we has are and back the benefit our done to that benefits by gives part but well the say max and about that the feel company. at some we brings different rig

couple comments We a benchmark return. has earn this top own of of business, and other its to it that. And on

it were so it commitments all and but its they delivers company, makes. has – And that of it it assure his us as on if Clay own that team that go just through little the that

coming. rigs, consistent They so know which is have teams happen on employees, great. we We these be who to is

consistent are way learn performance allowed deliver are In to this you go easy work like allow where it’s you to they to business process. – they the company people capability And in plot to experience, work when rewarded the and a They been and only so for this is the And or has rewarded. it is. their for integration better else, their lose home on SWN. off have base and vertical somebody my

the of those you be put take we sure better think very I confident when So, to right a the Clay’s with am terms are in thing in us that doing, along spot. is and making we for I that rigor this

aggregate functions earnings help from big have in in earlier this demand of are on Thanks. with maybe it’s another softness hopefully, coming on to gas to in upward ability going that’s – a the came but I with especially. big just maybe meet sort in am LNG be to of ‘XX, this Great. industry’s I And that offset one near-term there that these of guess, going be And upwards LNG I producer XXXX, sentiment supply am your and to up production in step topic the able season, sort coming working ‘XX, in capacity of, wondering demand? about thoughts steps we to in those about bullish to be the really discussing the be concert to topic needed

capacity our powerful productive this of in industry Well, is quite and robust general.

with one And getting with on has to but on from gas mute so will infrastructure, cities. major challenges around investment, there, pullbacks to I with this industry that for place been the in respond ability another challenges

be Coast, to goes quite so are All Gulf is think going that. there the on it to risks Anyway, far. and built I of this

this the is the everybody you access up. grow, so to all – not the capability, to has LNG can then to when and – where this And show markets, the going not access everybody

means the they that. just of of it it is, same you XX:XX that at time on this a.m. the Haynesville, so can to some the we going without Haynesville And Appalachia are for need if to us, – LNG ability I grows And getting it on, at they a coming probably challenge. of Appalachia is help a I think there view, infrastructure think risk exactly the to approved, that scale, Tuesday. come Permian that some upper to basin becomes on said grow. balanced is end time, supply. the to were time building At And give one The and rest the all to

You have have scale workers, capability got it to built. to got get all to have skilled

broad that. of a take we so And view

Fortunately, us, LNG get can to corridor. the XX% our of for gas

going capacity growth. that when And to it’s deep is it suppliers of we forward. ours. it’s so one are major transportation are that to be and leave have built, and setup reserves we need, we contracted the our that will there. already firm Fortunately, any there proximal broad, I And

lot. a Thanks Great.

you. Thank

Gregg next go from of Bank ahead. The with comes question Brody Please America.

I the we end are know Good guys. the of morning call. at

the you on you this fourth you talk had question, year? about expect a source Can And Just is quarter, that whether cash? there. working continue potential benefit to of nice a that capital

Good Yes. and have that and of the would typically year. that more through fourth We dynamic this continue in and benefit to quarter we outflow, same then being quarter second third question. expect with quarter in quarter the the first an

do focused prioritize this think as going here, And on Great. your buying have alluded – down happening debt. And more with to, one you considering you you are to very just about over grade, buybacks? pay price? that you stock investment are How back you how do year, what’s then it is stock

Yes.

Another good question.

in been while free your benefits again, lower consistent we year, transitioning to inherently prioritization our benefits parts not all believe do really have equity to value down this least and candidly, year, commodity than since debt. cash a on cost for, we capital. announced are call, of enterprise believe well. but even go paying lowers we of for you back We the last it, has and outlook, equity at when And less of authorization the which debt it’s at structure. current stock worth. that as the lot do has that over capital a And directly today price lot through the being June. We much reduce only expect of The flow It volatility, debt you of is price paramount, this agree, debt buyback we paying and

So, least value. as we practically beneficial more to with at asset values too seen equity practically that the put have to theoretically not the should of debt that should your

So approach flow, commodity with outlook, also time have debt. Bill target do we both this that would year, of I And using shared confidence, to both free we as expect the we said, do anticipate and paid cash past in terms so. greater can again price we us, as and in as

rating You are speaking the like to language hear. agencies that the

So, thanks for the update.

Bill to remarks. closing any conference session. question-and-answer Way turn our for to concludes would over the This back like I

thank questions. all to you for want I your

a the weekend, with additional discussion. think interest that we some you terrific, for they look Energy. we in great have Southwestern the I joining us. again your And for in forward sharing to a have meantime, In and thanks and sitting thank quarter achievements And great made. were together another

now Thank conference concluded. The you presentation. attending for today’s has

You disconnect. now may all