Replies to This Discussion

Permalink Reply by The_Baron on February 15, 2012 at 5:46

I imagine with $2 gas they will need to slow down... oil or not its going to take some cash flow to fund the LSBD.

Permalink Reply by flex auger on February 15, 2012 at 6:36

Correct, I believe they announced a 200 million cut back in capital expenditures already. I wouldnt be surprized if that doubled. They have not laid any rigs down yet, they have not slowed down on hiring yet although rumblings about a tap on the brakes has been heard.

Permalink Reply by Matthew Kable on February 15, 2012 at 6:56

True enough... SWN will need cash to fund the LSBD if the economics even pan-out.  BUT, that will be mostly a problem to face in 2013-2014, and beyond.  The company has already capped (and even backtracked on) the number of development wells that they plan for 2012.  If NG stays low, it would not suprise if they accelerate the already announced shifting of some Fayetteville rigs to the Marcellus, LSBD, or elsewhere if it makes sense.

Oh, and then there's always the monetization of their Fayetteville mid-stream assets they keep talking about. I keep wondering about that one.

 

Permalink Reply by Skip Peel - Mineral Consultant on February 15, 2012 at 8:53

SWN is the only E&P in their cohort with 100% of production in gas.  Their stunted cash flow will limit their ability to capitalize their other development opportunities.

Permalink Reply by Matthew Kable on February 17, 2012 at 16:42

SWN's midstream assets consist basically of local NG gathering lines and compression facilities in the Fayetteville Shale play.  SWN collects gas from their own wells and also from other operators, and moves it to the major transmission pipelines.  Take a look at slide #12 from SWN's most recent investor presentation for a better explanation.

 

 http://www.swn.com/investors/LIP/latestinvestorpresentation.pdf

 

Regards,

MK