Southwestern Energy Earnings 2021-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

swn-20210331

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

For the quarterly period ended March 31, 2021

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities

Exchange Act of 1934

For the transition period from ________ to ________

Commission file number: 001-08246

Southwestern Energy Company

(Exact name of registrant as specified in its charter)

Delaware

71-0205415

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

10000 Energy Drive

Spring, Texas 77389

(Address of principal executive offices)(Zip Code)

(832) 796-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par Value $0.01

SWN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Outstanding as of April 27, 2021
Common Stock, Par Value $0.01						676,850,759

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SOUTHWESTERN ENERGY COMPANY

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021


PART I – FINANCIAL INFORMATION			Page

Item 1.	Financial Statements		3
	Consolidated Statements of Operations		3
	Consolidated Statements of Comprehensive Income (Loss)		4
	Consolidated Balance Sheets		5
	Consolidated Statements of Cash Flows		6
	Consolidated Statements of Changes in Equity		7
	Notes to Consolidated Financial Statements		8
		Note 1. Basis of Presentation	8
		Note 2. Acquisition	8
		Note 3. Restructuring Charges	10
		Note 4. Revenue Recognition	11
		Note 5. Cash and Cash Equivalents	12
		Note 6. Natural Gas and Oil Properties	12
		Note 7. Earnings per Share	13
		Note 8. Derivatives and Risk Management	14
		Note 9. Reclassifications From Accumulated Other Comprehensive Income (Loss)	22
		Note 10. Fair Value Measurements	22
		Note 11. Debt	24
		Note 1 2 . Commitments and Contingencies	27
		Note 1 3 . Income Taxes	28
		Note 1 4 . Pension Plan and Other Postretirement Benefits	28
		Note 15. Long-Term Incentive Compensation	29
		Note 1 6 . Segment Information	32
		Note 1 7 . New Accounting Pronouncements	33
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		33
	Results of Operations		36
	Liquidity and Capital Resources		43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		47
Item 4.	Controls and Procedures		48

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		49
Item 1A.	Risk Factors		49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		49
Item 3.	Defaults Upon Senior Securities		49
Item 4.	Mine Safety Disclosures		49
Item 5.	Other Information		49
Item 6.	Exhibits		49

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

All statements, other than historical fact or present financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements that address activities, outcomes and other matters that should or may occur in the future, including, without limitation, statements regarding the financial position, business strategy, production and reserve growth and other plans and objectives for our future operations, are forward-looking statements. Although we believe the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements

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are not guarantees of future performance. We have no obligation and make no undertaking to publicly update or revise any forward-looking statements, except as may be required by law.

Forward-looking statements include the items identified in the preceding paragraph, information concerning possible or assumed future results of operations and other statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) identified by words such as “anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,” “potential,” “should,” “could,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “forecast,” “model,” “target” or similar words.

You should not place undue reliance on forward-looking statements. They are subject to known and unknown risks, uncertainties and other factors that may affect our operations, markets, products, services and prices and cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with forward-looking statements, risks, uncertainties and factors that could cause our actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

•the timing and extent of changes in market conditions and prices for natural gas, oil and natural gas liquids (“NGLs”), including regional basis differentials and the impact of reduced demand for our production and products in which our production is a component due to governmental and societal actions taken in response to the COVID-19 pandemic;

•our ability to fund our planned capital investments;

•a change in our credit rating, an increase in interest rates and any adverse impacts from the discontinuation of the London Interbank Offered Rate (“LIBOR”);

•the extent to which lower commodity prices impact our ability to service or refinance our existing debt;

•the impact of volatility in the financial markets or other global economic factors, including the impact of COVID-19;

•difficulties in appropriately allocating capital and resources among our strategic opportunities;

•the timing and extent of our success in discovering, developing, producing and estimating reserves;

•our ability to maintain leases that may expire if production is not established or profitably maintained;

•our ability to realize the expected benefits from acquisitions, including the Merger (as defined below);

•integration of operations and results subsequent to the Merger;

•our ability to transport our production to the most favorable markets or at all;

•availability and costs of personnel and of products and services provided by third parties;

•the impact of government regulation, including changes in law, the ability to obtain and maintain permits, any increase in severance or similar taxes, and legislation or regulation relating to hydraulic fracturing, climate and over-the-counter derivatives;

•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;

•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; and

•any other factors listed in the reports we have filed and may file with the Securities and Exchange Commission (“SEC”).

Should one or more of the risks or uncertainties described above or elsewhere in this Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. We specifically disclaim all responsibility to update publicly any information contained in a forward-looking statement or any forward-looking statement in its entirety and therefore disclaim any resulting liability for potentially related damages.

All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the three months ended March 31,
(in millions, except share/per share amounts)		2021		2020
Operating Revenues:
Gas sales		$	464	$	248
Oil sales		81		52
NGL sales		173		50
Marketing		352		239
Other		2		3
		1,072		592
Operating Costs and Expenses:
Marketing purchases		356		248
Operating expenses		250		193
General and administrative expenses		38		26
Montage merger-related expenses		1		—
Restructuring charges		6		10

Depreciation, depletion and amortization		96		113
Impairments		—		1,479
Taxes, other than income taxes		24		13
		771		2,082
Operating Income (Loss)		301		(1,490)
Interest Expense:
Interest on debt		50		40
Other interest charges		3		2
Interest capitalized		(22)		(23)
		31		19

Gain (Loss) on Derivatives		(191)		339
Gain on Early Extinguishment of Debt		—		28
Other Income, Net		1		1

Income (Loss) Before Income Taxes		80		(1,141)
Provision (Benefit) for Income Taxes:
Current		—		(2)
Deferred		—		408
		—		406
Net Income (Loss)		$	80	$	(1,547)


Earnings (Loss) Per Common Share:
Basic		$	0.12	$	(2.86)
Diluted		$	0.12	$	(2.86)

Weighted Average Common Shares Outstanding:
Basic		675,385,145		540,308,491
Diluted		679,867,825		540,308,491

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	For the three months ended March 31,
(in millions)		2021		2020
Net income (loss)		$	80	$	(1,547)

Change in value of pension and other postretirement liabilities:
Amortization of prior service cost and net loss included in net periodic pension cost (1)		—		—

Comprehensive income (loss)		$	80	$	(1,547)

(1)The amortization of prior service costs and net loss along with corresponding tax benefits for the three months ended March 31, 2021 and March 31, 2020 were immaterial.

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2021		December 31, 2020

ASSETS	(in millions)
Current assets:
Cash and cash equivalents	$	4	$	13
Accounts receivable, net	400		368
Derivative assets	157		241
Other current assets	41		49
Total current assets	602		671
Natural gas and oil properties, using the full cost method, including $1,488 million as of March 31, 2021 and $1,472 million as of December 31, 2020 excluded from amortization	27,532		27,261

Other	493		523
Less: Accumulated depreciation, depletion and amortization	(23,741)		(23,673)
Total property and equipment, net	4,284		4,111
Operating lease assets	155		163
Deferred tax assets	—		—
Other long-term assets	206		215
Total long-term assets	361		378
TOTAL ASSETS	$	5,247	$	5,160
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	207	$	—
Accounts payable	639		573
Taxes payable	67		74
Interest payable	55		58

Derivative liabilities	338		245
Current operating lease liabilities	41		42
Other current liabilities	23		20
Total current liabilities	1,370		1,012
Long-term debt	2,812		3,150
Long-term operating lease liabilities	111		117
Long-term derivative liabilities	168		183
Pension and other postretirement liabilities	40		45
Other long-term liabilities	160		156
Total long-term liabilities	3,291		3,651
Commitments and contingencies (Note 12)
Equity:
Common stock, $0.01 par value; 1,250,000,000 shares authorized; issued 721,195,122 shares as of March 31, 2021 and 718,795,700 shares as of December 31, 2020	7		7

Additional paid-in capital	5,102		5,093
Accumulated deficit	(4,283)		(4,363)
Accumulated other comprehensive loss	(38)		(38)
Common stock in treasury, 44,353,224 shares as of March 31, 2021 and December 31, 2020	(202)		(202)
Total equity	586		497
TOTAL LIABILITIES AND EQUITY	$	5,247	$	5,160

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the three months ended March 31,
(in millions)	2021		2020
Cash Flows From Operating Activities:
Net income (loss)	$	80	$	(1,547)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization	96		113
Amortization of debt issuance costs	2		1
Impairments	—		1,479
Deferred income taxes	—		408
(Gain) loss on derivatives, unsettled	169		(246)
Stock-based compensation	—		1
Gain on early extinguishment of debt	—		(28)


Change in assets and liabilities:
Accounts receivable	(33)		53
Accounts payable	33		(86)
Taxes payable	(8)		(6)
Interest payable	(2)		1
Inventories	9		8
Other assets and liabilities	1		9
Net cash provided by operating activities	347		160

Cash Flows From Investing Activities:
Capital investments	(227)		(228)
Proceeds from sale of property and equipment	1		—
Other	(1)		—
Net cash used in investing activities	(227)		(228)

Cash Flows From Financing Activities:

Payments on long-term debt	—		(52)
Payments on revolving credit facility	(923)		(500)
Borrowings under revolving credit facility	790		615
Change in bank drafts outstanding	7		5




Cash paid for tax withholding	(3)		—

Net cash provided by (used in) financing activities	(129)		68

Decrease in cash and cash equivalents	(9)		—
Cash and cash equivalents at beginning of year	13		5
Cash and cash equivalents at end of period	$	4	$	5

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Common Stock in Treasury			Total
	Shares Issued	Amount								Shares	Amount

	(in millions, except share amounts)
Balance at December 31, 2020	718,795,700	$	7	$	5,093	$	(4,363)	$	(38)	44,353,224	$	(202)	$	497
Comprehensive income:
Net income	—	—		—		80		—		—	—		80
Other comprehensive income	—	—		—		—		—		—	—		—
Total comprehensive income	—	—		—		—		—		—	—		80
Stock-based compensation	—	—		—		—		—		—	—		—

Issuance of restricted stock	10,067	—		—		—		—		—	—		—
Cancellation of restricted stock	(405)	—		—		—		—		—	—		—
Restricted units granted	2,136,882	—		8		—		—		—	—		8

Performance units vested	1,001,505	—		4		—		—		—	—		4
Tax withholding – stock compensation	(748,627)	—		(3)		—		—		—	—		(3)
Balance at March 31, 2021	721,195,122	$	7	$	5,102	$	(4,283)	$	(38)	44,353,224	$	(202)	$	586


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Common Stock in Treasury			Total
	Shares Issued	Amount								Shares	Amount

	(in millions, except share amounts)
Balance at December 31, 2019	585,555,923	$	6	$	4,726	$	(1,251)	$	(33)	44,353,224	$	(202)	$	3,246
Comprehensive income:
Net loss	—	—		—		(1,547)		—		—	—		(1,547)
Other comprehensive income	—	—		—		—		—		—	—		—
Total comprehensive loss	—	—		—		—		—		—	—		(1,547)
Stock-based compensation	—	—		1		—		—		—	—		1

Issuance of restricted stock	12,397	—		—		—		—		—	—		—
Cancellation of restricted stock	(167,130)	—		—		—		—		—	—		—
Treasury stock	—	—		—		—		—		—	—		—
Restricted units granted	1,005,976	—		1		—		—		—	—		1
Tax withholding – stock compensation	(383,731)	—		—		—		—		—	—		—
Balance at March 31, 2020	586,023,435	$	6	$	4,728	$	(2,798)	$	(33)	44,353,224	$	(202)	$	1,701

Price	2.04	EPS	2
Shares	540	P/E	1
MCap	1,103	P/FCF	1
Net Debt	2,263	EBIT	733
TEV	3,366	TEV/EBIT	5
TTM 2019-09-30, in MM, except price, ratios

10-Q	2021-03-31	Filed 2021-04-29
10-K	2020-12-31	Filed 2021-03-01
10-Q	2020-09-30	Filed 2020-10-29
10-Q	2020-06-30	Filed 2020-07-31
10-Q	2020-03-31	Filed 2020-04-30
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-10-25
10-Q	2019-06-30	Filed 2019-08-06
10-Q	2019-03-31	Filed 2019-04-25
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-10-25
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-07
10-K	2018-03-01	Filed 2018-03-01
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-04-27	Filed 2017-04-27
10-K	2016-12-31	Filed 2017-02-23
10-Q	2016-09-30	Filed 2016-10-20
10-Q	2016-06-30	Filed 2016-07-21
10-Q	2016-03-31	Filed 2016-04-21
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-10-22
10-Q	2015-06-30	Filed 2015-07-27
10-Q	2015-03-31	Filed 2015-04-23
10-K	2014-12-31	Filed 2015-02-26
10-Q	2014-09-30	Filed 2014-10-23
10-Q	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-27
10-Q	2013-09-30	Filed 2013-10-31
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-21
10-Q	2012-09-30	Filed 2012-11-01
10-Q	2012-06-30	Filed 2012-08-02
10-Q	2012-03-31	Filed 2012-05-03
10-K	2012-02-27	Filed 2012-02-28
10-Q	2011-09-30	Filed 2011-10-27
10-Q	2011-06-30	Filed 2011-07-28
10-Q	2011-03-31	Filed 2011-04-28
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-09-30	Filed 2010-10-28
10-Q	2010-06-30	Filed 2010-08-05
10-Q	2010-03-31	Filed 2010-04-29
10-K	2009-12-31	Filed 2010-02-25

8-K	2020-11-13
8-K	2020-11-05
8-K	2020-10-29
8-K	2020-10-08
8-K	2020-08-27
8-K	2020-08-18
8-K	2020-08-16
8-K	2020-08-13
8-K	2020-08-12
8-K	2020-07-30
8-K	2020-06-08
8-K	2020-06-04
8-K	2020-05-19
8-K	2020-04-30
8-K	2020-02-27
8-K	2020-01-29
8-K	2019-10-24
8-K	2019-10-08
8-K	2019-08-06
8-K	2019-06-20
8-K	2019-05-21
8-K	2019-04-25
8-K	2019-02-28
8-K	2019-02-05
8-K	2018-12-03
8-K	2018-10-25
8-K	2018-09-28
8-K	2018-09-17
8-K	2018-08-30
8-K	2018-08-02
8-K	2018-06-27
8-K	2018-05-25
8-K	2018-04-26
8-K	2018-04-26
8-K	2018-03-07
8-K	2018-03-01
8-K	2018-02-26
8-K	2018-02-08
8-K	2018-01-12

EX-31.1	swn-20210331xex311.htm
EX-31.2	swn-20210331xex312.htm
EX-32.1	swn-20210331xex321.htm
EX-32.2	swn-20210331xex322.htm
EX-95.1	swn-20210331xex951.htm

SWN 10Q Quarterly Report

Southwestern Energy Earnings 2021-03-31