SWN earnings:
biz.yahoo.com
Monday July 26, 4:48 pm Eastern Time
Company Press Release
SOURCE: Southwestern Energy Company
Southwestern Energy Company
Announces Results for Second Quarter
1999
FAYETTEVILLE, Ark., July 26 /PRNewswire/ -- Southwestern Energy Company (NYSE: SWN -
news) today announced a net loss of $1.7 million, or $.07 per share, on revenues of $56.0 million for
the second quarter of 1999. This compares to a net loss of $42.1 million, or $1.70 per share, on
revenues of $56.3 million for the same period of 1998. In the second quarter of 1998, the Company
recorded an after-tax, non-cash ceiling test write-down of its oil and gas properties of $40.5 million,
or $1.63 per share. Excluding the effect of the non-cash ceiling test write-down, the company would
have recognized a net loss of $1.6 million, or $.07 per share, in the second quarter of 1998,
approximately even with the Company's 1999 results. Cash flow from operating activities (before
working capital changes) for the second quarter of 1999 was $13.0 million, up from $12.5 million for
the second quarter of 1998.
Net income for the six months ended June 30, 1999 was $7.4 million, or $.30 per share, compared
to $7.5 million, or $.30 per share for the same period in 1998, excluding the non-cash charge.
Revenues for the first six months of 1999 were $134.3 million, compared to $139.3 million for the
first six months of 1998. Cash flow from operating activities (before working capital changes) for the
first six months of 1999 was $33.9 million compared to $36.2 million for the same period of 1998.
''Our results for the first half of 1999 continue to reflect the underlying strength of the integrated
nature of our business. We were able to generate solid financial results despite the low natural gas
commodity price environment we were in and a decline in our production,'' stated Harold M. Korell,
President and Chief Executive Officer of Southwestern. ''Despite these temporary setbacks, we
have continued to focus on the fundamentals that add value and have taken proactive steps to realize
a more competitive cost structure in all of our businesses and will continue to do so in the future.
Overall, I am pleased with the improved efficiencies we are seeing across the Company and continue
to be optimistic about our long-term strategy.''
Drilling Program Replaces Year-To-Date Production
The Company's drilling program added an estimated 16.6 Bcf equivalent of proved oil and gas
reserves in the first six months of 1999, primarily through lower-risk exploration and exploitation
drilling activities in the Arkoma and Permian Basins.
Gas and oil production for the three months ended June 30, 1999, was 8.1 billion cubic feet (Bcf)
equivalent, down from 9.1 Bcf equivalent for the same period in 1998. For the six months ended
June 30, 1999, production was 16.6 Bcf equivalent, down from 19.0 Bcf equivalent for the same
period of 1998. The production declines over the past six months are the result of the combined
effects of lower production from the Company's non-operated properties caused primarily by the
industry slowdown that began last year, reduced demand from the Company's utility systems due to
warm weather, and higher declines than expected from some of the Company's Gulf Coast
properties.
Gas prices for the Company's production averaged $1.91 per thousand cubic feet (Mcf) for the
second quarter of 1999, and $2.19 per Mcf for the first half of 1999, down 18% and 8%,
respectively, from the same periods in 1998. The Company received an average price of $13.70 per
barrel for its oil production during the six months ended June 30, 1999, down slightly from $13.82
per barrel for the same period of 1998.
The effects of the lower production and wellhead prices experienced during the first six months of
1999 were partially offset by an improvement in cash and non-cash expenses for the period.
Operating and general expenses declined $2.7 million for the exploration and production segment
during the first half of 1999 from their levels in 1998, while depreciation, depletion and amortization
expense declined $4.5 million due both to lower production and a lower unit of production rate
resulting from the Company's second quarter 1998 write-down of oil and gas properties.
''We remain optimistic about our drilling program and are pleased that we continue to be able to
replace production with our lower-risk Arkoma and Permian drilling activities,'' said Korell. ''Over
the next 18 months our exploration inventory exposes us to the opportunity for significant reserve
growth and to put us back on the track to production growth.''
Utility and Marketing Segments Continue to Post Solid Results
Operating income for Southwestern's utility systems was $12.3 million in the first six months of 1999,
compared to $11.9 million for the same period in 1998. Despite weather that was 8% warmer than
last year and 17% warmer than normal, the Company's utility segment provided strong operating
results due to reduced operating costs and customer growth. The utility systems delivered 18.0 Bcf
to sales and end-use transportation customers during the six months ended June 30, 1999, down
slightly from 18.2 Bcf for the same period in 1998.
The Company's marketing segment reported gas volumes marketed of 28.4 Bcf in the first six months
of 1999, up 31% from 21.6 Bcf for the same period in 1998. Operating income for this segment
showed similar improvement, increasing to $1.5 million for the first six months of 1999, up from $.8
million for the same period in 1998.
Southwestern Energy Company is an integrated natural gas company whose wholly-owned
subsidiaries are engaged in gas and oil exploration and production, natural gas gathering,
transmission, and marketing, and natural gas distribution. Additional information on the Company can
be found on the Internet at swn.com.
The information in this release includes certain forward-looking statements within the meaning of
Section 21E of the Securities and Exchange Act of 1934. Although the Company believes that its
expectations are based on reasonable assumptions, actual results may differ materially from those in
the forward-looking statements. Factors that could cause actual results to differ materially from those
in the forward-looking statements are described in the Company's documents and reports that are
available from the Securities and Exchange Commission, including the report filed on Form 10-K for
the fiscal year ended December 31, 1998.
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
Statements of Income (Unaudited)
Three Months Six Months
Periods Ended June 30 1999 1998 1999 1998
($ in thousands, except per share amounts)
Operating Revenues
Gas sales $30,715 $32,412 $91,654 $95,294
Gas marketing 21,330 19,504 34,805 34,705
Oil sales 2,312 2,575 3,973 5,344
Gas transportation and other 1,682 1,843 3,827 3,947
56,039 56,334 134,259 139,290
Operating Costs and Expenses
Gas purchases - utility 7,714 3,983 28,074 22,670
Gas purchases - marketing 20,585 19,054 32,673 33,326
Operating and general 14,319 16,612 28,242 31,741
Depreciation, depletion and
amortization 10,321 12,399 20,693 25,438
Write-down of oil and
gas properties --- 66,383 --- 66,383
Taxes, other than income taxes 1,559 1,738 3,107 3,644
54,498 120,169 112,789 183,202
Operating Income (Loss) 1,541 (63,835) 21,470 (43,912)
Interest Expense 4,110 4,010 8,388 8,188
Other Income (Expense) (225) (1,103) (905) (1,976)
Income (Loss) Before Income
Taxes (2,794) (68,948) 12,177 (54,076)
Provision (Benefit) for
Income Taxes
Current (4,620) (1,418) 750 3,888
Deferred 3,530 (25,472) 3,999 (24,978)
(1,090) (26,890) 4,749 (21,090)
Net Income (Loss) $(1,704) $(42,058) $7,428 $(32,986)
Basic Earnings (Loss)
Per Share ($0.07) ($1.70) $0.30 ($1.33)
Weighted Average Common
Shares Outstanding 24,934,012 24,859,789 24,933,966 24,851,447
Diluted Earnings (Loss)
Per Share ($0.07) ($1.70) $0.30 ($1.33)
Diluted Weighted Average
Common Shares Outstanding 24,934,012 24,859,789 24,933,966 24,851,447
Cash Flows From Operations
(Before Working Capital
Changes) $12,991 $12,510 $33,864 $36,226
SOUTHWESTERN ENERGY COMPANY
AND SUBSIDIARIES
Operating Statistics
Three Months Six Months
Periods Ended June 30 1999 1998 1999 1998
Gas Production (Bcf)
Affiliated sales 1.3 2.4 4.5 6.9
Unaffiliated sales 5.9 5.6 10.4 9.8
Total 7.2 8.0 14.9 16.7
Average price per Mcf $1.91 $2.33 $2.19 $2.39
Oil production (MBbls) 153 195 290 387
Average price per Bbl $15.08 $13.21 $13.70 $13.82
Gas marketing (Bcf) 15.7 11.8 28.4 21.6
Distribution deliveries (Bcf):
End-use customers 5.4 5.5 18.0 18.2
Off-system deliveries --- 0.1 2.0 0.2
Average sales rate $6.61 $6.19 $5.44 $5.40
Average number of customers 177,087 174,694 178,377 176,049
Degree days 226 311 2,023 2,198
Capital Expenditures By Segment
Exploration and production $13,034 $14,513 $25,217 $21,658
Gas distribution 1,810 2,767 3,185 4,433
Other (24) 204 132 323
$14,820 $17,484 $28,534 $26,414
Condensed Balance Sheets (Unaudited)
Current assets $51,081 $49,562
Investments 12,960 12,676
Property, plant and equipment, net 552,500 536,660
Other assets 11,056 12,785
Total assets $627,597 $611,683
Current liabilities $40,165 $47,951
Long-term debt, less current maturities 267,800 259,071
Deferred income taxes 125,403 114,270
Other liabilities 3,668 4,432
Shareholders' equity 190,561 185,959
Total liabilities and shareholders' equity $627,597 $611,683
SOURCE: Southwestern Energy Company
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