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Southwestern Energy Company Loses $1.8B

WHEELING — Southwestern Energy Co., which now controls virtually all Marcellus and Utica shale drilling lease agreements in Ohio and Brooke counties, lost $1.8 billion during the first six months of 2016.

Company leaders, however, believe the firm remains destined for a bright future.

A global price slowdown during the last two years affected Southwestern and virtually every oil and natural gas production firm in the world, resulting in fewer active drilling rigs. Oilfield services giant Baker Hughes shows Ohio and West Virginia now feature only 23 active rigs, which compares to the 70 that worked in the two states in July 2014.

However, natural gas prices have increased to about $2.80 per 1,000 cubic-foot unit from about $1.70 per unit in March. As prices continue to recover, officials with drillers such as Southwestern and Antero Resources believe their companies are well-positioned to take advantage.

Last summer, Southwestern President and CEO Bill Way said the company planned to invest $24 billion to produce oil and natural gas in West Virginia over the next two decades. Company officials continue to renew the five-year leases they acquired from Chesapeake for an additional five-year period.

Speaking about the company’s activity for the April-June period, Way acknowledged his company lost $620 million during this time frame. However, the losses were less than the $1.2 billion from the first three months of the year.

“As promised, we took significant and deliberate steps this quarter to strengthen our balance sheet that, when combined with the continued outperformance by our assets, positions us to reinitiate drilling and completion activities and accelerate our path to value-adding growth,” Way said.

“We are excited as we drive into the second half of the year and build momentum toward the future.”

For its West Virginia and western Pennsylvania properties, Southwestern produced 8 percent more natural gas during the April-June period compared to the same time in 2015. The company placed 11 new wells into production in this operating area during the quarter.

“The second quarter was a defining time at Southwestern Energy, where we delivered on our strategic commitments of strengthening our balance sheet, enhancing margins and optimizing our portfolio,” Way added.

For the rest of this year in West Virginia and Pennsylvania, Southwestern plans to drill up to 15 new wells, while fracking up to 24 of them. This is because there are some wells that have been drilled but are still awaiting fracking.

In June, Denver-based Antero announced it would pay $450 million to acquire 55,000 acres of drilling rights in Wetzel, Tyler and Doddridge counties from Southwestern. The company anticipates spending $8 million to $9.4 million to complete each well in this acreage.

For the second quarter of 2016, Antero increased its daily natural gas production by 19 percent over the previous year and increased its liquids yields by 10 percent during the same period.

“We are excited about the recently announced acquisition adding quality net acres to further expand our consolidated position in the core of the Marcellus. Not only is the acreage primarily located in what we refer to as the ‘high-graded’ core area of the Marcellus, but the acquisition delivers all of the key attributes that Antero seeks in acquisitions,” Antero Chairman and CEO Paul Rady said. “Going forward, we believe we are well-positioned to achieve further consolidation in Appalachia during the downturn given our continuous operating improvements that further amplify our low-cost development competitive advantage.”

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