SWN
#Yes, specifically to the performance revisions, as you look at the SEC pricing, rearward pricing, you have a lot of those wells come off of the reserve deck.
So as you go forward, there's a mechanism that brings those back on.
They come back on as PDP, and so that's the basis of some of those performance revisions.
The performance revisions we continue to in Northeast Appalachia have to do with the production mechanisms that we've got.
Those wells continue by their production regime to outperform our decline base that we've got in the reserve system.
And so those are the continued performance revisions that you see to the positive up there.
Sure, the vast majority of those are performance-based.
The price-based were negative in periods.
So those were against your performance revisions to the positive.
Other pieces of revision that we have that you might be seeing is we had significant operating expense benefits on the performance that were rolled up to a performance revision.
The big driver of those in West Virginia had to do with improved gathering processing fees that we gained at the beginning of last year, and then we had also talked about an aggressive assault on margin improvement there, that has yielded quite a bit of success in driving costs out of our system; re-forecasting those wells with that lower operating expense is a significant gain on not only additional value created in period but an extension of tail reserves, that those wells have longer lives.
Economic success.
Without a doubt, our best well we've ever drilled in the Fayetteville is the Moorefield well, as far as EUR.
We're looking, we've got some very long laterals.
We're just looking to prove up areas.
We've moved out a few that I would call step-out areas, but just testing to see the economics of the play there.
We're very confident that the Moorefield works.
We've determined which is where to land the well optimally, and we've added more and more sand trying to make better and better wells just like we've done everywhere else, again, with the idea of creating economic value.
We can usually tell within 100 days of production, get an early indication of EUR.
Initial rate does give us, the 30-day rate will give us the amount of water that comes back to Moorefield generally has more water.
We're able to determine fairly quickly about economics and whether we're going to expand the program based on the rates that we have after we bring the wells on.
And <UNK>, you're probably seen some of the public data we have on that but the Moorefield as <UNK> said has outperformed a standard Fayetteville well on rate, reserves, little bit higher cost but not significant, so that is driving those economics, and an actual number, a 30-day test or 180, all just depends on where we are and what those costs are.
But it's really back to <UNK>'s point, it's all driven by economics and whether that's an initial rate or overall value driven based on the EURs and overall costs, that's what we're driving towards ultimately.
And there's a flow-through improvement because those gas gets gathered by our midstream business and taking on to market, so the benefits continue through all the way to the market.
And one of the things about having a program in the Fayetteville this year that's more extensive that really lowers our cost by able to reuse the water that does come out of these Moorefield wells, and so that improves the economics even more.
This is <UNK>, <UNK>.
We use PVI as a metric and it's bringing the value forward, if we got no additional reserve, adds anywhere from $0.10 to $0.12 of PVI just by again bringing on a well that's averaging 17 million a day versus a well that would average 5 million a day and stay flat for quite a while.
The big change in EUR and partial in the rates but even more on EUR that we expect is the fact that we're putting more sand, tighter stage spacing, and touching more rock.
That's why we think the EURs, we're confident they will increase.
Bringing the value forward through our flow techniques again adds, it's accretive and it just brings value forward, it helps our PVI metrics.
Sure, <UNK>, this is <UNK>.
On the natural gas macro, clearly the 2017 curve was negatively impacted by primarily weather-related influences, extremely warm winter again.
That being said, there's an emerging consensus that the supply/demand balance normalized for weather is tightening year over year, somewhere to the tune of three to five Bcf a day.
And I believe there's actually a reason to have some positive outlook that we will go back to a storage position maybe middle of the year that's closer to the five-year curve.
And so it portends some strengthening there.
NGL prices on the macro level, again, there's a positive outlook really on the basis of the anticipated demand coming online in the Gulf Coast, Mont Belvieu area, to the tune of 600,000 barrels a day or so.
That coupled with some of the export capacity that's come on has really lifted the NGL complex year over year.
Our NGL realizations for the first quarter this year is going to be double what they were the quarter before, or the year before.
And so with our access to the Belvieu area with the capacity out of Southwest Appalachia, we fully intend to ride that and capture some of that uplift.
Yes, hi, <UNK>, this is <UNK>.
We've got $40 million of bonds due in 2017, and if you add up the midpoints of cash flow guidance that we've given plus that equity raised, that's a number that's above our capital investments, so certainly could be sourced from that.
But just an overall theme is we're not going to do any harm to the balance sheet on leverage or anything like that with outspend or whatnot.
So we're going to source from cash flow and the cash we have on hand, but for that $40 million, we can easily take care of that within our cash flow balance or cash flow generation for the year.
And then certainly we've got some bonds, sometime in January, February of 2018 comes most of them, some later in the year.
And we'll think about those and think about our 2020s.
We've got, between bank debt and bonds, we've got a lot of flexibility is the point.
A lot of options on how we can address that.
We'll look at the overall complex as we go through, and to the extent we change our capital program based on economic factors, any of that cash flow can be utilized for debt, and we'll just manage that throughout the year.
Yes, those PDP F&Ds certainly have seen the benefit of those coming down over the last couple years.
And you see that with continued focus and really the lion's share of our capital allocation going to our Appalachian assets.
We lay out a magnitude of what those look like between the different types of wells we can drill in West Virginia and then Northeast Appalachia as well.
Certainly see that in, just call it in the $0.40 to $0.60 range, $0.40 to $0.70 range for those assets in particular.
So certainly continue to focus on that, as that drives those economics.
The second part of your question I missed at this point.
Yes, those breakevens as <UNK> mentioned with NGL pricing looking to be maybe two times of last year, certainly that has a big driver on the economics of the West Virginia assets.
A significant increase there, or that type of increase really pushes down that breakeven from a natural gas perspective and that better well performance along with just the pricing we are at today, drives up our inventory as well.
It does reflect the company's guidance on an in-service date for midyear 2017.
And then as <UNK> had mentioned earlier, we do have an active hedging program now that will ensure that we're able to lock in differentials consistent with the plan.
Thank you, and thanks for all the questions and we're happy to answer any other ones along the way.
Before I go through my closing comments, I do want to say that I trust that we've cleared up any concerns about any outspend of capital and any concerns about our commitment to the discipline that we have delivered and shown throughout this entire year of 2016 through some very tough times.
But we've emerged from that, with that same level of rigor and discipline.
2016 was a transformational year for our Company and as you can see, we have much to be excited about, from that work and for 2017 and beyond.
We've already begun building our momentum created through our lower cost structure, again, economic and capital allocation discipline, operational and technical excellence that's growing by the day, and ability to reach all key high-value markets for our products, and the focus on economics ahead of production growth from our vast assets.
We are one of the nation's largest suppliers and we take a lot of pride in that, and therefore managing our business with rigor and discipline around economics and driving economic value lets us stay in that position.
Our relentless focus on creating long-term economic value for our shareholders drives everything we do, and I hope that we've been able to give you some color on that, and we look forward to sharing more of these results, and I know the wells that everyone's excited about especially, we look forward to getting those out as well.
And we look forward to continue to talk to you about other areas where we've reached to add value [plus] and increase our performance.
So thanks to all of you for joining us on our call today and we hope you have a great weekend.
