Natural gas driller Southwestern Energy recorded a $488.1 million second quarter loss, but company officials said it was largely due to a non-cash charge on properties whose value declined from lower natural gas prices. Also, the CEO of the largest driller in Arkansas' Fayetteville Shale play said triple-digit temperatures were negatively impacting production.
Excluding the non-cash impairment, Southwestern said its second quarter net income would have leveled at $90.8 million. One year ago, the Houston-based energy company posted net income of $167.5 million.
Revenues for Southwestern Energy fell from $765.16 million a year ago to $599.7 million at the end of June 2012.
“The second quarter was challenging for any company drilling for natural gas,” said CEO Steve Mueller. “Our costs continue to be low, with all-in cash operating costs of $1.20 per Mcfe for the second quarter of 2012 and our Fayetteville and Marcellus drilling programs continue to provide a meaningful drilling inventory at the prices we see going forward.”
Mueller said that “extremely high” temperatures in central Arkansas have impacted production in the north-central Arkansas drilling region.
“The company estimates that its production from the field has been reduced by approxim
ately 0.5 to 1.0 Bcf due to the extreme heat. Since June 30, the company’s gross producing rate has returned to approximately 2 Bcf per day,” Mueller reported.
The company is currently utilizing 11 drilling rigs in its Fayetteville Shale play, including 7 that are capable of drilling horizontal wells.
Mueller also commented on Southwestern's 563,000 net acres in the Lower Smackover Brown Dense formation in southern Arkansas and northern Louisiana. The Brown Dense is an experimental horizontal drilling region tapping the area's potential oil reserves.
“Our New Ventures activities in the Brown Dense play are providing encouraging results and we are excited about the other ideas we are pursuing,” Mueller said.
The energy driller has previously tested 2 wells in south Arkansas' Brown Dense region and on Thursday (Aug. 2), the company disclosed it had added 2 additional wells in northern Louisiana to its testing for both oil and gas. It said it expected to sell some of the oil and gas from one of its Louisiana drill sites in the fourth quarter of 2012.
Southwestern Energy also announced that its CFO Greg D. Kerley will retire at the end of the third quarter. R. Craig Owen will be promoted to Chief Financial Officer effective October 1, 2012.