Southwestern Energy Company Annual Report 2014

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FY2014 Annual Report · Southwestern Energy Company

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V+ Prism

SOUTHWESTERN ENERGY COMPANY

2014 ANNUAL REPORT

S
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10000 Energy Drive
Spring, TX 77389-4954 / 832.796.4700

Mid strea m Servic es
Southwest Appalachia
Northeast Appalachia
New Ventures
Fayetteville

3/20/15 8:36 PM

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The Right People doing the
Right Things, wisely investing
the cash flow from the underlying
Assets will create Value+ ®

Forward-looking statements: This annual report contains forward-looking statements regarding Southwestern Energy
Company’s future plans and performance based on assumptions the Company believes are reasonable. A number of
factors could cause actual results to differ materially from these statements. For further information regarding these factors,
see “Cautionary Statement About Forward-Looking Statements” in Management’s Discussion and Analysis of Financial
Condition and Results of Operations and “Risk Factors” in the Company’s 2014 Form 10-K.

Certifications: In 2014, SWN’s Chief Executive Officer (CEO) provided to the NYSE the annual CEO certification regarding
SWN’s compliance with the NYSE’s corporate governance listing standards. In addition, SWN’s CEO (principal executive officer)
and SWN’s principal financial officer filed with the United States Securities and Exchange Commission (SEC) all
certifications required in SWN’s SEC reports for fiscal year 2014.

ANNUAL MEETING

May 19, 2015 at 11:00 a.m. CDT
Hilton Houston North Hotel, 12400 Greenspoint Drive, Houston, TX 77060

INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP, Houston, TX

INVESTOR RELATIONS

Michael E. Hancock, Director–Investor Relations

WEBSITE

www.swn.com

TRANSFER AGENT

Computershare Trust Co., N.A.
P.O. Box 43036, Providence, RI 02940
800.446.2617

By overnight delivery
250 Royall Street, Canton, MA 02021

Direct Stock Purchase and Dividend Reinvestment Plan
Computershare Trust Co., N.A.
P.O. Box 43081, Providence, RI 02940
800.446.2617

CORPORATE
HEADQUARTERS

Southwestern Energy Company
10000 Energy Drive, Spring, TX 77389-4954
832.796.4700

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NON-GAAP
RECONCILIATIONS

Net income (loss)
Add back (deduct):
Loss (Gain) on certain derivatives (net of taxes)
Adjustments due to discrete tax items
Transaction costs (net of taxes)

2014
$ 924

Adjusted Net Income (in millions)

2013
$ 704

2012
)
$ (707

2011
$ 638

2010
$ 604

)
(80
)
(46
3

)
(13
13
--

2
--
--

)
(4
--
--

)
(7
--
--

Impairment of natural gas and oil
properties (net of taxes)

Adjusted net income

--
$ 801

--
$ 704

1,192
$ 487

--
$ 634

--
$ 597

Diluted earnings per share
Add back (deduct):
Loss (Gain) on certain derivatives (net of taxes)
Adjustments due to discrete tax items

Transaction costs (net of taxes)
Impairment of natural gas and oil
properties (net of taxes)

Adjusted diluted earnings per share

Net income (loss)
Add back (deduct):

Net interest expense
Provision (benefit) for income taxes
Depreciation, depletion and amortization
Loss (Gain) on derivatives excluding
derivatives, settled

Adjusted EBITDA

Net cash provided by operating activities
Add back (deduct):

Change in operating assets and liabilities

Net cash flow

2014
$ 2.62

Adjusted Diluted Earnings Per Share

2013
$ 2.00

2012
$ (2.03
)

2011

2010

1.82

1.73

(0.23
)
(0.13
)
0.01

(0.04
)
(0.04
)
--

--
--
--

(0.01
)
--
--

)

(0.03
--
--

--
$ 2.27

--
$ 2.00

3.42
1.39

--
1.81

--
1.70

Adjusted EBITDA (in millions)

2014
$ 924

2013
$ 704

2012
$ (707
)

2011
$ 638

2010
$ 604

59
525
942

42
486
787

35
)
(443
2,751

24
413
705

26
392
590

(130
)
$ 2,320

(21
)
$ 1,998

2
$ 1,638

(6
)
$ 1,774

(10
)
$ 1,602

Net Cash Flow (in millions)

2014
$ 2,335

2013
$ 1,909

2012
$ 1,654

2011
$ 1,740

2010
$ 1,643

(65
)
$ 2,270

76
$ 1,985

(55
)
$ 1,599

26
$ 1,766

(63
)
$ 1,580

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SWN
201 4
ANN UAL

RE PORT1

2014 Highlights
2014 was a year where Southwestern
Energy again exhibited its operational
excellence by delivering outstanding
results while, at the same time,
building for an even brighter future by
acquiring another core asset to
enhance the already strong portfolio.

SHAREHOLDER
FOCUS

PRODUCTION &
RESERVE GROWTH

In 2014, adjusted
net income(1) of
$2.27 per share
and net cash flow(1)
of $2.3 billion
were all-time highs,
representing an
increase of 14%
for both metrics
compared to 2013.

In 2014,
production was
again at an
all-time record
of 768 Bcfe, or
approximately
2.1 Bcfe per day,
an increase of 17%
from 2013 levels.
Additionally, in
2014 total proved
reserves increased
to the highest
level in the
Company’s history,
growing by 54%
to approximately
10.7 Tcfe and
the Company
achieved a reserve
replacement rate
of 591%, including
reserve revisions.

SIGNIFICANT
GROWTH IN
NORTHEAST
APPALACHIA

The Northeast
Appalachia
division achieved
gross operated
production of
over 1.0 Bcf per
day at year-end
2014 compared
to 700 MMcf per
day at year-end
2013. Production
increased 69% to
254 Bcf in 2014,
compared to
151 Bcf in 2013,
while total
proved reserves
increased 63% to
approximately
3.2 Tcf, compared
to 2.0 Tcf in 2013.

ACQUISITION
OF 443,000 NET
ACRES IN
SOUTHWEST
APPALACHIA

Through strategic
acquisitions
that closed in
December 2014
and January 2015,
we created a
new platform in
West Virginia and
southwest
Pennsylvania to
deliver even more
per-share value for
our stockholders
in the future.
These transactions
added an
estimated 5,350
drilling locations
and 45+ Tcfe of net
resources among
multiple zones,
which include the
Upper Devonian,
Marcellus and
Utica shales.

LOW COST
STRUCTURE

Our cost structure
continues to be
one of the lowest
in the industry,
with an all-in cash
operating cost of
$1.32 per Mcfe in
2014, compared to
$1.25 per Mcfe in
2013. All-in cash
operating cost per
Mcfe is defined
as the per Mcfe
sum of our
E&P segment’s
lease operating
expenses, taxes
(other than
income taxes),
general and
administrative
expenses, and net
interest expense.

(1) For the Company’s reconciliation of adjusted net income and net cash flow to Generally
Accepted Accounting Principles, see “Non-GAAP Reconciliations” on the inside back cover

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Because of its many complexities,

All of this added color and

our industry is often seen only as a
“white” light. We provide feedstock
to manufacturing and energy to
homes and businesses, but the energy
sources are often not differentiated.
That is sufficient illumination for many
but, when applied to investing, it is
like living in a black and white world
compared to the vibrant colors
that might be distinguished when
the correct prism is applied.

Southwestern Energy’s spectrum
of colors broadened and brightened
in 2014. New records were set. Total
proved reserves increased 54% and
exceeded 10 trillion cubic feet for the
first time in our history. In addition,
production increased 17% and both
adjusted net income(1) and net cash
flow(1) increased 14%. This was
accomplished in a year when realized
natural gas price increased only 2%
for our company. We expanded our
exploration portfolio with the addition
of more than 375,000 acres in
northwest Colorado and at the end of
the year added another large focus
area in northern West Virginia
and southwest Pennsylvania. This
acquisition is in one the best geologic
areas in North America and almost
doubles the potential drilling
inventory for our company.

richness to Southwestern Energy
could not be recognized without
the prism. Our Southwestern Energy
prism begins with the goal every year
to create value for the shareholder
that no other company can match.
We call this uniqueness Value+.
It is a simple concept that creates
a startling spectrum of potential
when combined with curiosity
to understand the anomalies
encountered every day and an
insistence to only invest in economic
projects that deliver $1.30 discounted
at 10% for every dollar invested.

The face of our prism is polished

by our focus on just a few large
projects that enable full realization of
economies of scale and the relentless
drive to do better. One of the
best examples of that focus is in
the Fayetteville Shale, where we
celebrated our 10th anniversary of
first production by setting still
another overall production record
and drilling 24 of the field’s top 30
wells based on initial production while
improving production rates in wells
drilled almost 10% compared to 2013.
That focus and the lessons learned
have been leveraged to our project in
northeast Pennsylvania where
production and reserves grew more
than 60% compared to 2013. In
addition, encouraging tests near the
New York border, new wells on our
Lycoming and Tioga acreage and
encouraging completions in the
Upper Marcellus increased our already
10+ year inventory of locations.

To our
Shareholders:

The Southwestern
Energy Prism

One of mankind’s
unique skills is to
synthesize seemingly
unrelated trends and
broad patterns into
general conclusions.
It allows us to act in
an ever-changing world
and provides a means to
analyze the risks that
might imperil us. It
provides a “light” to
anticipate the future.
Unfortunately, there
are those times when
the trends are actually
unrelated and the
resulting conclusions are
incorrect. Other times,
the general conclusions
are correct but the
details that distinguish
success from failure are
missed. In a way, it
is similar to “white”
light before it enters a
prism. It provides
important illumination
but without the prism,
we could not contemplate
the many frequencies
of light that sum to
make it.

SW N
2014
AN NUA L
RE PORT

The Southwestern Energy prism

is also positioned to capture the
future potential of the expanding
natural gas markets and enhance
the recognition of natural gas as a
contributor to a better environment.
Our three focus areas— the
Fayetteville Shale, northeast
Pennsylvania and the new acquisition
in southwest Pennsylvania and
northern West Virginia —are
uniquely positioned to supply
inexpensive gas to the current
and growing demand centers in the
eastern half of the United States.
We are also leaders in trying to
illuminate potential ways to reduce
our already small environmental
impact. I have written in the past
about our fresh water initiative and
we are still on the path to be the
only company in our industry to be
fresh water neutral in 2016 and we
think we can do it even with the
new acquisition. We have initiated a
methane monitoring program on all
of our wells and midstream facilities
and captured more than $1.2 million
of methane in 2014 that went into
pipelines rather than the atmosphere.
In addition, we are working with
the other segments of the natural

gas industry on a project called
“One Future” where Southwestern
Energy and other companies have
established a volunteer program
to determine ways to lower
methane emission sources to less
than 1% across our entire industry.

Energy, like “white” light,
is important but the right prism
differentiates a richness and
spectrum that could not be imagined.
Southwestern Energy’s prism
is simple but has an elegance that
set a broad variety of records
in 2014 and created many new
opportunities for our investors.
Those accomplishments light
the way for 2015 and future years
to deliver a richer continuum
of Value+.

Sincerely,

STEVEN L. MUELLER
CHAIRMAN & CHIEF EXECUTIVE OFFICER

(1) For the Company’s
reconciliation of adjusted
net income and net cash
flow to Generally Accepted
Accounting Principles, see
“Non-GAAP Reconciliations”
on the inside back cover

“

Our Southwestern
Energy prism begins
with the goal every
year to create
value for the
shareholder that
no other company
can match.”

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SWN
2014
AN NUA L
RE PORT

$801

$2,320

$2.27

2014 was a year of
continued RECORD GROWTH.

$3.72

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A VE R A GE
R EA L I ZE D
G AS P R I CE
($/Mcf)

A DJ U S TE D
N ET I N C OM E
(in millions) (1)

A DJ U S TE D
E BI T DA
(in millions) (1)

ADJUSTED
DILUTED
EARNINGS
PER SHARE (1)

768

10,747

$2,440

$1.02

0
2
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2
$

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0
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C AP I T AL
I NV E S TM E NT S
(in millions) (2)

P RO D U CT I O N
(Bcfe)

R ES E R VE S
(Bcfe)

PRODUCTION
COST
($/Mcfe) (4)

3-Year F inding & Development Cost is $1.31/Mc f e(3)

FOOTNOTES

(1) For the Company’s reconciliation of adjusted net income, adjusted diluted earnings per share and adjusted EBITDA to
Generally Accepted Accounting Principles, see “Non-GAAP Reconciliations” on the inside back cover (2) Excludes the
acquisition capital associated with the acquisition of oil and gas properties in West Virginia and southwest Pennsylvania
that closed in the fourth quarter of 2014 totaling $5.0 billion (3) Finding and development cost is a non-GAAP measure and
excludes revisions, capital related to the Company’s sand facility, the purchase of drilling rig related and ancillary equipment
and the impacts of the acquisition of oil and gas properties in West Virginia and southwest Pennsylvania that closed
in the fourth quarter of 2014 (4) Production cost per Mcfe includes lease operating expenses and production taxes

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SW N
2014
AN NUA L
RE PORT

Fayetteville

Shale

A STRONG BASE OF GROWTH

In 2014, our Fayetteville Shale division
again had one of its best years ever. In its
tenth year of development, the division drilled
24 of its best 30 wells based on average
initial production rate as it applies the
learnings obtained from its continuous focus
on innovation.

Total proved reserves for the Fayetteville Shale
increased in 2014 to approximately 5.1 Tcf,
from 4.8 Tcf in 2013, while 2014 production
increased to 494 Bcf, up from 486 Bcf in 2013.
Gross operated gas production in the
Fayetteville Shale was approximately 2,132
MMcf per day at the end of 2014 compared
to approximately 2,011 MMcf per day at
the end of 2013.

In 2014, we invested approximately $944
million in the Fayetteville Shale, which
included approximately $838 million to spud
468 wells, 464 of which we operate. We
placed 454 operated wells on production
during 2014 with average initial production
rates of 4,430 Mcf per day, compared to
4,041 Mcf per day in 2013.

We also continued our progress on testing the
Upper Fayetteville, which we estimate to
be prospective on up to 130,000 net acres.
Further testing is planned for 2015.

In 2015, we plan to invest approximately $560
million in our Fayetteville Shale properties,
which includes participating in approximately
225 to 235 gross wells. We plan to operate
all of these wells, resulting in estimated net
production of 448 to 453 Bcf.

The Fayetteville
Shale provides over
3% of the nation’s
natural gas,
generating positive
cash flow for the
Company to invest in
other areas
of the portfolio

We have produced
approximately
4 Tcf from the
Fayetteville Shale
in its 10 years
of development

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2014
AN NUA L
RE PORT

Northeast
Appalachia

DELIVERING EXTRAORDINARY RESULTS

The growing
Northeast Appalachia
division accounted
for a third of
the Company’s
2014 production

Our Northeast Appalachia division
drove our overall production growth in 2014,
with gross operated production reaching
1.0 Bcf per day at year-end 2014 compared to
700 MMcf per day at year-end 2013. Production
increased to 254 Bcf in 2014, compared
to 151 Bcf in 2013, while total proved reserves
increased to approximately 3.2 Tcf from
2.0 Tcf in 2013.

In 2014, our operated horizontal wells had an
average completed well cost of $6.1 million
per well, average horizontal lateral length
of 4,752 feet and an average of 15 fracture
stimulation stages. This compares to an
average completed well cost of $7.0 million per
well, average horizontal lateral length
of 4,982 feet and an average of 18 fracture
stimulation stages in 2013.

The 3.2 Tcf of total proved reserves at year-end
2014 attributable to Northeast Appalachia
were from 737 locations, of which 524 were
proved developed producing, 13 were proved
developed non-producing and 200 were proved
undeveloped. The average gross proved
reserves for the undeveloped wells included
in our year-end reserves for 2014
were approximately 9.6 Bcfe per well.

Additionally, testing continues on multiple
target zones, including the Upper Marcellus,
where we have seen positive early results
to date. We plan to further test the Upper
Marcellus in 2015.

In 2015, we plan to invest approximately $700
million in Northeast Appalachia and expect
to participate in a total of 88 to 92 gross wells
in 2015, the vast majority of which will be
operated by us. In 2015, we estimate our net
production from Northeast Appalachia will
be in the range of 356 to 361 Bcf.

Northeast Appalachia
achieved significant
production growth
again in 2014,
ending the year
producing more than
1.0 billion cubic
feet per day of
natural gas

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® ®

SW N
2014
AN NUA L
RE PORT

Southwest
Appalachia

A NEW CORE AREA

In the fourth quarter of 2014, the
Company closed a transaction to acquire oil
and gas assets in West Virginia and southwest
Pennsylvania for approximately $5.0 billion.
This acreage has at least three drilling
objectives, namely the Marcellus, Utica and
Upper Devonian shales. As of December 31,
2014, we had approximately 413,376 net acres in
Southwest Appalachia and added an additional
30,000 net acres through a transaction
that closed in January 2015. Our undeveloped
acreage position as of December 31, 2014
had an average remaining lease term of 3 years
and an average net revenue interest of 86%.

Southwest Appalachia had approximately
2.3 Tcfe of total proved reserves at year-end
2014, substantially all from the Marcellus Shale.
Southwest Appalachia had a total of 255
horizontal wells that the Company operated and
were on production as of December 31, 2014.
Additionally, there were 42 horizontal wells in
progress at the end of 2014. The average gross
proved reserves for the undeveloped wells
included in our year-end reserves for 2014 were
approximately 8.4 Bcfe per well.

In 2015, we plan to invest approximately
$520 million in Southwest Appalachia and
expect to participate in 50 to 55 gross wells,
most of which will be operated by the
Company. In 2015, we estimate our net
production from Southwest Appalachia will
be in the range of 136 to 141 Bcfe.

The newly acquired
Southwest Appalachia
acreage provides
another opportunity
with scale for the
Company to exhibit its
operational strength
and create even
more long-term value
for shareholders

Acreage includes
an estimated 5,350
drilling locations
with 45+ Tcfe
net recoverable
resources

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TICC4027@Solid

SW N
2014
AN NUA L
RE PORT

New
Ventures

ENHANCING THE FUTURE

As of December 31, 2014, we held
approximately 4.2 million net acres in
connection with our New Ventures prospects,
of which 2.5 million net acres were located in
New Brunswick, Canada. The New Ventures
portfolio includes multiple projects at
various phases of their exploration lifecycle.

In 2014, the Company acquired approximately
376,497 net acres in northwest Colorado
targeting crude oil, natural gas liquids and
natural gas contained in the Sand Wash Basin.
Testing of the play commenced in the
second half of the year with the Company
drilling four vertical wells and one horizontal
well. Results have been encouraging to
date and the Company intends to continue
to test the play in 2015.

Our Brown Dense project is an unconventional
liquids rich play in southern Arkansas and
northern Louisiana. As of December 31, 2014,
we held approximately 304,371 net acres
in the area. During 2014, the Company drilled
its most economic well to date. As of December
31, 2014, we had drilled 14 operated wells
in the play area, 6 of which were currently
producing. In 2015, the Company plans
to analyze 75 miles of recently acquired 3-D
seismic data and further test the play.

We continue to expand the portfolio with
additional ideas and plan to announce
new ideas as acreage positions are completed
in 2015 and beyond.

Our commitment to
exploration remains
unchanged as
multiple projects
continue to
progress that could
produce material
future growth

We drilled our first
horizontal well in
the Sand Wash
Basin in 2014 with
encouraging results

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TICC4027@Solid

SW N
2014
AN NUA L
RE PORT

Midstream
Services

WORKING TOGETHER TO CREATE VALUE+

Our Midstream business continues
to expand and provide a stable source of
cash flow from the gathering and marketing of
our gas volumes and third-party gas volumes.
Our operating income from this segment
was $361 million in 2014, compared to $325
million in 2013.

In 2014, we invested approximately $144 million
and had gathering revenues of $562 million
related to gathering activities primarily in the
Fayetteville Shale, compared to $158 million
invested and revenues of $516 million in 2013.

We continue to expand our network of
gathering lines and facilities throughout the
Fayetteville Shale area. During 2014, we
gathered approximately 812 Bcf of natural
gas in the Fayetteville Shale area, including
62 Bcf of natural gas from third-party operated
wells. At the end of 2014, we had approximately
2,017 miles of pipe from the individual
wellheads to the transmission lines and
compression equipment representing
approximately 590,975 horsepower had been
installed in the field.

Our marketing activities allow us to capture
downstream opportunities related to the
marketing and transportation of natural gas,
crude and NGLs. Additionally, we also manage
portfolio and basis risk, acquire transportation
rights on third-party pipelines and in limited
circumstances, purchase third-party natural gas.
During 2014, we marketed 904 Bcf of natural
gas, compared to 800 Bcf in 2013.

We plan to invest approximately $85
million in our Midstream Services business
segment in 2015.

The Midstream business
is a differentiating
component of
Southwestern Energy
as the focus remains
on creating value
by working toward a
common goal with our
E&P operations

Our gathering
system in the
Fayetteville Shale
was gathering
approximately 2.4
Bcf per day
through 2,017
miles of pipe at
December 31, 2014

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EXECUTIVE OFFICERS

Back row from left: JOHN C. ALE (1), Senior Vice President, General Counsel and Corporate Secretary; RANDY L. CURRY (*), Senior Vice President -
Midstream; J. ALAN STUBBLEFIELD (17), Senior Vice President-Operations; JOHN E. “JACK” BERGERON, JR. (7), Senior Vice President -Northeast Appalachia
Division; STEVEN L. MUELLER (6), Chairman of the Board and Chief Executive Officer; RANDALL D. PONDER (10), Senior Vice President -Exploration;
JIM R. DEWBRE (17), Senior Vice President-Land; JAMES W. VICK (3), Senior Vice President-Business Information Systems; R. CRAIG OWEN (6), Senior Vice
President and Chief Financial Officer; PAUL W. GEIGER (*), Senior Vice President-Southwest Appalachia Division

Front row seated: WILLIAM J. WAY (3), President and Chief Operating Officer; JAMES L. BOLANDER, JR. (14), Senior Vice President -V+ Development
Solutions; JOANNE C. HRESKO (6), Senior Vice President-Corporate Development; DOUGLAS H. VAN SLAMBROUCK (15), Senior Vice President -Fayetteville
Shale Division; JENNIFER N. MCCAULEY (5), Senior Vice President-Human Resources; MARK K. BOLING (13), President -V+ Development Solutions;
JEFFREY B. SHERRICK (6), Executive Vice President-Corporate Development

DIRECTORS

STEVEN L. MUELLER (5)
Chairman of the Board and
Chief Executive Officer

CATHERINE A. KEHR (3)
Retired–The Capital
Group Companies

JOHN D. GASS (2)
Retired–Chevron
Corporation

GREG D. KERLEY (4)
Retired–Southwestern
Energy Company

VELLO A. KUUSKRAA (12)
President –
Advanced Resources

KENNETH R. MOURTON (20)
Managing Partner– Ball and
Mourton, Ltd., PLLC

TERRY W. RATHERT (*)
Retired–Newfield
Exploration Company

ELLIOTT PEW (2)
Retired–
Common Resources

ALAN H. STEVENS (4)
Retired–Southwestern
Energy Company

CORPORATE OFFICERS

STEVEN L. MUELLER (6)
Chairman of the
Board and Chief
Executive Officer

WILLIAM J. WAY (3)
President and Chief
Operating Officer

MARK K. BOLING (13)
President–V+
Development Solutions

JEFFREY B. SHERRICK (6)
Executive Vice President
–Corporate Development

R. CRAIG OWEN (6)
Senior Vice President
and Chief
Financial Officer

JOHN C. ALE (1)
Senior Vice President–
General Counsel and
Corporate Secretary

JENNIFER N.
MCCAULEY (5)
Senior Vice President–
Human Resources

JAMES W. VICK (3)
Senior Vice President–
Business Information
Systems

JAMES L.
BOLANDER, JR. (14)
Senior Vice President–
V+ Development
Solutions

DANNY W.
FERGUSON (10)
Vice President–
Government and
Community Relations

JAMES A. TRAMUTO (5)
Vice President–
Governmental and
Regulatory Strategies

ROY D. HARTSTEIN (7)
Vice President–
Strategic Solutions

JOANNE C. HRESKO (6)
Senior Vice President–
Corporate Development

THOMAS M.
ALEXANDER (14)
Vice President–
HS&E

OPERATING
SUBSIDIARY OFFICERS

J. ALAN
STUBBLEFIELD (17)
Senior Vice President–
Operations

RANDALL D. PONDER (10)
Senior Vice President–
Exploration

JIM R. DEWBRE (17)
Senior Vice President–
Land

JOHN E. “JACK”
BERGERON, JR. (7)
Senior Vice President–
Northeast Appalachia
Division

DOUGLAS H. VAN
SLAMBROUCK (15)
Senior Vice President–
Fayetteville Shale
Division

GEORGE A.
SHEFFER (10)
Vice President –
Operations, Fayetteville
Shale Division

RANDY L. CURRY (*)
Senior Vice President–
Midstream

STEPHEN M. GUIDRY (7)
Vice President –
Land, Fayetteville
Shale Division

C. GREG STOUTE (9)
General Manager–
ArkLaTex Division

JAMES N. PERKINS (14)
Vice President –Land,
New Ventures

DAVID A. DELL’OSSO (9)
General Manager–
Sand Wash
Basin Division

MARTIN D. CARLEY (9)
Vice President –
SWN Drilling Company

JOSH C. ANDERS (5)
Vice President
and Controller

JENNIFER E.
STEWART (4)
Vice President–Tax

JOHN C. GARGANI (21)
Vice President–
Strategy, Performance
and Innovation

PAUL W. GEIGER (*)
Senior Vice President–
Southwest Appalachia
Division

HARRY H. “SONNY”
BRYAN, (14)
Vice President –
New Ventures

JOHN R. LEE III (5)
Vice President –
Midstream
Field Operations

R. JASON KURTZ (17)
Vice President –
Marketing
and Transportation

For Executive Officers, years with the Company are shown on this page in parentheses, and an asterisk (*) indicates less than one year of service.
For Directors, years served on the Board of Directors are shown on this page in parentheses, and an asterisk (*) indicates less than one year of service.

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TICC4026@Solid NoCoat

The Right People doing the
Right Things, wisely investing
the cash flow from the underlying
Assets will create Value+ ®

ANNUAL MEETING

May 19, 2015 at 11:00 a.m. CDT
Hilton Houston North Hotel, 12400 Greenspoint Drive, Houston, TX 77060

INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP, Houston, TX

INVESTOR RELATIONS

Michael E. Hancock, Director–Investor Relations

WEBSITE

www.swn.com

TRANSFER AGENT

Computershare Trust Co., N.A.
P.O. Box 43036, Providence, RI 02940
800.446.2617

By overnight delivery
250 Royall Street, Canton, MA 02021

Direct Stock Purchase and Dividend Reinvestment Plan
Computershare Trust Co., N.A.
P.O. Box 43081, Providence, RI 02940
800.446.2617

CORPORATE
HEADQUARTERS

Southwestern Energy Company
10000 Energy Drive, Spring, TX 77389-4954
832.796.4700

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NON-GAAP
RECONCILIATIONS

Net income (loss)
Add back (deduct):
Loss (Gain) on certain derivatives (net of taxes)
Adjustments due to discrete tax items
Transaction costs (net of taxes)

2014
$ 924

Adjusted Net Income (in millions)

2013
$ 704

2012
)
$ (707

2011
$ 638

2010
$ 604

)
(80
)
(46
3

)
(13
13
--

2
--
--

)
(4
--
--

)
(7
--
--

Impairment of natural gas and oil
properties (net of taxes)

Adjusted net income

--
$ 801

--
$ 704

1,192
$ 487

--
$ 634

--
$ 597

Diluted earnings per share
Add back (deduct):
Loss (Gain) on certain derivatives (net of taxes)
Adjustments due to discrete tax items

Transaction costs (net of taxes)
Impairment of natural gas and oil
properties (net of taxes)

Adjusted diluted earnings per share

Net income (loss)
Add back (deduct):

Net interest expense
Provision (benefit) for income taxes
Depreciation, depletion and amortization
Loss (Gain) on derivatives excluding
derivatives, settled

Adjusted EBITDA

Net cash provided by operating activities
Add back (deduct):

Change in operating assets and liabilities

Net cash flow

2014
$ 2.62

Adjusted Diluted Earnings Per Share

2013
$ 2.00

2012
$ (2.03
)

2011

2010

1.82

1.73

(0.23
)
(0.13
)
0.01

(0.04
)
(0.04
)
--

--
--
--

(0.01
)
--
--

)

(0.03
--
--

--
$ 2.27

--
$ 2.00

3.42
1.39

--
1.81

--
1.70

Adjusted EBITDA (in millions)

2014
$ 924

2013
$ 704

2012
$ (707
)

2011
$ 638

2010
$ 604

59
525
942

42
486
787

35
)
(443
2,751

24
413
705

26
392
590

(130
)
$ 2,320

(21
)
$ 1,998

2
$ 1,638

(6
)
$ 1,774

(10
)
$ 1,602

Net Cash Flow (in millions)

2014
$ 2,335

2013
$ 1,909

2012
$ 1,654

2011
$ 1,740

2010
$ 1,643

(65
)
$ 2,270

76
$ 1,985

(55
)
$ 1,599

26
$ 1,766

(63
)
$ 1,580

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141005CVR_r4_FINAL MECH SWN '14 AR.indd 1

V+ Prism

SOUTHWESTERN ENERGY COMPANY

2014 ANNUAL REPORT

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10000 Energy Drive
Spring, TX 77389-4954 / 832.796.4700

Mid strea m Servic es
Southwest Appalachia
Northeast Appalachia
New Ventures
Fayetteville

3/20/15 8:36 PM