NEWS RELEASE For Further Information Contact:
Greg D. Kerley
Executive Vice President
and Chief Financial Officer
(501) 521-1141
SOUTHWESTERN ENERGY INCREASES
HEDGE POSITION IN 2001
Higher Commodity Prices Allow Company to Lock In Strong Cash Flow for 2001
Fayetteville, Arkansas - December 7, 2000...Southwestern Energy Company
(NYSE: SWN) announced today that it has recently increased its hedged position
to approximately 80% of its targeted 2001 gas production. Southwestern uses
natural gas and crude oil swap agreements and options to reduce the volatility
of earnings and cash flow due to adverse fluctuations in commodity prices. The
Company believes that, through the implementation of commodity hedges, it has
ensured a strong level of earnings and cash flow and has protected its capital
program for 2001. The following tables are attached that outline the Company's
recent hedge transactions and the Company's total current hedge position for
natural gas and oil in 2001 and 2002.
"With our current capital structure, we felt it was prudent to take
advantage of the recent increase in prices and secure a large portion of our
cash flow for next year. This will allow us to fund our 2001 capital program and
reduce our level of debt at the same time," stated Harold M. Korell, President
and Chief Executive Officer of Southwestern Energy Company. "As we enter 2001,
we expect continued positive comparisons versus our results in 2000, and these
recent hedges help ensure a strong level of cash flow to support our E&P
strategy in 2001."
The Company also announced that it will host a teleconference call
related to its capital program, outlook and strategy for 2001 on Monday,
December 18, at 11:00 a.m. EST. The dial-in number for the teleconference is
800-530-9601 and the reservation number is 17214726. The teleconference will
also be webcast on the Company's website: http://www.swn.com. RealPlayer 8 Basic
is required to listen to the teleconference and can be downloaded from the
website.
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 http://www.swn.com.
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<PAGE>
Summary of Commodity Hedge Transactions Since September 30, 2000:
Natural Gas - Zero-Cost Collars
<TABLE>
<CAPTION>
Notional NYMEX NYMEX
Term Volumes Floor Price ($/Mcf) Ceiling Price ($/Mcf)
---- ------- ------------------- ---------------------
<S> <C> <C> <C>
1Q 2001 1.2 Bcf $4.50 $5.23
1Q 2001 .5 Bcf $6.25 $7.12
2Q 2001 1.2 Bcf $4.50 $5.23
2Q 2001 1.05 Bcf $4.50 $5.45
2Q 2001 .6 Bcf $4.75 $6.00
3Q 2001 1.2 Bcf $4.50 $5.23
3Q 2001 1.05 Bcf $4.50 $5.45
3Q 2001 .6 Bcf $4.75 $6.00
4Q 2001 1.2 Bcf $4.50 $5.03
4Q 2001 1.2 Bcf $4.50 $5.23
4Q 2001 1.05 Bcf $4.50 $5.45
4Q 2001 .6 Bcf $4.75 $6.00
2002 6.0 Bcf $4.00 $4.72
</TABLE>
Natural Gas - Fixed Price Swaps
<TABLE>
<CAPTION>
Notional NYMEX
Term Volumes Contract Price ($/Mcf)
---- -------- ----------------------
<S> <C> <C>
2Q 2001 .3 Bcf $4.62
3Q 2001 .3 Bcf $4.62
4Q 2001 .1 Bcf $4.62
</TABLE>
Crude Oil - Zero-Cost Collars
<TABLE>
<CAPTION>
Monthly
Notional NYMEX NYMEX
Term Volumes Floor Price ($/Bbl) Ceiling Price ($/Bbl)
---- -------- ------------------- ---------------------
<S> <C> <C> <C>
2001 15,000 Bbls $27.00 $29.70
2001 10,000 Bbls $28.00 $30.33
</TABLE>
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<PAGE>
Summary of Total Commodity Hedge Contracts Outstanding at December 7, 2000:
Natural Gas - Zero-Cost Collars
<TABLE>
<CAPTION>
Notional NYMEX NYMEX
Term Volumes Floor Price ($/Mcf) Ceiling Price ($/Mcf)
---- -------- ------------------- ---------------------
<S> <C> <C> <C>
1Q 2001 2.1 Bcf $2.55 $3.33
1Q 2001 2.25 Bcf $2.70 $3.50
1Q 2001 1.2 Bcf $4.50 $5.23
1Q 2001 .5 Bcf $6.25 $7.12
2Q 2001 2.1 Bcf $2.50 $3.00
2Q 2001 1.5 Bcf $3.50 $4.82
2Q 2001 1.2 Bcf $4.50 $5.23
2Q 2001 1.05 Bcf $4.50 $5.45
2Q 2001 .6 Bcf $4.75 $6.00
3Q 2001 2.1 Bcf $2.50 $3.00
3Q 2001 1.5 Bcf $3.50 $4.82
3Q 2001 1.2 Bcf $4.50 $5.23
3Q 2001 1.05 Bcf $4.50 $5.45
3Q 2001 .6 Bcf $4.75 $6.00
4Q 2001 .7 Bcf $2.50 $3.00
4Q 2001 1.5 Bcf $3.50 $4.82
4Q 2001 1.2 Bcf $4.50 $5.03
4Q 2001 1.2 Bcf $4.50 $5.23
4Q 2001 1.05 Bcf $4.50 $5.45
4Q 2001 .6 Bcf $4.75 $6.00
2002 6.0 Bcf $4.00 $4.72
</TABLE>
Natural Gas - Fixed Price Swaps
<TABLE>
<CAPTION>
Notional NYMEX
Term Volumes Contract Price ($/Mcf)
---- -------- ----------------------
<S> <C> <C>
1Q 2001 .3 Bcf $2.70
2Q 2001 .3 Bcf $2.70
2Q 2001 .3 Bcf $4.62
3Q 2001 .3 Bcf $2.70
3Q 2001 .3 Bcf $4.62
4Q 2001 .3 Bcf $2.70
4Q 2001 .1 Bcf $4.62
2002 1.0 Bcf $2.65
2003 .2 Bcf $2.75
</TABLE>
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<PAGE>
Summary of Total Commodity Hedge Contracts Outstanding at December 7, 2000
(cont'd):
Crude Oil - Zero-Cost Collars
<TABLE>
<CAPTION>
Monthly
Notional NYMEX NYMEX
Term Volumes Floor Price ($/Bbl) Ceiling Price ($/Bbl)
---- -------- ------------------- ---------------------
<S> <C> <C> <C>
2001 15,000 Bbls $27.00 $29.70
2001 10,000 Bbls $28.00 $30.33
</TABLE>
Crude Oil - Fixed Price Swaps
<TABLE>
<CAPTION>
Monthly
Notional NYMEX
Term Volumes Contract Price ($/Bbl)
---- -------- ----------------------
<S> <C> <C>
2001 6,000 Bbls $17.49
</TABLE>
Crude Oil - Floor Option
<TABLE>
<CAPTION>
Monthly
Notional NYMEX
Term Volumes Floor Price ($/Bbl)
---- -------- -------------------
<S> <C> <C>
2001 27,083 Bbls $18.00
</TABLE>
All statements, other than historical financial information may be
deemed to be forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Although the Company believes the expectations
expressed in such forward-looking statements are based on reasonable
assumptions, such statements are not guarantees of future performance and actual
results or developments may differ materially from those in the forward-looking
statements. Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include, but are
not limited to, the timing and extent of changes in commodity prices for gas and
oil, the timing and extent of the Company's success in discovering, developing,
producing, and estimating reserves, property acquisition or divestiture
activities that may occur, the effects of weather and regulation on the
Company's gas distribution segment, the value that the Company's gas
distribution segment may bring in exploring sales opportunities for this
segment, increased competition, legal and economic factors, governmental
regulation, the financial impact of accounting regulations for derivative
instruments, changing market conditions, the comparative cost of alternative
fuels, conditions in capital markets and changes in interest rates, availability
of oil fieldservices, drilling rigs, and other
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<PAGE>
equipment, as well as various other factors beyond the Company's control. A
discussion of these and other factors affecting the Company's performance is
included in the Company's periodic reports filed with the Securities and
Exchange Commission including its Annual Report on Form 10-K for the year ended
December 31, 1999.
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