Southwestern Energy Company (NYSE:SWN) Q1 2018 Earnings Conference Call Transcript
Apr 27, 2018 • 10:00 am ET
(Operator Instructions) Dan McSpirit, BMO Capital.
Behind capital efficiency that you rightly emphasize are cycle times, the offset date highlighted increases in stages pumped per day, you spoke about it in your prepared remarks as you did improve facilities installation times. What more can be done on this front? Or is the company nearing the physical limit, if you will, on these efficiency gains?
This is Clay. I don't believe we're anywhere near being done on this. The logistics are improving dramatically around sand and water in our Appalachian business and then that gives us the opportunity to move more into the completions utilized in the zipper fracs, which allows us to be much more efficient in the completion side of the business. We're continuing to focus on efficiencies around our cycle times in both the facilities and the drilling side of our business. So the opportunity is there for us to continue to expand on some of the results we talked about in the call.
And as a follow-up to that. At the time of the announcement on repositioning the portfolio, it was expressed that one of the use of proceeds was to "potentially return capital to shareholders." Has that option been further refined or maybe defined? And where do you see it ranking today, appreciating debt reduction likely ranks highest? I ask that question in the context of share buybacks being all the rage these days.
We're well aware of that trend. And I think you're right, we have said that our first focus is to reduce debt on our balance sheet. And we've targeted 2 times. The new facility that we've just put in place does remove some of the obstacles to continuing to address our capital structure, and certainly would give us some flexibility around share buybacks. That said, today, I think there's a limited amount that we could do, and I think it would probably be imprudent to do anything until we have greater clarity on the strategic initiative.
But to further that, as a public company, we understand the obligation to consider really all of the strategic options, those you talk about and the ones we've talked about to enhance value. And at this point, all those are on the table and we'll continue to work that as we progress the work on Fayetteville.
Arun Jayaram, J.P. Morgan.
Bill, I was wondering if you could maybe elaborate on the company's kind of transportation strategy on a go-forward basis. You do have some options when I look at your northeast kind of portfolio. But how do you think you're going to manage that portfolio on a go-forward basis?
Well, I'll start with Northeast Appalachia and go to Southwest. And Jason, you chime in here as appropriate. Our strategy into Pennsylvania when we first moved in there was to lock up firm transportation for our future development in the area. We entered at a time when transportation costs were low and the ability to lock those up,