(16) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Company is providing condensed consolidating financial information for SEECO, SEPCO and SES, its subsidiaries that are currently guarantors of the Company's registered public debt, and for its other subsidiaries that are not guarantors of such debt. These wholly owned subsidiary guarantors have jointly and severally, fully and unconditionally guaranteed the Company's 7.35% Senior Notes and 7.125% Senior Notes. The subsidiary guarantees (i) rank equally in right of payment with all of the existing and future senior debt of the subsidiary guarantors; (ii) rank senior to all of the existing and future subordinated debt of the subsidiary guarantors; (iii) are effectively subordinated to any future secured obligations of the subsidiary guarantors to the extent of the value of the assets securing such obligations; and (iv) are structurally subordinated to all debt and other obligations of the subsidiaries of the guarantors.

The Company has not presented separate financial and narrative information for each of the subsidiary guarantors because it believes that such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the guarantees. The following condensed consolidating financial information summarizes the results of operations, financial position and cash flows for the Company's guarantor and non-guarantor subsidiaries.


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)

	Parent	Guarantors	Non-Guarantors	Eliminations	Consolidated
	(in thousands)
Three months ended June 30, 2011:
Operating revenues	$ 0	$ 728,430	$ 100,108	$ (63,372)	$ 765,166
Operating costs and expenses:
Gas purchases - midstream services	0	200,420	0	(368)	200,052
Operating expenses	0	88,477	28,793	(62,216)	55,054
General and administrative expenses	0	35,298	5,728	(788)	40,238
Depreciation, depletion and amortization	0	161,699	9,921	0	171,620
Taxes, other than income taxes	0	13,568	2,092	0	15,660
Total operating costs and expenses	0	499,462	46,534	(63,372)	482,624
Operating income	0	228,968	53,574	0	282,542
Other income, net	0	16	53	0	69
Equity in earnings of subsidiaries	167,454	0	0	(167,454)	0
Interest expense	0	1,748	4,422	0	6,170
Income (loss) before income taxes	167,454	227,236	49,205	(167,454)	276,441
Provision for income taxes	0	89,651	19,336	0	108,987
Net income (loss)	167,454	137,585	29,869	(167,454)	167,454
Less: Net loss attributable to noncontrolling interest	0	0	0	0	0
Net income (loss) attributable to Southwestern Energy	$ 167,454	$ 137,585	$ 29,869	$ (167,454)	$ 167,454

Three months ended June 30, 2010:
Operating revenues	$ 0	$ 561,762	$ 74,701	$ (46,520)	$ 589,943
Operating costs and expenses:
Gas purchases - midstream services	0	142,269	0	(477)	141,792
Operating expenses	0	74,980	21,759	(45,796)	50,943
General and administrative expenses	0	32,104	4,776	(247)	36,633
Depreciation, depletion and amortization	0	136,640	7,366	0	144,006
Taxes, other than income taxes	0	8,858	1,394	0	10,252
Total operating costs and expenses	0	394,851	35,295	(46,520)	383,626
Operating income	0	166,911	39,406	0	206,317
Other income (loss), net	0	(93)	9	0	(84)
Equity in earnings of subsidiaries	122,069	0	0	(122,069)	0
Interest expense	0	936	5,244	0	6,180
Income (loss) before income taxes	122,069	165,882	34,171	(122,069)	200,053
Provision for income taxes	0	64,718	13,326	0	78,044
Net income (loss)	122,069	101,164	20,845	(122,069)	122,009
Less: Net loss attributable to noncontrolling interest	0	(60)	0	0	(60)
Net income (loss) attributable to Southwestern Energy	$ 122,069	$ 101,224	$ 20,845	$ (122,069)	$ 122,069


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)

	Parent	Guarantors	Non-Guarantors	Eliminations	Consolidated
	(in thousands)
Six months ended June 30, 2011:
Operating revenues	$ 0	$ 1,370,273	$ 193,766	$ (122,538)	$ 1,441,501
Operating costs and expenses:
Gas purchases - midstream services	0	371,002	0	(720)	370,282
Operating expenses	0	175,329	56,777	(120,254)	111,852
General and administrative expenses	0	67,342	11,577	(1,564)	77,355
Depreciation, depletion and amortization	0	316,100	18,967	0	335,067
Taxes, other than income taxes	0	27,475	4,277	0	31,752
Total operating costs and expenses	0	957,248	91,598	(122,538)	926,308
Operating income	0	413,025	102,168	0	515,193
Other income, net	0	361	82	0	443
Equity in earnings of subsidiaries	304,063	0	0	(304,063)	0
Interest expense	0	5,393	8,213	0	13,606
Income (loss) before income taxes	304,063	407,993	94,037	(304,063)	502,030
Provision for income taxes	0	161,013	36,954	0	197,967
Net income (loss)	304,063	246,980	57,083	(304,063)	304,063
Less: Net loss attributable to noncontrolling interest	0	0	0	0	0
Net income (loss) attributable to Southwestern Energy	$ 304,063	$ 246,980	$ 57,083	$ (304,063)	$ 304,063

Six months ended June 30, 2010:
Operating revenues	$ 0	$ 1,204,589	$ 142,023	$ (88,552)	$ 1,258,060
Operating costs and expenses:
Gas purchases - midstream services	0	300,285	0	(825)	299,460
Operating expenses	0	133,139	41,604	(87,234)	87,509
General and administrative expenses	0	60,229	9,841	(493)	69,577
Depreciation, depletion and amortization	0	269,015	14,008	0	283,023
Taxes, other than income taxes	0	21,447	2,637	0	24,084
Total operating costs and expenses	0	784,115	68,090	(88,552)	763,653
Operating income	0	420,474	73,933	0	494,407
Other income (loss)	0	(140)	79	0	(61)
Equity in earnings of subsidiaries	293,866	0	0	(293,866)	0
Interest expense	0	3,810	8,878	0	12,688
Income (loss) before income taxes	293,866	416,524	65,134	(293,866)	481,658
Provision for income taxes	0	162,479	25,402	0	187,881
Net income (loss)	293,866	254,045	39,732	(293,866)	293,777
Less: Net loss attributable to noncontrolling interest	0	(89)	0	0	(89)
Net income (loss) attributable to Southwestern Energy	$ 293,866	$ 254,134	$ 39,732	$ (293,866)	$ 293,866


CONDENSED CONSOLIDATING BALANCE SHEETS
(Unaudited)

	Parent	Guarantors	Non- Guarantors	Eliminations	Consolidated
	(in thousands)
June 30, 2011:

ASSETS

Cash and cash equivalents	$ 13,180	$ 0	$ 99	$ 0	$ 13,279
Restricted cash	85,002	0	0	0	85,002
Accounts receivable	1,485	317,346	17,886	0	336,717
Inventories	43	32,527	808	0	33,378
Other current assets	3,875	210,008	3,883	0	217,766
Total current assets	103,585	559,881	22,676	0	686,142
Intercompany receivables	1,792,206	50	20,204	(1,812,460)	0
Property and equipment	158,583	8,738,206	1,077,035	0	9,973,824
Less: Accumulated depreciation, depletion and amortization	59,499	3,870,668	112,591	0	4,042,758
	99,084	4,867,538	964,444	0	5,931,066
Investments in subsidiaries (equity method)	2,589,149	0	0	(2,589,149)	0
Other assets	26,085	75,935	22,873	0	124,893
Total assets	$ 4,610,109	$ 5,503,404	$ 1,030,197	$ (4,401,609)	$ 6,742,101

LIABILITIES AND EQUITY

Accounts and notes payable	$ 136,963	$ 394,049	$ 63,902	$ 0	$ 594,914
Other current liabilities	3,364	166,879	2,192	0	172,435
Total current liabilities	140,327	560,928	66,094	0	767,349
Intercompany payables	0	1,315,642	496,818	(1,812,460)	0
Long-term debt	1,215,400	0	0	0	1,215,400
Deferred income taxes	(97,937)	1,221,864	200,043	0	1,323,970
Other liabilities	45,888	80,409	2,654	0	128,951
Total liabilities	1,303,678	3,178,843	765,609	(1,812,460)	3,435,670
Commitments and contingencies
Total equity	3,306,431	2,324,561	264,588	(2,589,149)	3,306,431
Total liabilities and equity	$ 4,610,109	$ 5,503,404	$ 1,030,197	$ (4,401,609)	$ 6,742,101


CONDENSED CONSOLIDATING BALANCE SHEETS
(Unaudited)

	Parent	Guarantors	Non- Guarantors	Eliminations	Consolidated
	(in thousands)
December 31, 2010:

ASSETS

Cash and cash equivalents	$ 8,381	$ 7,631	$ 43	$ 0	$ 16,055
Accounts receivable	382	331,154	20,037	0	351,573
Inventories	0	34,263	835	0	35,098
Other current assets	5,015	171,060	2,092	0	178,167
Total current assets	13,778	544,108	23,007	0	580,893
Intercompany receivables	1,820,857	131	18,724	(1,839,712)	0
Investments	0	11,103	(11,102)	(1)	0
Property and equipment	124,823	7,871,279	984,783	0	8,980,885
Less: Accumulated depreciation, depletion and amortization	52,256	3,526,010	104,422	0	3,682,688
	72,567	4,345,269	880,361	0	5,298,197
Investments in subsidiaries (equity method)	2,253,871	0	0	(2,253,871)	0
Other assets	18,918	92,747	26,708	0	138,373
Total assets	$ 4,179,991	$ 4,993,358	$ 937,698	$ (4,093,584)	$ 6,017,463

LIABILITIES AND EQUITY

Accounts and notes payable	$ 175,476	$ 336,411	$ 33,208	$ 0	$ 545,095
Other current liabilities	3,288	142,839	2,761	0	148,888
Total current liabilities	178,764	479,250	35,969	0	693,983
Intercompany payable	0	1,317,696	522,017	(1,839,713)	0
Long-term debt	1,093,000	0	0	0	1,093,000
Deferred income taxes	(98,206)	1,066,166	162,332	0	1,130,292
Other liabilities	41,557	89,986	3,769	0	135,312
Total liabilities	1,215,115	2,953,098	724,087	(1,839,713)	3,052,587
Commitments and contingencies
Total equity	2,964,876	2,040,260	213,611	(2,253,871)	2,964,876
Total liabilities and equity	$ 4,179,991	$ 4,993,358	$ 937,698	$ (4,093,584)	$ 6,017,463


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Unaudited)

	Parent	Guarantors	Non-Guarantors	Eliminations	Consolidated
	(in thousands)

Six months ended June 30, 2011:
Net cash provided by (used in) operating activities	$ (29,781)	$ 763,933	$ 122,778	$ 0	$ 856,930
Investing activities:
Capital investments	(35,347)	(889,700)	(99,611)	0	(1,024,658)
Proceeds from sale of property and equipment	0	120,892	241	0	121,133
Transfers to restricted cash	(85,002)	0	0	0	(85,002)
Other	7,244	(11,339)	7,974	0	3,879
Net cash used in investing activities	(113,105)	(780,147)	(91,396)	0	(984,648)
Financing activities:
Intercompany activities	22,870	8,583	(31,453)	0	0
Payments on current portion of long-term debt	(600)	0	0	0	(600)
Payments on revolving long-term debt	(1,717,600)	0	0	0	(1,717,600)
Borrowings under revolving long-term debt	1,840,600	0	0	0	1,840,600
Other items	2,415	0	0	0	2,415
Net cash provided by (used in) financing activities	147,685	8,583	(31,453)	0	124,815
Effect of exchange rate changes on cash	0	0	127	0	127
Increase (decrease) in cash and cash equivalents	4,799	(7,631)	56	0	(2,776)
Cash and cash equivalents at beginning of year	8,381	7,631	43	0	16,055
Cash and cash equivalents at end of period	$ 13,180	$ 0	$ 99	$ 0	$ 13,279


Six months ended June 30, 2010:
Net cash provided by (used in) operating activities	$ (29,605)	$ 701,961	$ 136,697	$ 0	$ 809,053
Investing activities:
Capital investments	(23,175)	(814,494)	(147,641)	0	(985,310)
Proceeds from sale of property and equipment	0	347,150	1,224	0	348,374
Transfers to restricted cash	(355,773)	0	0	0	(355,773)
Other	6,364	(13,016)	4,207	0	(2,445)
Net cash used in investing activities	(372,584)	(480,360)	(142,210)	0	(995,154)
Financing activities:
Intercompany activities	221,780	(227,355)	5,575	0	0
Payments on current portion of long-term debt	(600)	0	0	0	(600)
Payments on revolving long-term debt	(1,297,000)	0	0	0	(1,297,000)
Borrowings under revolving long-term debt	1,478,100	0	0	0	1,478,100
Other items	6,365	0	0	0	6,365
Net cash provided by (used in) financing activities	408,645	(227,355)	5,575	0	186,865
Increase (decrease) in cash and cash equivalents	6,456	(5,754)	62	0	764
Cash and cash equivalents at beginning of year	7,378	5,776	30	0	13,184
Cash and cash equivalents at end of period	$ 13,834	$ 22	$ 92	$ 0	$ 13,948