(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 September 30, 2011:
Operating revenues	$ -	$ 730,826	$ 105,486	$ (69,057)	$ 767,255
Operating costs and expenses:
Gas purchases – midstream services	-	175,729	-	(493)	175,236
Operating expenses	-	101,645	30,034	(67,768)	63,911
General and administrative expenses	-	34,030	2,366	(796)	35,600
Depreciation, depletion and amortization	-	169,446	9,667	-	179,113
Taxes, other than income taxes	-	13,731	3,946	-	17,677
Total operating costs and expenses	-	494,581	46,013	(69,057)	471,537
Operating income	-	236,245	59,473	-	295,718
Other loss, net	-	(16)	(106)	-	(122)
Equity in earnings of subsidiaries	175,173	-	-	(175,173)	-
Interest expense	-	2,376	3,281	-	5,657
Income (loss) before income taxes	175,173	233,853	56,086	(175,173)	289,939
Provision for income taxes	-	92,725	22,041	-	114,766
Net income (loss)	175,173	141,128	34,045	(175,173)	175,173
Less: Net loss attributable to noncontrolling interest	-	-	-	-	-
Net income (loss) attributable to Southwestern Energy	$ 175,173	$ 141,128	$ 34,045	$ (175,173)	$ 175,173

Three months ended September 30, 2010:
Operating revenues	$ -	$ 648,605	$ 85,602	$ (52,035)	$ 682,172
Operating costs and expenses:
Gas purchases – midstream services	-	158,503	-	(408)	158,095
Operating expenses	-	78,113	26,197	(51,381)	52,929
General and administrative expenses	-	31,041	4,363	(246)	35,158
Depreciation, depletion and amortization	-	143,202	8,082	-	151,284
Taxes, other than income taxes	-	13,014	1,556	-	14,570
Total operating costs and expenses	-	423,873	40,198	(52,035)	412,036
Operating income	-	224,732	45,404	-	270,136
Other income, net	-	214	112	-	326
Equity in earnings of subsidiaries	160,741	-	-	(160,741)	-
Interest expense	-	1,716	4,873	-	6,589
Income (loss) before income taxes	160,741	223,230	40,643	(160,741)	263,873
Provision for income taxes	-	87,387	15,848	-	103,235
Net income (loss)	160,741	135,843	24,795	(160,741)	160,638
Less: Net loss attributable to noncontrolling interest	-	(103)	-	-	(103)
Net income (loss) attributable to Southwestern Energy	$ 160,741	$ 135,946	$ 24,795	$ (160,741)	$ 160,741


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Unaudited)

	Parent	Guarantors	Non-Guarantors	Eliminations	Consolidated
	(in thousands)
Nine months ended September 30, 2011:
Operating revenues	$ -	$ 2,101,099	$ 299,252	$ (191,595)	$ 2,208,756
Operating costs and expenses:
Gas purchases – midstream services	-	546,731	-	(1,213)	545,518
Operating expenses	-	276,974	86,811	(188,022)	175,763
General and administrative expenses	-	101,372	13,943	(2,360)	112,955
Depreciation, depletion and amortization	-	485,546	28,634	-	514,180
Taxes, other than income taxes	-	41,206	8,223	-	49,429
Total operating costs and expenses	-	1,451,829	137,611	(191,595)	1,397,845
Operating income	-	649,270	161,641	-	810,911
Other income (loss), net	-	345	(24)	-	321
Equity in earnings of subsidiaries	479,236	-	-	(479,236)	-
Interest expense	-	7,769	11,494	-	19,263
Income (loss) before income taxes	479,236	641,846	150,123	(479,236)	791,969
Provision for income taxes	-	253,738	58,995	-	312,733
Net income (loss)	479,236	388,108	91,128	(479,236)	479,236
Less: Net loss attributable to noncontrolling interest	-	-	-	-	-
Net income (loss) attributable to Southwestern Energy	$ 479,236	$ 388,108	$ 91,128	$ (479,236)	$ 479,236

Nine months ended September 30, 2010:
Operating revenues	$ -	$ 1,853,194	$ 227,625	$ (140,587)	$ 1,940,232
Operating costs and expenses:
Gas purchases – midstream services	-	458,788	-	(1,233)	457,555
Operating expenses	-	211,252	67,801	(138,615)	140,438
General and administrative expenses	-	91,270	14,204	(739)	104,735
Depreciation, depletion and amortization	-	412,217	22,090	-	434,307
Taxes, other than income taxes	-	34,461	4,193	-	38,654
Total operating costs and expenses	-	1,207,988	108,288	(140,587)	1,175,689
Operating income	-	645,206	119,337	-	764,543
Other income, net	-	74	191	-	265
Equity in earnings of subsidiaries	454,607	-	-	(454,607)	-
Interest expense	-	5,526	13,751	-	19,277
Income (loss) before income taxes	454,607	639,754	105,777	(454,607)	745,531
Provision for income taxes	-	249,866	41,250	-	291,116
Net income (loss)	454,607	389,888	64,527	(454,607)	454,415
Less: Net loss attributable to noncontrolling interest	-	(192)	-	-	(192)
Net income (loss) attributable to Southwestern Energy	$ 454,607	$ 390,080	$ 64,527	$ (454,607)	$ 454,607


CONDENSED CONSOLIDATING BALANCE SHEETS
(Unaudited)

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

ASSETS

Cash and cash equivalents	$ 11,842	$ 1,451	$ -	$ -	$ 13,293
Restricted cash	69,261	-	-	-	69,261
Accounts receivable	273	322,217	24,406	-	346,896
Inventories	-	45,629	903	-	46,532
Other current assets	4,557	352,209	3,372	-	360,138
Total current assets	85,933	721,506	28,681	-	836,120
Intercompany receivables	1,853,309	34	24,961	(1,878,304)	-
Property and equipment	175,968	9,147,370	1,121,055	-	10,444,393
Less: Accumulated depreciation, depletion and amortization	63,301	4,042,935	123,885	-	4,230,121
	112,667	5,104,435	997,170	-	6,214,272
Investments in subsidiaries (equity method)	2,902,323	-	-	(2,902,323)	-
Other assets	23,995	117,782	21,938	-	163,715
Total assets	$ 4,978,227	$ 5,943,757	$ 1,072,750	$ (4,780,627)	$ 7,214,107

LIABILITIES AND EQUITY

Accounts and notes payable	$ 148,433	$ 334,144	$ 45,285	$ -	$ 527,862
Other current liabilities	3,531	232,632	2,225	-	238,388
Total current liabilities	151,964	566,776	47,510	-	766,250
Intercompany payable	-	1,394,690	483,614	(1,878,304)	-
Long-term debt	1,271,000	-	-	-	1,271,000
Deferred income taxes	(101,174)	1,339,822	222,557	-	1,461,205
Other liabilities	47,884	53,234	5,981	-	107,099
Total liabilities	1,369,674	3,354,522	759,662	(1,878,304)	3,605,554
Commitments and contingencies
Total equity	3,608,553	2,589,235	313,088	(2,902,323)	3,608,553
Total liabilities and equity	$ 4,978,227	$ 5,943,757	$ 1,072,750	$ (4,780,627)	$ 7,214,107


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	$ -	$ 16,055
Accounts receivable	382	331,154	20,037	-	351,573
Inventories	-	34,263	835	-	35,098
Other current assets	5,015	171,060	2,092	-	178,167
Total current assets	13,778	544,108	23,007	-	580,893
Intercompany receivables	1,820,857	131	18,724	(1,839,712)	-
Investments	-	11,103	(11,102)	(1)	-
Property and equipment	124,823	7,871,279	984,783	-	8,980,885
Less: Accumulated depreciation, depletion and amortization	52,256	3,526,010	104,422	-	3,682,688
	72,567	4,345,269	880,361	-	5,298,197
Investments in subsidiaries (equity method)	2,253,871	-	-	(2,253,871)	-
Other assets	18,918	92,747	26,708	-	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	$ -	$ 545,095
Other current liabilities	3,288	142,839	2,761	-	148,888
Total current liabilities	178,764	479,250	35,969	-	693,983
Intercompany payable	-	1,317,696	522,017	(1,839,713)	-
Long-term debt	1,093,000	-	-	-	1,093,000
Deferred income taxes	(98,206)	1,066,166	162,332	-	1,130,292
Other liabilities	41,557	89,986	3,769	-	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)

Nine months ended September 30, 2011:
Net cash provided by (used in) operating activities	$ (23,901)	$ 1,146,062	$ 178,050	$ -	$ 1,300,211
Investing activities:
Capital investments	(53,085)	(1,333,977)	(156,487)	-	(1,543,549)
Proceeds from sale of property and equipment	-	121,281	265	-	121,546
Transfers to restricted cash	(85,040)	-	-	-	(85,040)
Transfers from restricted cash	15,779	-	-	-	15,779
Other	11,046	(31,564)	25,458	-	4,940
Net cash used in investing activities	(111,300)	(1,244,260)	(130,764)	-	(1,486,324)
Financing activities:
Intercompany activities	(44,592)	92,018	(47,426)	-	-
Payments on current portion of long-term debt	(600)	-	-	-	(600)
Payments on revolving long-term debt	(2,575,000)	-	-	-	(2,575,000)
Borrowings under revolving long-term debt	2,753,600	-	-	-	2,753,600
Other items	5,254	-	-	-	5,254
Net cash provided by (used in) financing activities	138,662	92,018	(47,426)	-	183,254
Effect of exchange rate changes on cash	-	-	97	-	97
Increase (decrease) in cash and cash equivalents	3,461	(6,180)	(43)	-	(2,762)
Cash and cash equivalents at beginning of year	8,381	7,631	43	-	16,055
Cash and cash equivalents at end of period	$ 11,842	$ 1,451	$ -	$ -	$ 13,293


Nine months ended September 30, 2010:
Net cash provided by (used in) operating activities	$ (46,565)	$ 1,082,585	$ 179,042	$ -	$ 1,215,062
Investing activities:
Capital investments	(33,915)	(1,231,500)	(240,664)	-	(1,506,079)
Proceeds from sale of property and equipment	-	347,150	1,229	-	348,379
Transfers to restricted cash	(355,865)	-	-	-	(355,865)
Transfers from restricted cash	1,689	-	-	-	1,689
Other	9,437	(18,440)	6,371	-	(2,632)
Net cash used in investing activities	(378,654)	(902,790)	(233,064)	-	(1,514,508)
Financing activities:
Intercompany activities	130,114	(184,121)	54,007	-	-
Payments on current portion of long-term debt	(600)	-	-	-	(600)
Payments on revolving long-term debt	(2,043,600)	-	-	-	(2,043,600)
Borrowings under revolving long-term debt	2,336,100	-	-	-	2,336,100
Other items	8,559	-	-	-	8,559
Net cash provided by (used in) financing activities	430,573	(184,121)	54,007	-	300,459
Increase (decrease) in cash and cash equivalents	5,354	(4,326)	(15)	-	1,013
Cash and cash equivalents at beginning of year	7,378	5,776	30	-	13,184
Cash and cash equivalents at end of period	$ 12,732	$ 1,450	$ 15	$ -	$ 14,197