Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In April, 2018, the Company entered into the 2018 credit facility.  Pursuant to requirements under the indentures governing the Company’s senior notes, each 100% owned subsidiary that became a guarantor of the 2018 credit facility also became a guarantor of each of the Company’s senior notes (the “Guarantor Subsidiaries”). The Guarantor Subsidiaries also granted liens and security interests to support their guarantees under the 2018 credit facility but not of the senior notes.   These guarantees are full and unconditional and joint and several among the Guarantor Subsidiaries.  Certain of the Company’s operating units which are accounted for on a consolidated basis do not guarantee the 2018 credit facility and senior notes (“Non-Guarantor Subsidiaries”).  See Note 12 – Debt for additional information on the Company’s 2018 revolving credit facility and senior notes.  At the closing of the Fayetteville Shale sale in December 2018, its subsidiaries being sold were released from these guarantees. See Note 2 for additional information on the divestiture of the Company’s Fayetteville Shale-related subsidiaries.

The following financial information reflects consolidating financial information of Southwestern Energy Company (the parent and issuer company), its Guarantor Subsidiaries on a combined basis and the Non-Guarantor Subsidiaries on a combined basis, prepared on the equity basis of accounting.  The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X.  The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantor Subsidiaries operated as independent entities.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions)	Parent		Guarantors			Non-Guarantors		Eliminations			Consolidated
Three months ended March 31, 2019
Operating Revenues:
Gas sales	$	—	$	430		$	—	$	—		$	430
Oil sales	—		39			—		—			39
NGL sales	—		81			—		—			81
Marketing	—		438			—		—			438
Other	—		2			—		—			2
	—		990			—		—			990
Operating Costs and Expenses:
Marketing purchases	—		441			—		—			441
Operating expenses	—		165			—		—			165
General and administrative expenses	—		37			—		—			37
Restructuring charges	—		3			—		—			3
Depreciation, depletion and amortization	—		112			—		—			112
Taxes, other than income taxes	—		19			—		—			19
	—		777			—		—			777
Operating Income	—		213			—		—			213
Interest Expense, Net	14		—			—		—			14
Loss on Derivatives	—		(32		)	—		—			(32		)
Other Income, Net	—		1			—		—			1
Equity in Earnings of Subsidiaries	608		—			—		(608		)	—
Income (Loss) Before Income Taxes	594		182			—		(608		)	168
Benefit from Income Taxes	—		(426		)	—		—			(426		)
Net Income (Loss)	594		608			—		(608		)	594
Net Income (Loss)	$	594	$	608		$	—	$	(608	)	$	594
Other comprehensive income	—		—			—		—			—
Comprehensive Income (Loss)	$	594	$	608		$	—	$	(608	)	$	594

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions)	Parent		Guarantors			Non-Guarantors		Eliminations			Consolidated
Three months ended March 31, 2018
Operating Revenues:
Gas sales	$	—	$	540		$	—	$	—		$	540
Oil sales	—		35			—		—			35
NGL sales	—		65			—		—			65
Marketing	—		253			—		—			253
Gas gathering	—		24			—		—			24
Other	—		3			—		—			3
	—		920			—		—			920
Operating Costs and Expenses:
Marketing purchases	—		255			—		—			255
Operating expenses	—		189			—		—			189
General and administrative expenses	—		55			—		—			55
Depreciation, depletion and amortization	—		143			—		—			143
Taxes, other than income taxes	—		23			—		—			23
	—		665			—		—			665
Operating Income	—		255			—		—			255
Interest Expense, Net	39		—			—		—			39
Loss on Derivatives	—		(7		)	—		—			(7		)
Other Loss, Net	—		(1		)	—		—			(1		)
Equity in Earnings of Subsidiaries	247		—			—		(247		)	—
Income (Loss) Before Income Taxes	208		247			—		(247		)	208
Provision (Benefit) for Income Taxes	—		—			—		—			—
Net Income (Loss)	$	208	$	247		$	—	$	(247	)	$	208
Participating securities - mandatory convertible preferred stock	3		—			—		—			3
Net Income (Loss) Attributable to Common Stock	$	205	$	247		$	—	$	(247	)	$	205
Net Income (Loss)	$	208	$	247		$	—	$	(247	)	$	208
Other comprehensive income	—		—			—		—			—
Comprehensive Income (Loss)	$	208	$	247		$	—	$	(247	)	$	208

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
March 31, 2019 :
ASSETS
Cash and cash equivalents	$	366		$	—		$	—		$	—		$	366
Accounts receivable, net	—			390			—			—			390
Other current assets	11			120			—			—			131
Total current assets	377			510			—			—			887
Intercompany receivables	7,744			—			—			(7,744		)	—
Natural gas and oil properties, using the full cost method	—			24,433			53			—			24,486
Gathering systems	—			11			27			—			38
Other	197			312			—			—			509
Less: Accumulated depreciation, depletion and amortization	(159		)	(19,947		)	(56		)	—			(20,162		)
Total property and equipment, net	38			4,809			24			—			4,871
Investments in subsidiaries (equity method)	—			23			—			(23		)	—
Other long-term assets	42			646			—			—			688
TOTAL ASSETS	$	8,201		$	5,988		$	24		$	(7,767	)	$	6,446
LIABILITIES AND EQUITY
Accounts payable	$	124		$	502		$	—		$	—		$	626
Other current liabilities	189			128			—			—			317
Total current liabilities	313			630			—			—			943
Intercompany payables	—			7,743			1			(7,744		)	—
Long-term debt	2,267			—			—			—			2,267
Pension and other postretirement liabilities	43			—			—			—			43
Other long-term liabilities	47			209			—			—			256
Negative carrying amount of subsidiaries, net	2,594			—			—			(2,594		)	—
Total long-term liabilities	4,951			209			—			(2,594		)	2,566
Commitments and contingencies
Total equity (accumulated deficit)	2,937			(2,594		)	23			2,571			2,937
TOTAL LIABILITIES AND EQUITY	$	8,201		$	5,988		$	24		$	(7,767	)	$	6,446

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)	Parent			Guarantors			Non-Guarantors			Eliminations			Consolidated
December 31, 2018
ASSETS
Cash and cash equivalents	$	201		$	—		$	—		$	—		$	201
Accounts receivable, net	4			577			—			—			581
Other current assets	8			166			—			—			174
Total current assets	213			743			—			—			956
Intercompany receivables	7,932			—			—			(7,932		)	—
Natural gas and oil properties, using the full cost method	—			24,128			52			—			24,180
Gathering systems	—			11			27			—			38
Other	197			290			—			—			487
Less: Accumulated depreciation, depletion and amortization	(154		)	(19,840		)	(55		)	—			(20,049		)
Total property and equipment, net	43			4,589			24			—			4,656
Investments in subsidiaries (equity method)	—			24			—			(24		)	—
Other long-term assets	19			166			—			—			185
TOTAL ASSETS	$	8,207		$	5,522		$	24		$	(7,956	)	$	5,797
LIABILITIES AND EQUITY
Accounts payable	$	113		$	496		$	—		$	—		$	609
Other current liabilities	115			122			—			—			237
Total current liabilities	228			618			—			—			846
Intercompany payables	—			7,932			—			(7,932		)	—
Long-term debt	2,318			—			—			—			2,318
Pension and other postretirement liabilities	46			—			—			—			46
Other long-term liabilities	54			171			—			—			225
Negative carrying amount of subsidiaries, net	3,199			—			—			(3,199		)	—
Total long-term liabilities	5,617			171			—			(3,199		)	2,589
Commitments and contingencies
Total equity (accumulated deficit)	2,362			(3,199		)	24			3,175			2,362
TOTAL LIABILITIES AND EQUITY	$	8,207		$	5,522		$	24		$	(7,956	)	$	5,797

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(in millions)	Parent			Guarantors			Non-Guarantors		Eliminations			Consolidated
Three months ended March 31, 2019
Net cash provided by (used in) operating activities	$	1,031		$	19		$	—	$	(608	)	$	442
Investing activities:
Capital investments	3			(261		)	—		—			(258		)
Other	—			—			—		—			—
Net cash used in investing activities	3			(261		)	—		—			(258		)
Financing activities
Intercompany activities	(850		)	242			—		608			—
Change in bank drafts outstanding	3			—			—		—			3
Purchase of treasury stock	(21		)	—			—		—			(21		)
Cash paid for tax withholding	(1		)	—			—		—			(1		)
Net cash provided by (used in) financing activities	(869		)	242			—		608			(19		)
Increase in cash and cash equivalents	165			—			—		—			165
Cash and cash equivalents at beginning of year	201			—			—		—			201
Cash and cash equivalents at end of period	$	366		$	—		$	—	$	—		$	366
Three months ended March 31, 2018
Net cash provided by (used in) operating activities	$	183		$	428		$	—	$	(247	)	$	364
Investing activities:
Capital investments	(5		)	(297		)	—		—			(302		)
Other	—			8			—		—			8
Net cash used in investing activities	(5		)	(289		)	—		—			(294		)
Financing activities
Intercompany activities	(116		)	(131		)	—		247			—
Preferred stock dividend	(27		)	—			—		—			(27		)
Cash paid for tax withholding	(1		)	—			—		—			(1		)
Net cash provided by (used in) financing activities	(144		)	(131		)	—		247			(28		)
Increase in cash and cash equivalents	34			8			—		—			42
Cash and cash equivalents at beginning of year	914			2			—		—			916
Cash and cash equivalents at end of period	$	948		$	10		$	—	$	—		$	958