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Southwestern Energy Management Discusses Q2 2012 Results - Earnings Call Transcript

William J. Way

Thank you, Steve. Good morning, everyone. In the Fayetteville Shale, we placed 131 operated wells on production in the second quarter resulting in net production of 121 Bcf, which is up from 116 Bcf in the first quarter and 107 Bcf a year ago, which was a new quarterly record for us. Our operated horizontal wells had an average initial production rate of 3.5 million cubic feet of gas per day, up from 3.3 million cubic feet of gas per day in the first quarter, an average completed well cost of $2.8 million per well and an average drilling time of 6.9 days during the quarter, which is the fastest quarterly drill time in the history of the play. We also placed 30 wells on production during the quarter that were drilled in 5 days or less.

As you may recall, we've optimized our portfolio in the Fayetteville and are targeting the highest return wells in the field. Going forward, we expect to see our average production on a per well basis improve over the next few quarters.

On the Midstream side, our gas gathering business in the Fayetteville Shale continues its strong performance, and at June 30, was gathering approximately 2.1 billion cubic feet of natural gas per day through 1,829 miles of gathering lines compared to gathering approximately 2 billion cubic feet a day a year ago. Lately, our production in the Fayetteville has been affected by recent extremely high temperatures in Central Arkansas, and year-to-date, we estimate that production from the field has been impacted by 0.5 to 1 Bcf due to the extreme heat. However, since June 30, our gross production rate has returned to approximately 2 Bcf per day. However, we are still managing the impact of extreme heat on our compressors and dehydration facilities.

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