Southwestern Energy Company

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Southwestern Energy's second quarter 2022 earnings call. Management will open the call for a question and answer session following prepared remarks. In the interest of time, please limit yourself to two questions and requeue for additional questions. This call is being recorded. I would now like to turn the conference over to Brittany Rayford, Southwestern Energy's Director of Investor Relations. You may begin.

Thank you, Cole. Good morning and welcome to Southwestern Energy's second quarter 2022 earnings call. Joining me today are Bill Way, President and Chief Executive Officer, Clay Carroll, Chief Operating Officer, Carl Giesler, Chief Financial Officer, and Jason Kurtz, Head of Marketing and Transportation. Before we get started, I'd like to point out that many of the comments we make during this call are forward-looking statements that involve risk and uncertainties affecting outcomes. Many of these are beyond our control and are discussed in more detail in the risk factors and the forward-looking statement sections of our annual report and quarterly reports as filed with the Securities and Exchange Commission. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results on developments may differ materially, and we are under no obligation to update them. We may also refer to some non-GAAP financial measures which help facilitate comparisons across periods and with peers. For any non-GAAP measures we use, a reconciliation to the nearest corresponding GAAP measure can be found in our earnings release available on our website. I'll now turn the call over to Bill Way.

Thank you, Brittany, and good morning, everyone. Southwestern Energy is well positioned as a leading natural gas producer in the two premier U.S. natural gas basins. We are executing on our deliberate strategy to grow resilient free cash flow, as evidenced by our second quarter and year-to-date results. I'm particularly pleased with the successful integration of our Hainesville business and its contribution to the company's results. In June, we progressed our capital allocation strategy, complementing continued debt repayment with a share repurchase authorization of up to $1 billion through the end of 2023, which is nearly 15% of our current market capitalization. This share repurchase program underscores management's confidence in the long-term free cash flow generation capability of our business. Additionally, due to its flexibility, we expect to execute the program consistent with our strategic financial objectives of reducing debt and returning to investment grade. This program also directly allows the company to capitalize on the significant disconnect we see between the current enterprise value and the intrinsic value of our business as reflected in our second quarter PB10 reserve value of $31 billion at recent strip prices. Regarding the current macro environment, we believe natural gas supply and demand dynamics have strengthened near and long term supporting our growing free cash flow generation. On the supply side, Capital discipline, producer consolidation, service market tightness, and infrastructure capacity constraints continue to moderate production growth. On the demand side, global decarbonization and energy security priorities have accelerated the demand for clean-burning, reliable U.S. natural gas. Domestically, strong industrial and residential power generation demand have become less sensitive to natural gas pricing given continued cold power capacity retirements. The net effect, we believe, is that the U.S. natural gas market continues to move from structural oversupply to a more balanced market with the potential for further excess demand, especially in the Gulf Coast region. As a key differentiator for SWIN is our proximity and firm transportation to the long-term demand growth along the Gulf Coast. As the largest producer in Haynesville, with complementary firm transportation from Appalachia 65% of our total production reaches this market. Approximately 12 BCF per day of liquid faction is currently in service, which could more than double with FERC-approved projects, including approximately 7 BCF per day that is already under construction. Today, Southwestern Energy is one of the largest suppliers of natural gas to existing LNG exporters at 1.5 billion cubic feet per day. As natural gas transitions from a regional to a global price-linked commodity, we believe we will differentially benefit as the Hainesville and Gulf Coast garner premium pricing relative to other basins. We are evaluating on a risk-adjusted basis potential opportunities to benefit from global pricing by leveraging our proximate, reliable, long-term supply capability to help enable liquefaction projects to achieve FID. Hedging remains core to SWIN's enterprise risk management practice, ensuring recovery of the company's cost and capital expenditures. With our improved financial position, however, and the supportive fundamental outlook for natural gas prices, expect our future hedging levels to migrate lower within our approved ranges and with preference for using callers. As our hedges settle, our reinvestment rate will more clearly reflect the inherent cash generation capability of our asset base. The resulting prospective rate of change in our free cash flow profile differentiates SWIN as an investment opportunity. We're highly encouraged by the high level of performance across our portfolio and are increasing our full year production guidance and updating other key metrics included in that update is an increase of our 22 capital investment by approximately 10% to offset inflationary impacts and further strengthen the continuity of our operational activity as we head into our 2023 maintenance capital investment program. This approach increases cumulative free cash flow generation, accelerating debt reduction and the return of capital to shareholders. As a core aspect of how we operate at SWIN, by the end of this year, Haynesville Production will join Appalachia as fully certified responsibly sourced gas. Additionally, our ninth annual corporate responsibility report will be released this fall, and highlights ESG achievements for the company. This report will also include a longer-term GHG emissions reduction goal and the specific path for the company to achieve it. With that, I'll turn the call over to Clay for an operational update.