Southwestern Energy Company (NYSE:SWN) Renegotiates Fayetteville Firm Transportation Deal


Southwestern Energy Company (NYSE:SWN) has finalized an amended transportation deal with Boardwalk Pipeline Partners, LP (NYSE:BWP) Texas Gas Transmission, LLC subsidiary for a part of its Fayetteville firm takeaway capacity, depending on the nod from the Federal Energy Regulatory Commission. The new deal is effective November 1, 2017 and is anticipated to offer savings of around $70 million from 2017 through 2020, counting around $45 million in savings in 2018 via the reduction of current surplus capacity, while ensuring imminent flexible takeaway capacity through 2030 at viable rates.

The details

Major components of this amended deal include: offers right-sized, fixed rate, ensured long-term takeaway capacity and upcoming option capacity to target gulf coast markets; Next Fayetteville Lateral volume commitment lowered to 100,000 MMBTU per day from 800,000 MMBTU per day in November 2017 through October 2020 at prevailing rates; restructured firm transportation deals and demand fees starting in 2021 at around $0.10 per MMBTU; and Firm transportation deals for up to 800,000 MMBTU daily starting in 2021 and declining each year.

Bill Way, the CEO and President of Southwestern Energy, reported that they are extremely thrilled about this new deal and the prospect to continue their long-standing association with an exceptional firm like Texas Gas. This deal further reduces surplus demand capacity and enhances their margins while securing option capacity for upcoming development.

It also offers the flexibility to increase activity in the Moorefield and Fayetteville area as economics command at competitive transportation rates without experiencing additional liabilities during times of reduced activity.

In the last trading session, the stock price of Southwestern Energy gained more than 2% to close the day at $6.26. The gains came at a share volume of around 17.40 million compared to average share volume of 15.80 million. After the recent gain, the market cap of firm was noted at $3.19 billion.