Andy Huggins, senior vice president of the Haynesville division at Southwestern Energy Co. spoke with Jordan Blum, Hart Energy’s editorial director, on the company’s operations in the Appalachia and Haynesville, the likelihood of additional M&A and Southwestern’s goal to certify its natural gas as responsibly sourced.
Jordan Blum: So you all went from not having any Haynesville presence to having the biggest production of the whole basin with the acquisitions of Indigo Resources and GEP [Haynesville] in 2021. So we're less than two years later. Can you just talk about how the learning curve's been? How things are going?
Andy Huggins: Yeah. sure. Yeah, certainly as busy as  was, you know, doing two acquisitions, integrating the assets, building teams, and as you mentioned, getting that learning curve started in ‘22 was equally if not more busy. And then you underpinned with the dynamic gas markets and service environment. It was quite a busy and fun year. So a really good year. [We’ve] very proud of the team and our people. I think a lot of, in a lot of ways making acquisitions in a new basin, you have to have a lot of trust in your ability to perform, and that's really driven by our people and our team. And I couldn't be more pleased with the progress we made, whether it's in drilling and completion efficiencies, an understanding of the reservoir and understanding of overall dynamics of how fluid flows through a high pressure deep reservoir like the Haynesville, but then also strategically setting ourself up through some transportation agreements, expansions, getting more of our gas to the Gulf Coast to the LNG corridor specifically. That really strategically we see as beneficial longer term.
JB: As opposed to Appalachia, it’s nice having that pipeline access, is that Gulf Coast access a lot easier?
AH: You know, we also obviously have a big Appalachia position that are very complimentary assets with our Haynesville. And from that position we have 700 million a day of gas that goes to Gulf Coast as well. So, so yeah, a little easier in the Haynesville. Part of the thesis to be in the Haynesville to build pipelines to get down to that. But you know, we like those assets in Appalachia as well.
JB: Nice balance. And what is kind of the broader M&A strategy going forward in the Hayesville? I mean, are you all interested in growing on the Texas side at all? You're all in Louisiana now or is it agnostic to state lines, so to speak?
AH: Yeah, really good question. I mean, I think broadly you know, M&A and A&D is a corporate competency and you're always looking to position yourself better than you were standalone. It gets harder and harder to do that as you've strengthened your company. And we've certainly through, you know, not only three acquisitions over the last couple years, but a lot of operational improvements, balance sheet improvements, just a lot of things have gone in a really good direction that the math gets harder and harder to make it work. But to answer more directly, you know, while we are kind of agnostic, I think things have to make sense. They have to have synergies. But they have to be competitive versus what we've got. And we really like our 15 years plus a core inventory. We like the balance between Appalachia and Haynesville. We like the liquids-rich opportunities we have in Appalachia that provides an incremental or another layer of balance in our portfolio. So I think it'd be hard pressed to find something that competes with that as we sit here today.
JB: With natural gas prices lower now what's kind of the, the production, the drilling rig strategy right now? I think you all are weighted a good bit more toward the Haynesville.
AH: Yeah, we are generally from a rig perspective. Now, of course from a well perspective, you know, Haynesville wells take twice as long to drill as Appalachia. So from a well perspective we're pretty split pretty evenly between Appalachia and Hayesville. Little bit more capital to Haynesville, but not a lot. And really, you know, one of the, again, the flexibility in our operations. We own seven of our own drilling rigs that provides incremental flexibility as well as two full frac fleets that run in Appalachia. And so internally we've built a lot of flexibility in our program to ebb and flow capital investment pending how gas prices and overall liquid prices are telling us to do so. So we'll keep that flexibility.
JB: And you all are doing a lot more too with certified RSG [responsibly sourced gas]. How important is that strategy and do you think the broader industry is doing enough with that?
AH: Yeah, really good question. I think at, at Southwestern we've been one of the leaders in RSG for a long time. And it's really just core to who we are to doing things the right way. We have effectively all of our operated gas certified RSG, so we did all that when we moved into the Hayesville as well. Appalachia was already there. We've committed to put continuous monitoring devices on all our locations so as supply chain can keep up with our well pads that continues to get installed all the time. And so yeah, it's a big part of who we are as a company, our DNA, and then then more global and more broadly, I think that the end users are caring a whole lot more about it. The utilities themselves and then as we talk about this LNG thesis, the European utilities and European people certainly care all the way back to the wellhead. And being RSG is probably going to be an important part of that.
JB: Great. Well, thanks so much for joining us here at the, the DUG Haynesville conference.
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