Harold Korell wondered if he did the right thing in taking the chairman and chief executive post at publicly held Southwestern Energy Co. (NYSE: SWN) in the late 1990s. Just a few weeks into the job, "I concluded I had left a good job," he told fellow producers at an IPAA/Tipro program in Houston recently. The company was based in Arkansas at the time and was primarily in the gas-distribution business. Korell aimed to grow its E&P business and at one time considered divesting the gas-distribution assets but ownership of that proved handy during a gas-price downturn in 2001, affecting E&P revenues. Over the years, he has pushed the company past a disappointing gas-distribution-related lawsuit, moved headquarters to Houston and grown Southwestern's reserves an average of 10% per year and reserves an average of 13% per year. Finding and development costs have averaged $1.29 per thousand cubic feet equivalent; reserve replacement, 264% per year. "Our objective is not to grow reserves or production but the net asset value of the company per share at a higher rate than our peers," he said. The company tends to drill prospects on acreage it has put together, rather than buy production and prospects. It did purchase Overton Field, East Texas, assets in 2001 for $6 million from Total SA, gaining 10,000 acres and 16 existing gas wells. Since then, it has brought the assets' 9 million cubic feet of daily production to more than 90 million. Meanwhile, Southwestern is currently putting together a Fayetteville shale play in what has been its backyard in the Arkoma Basin of Arkansas. The shale is Mississippian in age and the geologic equivalent of the Caney shale in Oklahoma and the Barnett shale in north Texas. Southwestern set out in 2000 to map the thin Weddington sand in the Arkoma acreage and became interested in the Fayetteville shale, which can be as much as 250 to 350 feet thick in the acreage. It has now amassed 600,000 acres and drilled 38 wells in four counties, involving six pilot areas. Most of the wells are in two pilot areas in particular. Two horizontal wells have been drilled and are being completed; a third one is planned. With these results, Southwestern will determine if it will tap the gas resources with vertical or horizontal wells. Otherwise, the company is keeping its results close to the vest, other than making an initial report in August of the investment it will make toward proving the Fayetteville potential. "We have a lot of competition now that has fired up out there," Korell said. Standard & Poor's downgraded its rating of Southwestern's credit-worthiness recently, because the company plans to outspend its cash flow. The rating remains investment grade. Korell said at the IPAA/Tipro program that other producers should be asked why they're not spending their cash flow. Southwestern is because it has more opportunities, he said, from internally generated drilling ideas.