Q1 2021 Southwestern Energy Co Earnings Call
Good morning, ladies and gentlemen, and thank you for standing by.
Come to the southwestern Energy's first quarter 2021 earnings call Dan.
Greg will open up the call for a question and answer session. Following the prepared remarks Dan.
Interest of time, please limit yourself to two questions and re queue for additional questions.
This call is being recorded I would now like to turn the conference over to Brent you referred to southwestern energy as director of Investor Relations you may begin.
Thank you Andrea good morning, and welcome to southwestern Energy's first quarter 2021 earnings call. Joining me today are Bill way, President and Chief Executive Officer, Clay Carroll, Chief Operating Officer, Michael Hancock, Interim 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 risks and uncertainties affecting outcomes.
Any of these are beyond our control and are discussed in more detail in the risk factors and the forward looking statements section of our annual report and quarterly filings 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 Britney and good morning, everyone. We appreciate you joining us today and I hope that all of your safe and well.
Southwestern energy is returns driven strategy focuses on creating sustainable value protecting financial strength consistently delivering leading operating and financial results and pursuing opportunities to capture the benefits of increasing scale.
We made solid gains on our 2021 plan this quarter the business generated $88 million in free cash flow and pay down debt as promised.
We delivered production within guidance from our maintenance capital program further lowered total cost, including well cost and deliver drilling and completions achievements all while remaining financially disciplined.
The continuous efforts to optimize our business performance are clearly evident in this first quarter results.
Postage price realizations increased 18% compared to the first quarter of 2020, while our cash flow is up 85% highlighting another benefit of increased scale and improving performance across the enterprise.
The broader market dynamics have materially improved and fundamentals for all commodities are indicating support for higher prices.
Except for the record setting weather in February the U S experienced a relatively mild winter natural gas storage balances remain near the five year average driven by decreased natural gas supply and strong export demand.
In fact, LNG gas recently reached new highs of nearly 12 Bcf per day and exports to Mexico would have top six bcf per day.
The 2021 Wty strip price has improved over $8 per barrel since we set our guidance in February with transportation demand, improving and OPEC plus compliance shaping supply increases to better match demand recovery.
The NGL landscape also remains promising with low propane storage levels and increased global demand for both ethane and propane.
We positioned the company to take advantage of these supportive market fundamentals to capture additional value and greater free cash flow.
So why invest in swim lane.
It's very straightforward as I said earlier the company is expected to generate meaningful free cash flow directed to debt reduction, we've got a strong balance sheet with ample liquidity and a leading debt maturity runway or.
Our tier one assets across almost 800000 acres in West, Virginia, Pennsylvania, and Ohio are expected to produce more than one trillion cubic feet of clean natural gas and basin, leading liquids production this year.
These assets offer flexibility from a diverse commodity profile, including prolific dry gas wells and the highest condensate yield acreage in the Appalachian basin.
We consistently lead exercise discipline in our capital allocation investing in the highest return projects across our high quality inventory that meet our rigorous internal hurdles.
We're a cost focused operator with top quartile well cost and we have realized broad reductions across all expense categories.
Our differentiated operating capabilities are consistently demonstrated by our highly talented people operating company owned drilling rigs Frac fleet and.
An extensive water pipeline networks or.
Our production is marketed through a diverse and rightsize transportation portfolio with access to premium markets.
And foundational to all of this southwestern energy is also recognized for ESG leadership.
Many of today's ESG headlines are in fact past achievements for swim, including low ghd emissions and methane intensity transparent chemical management and disclosure responsible land use water conservation and leading corporate governance standards.
For example, we continue to join with local and state stakeholders to always replace more fresh water back into the offers than we consume in our operations in the areas, where we work.
We've replaced more than 14 billion gallons of freshwater to date.
We demonstrated our commitment to the importance of ESG by adding methane intensity to our corporate compensation scorecard and increase the overall weighting on the scorecard of ESG related metrics.
Each day, we take steps to strengthen our social license to operate by committing ourselves to a higher standard of care for our employees our communities and the environment.
As we've done for years, we will continue to progress our ESG efforts through actions that make a meaningful impact for our stakeholders, including the communities in which we're proud to work and live.
And later this year, we'll publish our eighth annual corporate responsibility report, which will provide a comprehensive view of the companys efforts and achievements.
The remaining at the core of our value proposition as a commitment to the right people doing the right things.
Our success depends on the alignment of a fully engaged diverse and inclusive workforce.
Richard by our high performing value driven culture. So as you can see there is plenty of proof point supporting swings value proposition for shareholders.
Now to get in a little more detail I'd like to turn over the call to clay to discuss some specific operating achievements in the quarter.
Thanks, Bill and good morning.
We continue to demonstrate leading operational execution, leveraging technology innovation and efficiencies to capture untapped resources improved well performance and drive well cost down to enhance returns.
We are building on our success executing on our 2021 plan with production costs and activity levels on track in Q1.
Let me give you some highlights from the quarter.
We delivered total production of 269 Bcf.
Or three Bcf per day slightly above the midpoint of guidance.
Gas production represented 79% of total production with oil and Ngls, making up the remaining 21% at approximately 103000 barrels per day.
During the quarter, we average five drilling rigs two in Pennsylvania, two in West, Virginia, and one in Ohio with three Frac crews.
As planned we invested $266 million of capital in Q1, and expect the second and third quarter expenditures to trend slightly lower before declining in Q4 similar to 2020.
We brought 17 wells to sales in the quarter.
Drew 23 and completed 29.
Overall costs on wells to sales came in as expected at $628 per foot with an average lateral length of approximately 13000 feet.
As a result of our vertical integration assets and teams, we have been able to methodically increase lateral lengths across the program and realized the improved returns inefficiencies that come with successfully drilling longer laterals.
We remain on track to deliver our previously guided 10% reduction in well costs as well as the 15% increase in average lateral length.
The combination of our operational execution and tier one assets continue to provide differentiated well performance across both our dry gas and liquids rich areas in the basin.
In northeast Appalachia, we brought online a three well dry gas pad in Lycoming County, with an average initial production rate of 33 million cubic feet per day per well and an average lateral length of approximately 16000 feet per well.
In southwest Appalachia, the condensate rich acreage continues to impress.
In the quarter, we brought online a 13000 foot Super Rich wells with an average 30 day condensate rate of over 900 barrels per day.
Further emphasizing the quality of this acreage at the end of last year, we brought online a seven well pad that has continued to perform well averaging 770 barrels per day per well in the first 90 days of production.
Ohio, we drilled our first Utica dry gas wells in Monroe County, since the acquisition.
The drilling portion of the wells have gone as planned and they are currently being completed.
Pad is expected to be online in the second quarter and we are on track to deliver the $100 per foot well cost reduction that we previously guided.
Innovation and technology continue to play a key role in our success.
This quarter, we completed three more pads utilizing our swim owned Frac fleet and the double Zipper Frac design.
Average 12 stages per day, and saving approximately $150000 per well.
We keep raising the bar on our operational performance and expect to continue that trend going forward.
I believe we have a competitive advantage that comes from our tier one acreage.
Vertically integrated assets and teams and our outperformance culture.
I am excited to see the teams deliver once again this year.
I'll now turn it over to Michael to discuss the financial highlights.
Thank you clay and good morning, everyone. As Bill mentioned earlier, our plan is to generate material free cash flow, which will be used for debt reduction on our path to a sustainable two times leverage ratio.
In the first quarter, we made meaningful progress toward that goal, we reported adjusted EBITDA of $382 million net cash flow of $354 million and free cash flow of $88 million.
Consistent with our commitment to reduce debt, we lowered the balance on our $2 billion revolver by $133 million this quarter, resulting in an outstanding balance of approximately $570 million.
This reduction in debt coupled with our growing EBITDA resulted in a decrease to our leverage ratio of five times, we expect to further delever as we move through the year and progress towards our two times leverage goal.
During our regularly scheduled spring borrowing base redetermination, our revolving credit facility and commitments were unchanged at an elected 2 billion maintaining strong liquidity with asset coverage that continues to exceed the borrowing base.
Our quarterly financial results were ahead of consensus and our weighted average realized price, including the impact of hedges increased nearly 40 per mcf compared to a year ago. Despite the mild weather in the first quarter, our reported gas price differentials were better than planned primarily due to our transportation to premium pricing locations.
Looking ahead to the second quarter, we expect our realized gas differentials to be consistent with seasonal impacts in previous years, resulting in an 85% to 95 discount to Nymex range consistent with the assumptions built into our full year guidance.
We expect to continue to benefit from our transportation portfolio throughout the year and when combined with our basis hedges, we have over 80% of our natural gas production protected from widening differentials in the Appalachia basin.
During the quarter liquids prices continued to improve driven by supportive slot supply and demand fundamentals.
Looking forward, we believe NGL and oil prices will remain strong and even with the improvement in <unk>. We expect the second quarter NGL price realizations as a percentage of WTO and oil differentials to be in line with our guidance ranges.
To sum it up we're off to a good start to the year with another quarter of solid financial results supported by the macro environment and our continued execution. Our 2021 plan is expected to even further solidify our strong financial foundation.
That concludes our prepared remarks, Andrea could you. Please open the line for questions.
We will now begin the question and answer session.
Ask a question you May press Star then one on your telephone keypad.
Speakerphone, please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
The interest from time, please limit yourself to two questions and re queue for additional questions.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Charles Meade of Johnson Rice. Please go ahead.
Good morning, Bill to you and the rest of the southwestern team their.
Morning, Charles how are you.
I wanted to ask a question on the Optionality you guys have across the products on your acreage position are you seeing anything either even spot price spot prices oil forward curve that our.
That's leading you to kind of shift your capex, one direction or the other or or are we going.
Mike proceed with the with the mix that you guys contemplated at the beginning of the year.
Yes, we set or the mix of our investment across the enterprise based off of strip pricing for all commodities plus basis, and we put that in our model.
The good news that we've got is that at this point.
Investment in any of the areas across the enterprises is comparable in terms of returns thus our investment in both dry gas and Super rich gas and in all three areas and we watch that continuously but we're really looking more for trends a little longer term than just in the short term to be able to make though.
Shifts the good news also is that we have vertical integration, so we drill and complete.
Many of our own wells and therefore, we can move about the area at wheel as we see those trends changing but for right now.
Thank the comparative nature of economics and returns.
<unk> put about 50% of the invest.
Investment in dry gas across the areas that have dry gas.
The other half in liquids rich and Super Rich wells.
Got it. Thank you for that Bill and then if I could drill down my second question drill down a little bit more on your your northeast, Pennsylvania position I guess as you call. It your Pennsylvania position can you give us a sense of that.
Your remaining inventory up there and how that inventory splits between.
Our lower Marcellus and upper.
Sure Charles so.
The lower core Marcellus opportunities.
That we consider economic in the current environment right now are pushing somewhere around 150 to 200 locations. We have an additional couple of hundred upper Marcellus locations that were methodically testing.
And working through we talked about at the beginning of the year that we were going to do a couple more upper Marcellus wells.
In 2021.
And then there is.
Flat castle.
Year to clear inventory that came from the montage asset that's a little further removed, but looks pretty interesting.
That's kind of the the opportunity set.
As.
More in the front of the line right now in northeast Appalachia.
Got it thanks for that quick.
The next question comes from Neal Dingmann of Trust Securities. Please go ahead.
Good morning, guys, a couple of things one it looks like you're.
Doing well and your free cash flow and could hit your goals I think even what potentially before year end and I'm. Just wondering once you get to some levels that youre very comfortable with on the leverage side.
You know kind of tip question's been coming out I'm, just wondering not only what you might think about doing or how you would think about allocating the shareholder return, but maybe how aggressively out of the gate or is that something you would just sort of build into.
Yes, no this is Michael.
The way you think about that is as you get to the two times kind of we've mentioned as you first step if you want to make sure that two times a sustainable Reits not just a blip on the radar. So we'll do that once you get comfortable that it is and you're exactly right and all of the options go on the table you look at them.
Plenty of variables that go into that decision the macro fundamentals our outlook how your equities performed what your bond trading levels are all those types of things. We will look at those at that time and see what we kind of view is the optimal long term value for the shareholder at that point, but I think we want to get to that sustainable two times and net debt conversation is right behind that.
That makes a lot of good to go.
Great details and then just one follow up.
Yeah.
Maybe even versus some others seems like crude costs are really holding in well and I'm. Just wondering anything you might be able to comment I don't know not just on Oss, but maybe other cost and then are you seeing any type of product or personnel shortages out there it doesn't seem like it but I thought I would ask.
No I think that.
We still are going to experience, we expect through the balance of the year, a little bit of deflationary trend.
Before we expect to see some time next year, a slight uptick reminder, that we are major expenditure of ours is drilling and completions.
Ono and operate all of our own rigs and those people are <unk> employees that we're thrilled to have and so they are a part of the organization and the Frac business as well and so we are insulated from cost swings in that space.
I think our procurement group has done a terrific job of really stretching out the horizon contracting out longer term expenditures, where we can obviously anything that requires additional resources.
We've got to make sure that those are there and that they are competent to do what we need them to do but we don't expect.
Georges and I think we're in a pretty good position from the standpoint of having to rightsize the business.
And control over some major.
Expenditures from vertical integration.
Yes, just.
Go ahead, John add to that would be the self sourcing of sand that we do through our <unk>.
Supply chain group and that is also a big benefit for us.
No definitely noticeable in your costs that you took them down day. Thanks, guys.
The next question comes from Holly Stewart of Scotia, Howard Weil. Please go ahead.
Thanks, Mike.
Good morning, Good morning, gentlemen, good morning Britney.
Maybe I'll I'll I'll start off here Bill on just the free cash flow guide I mean, I think based on our expectations at this point, you're you're pretty handily going to exceed that guidance. So is it is it just time that you need or I guess, what do you need to see to gain comfort in.
And sort of elevating that guidance level.
Yeah, Hey, it's Michael I think the way we look at it we kind of gave some some calibration data points for everyone right with the $2, 77% and $50 oil gives you about $275 million and then you get to $3 $58 oil gives you more than 375, obviously prices have strengthened the business that conversation so.
They change price prices change daily so obviously it moves around but youre exactly right with what you've seen strength and since then you'd be on the upper end of that so we'll continue to watch that as we move throughout the year, but.
Youre <unk>.
You are right with your thinking okay. Okay, great and then maybe Michael another one for you just it looks like you paid down all of that 133 on onto the revolver I guess as you move forward with additional free cash flow in 2021.
How do you think about balancing that down that revolver versus the 'twenty twos.
Yeah, I think the 'twenty twos, we've looked at before there.
They are funded I'd say with the free cash flow right. So it's just a matter when you want to take those out and sometimes we've tried to take those out before and haven't had a lot of luck on early.
So I think we feel very comfortable as you get the end of this year into next year, we will take those out in due time if.
Before I know you've only taken out before that we have plenty of liquidity to do it. So I think you'll focus will be on the <unk> right now and then 'twenty two does come in time.
And maybe one more follow up if I could clay you mentioned flat castle and that was sort of a blast from the past from our montage days.
And I can't recall, if you said, how many uppers where in the.
The well count for this year. So just any any color you can provide on just if theres a flat castle.
A program in place for this year versus.
Versus an upper well count.
Sure the upper that we planned in the budget was two straight upper Marcellus wells, so continuing to progress the trend there.
The thought on the podcast oil was just with the new asset there as we continue to progress our resource to reserves effort.
There are some interesting.
<unk> there that our team is doing detailed studies on and we don't have any.
Wells planned there in the budget this year, but we're continuing to watch it just a final comment there is we.
We've been maintaining flat production that went up a little bit last year in northeast App, when we reallocated capital.
But to stay flattish were somewhere around 30 wells a year.
And so.
We've got quite a bit lower Marcellus.
To choose from in that mix, and then sprinkle in and the upper end continuing to progress the flat castle.
That's helpful. Alright, Thank you guys.
Thank you.
The next question comes from Dan <unk> of Jpmorgan. Please go ahead.
Yes, So let me start with your Clay I was just wondering if you could.
Give us some thoughts on the Ohio Utica program. This year I think you are planning to do.
12, 15 wells, there and just some thoughts on that program.
Type of recoveries per thousand do you anticipate and how does kind of capital efficiency here compare.
Two <unk>.
<unk> assets in northeast App in southwest App.
Sure. So we talked about we drilled our first pad there our teams did a great job.
Using our drilling rigs incorporating.
The improvements around efficiency and cycle time that we've been realizing on the existing assets and bringing those over into the Ohio, Utica and those wells have gone as expected with the reductions that we had modeled in we're currently completing them.
And we expect those will come online in <unk>.
Like you said, we've guided to 12 to 15 wells there this year.
We get the incremental benefit.
From that program of now consistently.
Consistently drilling Utica wells and all the learning thats going to come from that.
We keep applying that to the understanding.
On this one legacy asset Utica and how we can keep bringing those costs down and keep working on the resource to reserves effort in the Utica also so that's a nice additional benefit with the high rate of these wells, they're going to have efficiencies net.
Maybe similar to our dry gas in northeast Appalachia, but with a little bit higher cost, we've got them modeled at $725 a foot well costs, which is a little elevated over what we're seeing in northeast app because of them being deeper.
We've got $100 a foot.
Out of what previous operators have been doing and we expect to keep improvement on that trend.
Great that's helpful.
Perhaps one for you Bill.
I've spoken a little bit about M&A recently.
But I wanted to get your thoughts.
The company has folded in montage seamlessly not really missing a beat.
There.
As we think about U S shale consolidation last year was a big year for public to public partnerships, including what you guys did with montage.
More recently, we've seen a bit more news flow with the publics.
Privates.
<unk>.
Transacted and we're hearing about more.
In terms of speculation around privates put themselves up for sale. So I know you guys look at everything within the Appalachia basin, but would love to get your thoughts on.
What youre seeing on the M&A front and perhaps.
Your thoughts on potentially looking at consolidation within the basin or other call. It natural gas plays such as the Haynesville.
I appreciate you I. Appreciate your question as you know we continue to believe in consolidation as we've talked about before but we believe in and in accordance with our very well established framework in that framework leads off by doing the right deal the right way.
I'll use our montage acquisition as evidence of that.
That's a.
As a screen for how we look at any opportunity and we continue to study.
Ideas, we continue to think that consolidation makes sense and where you can bring those ideas into some kind of a an opportunity and then get that opportunity done the right way.
And make the right deal for shareholders then we we.
We'll consider it and until then I think that.
We will watch the market, we will launch our core competencies and capabilities.
We might leverage those.
And come back to you sometime in the forward world when we identify something thats of interest to us in the in line with all of that.
Great. Thanks, a lot.
The next question comes from the wrong Shawn training all of Goldman Sachs. Please go ahead.
Hi, good morning, and thank you for taking my questions.
Good morning.
Wanted to follow up on your comments on consolidation.
Can you remind us again, what are the key considerations. When you assess these opportunities with respect to either Mike macro oil with respect to Mike Wilkins concentrations.
Yes, I mean, obviously.
We've got a very rigid framework and that includes.
Issues like I, just spoke about and finding the right deal that can be done the right way and we can we can bring the value to the shareholders certainly synergies are important but when you look at sort of the way. We evaluate these it's all of the major balance sheet metrics and being accretive to those we're going to protect our balance sheet, we're going to look forward and.
And do an end study deals that.
Our accretive on each of the critical.
Metrics.
That matter to shareholders.
We're going to watch the contribution of any future debt to those kinds of things and again, we've got an objective to get to a sustainable two times and were right.
Physicians well to do that so we're not going to undo the progress that we've made in any respect I think as you look at the.
The macro.
They've got to be strong returns and we've got to have some ability to hedge those returns to ensure that the commitments that we've made are delivered.
The.
Complementary nature of our existing business to new opportunities.
And again the critical skills that we believe we have the differentiate us from an operating perspective are important so that we can deliver the value. We said that we're going to deliver so kind of the right to own meaning the right deal done the right way.
Ensuring execution of that deal. So that's the primary drivers that we look at it.
Thank you that was really helpful.
And.
A quick one from me.
How do you define sustainable leverage of two times is it any particular gas plays.
Are you price and if yes could you share that with us.
Yes, I think it's not necessarily a.
Definition calculator mobile number, but I think as you look forward you have to feel comfortable that it is sustainable with your expectations of the forward strip right and you can see what we're doing this year with.
Stripped around $2 75 to 80 type number.
To the to the extent that that softened a bit you would obviously want to make sure you had a little bit of cushion there to get.
Any kind of uptick from a from a blip on the commodity side, but.
It really rule as it revolves around that among its what your outlook is in your business plan that the EBITDA you plan to generate.
Got it that's helpful. Thank you.
The next question comes from Noel Parks of Tuohy Brothers. Please go ahead.
Good morning.
Good morning.
I Wonder if you touched a little bit.
In Monroe County.
You mentioned improving cycle time, but beyond that could you just walk through what the components are of that $100 per foot.
Well cost improvement.
You are looking to realize out there I am assuming some of that might also be on the completion side.
Yes, definitely it's a combination of drilling completions and facilities just like we've driven the cost down and this win legacy assets in <unk>.
More efficient.
Drilling.
The benefit of our supply chain on the cost side.
The benefit of.
How we're going to complete the wells.
The work, we do on prefab and facilities so that.
We lower cost and then shortening.
The overall timeframe.
To get the wells from spud to turn in line. So it's a combination of all the things that we've done.
On our.
Legacy assets.
Greg.
Right, Thanks and.
I.
Turning a bit too.
A little bit of the macro environment.
Actually.
Let me let me ask you about the Utica you also mentioned that with.
What youre learning from the montage assets that you're.
Looking to apply some of that too to the legacy southwestern Utica.
You.
Yes, I can recall you did.
Pretty little.
The Utica in the year or two before montage. So do you do you have a sense of.
I don't know is there may be a linchpin of of improvement that could.
Could bring that that legacy Utica much closer to being able to compete for capital.
Yes.
In general we always talk about how we focus.
On our full inventory of opportunities and continue to bring that resource.
Into the economic arena, and that's what I'm speaking of with the Utica The learning lab of drilling wells right now in Ohio is benefiting the cost side of that we've got significant lower Marcellus opportunities that we're continuing to develop right now so none.
This legacy Utica is imminent by any means it's just a way to keep improving the economics of the deeper inventory bench that we have and I think some of a lot of our success in some of these newer areas. I believe is supported by our team's disciplined and methodical approach to.
Extending their knowledge and proving out that concept and then delivering exactly what they said the analogy can be how we've drilled these ultra long laterals. We didn't go from 10000 feet to 25000 feet. All in one go just to show that we can draw drill long laterals and there was a very methodical test approach.
<unk>.
Timely as well.
Disciplined net.
Great success. So when we can learn out of alive reservoir fly those learnings to ours.
To the legacy it's a great thing to do.
The extensive inventory we have in Marcellus means there is no rush and.
And we can.
Continue to build.
Build that position.
Thanks, a lot.
Yes.
Once again, if you would like to ask a question. Please press Star then one.
The next question will come from Karl Blunden with Goldman Sachs. Please go ahead.
Hi, Good morning, this is Gerald <unk> Carl.
Good good progress so far in 2021 towards your balance sheet targets. Just wondering if you would consider going.
Going below that two <unk> target.
Goal on the revolver balances to actually bring that to zero.
Yes, I think from the first part of the question. The two times, yes, I think thats, possibly you could I mean, when we say sustainable times it for even when things get a little bit more challenging you want to make sure you are controlling the balance sheet and keeping it strong.
I think as you get to that two times you reassess as I've mentioned earlier on much of a bunch of different variables to see is it prudent to go a little lower is it prudent to start to return capital to shareholders is a combination of both so so I think all of that would be considered.
What was the second part.
Just to go on the revolver balances to actually bring that to zero.
Oh, Yes, I think thats right.
We view.
<unk> is temporary that that should be paid down with free cash flow I think you've seen a lot of people go out there and extend theirs.
And refinance them with long term notes and make it a little bit more permanent debt, we're not quite aligned with that thinking.
We are in.
We focus on strengthening the balance sheet, knocking out that temporary debt and so I think thats, what youll see us focus on.
That makes sense. Thank you and then just from my follow up I appreciate the commentary on the 'twenty twos.
What time do you start to think about the longer David notes.
Yes, I think it's something that definitely something we stay aware of I mean, we do work on it.
Even.
Now when I were watching what we could do at what options are out there.
The debt markets are.
Much improved over where they were when we went to the market in August. So it's something you look at I think you balance.
John.
Refinancing things and an appropriate level, but not do it too early.
And obviously looking at all the costs associated with that kind of activity. So definitely something we keep up to date with and something that we could look at doing but Dan.
The nice thing about our maturity runway is it gives us net flexibility to only do it if it's opportunistic.
Understood I'll turn it over thank you. Thank you.
Okay.
The next question comes from Sean from Northland. Please go ahead.
Alright. Thanks. Good morning, I think you guys were one of the first companies to do responsibly sourced.
<unk>, maybe it was the new Jersey resources.
Possibly for premium gas realizations could you comment on how that might have worked out if you see this.
As an emerging opportunity are still a bit of a science project out there and.
Just your thoughts in general.
On getting paid for your superior ESG achievements.
Well, we certified our first wells a few years ago.
Executed several pilot agreements actually in several states.
And coupled with our position in ghd and methane intensity, along with all of our other ESG positioning.
Whether it's chemical disclosures or.
Leading practices in ESG, I think it's positioned us physicians as well as a candidate for future transactions. We have a number of wells that are that are certified and we've got a number of.
Real opportunities that we're working as we speak and so when those are complete we can talk more about it.
We believe that it's the right thing to do.
It's completely aligned with our our view on ESG in.
And that's not just a new practice, it's something we've been doing for years.
And we will continue it.
Got it and just a follow up on that so is there a.
Our commercial advantage.
In doing this as well or these deals being done so you get a premium net back.
Yes. This is Jason So I think yes, I think so that's the.
That's our goal is trying to figure out how to monetize our environmental proven performance and extremely low methane emissions.
That's the goal from a from a sales perspective, and an opportunity that's out there.
Okay, great. Thanks look forward to the net transactions. Thank you.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Bill way for any closing remarks.
Thank you and thank you to everybody who joined US today I think we're off to a great start in the year.
A year that looks quite promising and filled with opportunities as we move ahead. So thanks for your call. Thanks for being on the call. Thanks for your questions.
And thanks for your support of southwestern energy have a great weekend take care.
This concludes with southwest southwestern energy first quarter 2021 earnings call you may now disconnect.