Horizon Summer 13 (v05).indd

horizon
Spring 13 | An informative newsletter for Arkansas land and royalty owners
economic impact
$1 Billion
Paid in Fayetteville Shale Royalties
Across the nation, it’s estimated that the shale gas
industry alone will add more than 1 million new jobs by
2035. The natural gas boom is rippling through other
industries that rely on the resources we gather, creating
even more jobs and tax revenue while decreasing our
dependence on other countries.
As a SWN partner, you know the importance of the industry to our
national economy.
have. For this area, it’s a blessing.”
Closer to home, you’ve seen firsthand how the industry creates jobs
and provides economic stability to sustain our communities, and
Southwestern Energy is proud to announce that royalties paid to our
landowner partners in the Fayetteville Shale have exceeded $1 Billion.
“Southwestern Energy is thrilled to reach this incredible milestone of
providing over $1 billion paid in royalties to our landowners in the
Fayetteville Shale play,” said David Evans, SWN director of regulatory
and community relations. “We have a long history in the region, and
we do our best to respect landowners’ property while forging strong
relationships that are beneficial for all. We are grateful they have
chosen to partner with us.”
Landowners are an essential part of SWN’s long-term growth plan to
discover new natural gas and oil reserves in addition to economically
develop existing projects.
Thomas House of Judsonia, Ark., attributes the sustained and
improved economy in his area to the natural gas industry, “Since the
recession in 2008, we haven’t had near the impact that other places
For Thomas, a retired truck driver and Vietnam Veteran, and his wife,
Darlene (pictured above), royalties have had a significant impact on
how they have been able to spend their retirement and invest in their
farm.
“Last year was a tough year for cattle. If it weren’t for Southwestern,
I’d have had to sell out of that part of the farm business,” Thomas said.
“They’ve done everything they said they’d do and they even worked
with me when we didn’t agree on the expansion of the well pad on
our land.”
In addition to royalties, SWN plays an active and supportive role in
the communities where we work. That begins by fully understanding
our local impact and is enhanced by building and nurturing
relationships with local officials, community members, and
businesses, and by creating partnerships with local organizations.
continued on pg. 2
NOTICE AND DISCLAIMER: The information contained in this document is as of May 8, 2013, and has not been updated to reflect subsequent
events or revisions of the company’s plans, projections, expectations or other statements that may be deemed to be forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. For additional information with respect to Southwestern Energy Company and factors that may affect its performance, see the
reports filed by the company with the Securities and Exchange Commission.
SWN aids
storm victims
O
n the evening of April 10, an EF2 tornado with peak
winds between 111 and 135 mph wrought a 17.4 mile
path of destruction through Van Buren County.
Thankfully no lives were lost, but the National Weather
Service reports five homes were destroyed and 33 others
damaged. Numerous trees were downed or snapped
causing issues for emergency responders trying to reach
victims of the storm.
“We take pride in being responsible
members of our partners’ communities
and families, and we are committed to
continual support of those who are
integral parts of our operations.”
- David Evans
continued from cover
The communities where we work are also the communities where we live.
We take pride in being accepted as an important part of each
community in which we operate, and that compels us to continuously
carry out our operations responsibly and with high standards.
While a number like $1 billion is impressive, what’s more meaningful are
stories like the Houses’ and Linda Nabors’s of Conway, Arkansas:
“The Fayetteville Shale and SWN literally ‘saved the farm’ for our family.
My dad retired from the business world at a fairly young age (55) but
was sure raising cattle and hay would pay the bills. And it did for a while
until his health started to decline as well as cattle prices. He had social
security benefits, but any funds he could have put away went to buying
land.
‘Well, land is a great investment,’ he always said, ‘they aren’t making any
more land.’ He loved the farm too much to ever dream about selling it
until the day finally came when he thought he would have let go of parts
of the 300+ acres. And then the gas boom started. Thanks to the
royalties and lease payments from SWN, the family farm was saved
intact.
My dad passed away in March of last year but my mother, brother, and I,
are carrying on his love of this land. We have been doing improvements
on the land and we think he would be proud.”
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Immediately after the storms passed, Southwestern Energy
personnel and our family of construction vendors provided
volunteers and heavy equipment to help with recovery
efforts in and around Clinton.
SWN worked with Van Buren County Judge Roger Hooper to
provide resources for clearing roadways for emergency
access to affected residents. Crews worked to clear debris
from Moores Lake, Ginger, Butter Creek, Hardy Hill roads,
Highways 65 and 16 north of Clinton.
The morning after the storm, SWN reached out to the
Salvation Army and the American Red Cross to identify
needs and provide support.
Arrangements were made to deliver an 18-wheeler stocked
with bottled water, and SWN sponsored the Salvation
Army’s meal service, providing $3,000 to cover expenses.
Over the course of two days that week, the Salvation Army
helped to provide several hundred meals, drinks and snacks
to first responders, volunteers and victims of the storm in
and around Botkinburg.
SWN also contributed $5,000 to the American Red Cross to
support their ongoing disaster recovery efforts in the area.
If you would like to learn how you can help victims of the
April 10 storm, visit American Red Cross of Greater Arkansas’
website at www.redcross.org/arkansas.
in the community
Everyday Heroes
49 grants awarded
to area fire departments
S
ince its establishment in 2008, SWN has distributed
more than $525,000 to emergency response
organizations in our six county operating area – Cleburne,
Conway, Faulkner, Pope, Pulaski and White Counties
through our annual SWN Everyday Heroes recognition
program. These funds have been used to purchase a
variety of equipment ranging from pagers to equipping
pumper trucks.
This Spring, three recognition dinners were held for
volunteer fire departments in locations throughout the
Fayetteville Shale – St. Mary’s Parish Hall in Conway
County, SWN’s Damascus Training Facility in Van Buren
County, and Eagleview in White County. Attendees
included representatives from each of the participating fire
departments, SWN employees, and local elected officials.
Pope County VFD
Conway County VFD
Faulkner County VFD
Cleburne County VFD
Van Buren County VFD
White County VFD
Over the course of the three events, 49 grants were
presented totaling $49,000 to area volunteer fire
departments.
Pipeline Safety
We’re working to ensure the safe transport of natural gas
T
he rupture of the Pegasus pipeline operated
by ExxonMobil Corp. on April 26 in Mayflower
has generated widespread media coverage.
As a result, various blogs and editorials have
circulated questioning overall pipeline safety.
DGC, a subsidiary of SWN Midstream
Company, works with the Arkansas Oil and
Gas Commission (AOGC) to ensure its pipeline
network in the Fayetteville Shale complies with
all pipeline safety requirements. DGC’s pipelines
are designed and built to be compliant with
the AOGC Part D-17 and the Department of
Transportation Pipeline and Hazardous Materials
Safety Administration Part 192 requirements.
Southwestern Energy Company (SWN) does
not operate any crude oil pipelines similar to the
Pegasus pipeline. At SWN, we want to reassure
residents in the Fayetteville Shale that we are
committed to exploring for and producing natural System pressures are monitored 24 hours a day,
7 days a week. In addition, steel lines are under
gas in a safe, environmentally-responsible
cathodic protection (CP) to prevent deterioration
manner.
from corrosion, and data from CP rectifier units
are reviewed monthly. DGC works with a thirdDeSoto Gathering Company’s (DGC) network
party contractor to conduct a yearly survey
of pipelines is used to carry the natural gas
on the steel pipeline network to ensure all CP
recovered from wells in the Fayetteville Shale
devices are working correctly.
to interstate pipelines. The Fayetteville Shale
formation produces only dry natural gas, so no
hydrocarbon liquids are transported through the
system.
Southwestern Production Company | Spring 13
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A BYRD’S
EYE VIEW:
NEW WATER
TREATMENT
FACILITY
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W
ater use in our industry will
continue to be a top environmental
concern as long as fossil fuel
operations exist. Utilization of this vital
resource is not something we take lightly.
SWN has been a leader in water recycling
and is an innovator when it comes to
water. So it comes as no surprise that we
have developed a water treatment facility
in Arkansas that enhances our ability to
return water to the environment.
The first of its kind (with others to
follow), the SWN Judsonia Water Reuse/
Recycling Facility covers 160 acres and
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is located just north of Searcy on the
east side of the Fayetteville Shale play.
The facility eliminates the need to truck
produced water long distances for disposal
by other methods. By treating the water
here instead, we can actually return water
to the ecosystem in the same shape we
found it in (or better). The first purified
water discharge into the Byrd Pond was on
Feb. 1, 2013, with plans to discharge 2,000
barrels per day or approximately 84,000
gallons per day. We also have the ability
to add an additional treatment train and
double capacity in the future.
Did you know?
Our fracture stimulation design
in the Fayetteville Shale allows us
to use less pure water and more
recycled water that has already
been used to frac another well.
Produced water is the most
challenging for us to reuse on
site, but now it can be treated
and/or stored at this facility.
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FACILITY PROCESS FLOW
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Truck Unloading Station – Produced water is transported here by truckload.
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Storage Impoundment – Able to hold 250,000 barrels of water for either treatment or reuse, this lined
impoundment includes a leak detection system and groundwater monitoring program.
4
Treatment Equipment – The input water containing salts, metals and suspended solids is routed through
the system where metals are precipitated out and solids are mechanically skimmed from water and
isolated. Mechanical vapor recompression is conducted to purify/desalinate the water by a third-party.
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Verification Tanks – Water is held here and tested to ensure the stringent permit limits required by the
Arkansas Department of Environmental Quality are met prior to discharge. On a daily basis, we monitor pH
level, dissolved oxygen, salt and metal content.
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Brine Storage & Loading Station – 20% of the water treated at this facility will remain as concentrated
brine (salt water) and require transport and disposal. We also have the ability to load trucks with untreated
water from the facility to be recycled for nearby frac operations.
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Discharge Point – Fresh water is released into the Byrd Pond on the property, which drains to a creek and
through Holcomb Branch, Arkansas.
Primary Settling Impoundments – Large sediment naturally settles to the bottom of these lined
impoundments.
Southwestern Production Company | Spring 13
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Announcing ECH2O:
Energy Conserving Water, a Southwestern Energy imperative.
hen scientists are searching for life on other planets, they
look for water or signs that water existed there. That’s how
important water is as a resource. It’s essential to life.
W
the Fayetteville Shale. So, is it really possible to offset this large
volume of water and all our other fresh water uses to become net
neutral?
While water is a universally important resource, it’s also local. You
can look to recent headlines and see that the State of Arkansas
is expecting continued drought conditions this year, while the
Midwest is currently experiencing severe flooding.
Southwestern Energy has committed to demonstrating that it is
possible. And by taking the lead, we will position ourselves to help
create opportunities within the industry. It’s part of our Value+
approach. By working proactively, we can take a more balanced
approach to developing energy for our country and achieve the
greatest benefit for our stakeholders.
The importance of water as a natural resource is self-evident.
We understand this, and are developing operational practices
and programs to protect and conserve it, including our efforts
related to water recycling, sustainable water sourcing via pond
construction, and wetland restoration.
The importance of water to local communities, the environment
and the economy is reflected in the initiative set forth by
V+ Development Solutions, the newly formed division of our
Company charged with addressing such challenges. It also points
to why Southwestern Energy is pursuing ECH2O: our imperative to
become net neutral regarding our use of fresh water.
“We believe reaching for that goal is not only the right thing
to do, but it will deliver extra value both economically and for
the environment,” said CEO Steve Mueller. “Work by both the
Fayetteville and Marcellus Shale teams has shown that we
can shrink our water footprint through reducing, reusing and
replenishing water. In 2012, that work provided value through
eliminating the need for two of three disposal wells in the
Fayetteville Shale.”
Water has always been, and will continue to be, an essential
resource for energy development. Last year, SWN used more
than 43 million barrels of fresh water for completions work in
6 horizon
In order to offset 100% of the volume of fresh water used in SWN
operations over the next three years, we will focus on four key
areas:
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First, we will reduce fresh water demand for our operations by
reducing the total volume of water needed, or replace fresh
water with alternatives.
Second, we will protect water resources, minimizing our
impact on the watersheds where we work.
Third, we will pursue innovative technologies that will provide
new means for water treatment or new ways of replacing
water.
Finally, we will work with state agencies, municipalities, nongovernmental organizations and other industries to find ways
to improve the quality of water and the efficiency of water
use in local watersheds.
SWN has made water sourcing and conservation a priority and
ECH2O is the next step in developing operational practices to
protect and conserve it. These projects and many more will be
part of our ECH2O initiative.
Partnership brings
Defensive Driving to High School Freshmen
Did you know drivers between the ages of 15 and 24 make up 14
percent of licensed drivers, yet make up 27 percent of the people
involved in vehicle collisions? Every year, almost 11,000 drivers
aged 15-24 die in motor vehicle crashes.
These statistics are alarming – and preventable. So Southwestern
Energy, with the help of the Safety Council of the Ozarks and
the National Safety Council, is working
to provide a solution here in the
Fayetteville Shale.
SWN has been partnering with Morrilton
High School (MHS) to present a pilot
of the National Safety Council’s Alive
at 25 defensive-driving program to
the freshman class. SWN employees
with National Safety Council instructor
certification taught the four-hour course
to 147 ninth-graders, presenting one unit
to each class period over the course of
four days.
Alive at 25 uses videos, workbook exercises, class discussion,
and role-playing to help young drivers develop strategies to make
good decisions and stay safe when they’re behind the wheel.
“Our students really enjoyed the Alive at 25 presentations,” said
Leeann Mobley, MHS Alive at 25 partnership coordinator. “They
were very interesting and got them to thinking about real-life
situations. The presenters were well-prepared and knowledgeable
and the video clips were engaging.”
SWN and MHS plan to continue the program by presenting Alive
at 25 through the High School 101 freshman orientation classes
each fall.
“I am very satisfied with the program and
look forward to continuing this relationship
with SWN. Thanks so much for taking the
time and effort to present this valuable
program to our students at Morrilton High
School,” Mobley said.
As a natural extension of the SWN Street
Smart roadway safety program we
provide for our vendors, SWN is excited
to partner with area schools to discuss
roadway safety with these young drivers.
The important messages about distracted driving, preparing for
possible hazards, and making good choices while driving will
positively impact their driving behavior.
SWN would like to extend this opportunity to other schools in the
Fayetteville Shale. However, parents are needed to help sponsor
and promote this opportunity within their local school. If you are
interested in learning more about this opportunity, please email
streetsmart@swn.com.
Southwestern Production Company | Spring 13
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horizon
Spring 13 | An informative newsletter for Arkansas land and royalty owners
Royalty Owner Q&A
Q:
A:
How do I add my spouse to my account?
In order to add a spouse, or anyone, to an
account, you will need to provide SEECO
with a recorded conveyance document (e.g.,
deed), which transfers interest from you to you and
your spouse. The conveyance document must
be recorded in the county and state where the
minerals are located. If you want someone added
to your account as an attorney-in-fact or under
a “power of attorney,” you will need to provide
SEECO with a document evidencing the same. An
attorney-in-fact or power of attorney allows that
person to get information on your account. Without
such a document, we will not provide information to
anyone but the record owner. We do this to protect
sensitive financial information and ensure the
privacy of all of our owners.
Q:
SEECO operates a well on a lease that I have
with another company. Why is SEECO not
paying my Excess Royalty (royalty in excess of
1/8)?
A:
Under Arkansas law, the company that
owns your lease is responsible for paying
any royalties above 1/8 unless the operator
markets their gas. If your lease contains an Excess
Royalty and you are not receiving that payment
from SEECO, it means we are not marketing gas for
your lessee.
Contact us
We want to make it easy for you to
get in touch with our Landowner
Relations Group.
Southwestern Production Company
Attn: Division Orders/Lease Records
2350 N. Sam Houston Parkway East,
Suite 125
Houston, TX 77032
Or e-mail Southwestern
Production Company at:
ownerrelations@swn.com
Check us out on the web:
www.swn.com/owners
Or contact Southwestern
Production Company by phone:
Owner Relations: 866 322 0801
Fax: 281 618 4757
During our office hours, someone in
our Landowner Relations Group will
be happy to speak with you and
assist you as needed.
Office hours:
Monday through Friday
7:30 a.m. to 4:30 p.m. Central time.