- Corporate Responsibility
- Royalty Owners
Dear Fellow Shareholders,
As we enter the third year of the COVID-19 pandemic, your Board is thankful that the pandemic has had minimal impact on the Company’s business, although we realize that the impact on everyone’s personal lives has been felt far more profoundly. As one global crisis appears to be waning, we are deeply saddened by the emergence of another. Southwestern Energy Company firmly supports the inspiring resolve of the people of Ukraine as they seek to defend their freedom and unequivocally condemns unnecessary and unjustified violence and loss of life.
Such events highlight the risks and uncertainty that every business faces and have galvanized attention on the dual risks of supply chain and global energy security. The crisis in Ukraine has made the value of responsibly produced natural gas from politically stable regions increasingly apparent. These events will only serve to facilitate the acceleration of the ongoing energy transition, and Southwestern Energy remains poised to play a meaningful role in the transition as a secure supplier of responsibly produced natural gas long into the future.
Positioned for the Energy Transition
Our focus on long-term shareholder value has led to continued improvement in Southwestern Energy’s existing business, and this past year was a pivotal one in the execution of our long-term strategy as your Board oversaw the disciplined execution of two strategic acquisitions. The acquisitions of Indigo Natural Resources, LLC and GeoSouthern Haynesville, LLC were the result of an intentional strategy to improve the Company’s economies of scale, bring greater exposure to the LNG corridor, and ensure the Company’s inventory depth for years to come. Importantly, both acquisitions brought improvements to the Company on all measures of shareholder value. The acquisitions position the company well to capitalize on the central role of natural gas in the global energy transition as shown by the following:
- Company-record year-end proved reserves of 21.1 Tcfe
- Company-record year-end after-tax PV-10 of $18.7 billion using SEC pricing
- Approximately 15 years of core inventory across two basins
- 65% of total Company production with access to LNG Corridor/Gulf Coast
The vital role of natural gas as a foundational fuel can only be achieved if it is accompanied by an industry commitment to responsible energy development. Your Board takes this governance responsibility seriously with direct oversight residing with our Health, Safety, Environment, and Corporate Responsibility Committee. In 2021, the Company reduced methane intensity for assets it acquired in 2020 by 24%; the total Company methane intensity decreased by 18%, and the Company has set a goal for 2022 to reduce its methane intensity by another 10%, including for its newly-acquired assets. Importantly, a methane intensity reduction goal was a part of the Company’s compensation program in 2021 and will again be a part of the 2022 compensation program. Further details of our commitment to the environment can be found in this proxy as well as the Company’s annual Corporate Responsibility Report.
While 2021 was a pivotal year for the Company, the groundwork obviously began much earlier. Since 2017, your Board has been consciously constructed with the diversity of skills and perspectives necessary to oversee the Company and the execution of its strategy. During that time, over half of the Board has been refreshed, including three diverse directors that bring the Board’s total diversity to 44% (2 women, 1 Native American, and 1 French national). As important as each director’s background are the specific skills and experiences that each director offers, which, as described more fully in this proxy, bring the right balance of perspectives both from inside and outside of the Company’s industry.
People and Culture
Finally, the Company’s performance in 2021 is a testament to the Company’s culture, and the Board regularly engages with management to ensure alignment among the Company’s culture, values, and strategy. In 2021, for example, the Company conducted its bi-annual employee engagement survey, in which 90% of the Company’s employees participated. Results of the survey were discussed with the Compensation Committee in late 2021 and with the Nominating and Governance Committee in early 2022, and action plans were developed to leverage identified strengths and to address specific feedback.
The Board extends its gratitude to the dedicated and hard-working employees and contractors of SWN who, in the face of a multi-year global pandemic, helped position the Company to return to free cash flow generation and to deliver sustainable returns for you, the shareholder. The past two years have not been easy, and the drive and determination exhibited by the people of SWN is a testament to their internal fortitude and commitment to SWN.
On behalf of the entire Board, thank you for continued investment in SWN.
Catherine A. Kehr
Chairman of the Board