Dear Fellow Shareholders,

As we as a nation face unprecedented worries of the spread of the novel coronavirus, your Board and the Company’s management are focused foremost on the health and safety of SWN’s employees while also maintaining the health of SWN as an enterprise. Operational excellence, integrity, transparency and respect for the environment remain at the heart of SWN’s culture, and we are committed to preserving and promoting these key values at this difficult time.

Risk Management and Oversight

While the current environment has only heightened the risks facing the enterprise, your Board proactively and regularly engages with management to carefully monitor a wide range of risks, including:

  • Commodity prices and hedging
  • Health, safety and environment
  • Financial strength and flexibility
  • Talent development, retention and compensation
  • Cyber security
  • Asset integrity
  • Reserves and resource development
  • Transportation and related commitments
  • Third-party performance/exposure
  • Regulatory matters and social license

The importance of proactive and effective commodity risk and balance sheet management was especially highlighted this past year, and SWN’s current hedge position and financial flexibility should provide significant risk mitigation as we navigate this difficult time ahead.

Strategy Oversight

Strategy is a constant topic for your Board and management. We approach these discussions through the lens of a shareholder with the objective of delivering returns on our investments in excess of SWN’s cost of capital. The rate of change in our industry has risen dramatically, and without a doubt, we know the future of the industry will look quite different from that of the past. As a Board, this challenge demands that we maintain a laser focus on strategic oversight and risk mitigation.

2019 Performance

SWN continued to deliver enhanced performance in 2019, and differentiates itself as a leader in responsible development, cost-efficient production and financial flexibility.

  • SWN reduced well costs by 27% and extended lateral lengths to over 10,000 feet through operational execution and efficiencies, while enhancing well performance.
  • The cost structure of the Company was further improved, with gross G&A and interest savings of $122 million; building on the savings realized in 2018.
  • SWN’s financial flexibility remained strong, with a year-end leverage ratio of 2.3x, $1.8 billion in liquidity and no material maturities until 2025.
  • The Company continued strong environmental stewardship, being a pacesetter in methane emission reductions, achieving its fourth consecutive year of freshwater neutrality, being recognized by environmental groups as the leader in water-related disclosure and reaching a milestone of 11 billion gallons of freshwater returned to the environment.

Governance Best Practices and Board Composition

As described more fully in this proxy statement, your Board has in place leading governance practices. We regularly refresh the depth and breadth of our collective skills and experience set, with half of our directors having joined the Board in the past three years. Last summer, we added Denis Walsh, who brings a strong investor perspective based on years as a portfolio manager overseeing energy investments at two large institutional fund managers. Half of our directors are women or from nontraditional backgrounds for a U.S. company.

Your Board believes that continuous and effective performance evaluation is an essential component of good governance. On an annual basis, each director provides an evaluation of the processes and effectiveness of the full Board and the committees on which she or he sits. In addition, with the assistance of an outside firm, each director provides anonymous feedback on the performance of the other directors. We take this feedback into account in deciding committee structure, evaluating Board composition and determining whether directors should be renominated.

And finally, on behalf of the entire Board, let me say thank you. Thank you to everyone in the communities where SWN operates helping with the fight against COVID-19. Thank you to all of SWN’s employees and contractors who remain dedicated to working safely and responsibly in keeping SWN’s operations going through a very disruptive time. More than ever, this is a moment when we should define ourselves by our values and our culture.


Catherine A. Kehr
Chairman of the Board