Southwestern’s CEO confident in natural gas
Despite sliding natural gas prices, Southwestern Energy chief executive Steven Mueller is confident in the direction of his Houston-based business.
Though natural gas prices last week hit their lowest level in two years — and despite the fact that many exploration and production companies have largely abandoned natural gas in the age of America’s oil boom — the company is doubling down on its investment.
Southwestern announced plans this week to increase its capital spending next year by $200 million to $2.6 billion at a time when a slew of other Houston exploration and production companies continue to announce cuts.
And while speculation mounts about the near-term future of Houston’s energy sector workforce at a time when crude oil prices have dropped 50 percent this year, Mueller said his company is hiring.
“If some people are leaving some of the other companies — we’d certainly be willing hire some of the higher-quality ones,” Mueller said in an interview with FuelFix. “We have an active hiring program.”
As oil companies lose workers as they face 2015 cuts, Mueller said, Southwestern may be able to attract them. “We see this as an opportunity,” Mueller said.
Earlier this year, it agreed to pay a combined $5.3 billion in two transactions to acquire 443,000 net acres from Statoil and Chesapeake Energy in Ohio, Pennsylvania and West Virginia.
Some industry analysts have suggested Southwestern overpaid. But Mueller said his company believes its moves will pay off.
He said the company has been designed to make money with natural gas priced in the high-$3 to low-$4 per million British thermal unit range. Natural gas was trading at $3.19 per million British thermal units Tuesday afternoon, but he sees that price rising next year.
That’s because utilities continue to shift from coal to natural gas-fired power plants, and inexpensive natural gas in the U.S. has a distinct price advantage compared to natural gas sourced abroad, which come bring more manufacturing here, further driving demand.
“We’re really a gas-driven company,” Mueller said. “Today’s gas prices are low. We’re a little bit contrarian. We don’t think it will stay in that low $3 range.”
https://fuelfix.com/blog/2014/12/30/southwesterns-ceo-confident-in-natural-gas/
