Effective Nov 1, 2017, this new agreement is anticipated to offer savings of about $70 million from 2017 through 2020. This takes into account savings of about $45 million in 2018 through the reduction of current excess capacity, while assuring future flexible takeaway capacity through 2030 at competitive rates.
Key Components of Revised Agreement
The agreement aims at offering right-sized, fixed-rate, guaranteed long-term takeaway capacity and future option capacity to extremely preferred gulf coast markets. Per the agreement, Fayetteville Lateral volume commitment has been lowered to 100,000 million British Thermal units (MMBTU) per day from 800,000 MMBTU in November 2017 through October 2020 at existing rates. The amended firm transportation agreements and demand fees are likely to commence in 2021 at about 10 cents per MMBTU. Firm transportation agreements for about 800,000 MMBTU beginning in 2021 will decrease each year.
Benefits of the Agreement
The agreement provides Southwestern Energy an opportunity to accelerate activity in the Fayetteville and Moorefield area at viable transportation rates without incurring extra liabilities during times of lower activity. It also boosts margins and lowers further demand capacity while securing option capacity for future development.