Southwestern Energy Company discovered the economic viability of the Fayetteville Shale and was the first company to drill and successfully produce its natural gas.

At December 31, 2010, Southwestern held leases for approximately 915,884 net acres in the Fayetteville Shale play area (367,206 net undeveloped acres, 423,692 net developed acres held by Fayetteville Shale production, 123,442 net developed acres held by conventional production and an additional 1,544 net undeveloped acres in the traditional Fairway).

During the third quarter of 2011, Southwestern placed a total of 132 operated wells on production in the Fayetteville Shale play, all of which were horizontal wells fracture stimulated using slickwater. At October 23, 2011, the company’s gross production rate from the Fayetteville Shale play was approximately 1.9 Bcf per day, up from approximately 1.5 Bcf per day a year ago. The company’s wells placed on production during the third quarter of 2011 averaged initial production rates of 3,443 Mcf per day. As of October 27, 2011, the company was utilizing 19 drilling rigs in its Fayetteville Shale play, including 12 that are capable of drilling horizontal wells and 7 smaller rigs that are used to drill the vertical portion of the wells.

Also during the third quarter of 2011, the company’s horizontal wells had an average completed well cost of $2.8 million per well, average horizontal lateral length of 4,847 feet and average time to drill to total depth of 7.8 days from re-entry to re-entry. This compares to an average completed well cost of $2.8 million per well, average horizontal lateral length of 4,839 feet and average time to drill to total depth of 8.2 days from re-entry to re-entry in the second quarter of 2011. In the third quarter of 2011, the company had 25 operated wells placed on production which had average times to drill to total depth of 5 days or less from re-entry to re-entry. In total, the company has had a total of 80 wells drilled to total depth of 5 days or less from re-entry to re-entry.

In 2011, Southwestern expects to invest approximately $1.5 billion, which includes midstream capital investments, and participate in 632 gross wells.

In 2012, Southwestern plans to invest approximately $1.4 billion, including midstream capital investments, and participate in approximately 580 to 590 gross wells in the Fayetteville Shale play, 490 to 500 of which will be operated. Nearly all of the company’s drilling in the Fayetteville Shale in 2012 will be on multi-well pads, which should result in faster drilling times and other efficiencies. The company expects that the average time to drill its operated horizontal wells to total depth from re-entry to re-entry will decrease in 2012 to approximately 7.4 days from approximately 8.0 days projected for 2011.