SOUTHWESTERN ENERGY CO - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549


FORM 10-Q

(Mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2003

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from___________ to ___________

Commission file number 1-8246

SOUTHWESTERN ENERGY COMPANY
(Exact name of the registrant as specified in its charter)

Arkansas		71-0205415
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2350 N. Sam Houston Pkwy. E., Suite 300, Houston, Texas 77032
(Address of principal executive offices, including zip code)

(281) 618-4700
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year: if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes: X		No:

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes: X		No:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class		Outstanding at July 24, 2003
Common Stock, Par Value $0.10		35,575,442

PART I

FINANCIAL INFORMATION


SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		For the three months ended				For the six months ended
		June 30,				June 30,
		2003		2002		2003		2002
		(in thousands, except share/per share amounts)
Operating Revenues:
	Gas sales	$	49,286	$	37,606	$	126,993	$	104,592
	Gas marketing		11,667		12,228		24,273		21,930
	Oil sales		3,821		4,416		7,280		7,599
	Gas transportation and other		1,713		1,754		6,596		3,541
			66,487		56,004		165,142		137,662
Operating Costs and Expenses:
	Gas purchases - utility		2,199		3,804		29,247		28,572
	Gas purchases - marketing		10,850		11,454		22,408		20,127
	Operating expenses		9,248		9,505		18,294		19,063
	General and administrative expenses		7,663		6,034		15,546		11,824
	Depreciation, depletion and amortization		13,686		13,868		26,069		27,738
	Taxes, other than income taxes		2,895		2,439		5,958		4,599
			46,541		47,104		117,522		111,923
Operating Income			19,946		8,900		47,620		25,739

Interest Expense:
	Interest on long-term debt		4,075		5,345		9,002		10,699
	Other interest charges		337		336		722		658
	Interest capitalized		(501)		(360)		(866)		(651)
			3,911		5,321		8,858		10,706
Other Income (Expense)			(63)		(232)		1,359		(474)

Income Before Income Taxes, Minority Interest & Accounting Change			15,972		3,347		40,121		14,559
Minority Interest in Partnership			(609)		(469)		(1,374)		(762)

Income Before Income Taxes & Accounting Change			15,363		2,878		38,747		13,797
Provision for Income Taxes - Deferred			5,837		1,108		14,724		5,312

Income Before Accounting Change			9,526		1,770		24,023		8,485
Cumulative Effect of Adoption of Accounting Principle			-		-		(855)		-

Net Income		$	9,526	$	1,770	$	23,168	$	8,485

Basic Earnings Per Share:
	Income Before Accounting Change		$0.27		$0.07		$0.76		$0.34
	Cumulative Effect of Adoption of Accounting Principle		-		-		(0.03)		-
	Net Income		$0.27		$0.07		$0.73		$0.34

Diluted Earnings Per Share:
	Income Before Accounting Change		$0.26		$0.07		$0.74		$0.33
	Cumulative Effect of Adoption of Accounting Principle		-		-		(0.03)		-
	Net Income		$0.26		$0.07		$0.71		$0.33

Weighted Average Common Shares Outstanding:
	Basic		35,053,171		25,208,974		31,614,921		25,146,550
	Diluted		36,087,726		26,131,452		32,558,360		25,995,692

The accompanying notes are an integral part of the financial statements.

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SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS

			June 30,		December 31,
			2003		2002
			(in thousands)
Current Assets
	Cash		$	2,013	$	1,690
	Accounts receivable			38,174		42,115
	Inventories, at average cost			19,837		24,735
	Hedging asset - SFAS No. 133			29		3,130
	Other			5,361		4,468
		Total current assets		65,414		76,138

Investments				14,231		15,287

Property, Plant and Equipment, at cost
	Gas and oil properties, using the full cost method			1,105,819		1,030,300
	Gas distribution systems			201,821		197,473
	Gas in underground storage			34,100		32,395
	Other			31,997		31,391
				1,373,737		1,291,559
	Less: Accumulated depreciation, depletion and amortization			680,391		659,398
				693,346		632,161

Other Assets				15,788		16,576

Total Assets			$	788,779	$	740,162

The accompanying notes are an integral part of the financial statements.

3

SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

			June 30,		December 31,
			2003		2002
			(in thousands)
Current Liabilities
	Accounts payable		$	32,401	$	29,881
	Taxes payable			2,973		5,213
	Interest payable			2,217		2,513
	Customer deposits			4,879		4,999
	Hedging liability - SFAS No. 133			29,968		20,409
	Regulatory liability - hedges			-		3,130
	Over-recovered purchased gas costs			2,032		5,697
	Other			2,982		2,715
		Total current liabilities		77,452		74,557

Long-Term Debt				247,800		342,400

Other Liabilities
	Deferred income taxes			125,486		116,591
	Other			27,654		16,671
				153,140		133,262

Commitments and Contingencies

Minority Interest in Partnership				13,298		12,455

Shareholders' Equity