OREANDA-NEWS. Southwestern Energy, the fourth largest producer of US natural gas by volume, raised its 2015 output guidance on the performance of new Marcellus wells as the company cut costs and secured new pipeline capacity.

The US independent's production from its Marcellus shale assets in northeast Pennsylvania surged to about 956mn cf/d (27mn m?/d) of natural gas equivalent (cfe), up by 43pc from a year earlier. Its output from the West Virginia portion of the field, which includes acreage acquired late last year from Chesapeake Energy, hit 385mn cfe/d.

Southwestern boosted its full-year production outlook to 973 Bcfe-982 Bcfe, up from its previous guidance of 940 Bcfe-955 Bcfe. The revised outlook includes 6 Bcfe of gas associated with divested assets in east Texas and the Arkoma basin.

"We have increased guidance on our already record production levels," said chief executive Steve Mueller.

Southwestern and other large independents such as Devon Energy and Pioneer Natural Resources have increased their production targets, despite slumping oil and gas prices, thanks to falling service costs and to new drilling and completion techniques that are boosting well output. Southwestern trimmed its 2015 capital budget to $1.88bn, down by 7pc from its previous spending plan.

In addition, Southwestern secured rights to firm capacity for 500mn cf/d on Columbia Pipeline Group's Mountaineer Xpress and Gulf Xpress pipelines, two projects that aim to take 2.7 Bcf/d of gas from the Marcellus shale to markets in the mid-Atlantic and Southeastern US by November 2018.

The additional capacity lifts Southwestern's firm takeaway capacity from its Southwest Appalachia holdings to 800mn cf/d, or enough to cover 80pc of its production, assuming a 35pc growth rate per year in 2016 and in 2017. The average transportation costs covered under those agreements are 60?/mmBtu, the company said.

The Marcellus is the largest gas-producing field by volume in the US. But producers there are scrambling to acquire the capacity needed to connect new wells with lucrative gas markets. Marcellus gas prices are typically among the lowest in the country during the non-winter months and can spike during periods of peak winter demand because of pipeline constraints.

Southwestern is in talks to add additional capacity. It also plans to evaluate new opportunities after 2018.

"We fully expect the cost of transportation to moderate" as new capacity comes on line, said Southwestern's president Bill Way during a conference call with investors.