Southwestern Energy (SWN) Incurs Loss in Q2, Guides Up
Independent natural gas operator, Southwestern Energy Company SWN reported second-quarter 2016 adjusted loss of 9 cents per share, narrower than the Zacks Consensus Estimate of loss of 11 cents. The company had reported a loss of 2 cents in the prior-year quarter.
Southwestern Energy Company Inc. (SWN) EPS BNRI - Last 5 Quarters | FindTheCompany
Quarterly operating revenues of $522 million missed the Zacks Consensus Estimate of $524 million. The top line also decreased from $764 million in the second quarter of 2015.
Production and Realized Prices
During the reported quarter, the company’s oil and gas production declined 8.2% year over year to 225 billion cubic feet equivalent (Bcfe).
The company’s average realized gas price for the quarter, including hedges, fell to $1.32 per thousand cubic feet (Mcf) from $2.23 per Mcf in the year-ago period. Oil was sold at $32.46 per barrel, significantly below the year-earlier level of $40.88. Natural gas liquids were sold at $6.41 per barrel, down from $5.77 in the year-ago period.
Segmental Highlights
Operating loss from the company’s Exploration and Production (E&P) segment was $68 million for the second quarter, narrower than the operating loss of $104 million in the year-ago quarter. The decrease was primarily due to lower realized natural gas prices and increased operating costs from higher activity levels. This was partially offset by the revenue impact of higher production volumes.
On a per-Mcfe basis, lease operating expenses were 87 cents, higher than the prior-year level of 93 cents. Also, general and administrative expenses per unit of production were 21 cents, flat year over year.
SOUTHWESTRN ENE Price, Consensus and EPS Surprise
SOUTHWESTRN ENE Price, Consensus and EPS Surprise | SOUTHWESTRN ENE Quote
Operating income for the company’s Midstream Services segment was $57 million compared with $77 million in the year-earlier quarter. As of Jun 30, 2016, the company’s Midstream Services segment was gathering approximately 154 Bcf per day.
Capex and Debt
As of Jun 30, 2016, the company had approximately $5,767 million in long-term debt, representing a debt-to-capitalization ratio of 91.0%. The company had a debt-to-capitalization ratio of 42.2% in the prior-year quarter. During the first six months of the year, Southwestern invested a total of $196 million. This is down from $971 million invested in the corresponding period of 2015.
Guidance
Southwestern increased its production guidance for 2016 by 45 Bcfe or 5% to 865–875 Bcfe from its earlier guidance of 815–835 Bcfe.
Of this, about 371–374 Bcf is expected from the Fayetteville Shale, about 345–348 Bcf is expected from Northeast Appalachia and 147–151 Bcfe is expected from Southwest Appalachia.
Zacks Rank
Southwestern holds a Zacks Rank #2 (Buy). Other favorably placed players from the energy sector are Sasol Ltd SSL, Dril-Quip, Inc. DRQ and ReneSola Ltd. SOL. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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