Southwestern (SWN) Q3 Earnings Beat Estimates on Lower Costs
Southwestern Energy Company SWN reported adjusted third-quarter 2023 earnings of 10 cents per share, beating the Zacks Consensus Estimate of 8 cents. The bottom line, however, declined from the year-ago quarter’s earnings of 32 cents.
Quarterly operating revenues of $1.44 billion beat the Zacks Consensus Estimate of $1.42 billion but declined from the year-ago quarter’s $4.54 billion.
Better-than-expected quarterly results were owing to declining total operating costs. This was offset partially by lower realized commodity prices.
Southwestern Energy Company Price, Consensus and EPS Surprise
Southwestern Energy Company price-consensus-eps-surprise-chart | Southwestern Energy Company Quote
Total Production
Southwestern’s total third-quarter production decreased to 425 billion cubic feet equivalent (Bcfe) from 443 Bcfe a year ago and also missed our estimate of 437 Bcfe. Gas production of 368 Bcf declined from the year-ago level of 389 Bcf and missed our estimate of 378 Bcf.
Natural gas liquids’ production in the quarter under review was 8,228 thousand barrels (MBbls), higher than the year-ago level of 7,788 MBbls. Oil production jumped to 1,310 MBbls from 1,173 MBbls. Almost 86.6% of its volume mix constituted natural gas.
Average Realized Prices
Southwestern’s average realized gas price in the reported quarter, excluding derivatives, decreased to $1.66 per thousand cubic feet (Mcf) from $7.42 a year ago. Our estimate of $1.83 per Mcf also suggests a decline.
Oil was sold at $71.09 per barrel compared with the year-earlier level of $84.34. Natural gas liquids were sold at $20.53 per barrel, lower than $33.33 in the year-ago period.
Expenses
On a per-Mcfe basis, lease operating expenses were $1.06 compared with the prior-year level of $1.02. General and administrative expenses per unit of production were 10 cents compared with 8 cents a year ago.
Total operating costs and expenses were reported at $1.44 billion, suggesting a decline from $2.13 billion in the September quarter of 2022.
Financials
Southwestern’s total capital investment in the third quarter was $454 million. As of Sep 30, 2023, the company’s cash and cash equivalents were $26 million. Long-term debt was $4.11 billion.
Guidance
For the fourth quarter, Southwestern projects total production in the band of 400 Bcfe to 420 Bcfe.
Zacks Rank & Stocks to Consider
Southwestern currently carries a Zacks Rank #3 (Hold). Two better-ranked players in the energy space are Matador Resources Company MTDR and Exxon Mobil Corporation XOM. While ExxonMobil carries a Zacks Rank #2 (Buy), Matador Resources sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources has a strong presence in the oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Promising oil price is likely to aid it in increasing production volumes. Matador acquired Advance Energy Partners Holdings, LLC, which comprises several oil and natural gas-producing properties and undeveloped acreage. MTDR expects the buyout to be accretive to important valuation and financial metrics.
In order to have a dominant presence in the Permian, ExxonMobil has entered into a staggering $59.5 billion all-stock deal to buy Pioneer Natural Resources PXD. Pioneer Natural is one of the foremost oil producers operating in the Permian Basin, the most prolific basin in the industry.
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