Southwestern (SWN) Q4 Earnings Beat on Higher Oil Production
Southwestern Energy Company SWN reported adjusted fourth-quarter 2023 earnings of 17 cents per share, which beat the Zacks Consensus Estimate of 13 cents. The bottom line, however, declined from the year-ago quarter’s figure of 26 cents.
Quarterly operating revenues of $1.7 billion beat the Zacks Consensus Estimate of $1.5 billion. However, the top line declined from the year-ago quarter’s level of $3.4 billion.
Better-than-expected quarterly results were driven by higher oil production and lower marketing purchases. However, the positives were partially offset 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 fourth-quarter production decreased to 410 billion cubic feet equivalent (Bcfe) from 427 Bcfe a year ago and also missed our estimate of 418 Bcfe. Gas production declined from the year-ago level of 372 Bcf to 352 Bcf and missed our estimate of 361 Bcf.
Natural gas liquids production totaled 8,144 thousand barrels (MBbls), higher than the year-ago level of 8,001 MBbls. Oil production jumped to 1,433 MBbls from 1,187 MBbls in the year-earlier period. Almost 86% of its volume mix constituted natural gas.
Average Realized Prices
Southwestern’s average realized gas price in the reported quarter, excluding derivatives, decreased to $2.14 per thousand cubic feet (Mcf) from $5.47 a year ago. Our estimate of $2.17 per Mcf for the metric also indicates a year-over-year decline.
Oil was sold at $67.55 per barrel compared with the year-earlier figure of $74.94. Natural gas liquids were sold at $21.96 per barrel, lower than $25.52 in the year-ago period.
Expenses
On a per-Mcfe basis, lease operating expenses amounted to $1.09 compared with the prior-year level of $1.00. General and administrative expenses per unit of production were 10 cents, flat year over year.
Total operating costs and expenses were reported at $3.22 billion, indicating an increase from $1.87 billion in the December quarter of 2023. General and administrative expenses increased to $54 million from $50 million in the year-ago period. Marketing purchases decreased to $638 million from the prior-year quarter’s level of $1 billion.
Financials
Southwestern’s total capital investment in the third quarter was $417 million. As of Dec 31, 2023, the company’s cash and cash equivalents were $21 million. Long-term debt was $3.95 billion.
Guidance
Southwestern has discontinued providing guidance owing to the pending merger with Chesapeake Energy Corporation.
Zacks Rank and Key Picks
Currently, SWN carries a Zacks Rank #3 (Hold).
Investors might want to look at some better-ranked stocks in the energy sector, such as Energy Transfer LP ET, Talen Energy Corporation TLNE and Archrock Inc. AROC, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. With a pipeline network extending more than 125,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.
Talen Energy is an independent power producer and infrastructure company in the United States. For 2024, it forecasted adjusted free cash flow in the range $150-$300 million. The company has also undertaken a new O&M (operational and maintenance) and G&A (general and administrative) cost savings initiative, under which it has identified specific actions to reduce spending.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
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