Independent natural gas operator,
Southwestern Energy Co.
) reported robust first-quarter 2014 results, owing to a
significant increase in production along with higher
Southwestern reported adjusted earnings of 66 cents per share,
surpassing the Zacks Consensus Estimate of 63 cents and the
prior-year quarter's earnings of 42 cents.
Southwestern Energy Company Inc - Quarterly
Earnings Per Share | FindTheBest
Quarterly operating revenues of $1,112.8 million comfortably
beat the Zacks Consensus Estimate of $970.0 million and increased
considerably from $733.7 million in the first quarter of 2013.
Production and Realized Prices
During the reported quarter, the company's oil and gas production
grew 23.0% year over year to 182.0 billion cubic feet equivalent
(Bcfe) - almost entirely gas - driven by increased Marcellus
Shale activities. Production from Southwestern's Fayetteville
shale plays increased marginally 0.4% from the year-earlier
period to 119.4 Bcf. Moreover, output from the Marcellus shale
plays soared 146.8% from the prior-year quarter to 58.0 Bcf.
The company's average realized gas price, including hedges, rose
22.5% to $4.19 per thousand cubic feet (Mcf) from $3.42 per Mcf
in the year-ago period. Oil was sold at $100.43 per barrel, down
6.1% from the year-earlier level of $106.93 per barrel. Natural
gas liquids (NGL) were sold at $50.16 per barrel.
Operating income from the Exploration and Production (E&P)
segment increased 100.3% year over year to $352.1 million in the
first quarter. Improved output level and natural gas prices aided
the results, partially offset by higher operating expenses.
On a per-Mcfe basis, lease operating expenses were 93 cents
versus 81 cents in the prior-year quarter. On the other hand,
general and administrative expenses per unit of production
increased to 25 cents from 21 cents in the prior-year quarter.
The Midstream Services segment's operating income increased 8.0%
to $82.6 million in the first quarter from $76.3 million in the
year-earlier quarter. Higher gas gathering volumes along with
increased marketing margins brought forth the improvement.
Capex and Debt
The company's total capital expenditure in first-quarter 2014 was
approximately $542.0 million, of which $499.0 million was spent
on E&P activities and $39 million was expended in the
As of Mar 31, 2014, long-term debt stood at $1,827.4 million,
representing a debt-to-capitalization ratio of 32.5%.
Southwestern currently retains a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next 1 to 3 months.
Meanwhile, one can look at better-ranked players in the oil and
gas exploration and production sector like
Athlon Energy Inc.
RSP Permian Inc.
Clayton Williams Energy Inc.
). All the stocks sport a Zacks Rank #1 (Strong Buy).
ATHLON ENERGY (ATHL): Free Stock Analysis
WILLIAMS(C)ENGY (CWEI): Free Stock Analysis
RSP PERMIAN INC (RSPP): Free Stock Analysis
SOUTHWESTRN ENE (SWN): Free Stock Analysis
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