Independent natural gas operator,
Southwestern Energy Co.
) reported third-quarter 2013 earnings of 51 cents per share
(excluding unrealized gain on derivative contracts), in line with
the Zacks Consensus Estimate. Moreover, the figure improved 34.2%
from the year-ago quarter's adjusted profit of 38 cents per
Third-quarter revenues increased 25.5% to $868.4 million from the
year-ago level of $691.7 million and comfortably surpassed the
Zacks Consensus Estimate of $849.0 million.
The improvement came on the back of increased production from
Marcellus shale operations as well as higher gas price
Production and Realized Prices
During the reported quarter, the company's oil and gas production
grew 19.5% year over year to 172.4 billion cubic feet equivalent
(Bcfe) - almost entirely gas - driven by increased Marcellus
Shale operations. Production from Southwestern's Fayetteville
shale plays decreased 0.7% from the year-earlier period to 122.7
Bcfe. However, output from the Marcellus shale plays increased
196.0% from the prior-year quarter to 44.7 Bcfe.
The company's average realized gas price, including hedges,
jumped 5.6% to $3.60 per thousand cubic feet (Mcf) from $3.41 per
Mcf in the year-ago period. Oil was sold at $106.72 per barrel,
up 7.1% from the year-earlier level of $99.67 per barrel. Natural
gas liquids (NGL) were sold at $42.05 per barrel.
Operating income for the Exploration and Production (E&P)
segment increased substantially 50.5% year over year to $222.7
million in the third quarter. Increased output level and improved
gas price realization aided the results which were however
partially offset by a rise in operating expenses.
On a per-Mcfe basis, lease operating expenses were 87 cents
versus 79 cents in the prior-year quarter. On the other hand,
general and administrative expense per unit of production
increased 14.3% year over year to 24 cents.
The Midstream Services segment's operating income increased 15.0%
to $86.7 million in the third quarter from $75.5 million in the
year-earlier quarter. Improvement in operations related to
gathering from the Marcellus and Fayetteville shale plays aided
Capex and Debt
The company's total capital expenditure was approximately $1.8
billion, of which $1.6 billion was invested in E&P activities
and $135 million in the Midstream segment.
As of Sep 30, 2013, long-term debt was $1,911.2 million,
representing a debt-to-capitalization ratio of 35.0%.
Southwestern has increased its production guidance for 2013 to
653-655 Bcfe from its earlier estimate of 643-651 Bcfe.
MATADOR RESOURC (MTDR): Free Stock Analysis
NORTHRN OIL&GAS (NOG): Free Stock Analysis
SOUTHWESTRN ENE (SWN): Free Stock Analysis
VOC ENERGY TRST (VOC): Free Stock Analysis
To read this article on Zacks.com click here.
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 performing oil and gas
exploration and production firms like
Matador Resources Company
Northern Oil and Gas Inc.
VOC Energy Trust
) that offer value. All the stocks sport a Zacks Rank #1 (Strong