Southwestern Energy (SWN) Q4 Earnings Beat, Reserves Grow

Southwestern Energy CompanySWN delivered fourth-quarter 2017 adjusted earnings of 12 cents per share, which beat the Zacks Consensus Estimate of 10 cents. The bottom line also improved from 8 cents in the year-ago quarter.

Quarterly operating revenues of $809 million surpassed the Zacks Consensus Estimate of $798 million and also the year-ago figure of $684 million.

The surge in production and increase in commodity price realizations primarily contributed to the strong fourth-quarter results. Following the outperformances, the stock gained nearly 4% yesterday.

Production and Realized Prices

During the fourth quarter, the company's total production increased 18.3% year over year to 239 billion cubic feet equivalent (Bcfe). Northeast Appalachia contributed the most to its total production.

The company's average realized gas price in the quarter, including hedges, rose to $2.12 per thousand cubic feet (Mcf) from $2.07 per Mcf in the year-ago quarter. Oil was sold at $48.05 per barrel, increasing from the year-earlier level of $41.18. Natural gas liquids were sold at $17.98 a barrel, up from $12.08 in the prior-year quarter.

Segmental Highlights

Adjusted operating income from the Exploration and Production (E&P) business unit increased from $82 million in the year-ago quarter to $114 million. The rise in gas equivalent output and the surge in commodity prices aided the outperformance.

On a per-Mcfe basis, lease operating expenses were 91 cents, increased from 87 cents in the prior-year quarter. However, general and administrative expenses per unit of production were 22 cents, lower than 27 cents in the prior-year quarter.

Operating income for the Midstream Services unit also jumped from $40 million in the year-ago quarter to $54 million, owing to the higher margin from marketing operations.

Q4 Price Performance

During the October-to-December quarter, Southwestern Energy slipped 8.6% as compared with the industry's 9.1% rally.

Capex and Debt

The company's total capital expenditure through 2017 was approximately $1.3 billion. As of Dec 31, the company's long-term debt was $4.4 billion, which represents a debt-to-capitalization ratio of 44.2%.

Reserves Grow

The company's total proved reserves, as of Dec 31, was recorded at 14,775 Bcfe, significantly higher than 5,253 Bcfe in the year-earlier period.

Zacks Rank & Key Picks

Southwestern has a Zacks Rank #4 (Sell). However, better-ranked players in the energy sector are Statoil ASA STO , Pioneer Natural Resources Company PXD and Concho Resources Inc. CXO . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Headquartered in Stavanger, Norway, Statoil is a major international integrated energy player. The company is expected to witness year-over-year earnings growth of 17.1% in 2018.

Headquartered at Irving, TX, Pioneer Natural Resources is an upstream energy firm. The company has an average positive earnings surprise of 66.9% for the last four quarters.

Headquartered in Midland, TX, Concho is also an upstream energy company. The firm is likely to witness year-over-year earnings growth of 73.2% in 2018.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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