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Southwestern Energy's (SWN) Stock Up 13% Since Q3 Earnings

Southwestern Energy Company’s SWN shares have gained more than 13% since its earnings announcement on Oct 24. The company met earnings expectations on the back of liquids production growth, a trait if continued, will likely boost the bottom line in the coming quarters.

Let’s delve deeper.

Southwestern Energy reported third-quarter 2019 adjusted earnings of 8 cents per share, matching the Zacks Consensus Estimate but declining from the year-ago profit of 25 cents.

Quarterly operating revenues of $636 million missed the Zacks Consensus Estimate of $647 million and declined from $951 million in third-quarter 2018.

The quarterly earnings were supported by higher liquids production, partially offset by average realized commodity prices.

Total Production Declines

The company’s total third-quarter production fell to 202 billion cubic feet equivalent (Bcfe) from 252 Bcfe in the year-ago period. Gas production in the quarter was 158 Bcf, lower than the year-ago level of 215 Bcf.

However, oil production surged to 1,419 thousand barrels (MBbls) from 998 MBbls in the year-ago quarter. Natural gas liquids production in the quarter under review was recorded at 5,911 MBbls, higher than year-ago level of 5,181 MBbls. It is to be noted that nearly 22% of its volume mix constituted of liquids in third-quarter 2019, higher than 14.7% in the year-ago period.

Average Realized Prices Fall

The company’s average realized gas price in the quarter, excluding hedges, fell to $1.45 per thousand cubic feet (Mcf) from $2.14 a year ago. Oil was sold at $46.54 per barrel compared with the year-earlier level of $61.20. Natural gas liquids were sold at $8.89 per barrel, lower than $21.60 in the year-ago period.

Operational Highlights

In the quarter under review, operating loss was recorded at $29 million against operating income of $66 million in the year-ago period.

On a per-Mcfe basis, lease operating expenses were 94 cents compared with the prior-year level of 92 cents. General and administrative expenses per unit of production were 15 cents, down from 18 cents in the year-ago period.

Financials

Southwestern Energy’s total capital expenditure during the third quarter was approximately $240 million.

As of Sep 30, 2019, the company’s cash and cash equivalents were $29 million. Long-term debt was $2,219 million, which represents a debt-to-capitalization ratio of 41.4%.

Guidance

The upstream energy player expects 2019 capital spending within $1.15 billion, owing to efficiency gains. For full-year 2019, the company expects lease operating expenses in the range of 90-94 cents per Mcfe.

Zacks Rank and Stocks to Consider

Currently, Southwestern Energy has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Lonestar Resources US Inc. LONE, CNX Resources Corporation CNX and Contango Oil & Gas Company MCF. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lonestar’s 2020 earnings per share are expected to rise 77% year over year.

CNX Resources’ 2019 earnings per share have witnessed two upward movements and no downward revision in the past 30 days.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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Southwestern Energy Company (SWN): Free Stock Analysis Report
 
CNX Resources Corporation. (CNX): Free Stock Analysis Report
 
Lonestar Resources US Inc. (LONE): Free Stock Analysis Report
 
Contango Oil & Gas Company (MCF): Free Stock Analysis Report
 
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