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Southwestern Energy (SWN) Q4 Earnings Beat, Reserves Grow

Zacks Equity Research
Updated

Southwestern Energy Company SWN 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.

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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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Southwestern Energy Company (SWN) : Free Stock Analysis Report
 
Statoil ASA (STO) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
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