Independent natural gas operator, Southwestern Energy Company SWN reported third-quarter 2016 adjusted earnings of 3 cents per share that missed the Zacks Consensus Estimate of earnings of 5 cents. Lower realized natural gas prices led to the underperformance.

The bottom line, however, came in above the year-ago adjusted figure of 1 cent due to lower exploration expenses and higher natural gas liquids (NGL) prices.

Quarterly operating revenues of $651 million surpassed the Zacks Consensus Estimate of $626 million. The improvement in oil prices drove the upside. The top line, however, decreased from $749 million in the third quarter of 2015 owing to lower production. 

Production and Realized Prices

During the reported quarter, the company’s oil and gas production declined 15.3% year over year to 211 billion cubic feet equivalent (Bcfe).

The company’s average realized gas price for the quarter, including hedges, fell to $1.73 per thousand cubic feet (Mcf) from $2.21 per Mcf in the year-ago period. Oil was sold at $35.41 per barrel, higher than the year-earlier level of $33.50. NGL was sold at $7.04 per barrel, up from $4.72 in the year-ago period.   

Segmental Highlights

Operating loss from the company’s Exploration and Production (E&P) segment was $777 million in the third quarter, much narrower than the operating loss of $2,910 million in the year-ago quarter. The improvement was owing to lower cost from operations and increased NGL prices.

On a per-Mcfe basis, lease operating expenses were 86 cents, lower than the prior-year level of 92 cents. Also, general and administrative expenses per unit of production were 23 cents as against 20 cents in the year-ago comparable period.

Operating income for the company’s Midstream Services segment was $52 million compared with $68 million in the year-earlier quarter.

Capex and Debt

As of Sep 30, 2016, the company had approximately $4,651 million in long-term debt, representing a debt-to-capitalization ratio of 80.6%. Over the nine months of the year, Southwestern invested a total of $376 million as against $2,054 million invested in the corresponding period of 2015.

SOUTHWESTRN ENE Price, Consensus and EPS Surprise

SOUTHWESTRN ENE Price, Consensus and EPS Surprise | SOUTHWESTRN ENE Quote

Zacks Rank

Southwestern holds a Zacks Rank #3 (Buy). Some better-ranked players from the energy sector are Helix Energy Solutions Group, Inc. HLX, W&T Offshore Inc. WTI and Ultra Petroleum Corp. UPLMQ. All the stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Helix Energy posted an average positive beat of 56.42% over the last four quarters.

W&T Offshore is projected to witness year-over-year earnings growth of 25.5% for the current year.

Ultra Petroleum is projected to witness year-over-year earnings growth of 148.4% for the current year.

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SOUTHWESTRN ENE (SWN): Free Stock Analysis Report
 
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