Southwestern Energy (SWN) Q1 Earnings And Revenues Beat

Independent natural gas operator, Southwestern Energy Company’s (NYSE:SWN) first-quarter 2017 results improved due to higher realized natural gas and liquids prices as well as lower operating expenses.

The company reported first-quarter adjusted earnings of 18 cents per share beat the Zacks Consensus Estimate of 17 cents. Last year, the company had incurred a loss of 8 cents per share.

Quarterly operating revenues of $846 million surpassed the Zacks Consensus Estimate of $738.6 million and also increased substantially from $579 million in the first quarter of 2016.

Production and Realized Prices

During the first quarter, the company’s total production declined 14% year over year to 204 billion cubic feet equivalent (Bcfe).

The company’s average realized gas price for the quarter, including hedges, rose to $2.57 per thousand cubic feet (Mcf) from $1.48 per Mcf in the year-ago period. Oil was sold at $43.74 per barrel compared with the year-earlier level of $18.65. Natural gas liquids were sold at $13.28 per barrel as against $4.98 in the year-ago period.

Segmental Highlights

Operating income from the Exploration and Production (E&P) segment was $225 million for the first quarter. The company reported operating loss of $1.2 billion in the last-year comparable quarter. The increase was primarily driven by higher realized natural gas and liquids prices as well as lower operating costs. This was partially offset by reduced production volumes.

On a per-Mcfe basis, lease operating expenses were 89 cents compared with the prior-year quarter level of 88 cents. General and administrative expenses per unit of production also increased to 21 cents from 19 cents in the prior-year quarter.

Operating income for the company’s Midstream Services segment was $41 million in the first quarter compared with $63 million in the year-ago quarter. The decline in operating income largely stemmed from a decrease in volumes gathered due to lower production volumes in the Fayetteville Shale.

Capex and Debt

The company’s total capital expenditure during the first quarter was approximately $290 million. As of Mar 31, 2017, the company’s long-term debt was $4.4 billion, which represents a debt-to-capitalization ratio of 77.3%.

Zacks Rank

Southwestern currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Diamond Offshore Drilling Inc. (NYSE:DO) , China Petroleum & Chemical Corporation (NYSE:SNP) and Bellatrix Exploration Ltd. (TO:BXE) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Diamond Offshore Drilling posted a positive earnings surprise of 341.67% in the preceding quarter. It beat estimates in all of the four trailing quarters with an average positive earnings surprise of 353.28%.

Bellatrix Exploration posted a positive earnings surprise of 240.00% in the preceding quarter. It beat estimates in three of the four trailing quarters with an average positive earnings surprise of 58.54%.

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