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Southwestern (SWN) Rises 7.9% on Q1 Earnings & Revenue Beat

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Southwestern Energy Company’s (SWN - Free Report) shares are up 7.9% since it reported strong first-quarter earnings on Apr 29. The better-than-expected results and the recent recovery scenario in the oil and gas industry are expected to have driven the stock price up.

The company reported first-quarter earnings of 29 cents per share, which beat the Zacks Consensus Estimate of 26 cents. Moreover, the bottom line improved from the year-ago quarter’s 10 cents per share.

Quarterly operating revenues of $1,072 million outpaced the Zacks Consensus Estimate of $924 million. Also, the top line increased significantly from $592 million in the prior-year quarter.

The strong quarterly results can be attributed to enhanced natural-gas-equivalent production volumes and higher commodity price realizations.

Southwestern Energy Company Price, Consensus and EPS Surprise

 

Total Production

The company’s total first-quarter production increased to 269 billion cubic feet equivalent (Bcfe) from 201 Bcfe a year ago. Gas production in the reported quarter was 214 Bcf compared with the year-ago level of 156 Bcf.

Moreover, natural gas liquids’ production in the quarter under review was 7,578 thousand barrels (MBbls), higher than the year-ago level of 6,128 MBbls. Also, oil production increased to 1,662 MBbls from 1,399 MBbls in the year-ago quarter. Notably, almost 79.6% of its volume mix constituted natural gas.

Average Realized Prices

The company’s average realized gas price in the reported quarter, excluding derivatives, increased to $2.11 per thousand cubic feet (Mcf) from $1.53 a year ago. Oil was sold at $48.14 per barrel compared with the year-earlier level of $36.72. Moreover, natural gas liquids were sold at $22.86 per barrel, significantly higher than $8.16 in the year-ago period.

Expenses

On a per-Mcfe basis, lease operating expenses were 93 cents compared with the prior-year level of 96 cents. However, general and administrative expenses per unit of production were 13 cents versus 11 cents in the year-ago quarter.

Total operating costs and expenses in the reported quarter were at $771 million, down from the year-ago level of $2,082 million.

Financials

Southwestern’s total capital investment in the first quarter was $266 million, higher than the year-ago quarter’s $237 million. Free cash flow in the reported quarter was $88 million.

As of Mar 31, 2021, the company’s cash and cash equivalents were $4 million, lower than the December-end quarter’s $13 million. Long-term debt was $2,812 million, lower than the previous quarter’s $3,150 million. The figure represents a debt-to-capitalization of 82.8%.

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The company plans to strengthen its balance sheet and maximize value with disciplined investment across its portfolio. Notably, it expects to utilize the free cash flow generated in 2021 to pay off debt and proceed toward its lower leverage targets.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are PDC Energy, Inc. (PDCE - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), NOW Inc. (DNOW - Free Report) and Royal Dutch Shell Plc (RDS.A - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1  Rank stocks here.

PDC Energy’s earnings for 2021 are expected to increase 5.6% year over year.

NOW’s bottom line for 2021 is expected to surge 397.8% year over year.

Shell’s bottom line for 2021 is expected to increase 17.3% year over year.

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