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Southwestern (SWN) Declines 6% Despite Q1 Earnings Beat

Southwestern Energy Company SWN declined 6.2% despite reporting better-than-expected first-quarter 2023 results. Rising lease operating expenses and weak gas pricing scenario add to the concerns, although differentiated access to premium markets partially nullifies the negative.

Southwestern reported first-quarter earnings of 31 cents per share, beating the Zacks Consensus Estimate of 27 cents. The bottom line, however, declined from the year-ago quarter’s earnings of 40 cents.

Quarterly operating revenues of $2,118 million surpassed the Zacks Consensus Estimate of $1,895 million. The top line, however, decreased from the year-ago quarter’s $2,943 million.

Total Production

Southwestern’s total first-quarter production decreased to 411 billion cubic feet equivalent (Bcfe) from 425 Bcfe a year ago. Gas production of 353 Bcf declined from the year-ago level of 376 Bcf.

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Natural gas liquids’ production in the quarter under review was 8,240 thousand barrels (MBbls), higher than the year-ago level of 6,919 MBbls. Yet, oil production jumped to 1,418 MBbls from 1,270 MBbls. Almost 85.9% of its volume mix constituted natural gas.

Average Realized Prices

Southwestern’s average realized gas price in the reported quarter, excluding derivatives, decreased to $3.22 per thousand cubic feet (Mcf) from $4.50 a year ago. Oil was sold at $65.92 per barrel compared with the year-earlier level of $86.30. Natural gas liquids were sold at $24.39 per barrel, lower than $39.33 in the year-ago period.

Expenses

On a per-Mcfe basis, lease operating expenses were $1.05 compared with the prior-year level of 94 cents. General and administrative expenses per unit of production were 10 cents compared with 9 cents a year ago.

Financials

Southwestern’s total capital investment in the first quarter was $657 million.

As of Mar 31, 2023, the company’s cash and cash equivalents were $3 million. Long-term debt was $3,935 million.

Guidance

For the second quarter, Southwestern projects total production in the band of 408 Bcfe to 420 Bcfe.

Zacks Rank & Stocks to Consider

Currently, Southwestern carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Murphy USA Inc. MUSA, Sunoco LP SUN and Cactus, Inc. WHD. While Murphy USA carries a Zacks Rank #2 (Buy), Sunoco and Cactus sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is a leading retailer of gasoline. MUSA has more than 1,700 stores and has witnessed upward earnings estimate revisions for 2023 earnings in the past seven days.

Sunoco, a distributor of motor fuel to approximately 10,000 convenience stores, has a stable business model. For this year, SUN has witnessed upward earnings estimate revisions in the past seven days.

Cactus has been aiding its clients in fast-tracking their well drilling and completion activities. The company has also been enabling lower operator emissions per barrel of production. Thus, there has been a significantly lower carbon intensity per well.

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Southwestern Energy Company (SWN) : Free Stock Analysis Report

Sunoco LP (SUN) : Free Stock Analysis Report

Murphy USA Inc. (MUSA) : Free Stock Analysis Report

Cactus, Inc. (WHD) : Free Stock Analysis Report

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