Independent natural gas operator, Southwestern Energy Company (SWN) announced its total capital investment program for 2015 of approximately $2.6 billion, compared to a projected $2.4 billion capital program in 2014.
The company also announced its target for total net gas and oil production of 970–980 billion cubic feet equivalent (Bcfe) for 2015, up from the company's current production projection of 758–764 Bcfe for 2014. Assuming a NYMEX commodity price of $4.00 per million cubic feet (Mcf) of gas and $80.00 per barrels of oil for 2015, the company projects full-year 2015 net income of $690 million to $710 million.
Southwestern Energy Company is an independent energy company with wholly owned subsidiaries engaged in natural gas and oil exploration and production and natural gas gathering and marketing. We believe the company is well positioned for production growth, given its streamlined cost structure, upcoming drilling programs in the Fayetteville and Marcellus shales, and wide acreage in New Ventures, especially in the Brown Dense play.
Southwestern boasts a strong balance sheet with significant liquidity and financial flexibility. Moreover, the company’s continuous endeavor in focusing on return on investment and its large drilling inventory, uniquely position it to create significant value for shareholders. Southwestern remains focused on generating economic returns.
On the flip side, natural gas accounts for almost all of the company’s reserves and production. Its results are thus vulnerable to the outlook for natural gas. Moreover, an oversupplied U.S. natural gas market, coupled with lower demand, provides little space for Southwestern to flourish. A volatile macro backdrop also adds to our negative sentiment, as it might lead the company to perform below expectations.
Southwestern Energy currently carries a Zacks Rank #3 (Hold). Investors may consider better-ranked stocks like Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and Sandridge Mississippian Trust II (SDR) all of which sport a Zacks Rank #1 (Strong Buy).
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