Independent energy company, Southwestern Energy Company (SWN) announced that it is commencing registered underwritten public offerings of 20.26 million shares of its common stock and 26.0 million depositary shares.
Southwestern Energy will grant the respective underwriters a 30-day option to purchase up to 3.04 million additional shares of its common stock and to solely cover overallotments up to 3.90 million additional depositary shares. The proceeds from the offerings will be used to partially repay borrowings under Southwestern Energy's $4.50 billion 364-day bridge term loan facility. As of Sep 30, 2014, long-term debt stood at $1,806.0 million, representing a debt-to-capitalization ratio of 30.0%.
The company’s total capital expenditure during the first nine months of 2014 was approximately $1,713 million. This included expenditures of $705 million in the Fayetteville Shale, $502 million in the Marcellus Shale, $247 million in the Niobrara, $97 million in the Brown Dense, $82 million for Drilling Rigs, $64 million in New Ventures, $7 million in E&P Services and $3 million in its Ark-La-Tex division.
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 that the company is well positioned for production growth, given its streamlined cost structure, upcoming drilling programs in the Fayetteville and Marcellus shales, and a 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, allows Southwestern little space 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 Exterran Holdings, Inc. (EXH), each sporting a Zacks Rank #1 (Strong Buy).
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