SWN / Southwestern Energy: Turnaround situation?

[drbubb]

SWN / Southwestern Energy: Upturn in stock price possible?

SWN may be be set for big turn around in the Stock price... If Natural Gas prices rally soon

Yahoo Finance Book Value : $??.25 per share

 

Completed $200 million share repurchase program, reducing shares outstanding by 8% at an average price of $4.53 per share

Shares O/S: 00.0M x $3.16 = MktCap: $??.5 Million  Financial Position As of June 1, 2019, inventories totaled $327.2 million compared to $329.7 million a year ago. At quarter end, the Company had $30.5 million of cash and cash equivalents, $190.5 million outstanding under its senior secured term loan, $50 million of borrowings under its FILO tranche and $20 million of borrowings under its $350 million revolving credit facility.

SWN / So'western Energy ... all-data : vs-ShComp : 5-yr : 2-yr : 10d - Last: $3.16 +0.10 (yr.L: $3.02)

: 5-yr : 2-yr - Last: $3.16 +0.10 (yr.L: $3.02)

SWN-vs-USO (oil) & NGAS : All : 5-yr : 3yr : 10d : w/rrc, chk :

With USO, Ngas:  2-yr : 1-yr : 10d :

NEWS

Date ET	Symbol	Type	Headline
2019-06-26 10:25	U:SWN	News Release	Bill Way, President & Chief Executive Officer, Southwestern Energy Named Entrepreneur Of The Year ® 2019 Award Winner
2019-06-07 09:00	U:SWN	News Release	Southwestern Energy CEO and President Bill Way Named Finalist in the Entrepreneur of the Year 2019 Program

> Presentation: https://www.swn.com/Pages/default.aspx

[drbubb]

Q1 Conference Call

EXCERPT

On the financial front, we ended the first quarter with the company's best liquidity position in almost four years. Net debt to EBITDA was an impressive 1.7x,down from 4.5x at year-end 2016, a testament to our rigorous focus on balance sheet improvement. We said we would do it,and we did it. Our transition plan is producing results,enabling the company to generate solid investment returns with less capital from lower costs and return to free cash flow by the year-end 2020.Our capital program is disciplined, returns-driven,and fully funded. Capital is allocated to the highest return projects,which are rigorously evaluated based on strip pricing, and as commodity prices are volatile in our industry, I'd like to remind everyone that if commodity prices fall and cash flow funding investments drops below our budget, we will reduce capital investment by a like amount. We will not increase the use of Fayetteville proceeds in 2019 to supplement cash flow resulting from lower prices. This is a critical part of our capital discipline and is another way of saying, like last year, we will not invest more than our capital guidance this year

. . . The next question comes from John Abbott with Bank of America. Please go ahead.

John Abbott: Hi, good morning, guys. Good quarter. Getting towards the end of the hour here,just one quick question. So,for 2020 you have a goal of getting to free cash flow by the end of the year and to get to a 2x net debt to EBITDA target. Now,I know you haven't given really specific guidance on 2020,but if commodity prices did not, were not agreeable,and leverage was by chance higher by the end of the year, is there a certain --how should we think about a certain level of growth that you guys would want to maintain maybe in 2020 to continue to drive down leverage? Is there --in other words,do you need to outspend cash flow or do you still would try to aim within cash flow?

JulianBott: Yes, Imean,you are endlessly pulling levers,and sometimes free cash flow versus leverage are against one another. And so,again,as you look at price environments, if we have unfavorable pricing,you can still potentially achieve free cash flow, but your leverage will suffer because you're putting --you're putting less to grow that EBITDA. I think we look at all the levers, we work through them,and we'll continue to do so.JohnAbbottThat's great. And then,finally,my follow-up question,you gave your inventory for the year and atyour last press presentation. What doesyour current liquids inventory look like average lateral length? And,what is the approximate split between the rich and the super-rich windows?

Clay Carrell: Yes. We extended laterals when we updatedour inventory at the start of the year. So,when we had been talking about 800 rich and super rich locations at the start of the previous year, now that number is around 600. It's roughly 50/50,but between the two areas,and the lateral length now is about 9,000 feet in the inventory versus 7,500 on the previous. So,there's a small amount of consumption, but then the rest of that reduction is just tied to higher return, more xxx

> Transcript: https://www.swn.com/investors/Transcripts/EarningsCallTranscript04262019.pdf

> Presentation: https://www.swn.com/Pages/default.aspx

[drbubb]

> Presentation: https://www.swn.com/Pages/default.aspx

SWN at a Glance

Completed $200 million share repurchase program, reducing shares outstanding by 8% at an average price of $4.53 per share

SWN is an independent energy company with operations focused across 480,000 net acres in the Appalachia Basin

Northeast Appalachia : 100% gas184,024 Net Acres2018 Proved Reserves –4.4 Tcf2019EProduction(3)–1,270 MMcf/d

Southwest Appalachia : 45% gas, 46% NGL, 9% oil297,445 Net Acres2018 Proved Reserves –7.6 Tcfe2019EProduction(3)–833 MMcfe/d

Resource Potential 53 Tcfe TotalDrilling

Locations(1)3,2002018Proved Reserves11.9 TcfeNatural Gas / Liquids67% / 33%2018 ProvedReserve PV-10$6.5B2018Production(2)702 BcfeLiquids (% of production / % of revenues)20% /28%Gross Producing Wells1,1002019EProduction(3)768 Bcfe2018 Year-end Debt$2.3B

===

Building Long-Term Shareholder Value•

Dynamic and disciplined capital allocation •Transition back to free cash flow neutral by end of 2020

•Strong and flexible balance sheet•Diversified commodity risk –gas, NGLs, oil•Improving costs, capital efficiency and operational execution•Recognized environmental stewardship•Identify long-term, accretive

[drbubb]

SWN production & earnings versus Energy prices

SWN-vs-USO (oil) & NGAS : All : 5-yr : 3yr : 1yr : 10d : w/rrc, chk :

: 1yr :

=== :

SWN's PRODUCTION vs. Ebitda, EPS
=== : prod, edit., EPS :
Year :    ————  (2017) /  ————  (2018) /   ————  (2019)* /
Prior: 219.: 180., (0.00)/ 224.: 312, $0.11 / 237.: 371, $0.26 / prior yr./4
Qtr1 : 000.: 000, $0.00 / 226.: 396, $0.28/ 182.: 319, $0.27 /
Qtr2 : 199.: 281, $0.09 /  201.: 317, $0.18 /  
Qtr3 : 205.: 269, $0.06 /  215.: 377, $0.25 /   
Qtr4 : 289.: 385, $0.11 /  304.: 394, $0.31 /  
===
Year* 897.: 1247, $0.44 / 946.: 1484, $1.02 / 948.: 1484, $1.04 /
SWN : 2.19: $0.00, 00.0 / 2.35: $0.00, 00.0 / 2.84: $3.06, 2.94 >2019: 7/1/19
Code: Ngas: SWN, PER /Ngas: SWN, PER / Ngas: SWN, PER / yr.end or 7/1/19
===
*Q1x4 for 2019
> see: pg 26/30: https://www.swn.com/investors/LIP/latestinvestorpresentation.pdf

Operational Results
Total production for the quarter was 182 Bcfe, or 2.0Bcfe per day including natural gas production of 143 Bcf, oil production of 854 MBbls and natural gas liquids of 5.6 MMBbls. SWN invested $325 million in the first quarter, drilling 30 wells, completing 31 and placing 19 to sales.

Financial Results

Southwestern Energy reported net income of $594 million or $1.10 per share for the first quarter of 2019, includinga $426 million non-cash deferred income tax benefit resulting from the release of a tax valuation allowance previously recorded against a deferred tax asset. The Company reported adjusted net income of $145 million, excluding the deferred tax benefit

> https://www.swn.com/investors/Press_Releases/2019/SWNPressRelease04252019.pdf

[drbubb]

Debt Reduction / Sale of Assets

Fayetteville Shale assets were sold in December 2018.

As of March 31, 2019, the Company had $2.3billion of outstanding, long-term, fixed rate notes and had$2.2billion of liquidity, including cash of $366 million. There are no material senior note maturities before 2025. The Company has no borrowings under its $2.0billion secured credit facility, and the borrowing base was recently reaffirmed

Total debt reduction for 2018 was $2.1 billion, including credit facility refinancing and the repurchase of senior notes. During the fourth quarter of 2018, the Company closed on the sale of its Fayetteville Shale assets and used the net proceeds received of $1.65 Billion to repurchase $900 million of senior notes, repurchase shares of common stock and repay all outstanding borrowings under its revolving credit facility, pending additional investments. Cash on hand at year-end was $201 million.

In the first quarter, the Company completed its $200 million authorized share repurchase program, repurchasing a total of approximately 44million shares at an average price of $4.53 per share, resulting in an 8 percent reduction in shares outstanding.

> https://www.swn.com/investors/Press_Releases/2019/SWNPressRelease04252019.pdf

Buyback Authority

Southwestern Energy Announces Extension of Cash Tender Offers and Consent Solicitations for Senior Notes

SPRING, Texas – October 2, 2018...Southwestern Energy Company (NYSE: SWN) (the “Company”) today announced that it has extended the Original Expiration Date for its previously announced offers to purchase for cash (collectively, the “Tender Offers” and each a “Tender Offer”) up to a maximum aggregate purchase price (subject to the respective sub-caps and Acceptance Priority Levels), excluding accrued interest, equal to $901,728,320 of the Company’s 4.10% senior notes due 2022 (the “2022 Notes”), 4.05% senior notes due 2020 (the “2020 Notes”), 4.95% senior notes due 2025 (the “2025 Notes”), 7.50% senior notes due 2026 (the “2026 Notes”) and 7.75% senior notes due 2027 (the “2027 Notes” and, together with the 2022 Notes, the 2020 Notes, the 2025 Notes and the 2026 Notes, the “Notes”) and related Consent Solicitations, upon the terms and conditions described in the Company’s Offer to Purchase and Consent Solicitation Statement dated September 4, 2018 (the “Offer to Purchase”). The expiration date applicable to the Tender Offers and the related Consent Solicitations, previously scheduled for 11:59 p.m., New York City time, on October 1, 2018 (the “Original Expiration Date”), has been extended to 11:59 p.m., New York City time, on November 1, 2018 (such date and time, as extended, the “New Expiration Date”), unless further extended or earlier terminated.

[drbubb]

Production Breakdown -
Qtr.1
Type 2018 : Price : Revs. / 2019 : Price : Revs./
Gas.: 197 : $2.72= $536m/ 143 : $2.95= $422m/
Oil.  : 0.61 : 56.01=  $34.m/ 0.85 : 45.48= $39.m/
NGL: 4.23 : 15.42=  $65.m/ 5.61 : 14.45=  $81m/
Eqv. : 226 : $2.81=$635.m/  182 : $2.98=$542m/
G-% : 87.% ======= 84.% / 79.% ======= 78.%
W/Derivs :  +0.00 = 0.00B /:  +0.00 = 0.00B/
Mkt’g: 00.0M+00.0=0.97B / 00.0M+00.0=1.22 B/
+Other 00.0M+00.0=3.21B / 00.0M+00.0=3.86 B/

====
Type 2017 : Price : Revs. / 2018 : Price : Revs./
Gas.: 797 : $2.32= $1.85B/ 807 : $2.45=$1.97B/
Oil.  : 2.32 : 43.12=  0.10B/ 3.41 : 56.79= 0.19 B/
NGL: 14.2 : 14.46=  0.21B/ 19.7 : 17.91= 0.35 B/
Eqv. : 897 : $2.41=$2.16B/  946 : $2.65=$2.51B/
G-% : 89.% ======= 85.% / 85.% ======= 78.%
W/Derivs :  +0.00 = 0.00B /:  +0.00 = 0.00B/
Mkt’g: 00.0M+00.0=0.97B / 00.0M+00.0=1.22 B/
+Other 00.0M+00.0=3.21B / 00.0M+00.0=3.86 B/

Fayetteville Shale assets sold in December 2018.

Appalachia production up 14percent to 182 Bcfe,liquids up 33percent to 71,740barrelsper day, Appalachia revenue up 13percent;Generated Adjusted EBITDA of $319 million, net cash provided by operating activities of$442 million and net cash flow of$309million;

Invested capitaltotaling$325 million in the quarter, consistent with front-loaded capital plan;Improved E&P marginby 14 percent to $1.79per Mcfe, as a result of improved differentialsand lower expenses;Realized a $46million, or 32percent, reduction in general and administrative and interest savings in the first quarter;Continued strength ofbalance sheet with net debt to EBITDA of 1.7times,excluding 2018 Fayetteville EBITDA,liquidity in excess of $2 billion

NATGAS Prices - at/near an important low ?

Natgas over the last three years

Ngas to-WTI Crude

==

Natural Gas Recovers From Multi-Year Lows on Supply Data

The U.S. Energy Department's weekly inventory release showed a smaller-than-expected increase in natural gas supplies. However, the injection was higher than the five-year average and the year-ago rise. Therefore, despite a slight recovery, natural gas prices remained close to the lowest levels in more than three years because of growing fears that soaring production is outpacing demand growth.

Analysis: Less-Than-Expected Rise in Storage

Stockpiles held in underground storage in the lower 48 states rose by 98 billion cubic feet (Bcf) for the week ended Jun 21, below the guidance (of 100 Bcf gain) as per the analysts surveyed by S&P Global Platts. However, the increase was higher than the five-year (2014-2018) average net injection of 70 Bcf and last year’s increase of 71 Bcf for the reported week.

The latest rise in inventories puts total natural gas stocks at 2.301 trillion cubic feet (Tcf) - 236 Bcf (11.4%) above 2018 levels at this time but 171 Bcf (6.9%) under the five-year average.

Fundamentally speaking, total supply of natural gas averaged 94.2 Bcf per day, essentially unchanged on a weekly basis. While dry production inched up to 89.6 Bcf per day from 89 Bcf per day, 2% less gas flowed into the country from Canada.

Meanwhile, daily consumption was up 3.3% to 84.1 Bcf compared to 81.4 Bcf in the previous week primarily due to strong power sector demand amid warmer weather across the Southeast region.

Prices Recover Somewhat

The slightly smaller-than-expected climb in U.S. supplies drove a 5.6% weekly gain for natural gas – the best week since January – erasing some of the steep losses that have taken the commodity to lows not seen since May 2016. Still, natural gas – at $2.308 per MMBtu – is far off the $3.722 per MMBtu 2019-high reached in January. Last week, the fuel hit a more than three-year low of $2.185.

Natural Gas to Trade at Low Levels in the Near Term

The fundamentals of natural gas consumption continue to be favorable. The demand for cleaner fuels and the commodity’s relatively lower price has catapulted natural gas' share of domestic electricity generation to 35%, from 25% in 2011. Moreover, new pipelines to Mexico, together with large-scale liquefied gas export facilities have meant that exports out of the U.S. are set for a quantum leap. Finally, higher consumption from industrial projects will likely ensure strong natural gas demand.  

However, record high production in the United States and expectations for explosive growth through 2020 means that supply will keep pace with demand. Therefore, prices are likely to trade sideways but for weather-driven movements.

Conclusion

Natural gas prices might experience short-lived surge based on positive weather forecasts but any powerful turnaround looks unlikely at the moment. A case in point is the spike seen last week that was mainly on account of expectations of above-average temperatures over the next few days.  

Buy the Dip?

The bearish natural gas fundamentals and its seasonal nature is responsible for the understandable reluctance on investors’ part to dip their feet into these stocks.

Moreover, most natural gas-heavy upstream companies like Gulfport Energy Corporation GPOR, Antero Resources AR, Cabot Oil & Gas Corporation COG, SilverBow Resources, Inc. SBOW, Southwestern Energy Company SWN etc. carry a Zacks Rank #3 (Hold), which means that investors should preferably wait for a better entry point before buying shares in them. Some like Ultra Petroleum Corp. UPL are further down the pecking order, with Zacks Rank #4 (Sell).

If you are looking for near-term natural gas play, Montage Resources Corporation MR might be a good selection. The company has a Zacks Rank #2 (Buy).

[drbubb]

CHK vs SWN ... 5yr : fr.Jan.2016 : 10d / Last;

Ratio: CHK / SWN - rallying from 50%

==

[drbubb]

BOUGHT a few shares of SWN, as it fell to new lows.  Why was it down again?

SWN / Southwestern Energy ... update / Last: $2.88

== WHY Down so much?

The energy complex fell yesterday. Crude oil was down about 5%

OIH- etc... update / Last:

Sym. : Last :  chg.: % chg. : ——-: Yr.Low-High : off Low: vs.High
SWN  $2.88  -0.18, -5.88% (52wk: $2.85 - 6.23): + 0.4% : - 53.8%
NGas $2.24. -0.03,  -1.19%.           ($2.13 - 4.93):  + 5.2% : - 54.6%
WTI : $56.25 -2.84, -4.81%.       ($42.36 - 66.60): +32.8% : - 15.5%
USO: $11.70  -0.58, -4.72%          ($9.23 - 16.24): +26.8% : - 28.0%
OIH.: $14.44 -0.48, -3.22%.        ($13.01 - 27.45): +11.0% : - 47.4%
BTU: $22.95 -1.23,  -5.09%.       ($21.42 - 46.27): +  7.1% : - 50.4%
CHK: $  1.85  -0.11,  -5.61%.          ($1.71- $5.60): + 8.2% : - 67.0%
CNQ: $26.58 -0.39, -1.45%.          (21.85-  37.41): +21.6% : -28.9%
ECA : $ 4.96. -0.18,  -3.50%.          ($4.56- 14.28): + 8.8%  : - 65.3%
COP : $60.10 -2.15,  -3.45%.       ($56.75- 80.24): + 5.9% :  - 25.1%
====

[drbubb]

Update: SWN :

Yesterday:

SWN, the one I bought for you at $3.10, was: $2.85 -0.03, -1.04%
And
PIR, the one I did not buy closed at $6.23 -0.71, -10.23% - ugly!

 

[jerpy]

Happy to wait a bit but still an interesting reversal play in the making.

[drbubb]

9 hours ago, jerpy said:

Happy to wait a bit but still an interesting reversal play in the making.

Fundamentals look good on this one... unlike PIR which is getting destroyed fast (so far)

I am looking for another Turnaround situation like GCM which has worked so well for me

(I also made money on PEI, NGD, and may soon on MUX.)

[drbubb]

NATGAS is Up. But SWN is not

Natgas - At $2.42. This is 13.6% off its low of $2.13.

SWN closed at $2.84, only 2.52% off its Year Low of $2.77 (made yesterday.)

Ratio is down to just 117.1%

Sym. : Last :  chg.: % chg.:  Yr. Low-High : off Low: vsHigh: EntVal. Ebitda: EV/Eb: PR.BV
SWN  $2.84, +0.02,  +0.71% ( $2.77- 6.23) : + 2.5%: - 54.4%: $3.66B: $1.36B: r2.70 : 52.0%
NGas $2.42. +0.02,  +0.92% ($2.13 - 4.93): +13.6%: - 50.9%:
CHK: $  1.81 Unch., +0.00% ($1.71- $5.60): + 5.8% : - 67.7%: $15.2B : $2.54B: r5.99 : 121.%
RRC : $ 6.22 +0.09, +1.47%. ($5.98- 18.60): + 4.0% : - 66.6%: $1.56B: $100.m: r4.68 : 37.0%
Bte.t: $ 1.84. - 0.03, -1.60%  ($1.80- $4.73): + 2.2% : - 61.1%:  $3.15B: $776.m: r4.05 : 34.0%
Sgy.t: $ 1.27 UNCH, +0.00%  ($1.06- $2.73):+19.8%: - 53.5%:  $870m: $138.m: r6.32 : 48.0%
VII.T : $ 6.30 - 0.14, -2.16%.  ($6.23- 17.27): + 1.1 %: - 63.5% : $4.34B: $1.69B:  r1.36 : 46.0%

[jerpy]

This i thought just needed an energy stock bounce to start shining, so I bought some awhile back at 2.40, I clumsily forgot I’d originally set a $2 price target, some time before.

Fortunately my dumb move, got triggered on the lurch past at $1.92.(no idea why it was never triggered at $2? Couldn’t believe my luck last week and cashed in on the mini bounce back up, managing to sell the lot at $2.20.

So lucky here, totally believe the logic and expected we we were overdue an energy stock bounce any time, so not knocking the pick; just thought it a slightly amusing and fortunate get out of jail trade.

[drbubb]

This one has been a mini-disaster for me.

But I have invested thru an account with many winners, so I hardly notice the big % loss

[jerpy]

2 hours ago, drbubb said:

This one has been a mini-disaster for me.

But I have invested thru an account with many winners, so I hardly notice the big % loss

Yes Dr B, I saw the logic, I think if energy prices turn, it’s a great turnaround opportunity, I got very lucky by poor portfolio management, for once an unexpected bonus.

[jerpy]

Been keeping a watch on these.

Some bounce off around $1.50 to $2.32 now

[drbubb]

SWN / Southwestern Energy Co....fr. 2012 : 2yr : 1yr : 6mo / Last: $2.09 + 0.06

: 1yr : 6mo : 10d :

BOUNCE was assisted by a rise in Natgas prices

SWN to Natgas