Southwestern Q2 Earnings Beat Estimates, Revenues Miss

Southwestern Energy Company SWN reported adjusted second-quarter 2024 earnings of 10 cents per share, which beat the Zacks Consensus Estimate by a penny. The bottom line also increased from the year-ago quarter's figure of 9 cents.

Quarterly operating revenues of $1.1 billion missed the Zacks Consensus Estimate of $1.4 billion and also declined from the year-ago quarter's level of $1.3 billion.

The better-than-expected quarterly earnings can be attributed to higher oil price realization. This was partially offset by lower gas-equivalent production volumes and reduced realized gas prices.

Total Production

Total production decreased to 379 billion cubic feet equivalent (Bcfe) from 423 Bcfe a year ago and missed our estimate of 430.1 Bcfe. Gas production declined from the year-ago level of 365 Bcf to 324 Bcf and missed our estimate of 375.7 Bcf.

Natural gas liquids production totaled 7,908 thousand barrels (MBbls), lower than the year-ago level of 8,247 MBbls. The metric beat our estimate of 7,675.1 MBbls.

Oil production declined to 1,261 MBbls from 1,441 MBbls in the year-earlier period and missed our estimate of 1,387.1 MBbls. Almost 85.5% of its volume mix constituted natural gas.

Average Realized Prices

Southwestern's average realized gas price in the reported quarter, excluding derivatives, decreased to $1.22 per thousand cubic feet (Mcf) from $1.47 a year ago. Our estimate of $1.42 per Mcf for the metric also indicates a year-over-year decline.

Oil was sold at $70.14 per barrel compared with the year-earlier figure of $63.20. Natural gas liquids were sold at $20.06 per barrel, higher than $18.63 in the year-ago period.

Expenses

On a per-Mcfe basis, lease operating expenses increased to $1.08 from the prior-year level of $1.00. The metric was also higher than our estimate of $1.06. General and administrative expenses per unit of production were 11 cents, up from 9 cents reported in the year-ago quarter. The reported figure was in line with our estimate.

Total operating costs and expenses were $1.8 billion, up from $1.3 billion in the June-end quarter of 2023. The figure beat our estimate of $1.1 billion. General and administrative expenses increased to $45 million from $41 million in the year-ago period. Marketing purchases decreased to $433 million from the prior-year quarter's level of $481 million.

Financials

Southwestern's total capital investment in the second quarter was $430 million. As of Jun 30, 2024, the company's cash and cash equivalents were $15 million, and long-term debt was $3.8 billion.

Guidance

SWN has discontinued providing guidance due to the pending merger with Chesapeake Energy Corporation.

Zacks Rank & Key Picks

Currently, SWN carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like Sunoco LP SUN, SM Energy Company SM and Baker Hughes Company BKR. While Sunoco and SM Energy currently sport a Zacks Rank #1 (Strong Buy) each, Baker Hughes carries a Zacks Rank #2 (Buy).

Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.26, respectively. The partnership has witnessed upward earnings estimate revisions for 2025 in the past 30 days.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM's 2024 EPS is pegged at $7.09. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 in the past 30 days.

Baker Hughes, a leading player in the oilfield service sector, is known for its advanced technologies and equipment catering to the needs of upstream companies. The company expects substantial growth from LNG contracts globally due to the strong demand outlook.

The Zacks Consensus Estimate for BKR's 2024 EPS is pegged at $2.20. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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