(By Tim) Southwestern Energy Company (NYSE: SWN) will release the company‘s 2009 4th quarter and year end results in the morning on February 26, 2010 followed by a conference call to discuss the results at 10:00 EST.
The consensus forecast for the quarter‘s earnings is 44¢ per share. The analysts that follow SWN have a pretty broad range of estimates, from a low of 36¢ to a high of 58¢. Earnings were 30¢ per share for the same quarter, one year ago. The average of the revenue estimates is $471.8 million compared to a fraction over $500 million for the 4th quarter of 2008.
For the last two quarters the earnings have matched the consensus exactly. Earnings for the quarters were 35¢ and 34¢, respectively, not far from the best guess for the current quarter. It looks like the analysts do not expect any recent, big changes in Southwestern Energy‘s fortunes.
Southwestern Energy Company is primarily in the business of exploration and production of natural gas. A secondary business of midstream natural gas gathering and processing supports the exploration and production efforts. Currently, the company is focused on developing the unconventional Fayetteville Shale play on the Arkansas side of the Arkoma Basin. Additional production areas are in Oklahoma, Texas and Pennsylvania, shale gas hot spots. SWN is a component of the S&P 500 index.
Natural gas prices have put a significant dent on Southwestern Energy‘s profits over the past year. The 3rd quarter net of 34¢ per share was near half the 63¢ earned a year earlier, even though natural gas production was 38% greater. The average price the company earned per mcf of gas was down 41%. The company‘s 4th quarter guidance for gas productions was 86 to 89 Bcfe, a significant increase over the 73.2 Bcfe produced in the 3rd quarter. At the start of the 4th quarter, Southwestern had 33 Bcf hedged at an average of $8.41 per Mcf.
For the last 3 months of 2009 natural gas prices as indicated by the Henry Hub Natural Gas Spot price started the quarter at about $2.50 per Mcf and finished 2009 at approximately $5.50. During the quarter there was a rally to $5.00, then a drop back to $2.50, then a month long climb to close at a peak for the year. It will be interesting to see what Southwestern Energy reports as their gas sales prices.
SWN was the best performing stock in the U.S. for the 5 years leading up to February 2010. The stock returned over 800% to shareholders during that period. The company‘s bottom line is heavily dependent on natural gas prices even as they continue to increase production. If they picked up some price recovery and met the production goals, actual earnings may come in on the high side.
