CORRECT: Southwestern Energy Swings To 1Q Loss; Output Rises
April 28 2009 - 10:33AM
Dow Jones News
Southwestern Energy Co. (SWN) late Monday said it swung to a
loss in the first quarter and trimmed its capital spending plans as
natural-gas prices hover near their lowest in more than six
years.
Shares of the Houston gas and oil producer rose nearly 10% early
Tuesday, however, as adjusted earnings came in ahead of
expectations and the company posted a 64% rise in production during
the quarter from a year earlier.
Southwestern reported a net loss of $432.8 million, or $1.26 a
share, down from net profit of $109.2 million, or 31 cents a share,
a year ago. The company's earnings were hit by $558.3 million,
pretax, non-cash impairment on the value of its gas and oil
properties on the plunge in gas prices.
Excluding the impairment, first-quarter earnings came in at
$125.5 million, or 36 cents a share. Analysts polled by Thomson
Reuters had forecast, on average, adjusted earnings of 31 cents a
share.
Southwestern, which has the biggest position in the Fayetteville
Shale in Arkansas, said its gas and oil production rose to 63.9
billion cubic feet of gas equivalent in the first quarter. The
Fayetteville is one of several unconventional gas plays, including
the Barnett Shale in Texas and the Haynesville Shale in Texas and
Louisiana, that have fuelled a boom in U.S. gas output. This big
production increase has helped pressure gas prices down from last
summer's peaks, just as the recession cut into demand for gas,
especially from industry.
Natural gas for May delivery was recently up 1.1 cents, or at
$3.264 on the New York Mercantile Exchange. The front-month futures
contract fell to a fresh, six-and-a-half-year low Monday, under
continued pressure from a surplus of the fuel in inventories and
tepid demand.
In response to the drop in gas prices, Southwestern joined many
of its gas-producing peers, including Chesapeake Energy Corp. (CHK)
and Petrohawk Energy Corp. (HK) by cutting its spending plans for
the year. The company trimmed its planned capital expenditures by
$100 million to $1.8 billion, which is about flat with last
year.
"The important thing to know is that commodity prices move in
cycles and with the decreased drilling activity in our industry we
are now positioned for an upturn in commodity prices," Southwestern
Chairman and Chief Executive Harold Korell said in a press release.
"With our growing production volumes and financial flexibility,
Southwestern Energy is well positioned to benefit."
Shares of Southwestern were recently up $3.28, or 9.8%, at
$36.75.
-By Mark Long, Dow Jones Newswires; (201) 938-4427;
mark.long@dowjones.com
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