(By Arun - iStockAnalyst Writer)
Southwestern Energy Company (NYSE: SWN) is set to report its earnings later in the day today. The company seems to be in the limelight due its low cost operations and the financial strength and flexibility to pursue highly accretive drilling programs. At the beginning of the fourth quarter, the company had over $425Mn of cash and cash equivalents in hand, had reduced its debt-to-total capitalization ratio to 25% down from 37% at the end of 2007, and its $1Bn unsecured credit facility was completely undrawn. While announcing the third quarter results back in October, Harold Korell had said that the company expected to end the year with one of the strongest balance sheets in its history. In its preceding third quarter, Southwestern Energy posted a 328% rise in net income to $218.2Mn or $0.63 per share from $51.0Mn or $0.15 per share last year, boosted by a significant gain on sale from the company's utility assets, together with significant growth in production volumes from Southwestern's Fayetteville Shale play and higher realized natural gas prices. Operating revenues grew to $683Mn from $297.6Mn last year. In the fourth quarter last year, Gas and oil production totaled 34.9 Bcfe, average realized gas price was $6.90 per Mcf, and average realized oil price was $90.96 per barrel, both including the effect of hedges.
Southwestern Energy is one of the few companies to boost capital spending for 2009, and announced it will commit $2.0Bn, with $1.78Bn on exploration. The company spent $1.7Bn in 2008. In 2009, $1.5Bn will be spent to develop the Fayetteville Shale. The company will operate at least 20 rigs in the Fayetteville Shale play in 2009, and will drill approximately 620 wells. Southwestern estimates that 2009 production will be in a range of 280 to 284Bn cubic feet equivalent (Bcfe), which will be a 48% increase from 2008.
Another development in the quarter was the decision to bring in a regional headquarters to Conway to support its Fayetteville Shale operations, along with as many as 450 new jobs.
