Southwestern Energy Company (SWN) is scheduled to report the third quarter results on Friday, October 30, 2009. In the last quarter, the company's actual earnings met the market's consensus estimate, whereas in the same quarter a year ago, the company exceeded the market's consensus significantly. The company is more likely to continue its positive earnings streak in Q3-2009 as well.
Analysts' estimates for the quarter ending September 2009 (Q3) range from a low of $0.29 to a high of $0.432, with a consensus of $0.341. For the fiscal quarter ending September 2009, the consensus EPS forecast has increased over the past week from $0.339 to $0.341 (0.59%) and decreased over the past month from $0.347 to $0.341 (-1.73%). Of the 26 analysts making quarterly forecasts, 7 raised and 7 lowered their forecast.
In the last six years, Q3 revenues trended up over Q2 revenues. The trend is more likely to continue due to increased production and sales in the third quarter. For instance, the company's gross operative production from the Fayetteville shale reached significant milestone of 1 Bcf per day in July compared to approximately 500 million cubic feet per day at this time a year ago. The company plans to drill 600 wells in Arkansas's Fayetteville Shale in the remainder of 2009. The company's E&P and Midstream businesses are expected to have continued strong results in the third quarter of 2009 and possibly beyond.
On the expenses side - total cash operating costs continue to be some of the lowest in the industry. The company's lease operating expenses per unit of production should have come in at $0.72 per Mcf in the third quarter of 2009. General and administrative expenses per unit of production should have come down in the third quarter due to increased production volumes, which more than offset increased compensation and related costs associated with the expansion of the company's operations. Taxes should also come down due to lower commodity prices.
Southwestern has been benefiting from quick learning curve. It now drills more than three-quarters of a mile in distance laterally through layers of rock, which it says has allowed the company to triple its average output per well. Going forward, for the fiscal year ending December 2009, the consensus EPS forecast has increased over the past week from $1.467 to $1.475 (0.55%) and increased over the past month from $1.470 to $1.475 (0.34%). Of the 25 analysts making yearly forecasts, 8 raised and 7 lowered their forecast.
The company's stock closed Tuesday at $46.78, compared to the 52 week range of $46.02 and $47.71. The company's shares have climbed nearly 50% this year. The stock is likely to set a new 52 week high soon.
