Southwestern Shares Hit 52-Week High - Analyst Blog

Shares of Southwestern Energy Company SWN hit a 52-week high of $45.53 during Wednesday's trading session. However, the stock closed the session at $45.39, which reflects a solid return of 22.1% over the past six months. The average trading volume for the last three months aggregated 4,188,850 shares.

Southwestern Energy is one of the largest producers of natural gas in the U.S., with core Fayetteville Shale properties spreading over 913,502 net acres. The company recently reported stellar fourth quarter results. A solid production growth more than offset the subtle drop in realized prices.

Southwestern reported adjusted earnings of 54 cents per share, surpassing the Zacks Consensus Estimate of 52 cents and improving from the prior-year quarter earnings of 45 cents. Quarterly operating revenues of $907.1 million comfortably beat the Zacks Consensus Estimate of $876.0 million and increased significantly from $777.4 million in the fourth quarter of 2012.

During the fourth quarter, the company's oil and gas production grew 18.0% year over year to 177.0 billion cubic feet equivalent (Bcfe) – almost entirely gas – driven by increased Marcellus Shale activity. Production from Southwestern's Fayetteville shale plays decreased 1.5% from the year-earlier period to 123.2 Bcfe. However, output from the Marcellus Shale plays jumped 151.3% from the prior-year quarter to 48.5 Bcfe.

As of Dec 31, 2013, Southwestern's gas and oil proved reserves totaled 6,976 Bcfe, up 74% from 4,018 Bcfe at the end of 2012. The substantial increase reflects higher Fayetteville and Marcellus shale drilling activities. Almost all of Southwestern's estimated proved reserves were natural gas, of which 61% was classified as proved developed at year-end 2013. During 2013, the company added 3,615 Bcfe to proved reserves. These additions replaced approximately 550% of its production.

Southwestern boasts a strong balance sheet with significant liquidity and financial flexibility. Moreover, the company's continuous endeavor of focusing on return on investment, coupled with its large drilling inventory, uniquely positions it to create significant value for shareholders. Southwestern remains focused on generating economic returns. It is committed to projects returning at least 1.3x the present value index and intends to only drill projects that meet the return threshold.

Southwestern currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader energy sector include Range Resources Corporation RRC, Vermilion Energy Inc. (VET) and Patterson-UTI Energy Inc. PTEN. All the three stocks hold a Zacks Rank #1.