ANALYST: Sterne Agee Downgrades Southwestern Energy Due to Poor Margin Outlook and increase in debt

On Thursday Sterne Agee released a company report on Southwestern Energy Company

downgrading the energy company from Buy to Neutral. Furthermore Sterne Agee removed Southwestern Energy's $39 price target. Analysts Tim Rezvan and Truman Hobbs wrote, "Given equity dilution and the sharp increase in debt in early 2015, we revise our outlook on SWN shares. Our concern is heightened by a deteriorating U.S. natural gas price outlook...2015 hedge coverage is the worst among coverage companies with significant gas production, below the 62% group average gas hedge level. The lack of substantial new hedging after announcing the southwestern Marcellus acquisition in 4Q14, a deal that was clearly going to stress the balance sheet, has proven a costly missed opportunity." Southwestern Energy does have the ability to sell legacy natural gas production to lessen the debt increase from recent acquisitions. However the company's margin outlook does not appear sufficient to support drilling in the current environment. If natural gas prices do not rally in the short term analysts believe that investors should expect further spending reductions. Southwestern Energy Company is currently trading at $22.98, down 2.87 percent.