Southwestern Energy Price Target Raised By Barclays Following Offering

Barclays’ Thomas R. Driscoll believes the issuance of 86 million shares at $13 per share, or worth a total of $1.1 billion, by Southwestern Energy Company SWN would be accretive to Southwestern Energy’s value per share.

Driscoll maintained an Underweight rating on the company, while raising the price target from $7 to $8.

Debt Repayment Plan

“Along with the recent $450 mm SW Appalachian asset sale to Antero and the announced plan for $750 mm debt repayment, we believe SWN has completed the majority of near-term financial transactions,” the analyst mentioned.

Driscoll expects the company’s net debt to forward EBITDA to improve in 2016 and for Southwestern Energy to use a portion of the proceeds to partly repay the term loan it had entered into in November 2015.

The remaining amount would be used to fund the company’s tender offers for up to $750 million of its 3.3 percent senior notes due 2018, 7.5 percent senior notes due 2018 and 4.05 percent senior notes due 2020.

“Southwestern recently renegotiated and extended its liquidity position by two years, securing part of a previously fully unsecured facility,” Driscoll pointed out.

The company has also entered into a new $1.9 billion line of credit due December 2020. The revised credit facility includes modest additional costs and covenants.