Southwestern Energy Reports 3Q Net Loss of $1.8 Billion
by October 22, 2015 7:32 pm 202 views
Southwestern Energy fell deep into the well on Thursday after the Fayetteville Shale leader reported third quarter losses of nearly $1.8 billion as natural prices dropped below the $2.50 mark in the futures market this week.
For the period ended Sept. 30, the Houston-based natural gas driller’s net loss attributable to common stock for the third quarter of 2015 of $1.76 billion, or $4.62 per share, compared to net income of $178 million, or 50 cents per share, in the third quarter of 2014.
Excluding a $2.8 billion write-down on the value of Southwestern’s oil and gas acreage, the Texas driller reported adjusted net income of one penny per share, or $3 million. Revenue for the quarter was $749 million, down 19.3% from $928 million a year ago. That adjusted tally just beat Wall Street’s estimates of a three cent loss on revenue of $779 million, according to analysts surveyed by Thomson Reuters.
“During the third quarter, we once again delivered excellent operational results while managing through the challenging commodity price environment,” Southwestern Chairman and CEO Steve Mueller said in a statement. “Our acquired acreage in Southwest Appalachia continues to provide exciting results, which we feel only scratches the surface of its potential considering we have been operating these assets for less than ten months. As we look forward, our disciplined approach to investing and our low costs will continue to differentiate our portfolio of high quality assets during these difficult times.”
In Southwestern’s exploration and production business, the company reported an operating loss of $71 million for the third quarter of 2015, compared to operating income of $189 million for the same period in 2014. The decrease was primarily due to lower realized natural gas prices and increased operating costs and expenses from higher activity levels, partially offset by the revenue impacts of higher production volumes, company officials said.
Including the effect of hedges, Southwestern’s average realized gas price in the third quarter of 2015 was $2.21 per thousand cubic feet (Mcf), down from $3.43 per Mcf in the third quarter of 2014. The company’s commodity hedging activities increased its average realized gas price by 44 cents per Mcf during the third quarter of 2015, compared to an increase of 22 cents per Mcf during the same period in 2014.
In the Fayetteville Shale, Southwestern said it had net production of 118 billion cubic feet (Bcf), down from 126 Bcf in the third quarter of 2014 and 121 Bcf in the second quarter of 2015. Gross operated gas production in the Fayetteville Shale was approximately 1,856 MMcf per day at the end of September.
Like most producers, Southwestern said it typically sells its natural gas at a discount to New York Mercantile Exchange (Nymex) settlement prices. This discount includes a basis differential, third-party transportation charges and fuel charges.
Disregarding the impact of hedges, the company’s average price received for its gas production during the third quarter of 2015 was approximately $1.00 per Mcf lower than average Nymex settlement prices, compared to nearly 85 cents per Mcf lower during the third quarter of 2014. In Thursday’s session on Nymex, natural gas futures were down two cents at $2.36 per one million British Thermal units – the lowest level in more than three years.
At the close of business Thursday, Southwestern shares were down 5.89%, or 73 cents at $11.67 as nearly 18 million shares traded hands in heavy volume. The company’s stock has traded in the range of $11.48 and $37.26 over the past 52 weeks.