Southwestern Energy posts 4Q earnings of $267 million, focusing on Fayetteville Shale sale

Southwestern Energy Company posted solid results in the fourth quarter and returned to profitability in 2017 after the company’s drilling program picked up steam on the East Coast amid plans to exit the once-prosperous Fayetteville Shale.

For the period ended Dec. 30, the Houston-based oil and gas company reported fourth quarter earnings of $267 million, or $53 cents per share, a marked improvement over a net loss of $237 million, or $48 cents per share, in the fourth quarter of 2016. After adjustments, Southwestern reported net income of $63 million, or 12 cents per share, compared to net income of $39 million, or 8 cents per share in the same period a year ago.

Fourth quarter revenues came in at $809 million, up 18.3% from $684 million a year ago. Wall Street analysts had expected the independent oil and gas company to report fourth quarter earnings of nine cents per share on revenue of nearly $805 million, according to Thomson Reuters.

For the full year, Southwestern posted profits of $815 million, or $1.63 million per share, on revenue of $3.2 billion. After adjustment, net income was $219 million, or 44 cents in 2017.

“Southwestern Energy delivered solid financial and operational results in 2017. There is clear evidence of upside in our assets, as the value of our … reserves alone is well above current enterprise value,” said Bill Way, company president and CEO. “Our focus in 2018 will be on exploring strategic alternatives for Fayetteville Shale assets, accelerating development in Appalachia and reducing structural costs as we reposition the company to compete and win in any commodity price environment for years to come.”

Southwestern shares (NASDAQ: SWN) closed up 14 cents, or 4.2% at $4.20. Over the past 52 weeks, Southwestern’s shares have traded in the range of $3.42 for a low and $8.94 as high.

Three weeks ago, Southwestern announced at 2018 capital budget of up to $1.25 billion and first revealed plans to put its Fayetteville Shale upstream and midstream natural gas drilling assets up for sale as the company pivots to “liquids rich” shale plays in the Appalachian Region of the U.S.

Although the company has not revealed details on how it plans to auction off its 919,000-acre leasehold position in the unconventional dry natural gas development, Wall Street analysts have said the former Arkansas oil and gas company could receive bids as high as $2 billion if the company’s Arkansas shale is sold to one suitor.

Company officials say there are only about 500 Southwestern employees left in Arkansas, as most workers that supported drilling operations during the Fayetteville Shale boon have left the company or moved eastward to the support the company’s shale operations in the Appalachian region.

Earlier this month, Australian industrial giant opened its Fayetteville Shale auction, which is being run by the Houston-based energy office of British investment banking giant. On Feb. 20, Barclays began accepting bids for BHP’s 270,000-acre leasehold position in north-central Arkansas play that includes over 930 operated wells and average net production of 223,000 cubic feet per day.

According to Barclays’ Fayetteville Shale overview, BHP will host management presentations through March 16 and closed bidding in early April. Wall Street analysts have forecasted that BHP will likely receive offers for its U.S. onshore operations between $6 billion and $10 billion, with the separate Fayetteville Shale auction receiving bids as high as $1 billion.