Southwestern Energy Company : Southwestern Energy 1Q Net Down 21% On Weaker Gas Prices
05/03/2012| 05:22pm US/Eastern
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Southwestern Energy Co.'s (SWN) first-quarter profit dropped 21% as the energy producer saw softer realized natural gas prices and higher expenses weaken margins.
Earnings have varied for Southwestern as a slump in natural gas prices continues to pressure revenue. The current glut of natural gas partly stems from the U.S. energy industry's success with new exploration techniques--notably hydraulic fracturing of shale formations, or fracking. Investors sense the oversupply of natural gas won't improve until next year.
For the latest quarter, Southwestern reported a profit of $107.7 million, or 31 cents a share, from $136.6 million, or 39 cents a share, a year earlier. Revenue fell 2.9% to $656.5 million.
Analysts polled by Thomson Reuters had expected a profit of 32 cents with $607 million of revenue.
Operating margin narrowed to 28.3% from 34.4%, as expenses rose 6.1%.
Total equivalent production increased 16%. The average realized price for natural gas, including hedging, declined 15%, while oil prices rose 13%.
Operating income sank 35% in the exploration and production segment on lower natural-gas prices and higher operating costs due to increased activity, while the smaller midstream services business saw earnings rise 29% on improved gathering revenue from its Fayetteville and Marcellus Shale properties.
Shares closed Thursday at $30.96 and were up 1.9% after hours. Through the close, the stock was down 3.1% so far this year.
-By Ben Fox Rubin, Dow Jones Newswires; 212-416-3108; ben.rubin@dowjones.com
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