Southwestern Energy: Where Natural Gas Marches to Its Own Beat
Southwestern Energy: Where Natural Gas Marches to Its Own Beat Hey there, folks! Let’s dive into the world of Southwestern Energy, a company that’s all about natural gas and making you smile. Southwestern Energy (NYSE:SWN) is a Texas-based natural gas exploration and production company with a market cap of $7 billion.
Table of Contents
A Blast from the Past:
Back in 1929, when the Great Depression was about to throw its party, Southwestern Energy decided to join in. Fast forward to 1981, and they decided to become a public company. Oh, what a decision!
Now, Southwestern Energy is famous for discovering the Fayetteville Shale in 2004. It was like finding a pot of gold in the world of natural gas. But then, like a rollercoaster, gas prices dropped, and Southwestern Energy had to say goodbye to the Fayetteville Shale in 2018.
Today’s Playground:
Now, they’re playing in the Appalachia regions and the Haynesville Shale in Louisiana. And you know what? It’s not just about the gas; it’s about location, location, location!
Cash Flow Comedy:
In 2020, Southwestern Energy’s cash flow was like a rollercoaster too. But, they made some financial magic happen, got better gas prices, and now their cash flows seem more stable. Still, old habits are hard to break, and they’re spending more than they’re earning. Oops!
Gas Price Thrills:
Gas prices in 2022 were like a skyrocket ride, but here comes the twist! Their hedging program prevented them from fully enjoying those prices. They had to play it safe, and that cost them.
Show Me the Money:
You see, natural gas prices can be as tricky as a funhouse mirror. Southwestern Energy’s contracts limited their earnings, so even though gas prices went up, they only got a fraction of it. Tricky business!
Hedging for the Future:
The company’s got most of its production hedged until 2024. So, after that, if gas prices keep dancing up, they might be in for a treat. We’re keeping our fingers crossed for those prices!
Balance Sheet Balancing Act:
Back in 2020, their balance sheet was a bit wobbly, so they went on a shopping spree and got some new stuff through share dilution. It’s like a retail therapy session for companies! Now, they’re doing better, but we hope they’ve learned their lesson.
Debt Drama:
They’ve got a pretty manageable debt until 2029 and 2030. Let’s hope they don’t get into more debt shenanigans.
Shares in the Game:
They’ve diluted shares like a watered-down drink at a cheap bar, but not as much as some other companies. It’s like getting a slightly weaker punch, but it’s not too bad.
The Competition: Permian Resources
Now, let’s talk about the competition. In one corner, you’ve got Southwestern Energy, and in the other, Permian Resources, which is all about oil and gas. But, oil and gas are like apples and oranges. Both tasty, but different!
Oil vs. Gas:
See, oil and natural gas are both hydrocarbons, but they’re not twins. Oil is denser, while natural gas is like a balloon. One barrel of oil equals about 6 mcf of natural gas. And guess what? Oil sells for a whole lot more! So, oil-focused companies seem to have an edge.
Numbers Galore:
Now, let’s crunch some numbers. Permian Resources has cash flows that make you go “wow.” Their balance sheet is strong and shares are diluting, but for a good cause (they say).
Final Thoughts:
Southwestern Energy might be riding the natural gas rollercoaster, but it’s not our top pick for the amusement park. They’ve had their ups and downs, but oil-focused companies seem like a better bet. Natural gas has potential, but it’s like waiting for a jack-in-the-box to pop.
So, that’s the Southwestern Energy show, folks! It’s not all fun and games, but hey, investing isn’t always a barrel of laughs. Remember, in the world of stocks, you’ve got to pick the right horse to win the race, and for now, Southwestern Energy might be better suited for a different ride.
