Southwestern Energy Company (SWN) | Investment Case

1. Company Snapshot

1.a. Company Description

Southwestern Energy Company, an independent energy company, engages in the exploration, development, and production of natural gas, oil, and natural gas liquids (NGLs) in the United States.It operates through two segments, Exploration and Production, and Marketing.The company focuses on the development of unconventional natural gas and oil reservoirs located in Pennsylvania, West Virginia, Ohio, and Louisiana.

As of December 31, 2021, it had approximately 768,050 net acres in Appalachia; a total of 1,527 wells on production; and approximately proved natural gas, oil, and NGLs reserves comprise 21,148 billion cubic feet of natural gas equivalent (Bcfe).It also engages in the marketing and transportation of natural gas, oil, and NGLs. The company serves LNG exporters, energy companies, utilities, and industrial purchasers of natural gas.Southwestern Energy Company was incorporated in 1929 and is headquartered in Spring, Texas.

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1.b. Last Insights on SWN

Southwestern Energy Company's recent performance was negatively driven by lower gas-equivalent production volumes and lower realized gas prices, partially offset by higher oil price realization. The company's Q2 earnings beat estimates, but revenue missed expectations. Additionally, the company's net loss was attributed to a non-cash impairment charge, despite positive cash flow. The delayed merger with Chesapeake Energy presents a potential short-term profit opportunity for investors if and when it closes.

1.c. Company Highlights

Last Price	7.11
Change Percentage	-0.56%
Open	7.12
Previous Close	7.15
Market Cap ( Millions)	7842
Volume	39859353
Year High	7.8
Year Low	5.85
M A 50	6.34
M A 200	6.84

FCF Yield	5.02%
Dividend Yield	2.60%
ROE	4.90%
Debt / Equity	27.95%
Net Debt / EBIDTA	102.36%
Price To Book	1.61
Price Earnings Ratio	33.72
Price To FCF	19.9
Price To sales	2.7
EV / EBITDA	7.86

2. Transcript Summary

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3. NewsRoom

Chili's® Sets the Queso Standard with All-New Southwestern Queso

Oct -02

Source: prnewswire.com

Chesapeake And Southwestern Become Expand Energy

Oct -09

Source: seekingalpha.com

Chesapeake Energy Corporation and Southwestern Energy Company Combination Expected to Close in the First Week of October

Sep -26

Source: prnewswire.com

Options Bulls Blast Oil & Gas Stock After Merger Update

Sep -19

Source: schaeffersresearch.com

Chesapeake Energy says deal for Southwestern Energy to close early in 4Q

Sep -18

Source: reuters.com

Southwestern Energy: Earnings Has Lower Production, But Pending Merger Offers Upside

Aug -08

Source: seekingalpha.com

Southwestern (SWN) Q2 Earnings Beat Estimates, Revenues Miss

Aug -05

Source: zacks.com

Southwestern Energy (SWN) Tops Q2 Earnings Estimates

Aug -01

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.56%)

6. Segments

Exploration and Production

Expected Growth: 12%

Southwestern Energy Company's 12% growth in Exploration and Production is driven by increased drilling activities in the Appalachian Basin, improved operational efficiencies, and a focus on high-return wells. Additionally, the company's strategic acquisitions and divestitures have optimized its asset portfolio, leading to higher production volumes and reduced costs.

Marketing

Expected Growth: 8%

Southwestern Energy Company's 8% growth in marketing is driven by increasing natural gas demand, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on digital marketing and e-commerce platforms has improved customer engagement and retention, resulting in higher sales volumes and revenue growth.

7. Detailed Products

Natural Gas

Southwestern Energy Company is a leading producer of natural gas, with operations focused in the Appalachian Basin and North Louisiana.

Crude Oil

The company also produces crude oil, primarily in the North Louisiana region.

Natural Gas Liquids (NGLs)

Southwestern Energy Company produces NGLs, including ethane, propane, and butane, as a byproduct of natural gas production.

Condensate

The company produces condensate, a type of light oil, in the Appalachian Basin.

8. Southwestern Energy Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Southwestern Energy Company operates in a highly competitive industry, and there are many substitutes available to customers. However, the company's strong brand reputation and high-quality products help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Southwestern Energy Company's customers have limited bargaining power due to the company's strong market position and the lack of alternative suppliers.

Bargaining Power Of Suppliers

Southwestern Energy Company's suppliers have some bargaining power due to the company's dependence on them for raw materials. However, the company's strong relationships with suppliers help to mitigate this threat.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the energy industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The energy industry is highly competitive, and Southwestern Energy Company faces intense rivalry from other companies. The company must continually innovate and improve its operations to remain competitive.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	41.04%
Debt Cost	3.95%
Equity Weight	58.96%
Equity Cost	9.67%
WACC	7.32%
Leverage	69.60%

11. Quality Control: Southwestern Energy Company passed 0 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

California Resources

A-Score: 5.9/10

Value: 8.0

Growth: 3.3

Quality: 8.2

Yield: 5.0

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

Range Resources

A-Score: 5.2/10

Value: 5.4

Growth: 3.2

Quality: 6.9

Yield: 1.0

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

Antero Resources

A-Score: 5.0/10

Value: 6.6

Growth: 3.9

Quality: 6.0

Yield: 0.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

Comstock Resources

A-Score: 3.9/10

Value: 4.4

Growth: 2.1

Quality: 2.8

Yield: 1.0

Momentum: 10.0

Volatility: 3.0

1-Year Total Return ->

Southwestern Energy

A-Score: 3.7/10

Value: 5.1

Growth: 1.6

Quality: 4.7

Yield: 3.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

Kosmos Energy

A-Score: 3.4/10

Value: 9.4

Growth: 5.2

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 1.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

21.82%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.32%

Southwestern Energy Company - US8454671095

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SWN

1.c. Company Highlights

Lower Quality

Strong Momentum

Lower Yield

Earnings Miss

Revenues Beats

Average Growth

Earnings Beats

Fairly Valued

Revenues Miss

Medium Volatility

Stable Momentum

Less Volatile

Lower Growth

Expensive

Average Quality

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.56%)

6. Segments

Exploration and Production

Expected Growth: 12%

Marketing

Expected Growth: 8%

7. Detailed Products

Natural Gas

Crude Oil

Natural Gas Liquids (NGLs)

Condensate

8. Southwestern Energy Company's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Southwestern Energy Company passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.11$

Current Price

7.11$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA