Energy Stocks To Buy #5 — Southwestern Energy
While the bulk of Southwestern Energy’s (SWN) assets are located in prolific Fayetteville shale, the firm is no slouch in the Marcellus shale, either. SWN owns 337,300 net acres in play and has been active there since 2007.
That acreage in the Marcellus is helping SWN drive its production increases. Production in the Marcellus jumped a whopping 151% this year versus last year and helped offset production declines in the Southwestern’s Fayetteville assets. Overall, SWN managed to show an overall 18% year-over-year increase in production to reach 177.0 billion cubic feet (Bcf) of production. Those Marcellus assets also helped the firm beef up its total reserves, and SWN’s replace ratio for 2013 stands at 550%.
Yet, despite the great production and reserve numbers, investors abandoned SWN stock in spades — with shares falling about 4% on its earnings report. This was mostly due to the fact that it has more dry gas reserves than before.
For more forward-thinking investors, SWN stock could now be one of the biggest values among the Marcellus shale energy stocks. SWN stock is pretty cheap on a forward P/E basis of 17. It looks even cheaper when you consider that its natural gas holdings will be worth more as prices for natural gas continue to rise.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.