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Inside Southwestern Energy’s 4Q16 Revenue Expectations

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4Q16 revenues estimates

For 4Q16, Wall Street analysts expect Southwestern Energy (SWN) to report ~6% lower revenues on a YoY (year-over-year) basis, as compared to 4Q15. Sequentially, Southwestern Energy’s 4Q16 revenues expectations are ~1% lower than its 3Q16 revenues.

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Understanding SWN’s 3Q16 revenue performance?

In its most recent earnings release in October 2016, Southwestern Energy beat its 3Q16 revenue estimate of ~$628 million by ~4%. In 3Q16, SWN reported a much steeper YoY fall of ~13% in YoY revenue growth. SWN’s ~59% revenues in 3Q16 came from natural gas and liquids production sales, while the remaining ~41% revenues came from its midstream business.

Despite higher realized prices in 3Q16, a steep decline in production volumes decreased SWN’s revenues from natural gas (UNG) and liquids production sales by ~22% to ~$381 million in 3Q16, down from ~$491 million in 3Q15, which negatively impacted SWN’s overall revenues growth. In 3Q16, Southwestern Energy’s production volumes fell ~15% to 211 Bcfe (billion cubic feet equivalent) from 249 Bcfe in 3Q15.

By comparison, peers Devon Energy (DVN), ConocoPhillips (COP), and Marathon Oil (MRO) reported revenues of ~$2.9 billion, ~$6.5 billion, and ~$1.2 billion, respectively, in 3Q16.

Fiscal 2016 revenues estimates

For fiscal 2016, Wall Street analysts expect Southwestern Energy to report ~22% lower revenues at ~$2.4 billion, as compared to ~$3.1 billion in 2015.

Notably, SWN’s yearly revenues have been declining since 2015.

We’ll discuss SWN’s production guidance for 4Q16 and fiscal 2016 in the next part.

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