After eighteen months of unabated decline, Southwestern Energy’s (SWN) stock price started a new uptrend in February 2016. Natural gas prices (UNG) had bottomed shortly after one month in March 2016, adding fuel to the SWN’s rally.
Now, since March 2016, natural gas prices have risen ~83%, whereas Southwestern Energy’s stock price has risen ~48% since that February 2016 low.
Why SWN stock price has lagged behind natural gas
More recently, however—since November 9, 2016—SWN’s stock price has not been catching a break, despite the rise in natural gas prices. Since November 2016, natural gas prices have risen from $2.55 per MMBtu (million British thermal units) to $2.94 MMBtu, while SWN’s stock price fell from $9.78 to $7.38 during this period.
As you can see in the chart above, natural gas prices are still making higher lows and higher highs, whereas SWN’s stock price has been making lower lows and lower highs since November 2016. This pattern of lower lows and lower highs indicates that SWN’s stock price is in a downtrend, despite the uptrend in natural gas.
After falling ~11% in 2016, SWN’s stock price is on a decline again in 2017. So far in 2017, SWN’s stock price has fallen ~32%. Oil and gas producing peers Occidental Petroleum (OXY), Range Resources (RRC), and Energen (EGN) have fallen ~10%, ~20%, and ~13%, respectively, during the same period. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) has fallen ~13% so far in 2017.
In this series
In this series, we’ll try to figure out why Southwestern Energy’s stock price is lagging behind natural gas prices. Specifically, we’ll explore SWN’s operational details in light of the recent bounce in natural gas prices. We’ll also cover Southwestern Energy’s production details, production mix, realized prices, hedges, hedges effectiveness, costs, and margins.
Let’s start with the Southwestern Energy’s production details.