SunTrust Robinson Humphrey Upgrades Southwestern Energy Company (SWN) to Buy
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SunTrust Robinson Humphrey upgrades Southwestern Energy Company (NYSE: SWN) from Neutral to Buy and raises their price target from $45 to $55.
The firm highlighted that the company has "excellent exposure to the U..S. natural gas market fundamentals (99% production/reserves)" and an "operating strategy [that] emphasizes development of Mississippian-age Fayetteville Shale and Pennsylvanian-age formations in the Arkoma Basin and the Travis Peak/James Lime formations in East Texas." Also, the company has approximately 851,100 net-acre leasehold in the Fayetteville Shale which provides a multi-decade drilling inventory. The firm also highlighted that the company’s per unit operating/overhead expense is 20%+ below the industry median.
The firm believes the company should exhibit 56% production growth in 2008. In addition, their 2008 production expectation of 177.2 Bcfe is 3% above the high end of company guidance (168-172 Bcfe).
The firm raised their long-term gas price forecast from $9.50 to $10, and raised their long-term oil price forecast from $85 to $90, due to minor model refinements.
Southwestern Energy is a natural gas-oriented exploration and production (E&P) company with core operating areas in the Arkoma Basin and East Texas.
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