Southwestern Energy (NYSE:SWN) is encouraged by preliminary results from the development of oil and liquid plays within the company's New Ventures portfolio, and plans to shift more capital to this area in 2012.
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2012 Capital Budget
Southwestern Energy set a $2.1 billion capital program for 2012, down about 5% from 2011. The company's original plan called for spending 9% or approximately $190 million on properties within the New Ventures portfolio. The latest update, announced by the company along with earnings for the first quarter of 2012, calls for an additional $50 million of spending in 2012.

Lower Smackover Brown Dense
Southwestern Energy's main focus within the New Ventures portfolio is the Lower Smackover Brown Dense formation which is spread across Louisiana, Arkansas and Mississippi. The company has 540,000 net acres under lease and has disclosed details on three wells recently drilled into this play.

Although the results of these wells may have been below investor's expectations, this is typical of early results in emerging areas and occurred also at the initial stages of development in other plays that have been proved up by the industry.

The industry is interested in the Lower Smackover Brown Dense formation because of the high price of crude oil relative to natural gas. Core Laboratories (NYSE:CLB) is currently conducting a study of the geological and other properties of this play to assist operators with future development.

SEE: Unearth Profits In Oil Exploration And Production

New Ventures Portfolio
Southwestern Energy also moved forward on the development of other plays within the New Ventures portfolio during the first quarter of 2012. The company has 264,000 net acres in the Denver Julesburg Basin and it testing several different formations in this prolific basin.

Southwestern Energy reached total depth on its first well here and plans to start drilling the company's second well in the Denver Julesburg Basin during May 2012.

Southwestern Energy has several million acres in New Brunswick, Canada, and is involved in a multiyear exploration program testing many different formations. The company allocated $13 million to this area in its original 2012 capital budget.

Another company that is exploring in Eastern Canada is Lone Pine Resources (NYSE:LPR), which spun off from Forest Oil (NYSE:FST) in 2011. The company has approximately 240,000 net acres under lease in Quebec and is testing the potential of the Utica Shale in this area.

SEE: Oil And Gas Industry Primer

The Bottom Line
Southwestern Energy is the acknowledged king of the Fayetteville Shale and is now making initial efforts in emerging plays in the company's New Ventures portfolio. The company's previous success in its core area makes it likely that Southwestern Energy will replicate that achievement in the New Ventures portfolio.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.