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.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
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.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.
InvestingCommodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
Stock AnalysisHere are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
InvestingThe further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
InvestingWest Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
Fundamental AnalysisOptions market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
Stock AnalysisCan these two oil stocks buck the trend?
Investing NewsAlcoa plans to split into two companies. Is this a bullish catalyst for investors?
Stock AnalysisIf you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
Investing NewsA rate hike would certainly alter the investment scene, but would it be for the better or worse?
Investing NewsWith market volatility high, you may think it is time to run for corporate bonds instead of stocks. Before you do take a deeper look into which is better.
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>