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.

Related Articles
  1. Stock Analysis

    Starbucks: Profiting One Cup at a Time (SBUX)

    Starbucks is everywhere. But is it a worthwhile business? Ask the shareholders who've made it one of the world's most successful companies.
  2. Stock Analysis

    How Medtronic Makes Money (MDT)

    Here's the story of an American medical device firm that covers almost every segment in medicine and recently moved to Ireland to pay less in taxes.
  3. Stock Analysis

    3 Volatile U.S. Industries to Exploit in 2016 (VRX, IBB)

    Read about volatile sectors in the stock market that may provide opportunities for investors in 2016, including energy, mining and biotechnology.
  4. Investing News

    Latest Labor Numbers: Good News for the Market?

    Some economic numbers are indicating that the labor market is outperforming the stock market. Should investors be bullish?
  5. Investing News

    Stocks with Big Dividend Yields: 'It's a Trap!'

    Should you seek high yielding-dividend stocks in the current investment environment?
  6. Investing News

    Should You Be Betting with Buffett Right Now?

    Following Warren Buffett's stock picks has historically been a good strategy. Is considering his biggest holdings in 2016 a good idea?
  7. Products and Investments

    Cash vs. Stocks: How to Decide Which is Best

    Is it better to keep your money in cash or is a down market a good time to buy stocks at a lower cost?
  8. Investing News

    Who Does Cheap Oil Benefit? See This Stock (DG)

    Cheap oil won't benefit most companies, but this retailer might buck that trend.
  9. Investing

    How to Ballast a Portfolio with Bonds

    If January and early February performance is any guide, there’s a new normal in financial markets today: Heightened volatility.
  10. Stock Analysis

    Performance Review: Emerging Markets Equities in 2015

    Find out why emerging markets struggled in 2015 and why a half-decade long trend of poor returns is proving optimistic growth investors wrong.
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    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 >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    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 >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center