When Southwestern Energy (SWN) reports earnings after Thursday's close, investors will get a glimpse into the possible success of its -- sometimes creative -- turnaround attempts.
In January, Real Money named the Texas-based oil and gas company to our "Stressed Out" list. At the time, the company had recently announced plans to lay off 44% of its workforce by the end of the first quarter. The company also had a $4.7 billion debt load, which was downgraded below investment grade, to BB+ from BBB-, by Standard & Poor's Ratings Service in February.
Despite the headwinds in the energy space, Southwestern Energy has staged an impressive comeback so far this year. Its shares are up nearly 50% year to date and are trading around $10.50. Thursday's earnings release will show if the comeback story holds.
Analysts surveyed by Bloomberg project Southwestern Energy will report losses of $0.21 on $535 million in revenue, down from first-quarter 2015 earnings of $0.22 a share on $933 million in revenue. Southwestern Energy has six Buy ratings, 24 Hold ratings and 10 Sell ratings.
In February the company released its strategic initiatives and plans for 2016, which were based on natural gas prices of $2.35 and oil prices of $35, down from 2015 targets of $2.66 and $48.80, respectively. Southwestern Energy is targeting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $450 million to $500 million for 2016, down from $1.4 billion last year.
The company has also taken creative measures to fix its finances. Earlier this month, Southwestern Energy announced via a filing with the Securities and Exchange Commission that it borrowed $1.55 billion from its credit agreement on March 30, and it promptly repaid the funds on April 1. Doing so allowed it to record more cash on its balance sheet on the last day of the first quarter, which allows it to incur $232 million more of secured debt during the second quarter. Those funds could be used to pay off or restructure existing debts.
"I think we are positioned well to manage through this," CEO Bill Way said at a conference earlier this month. "We are proactively working. You saw us draw on our revolver and then pay it back two days later. That's all a part of a plan to manage our overall liquidity position."
Soon we will see if Southwestern Energy has been successful. The company will be holding a call at 10:00am ET Friday to discuss its first-quarter results.
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