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Southwestern Energy Prices $1.15B Senior Notes Offering


Upstream player Southwestern Energy Company SWN has priced its underwritten public offering of senior notes valued at $1.15 billion. The offering comprises 7.5 % senior unsecured notes due 2026 of $650 million and another $500 million series of 7.75 % senior unsecured notes due 2027.

Both series of senior notes will be sold to the public at a price of 100% of their face value. The closing of the offering is expected on Sep 25, 2017.

Total net proceeds from the offering will be approximately $1.1 billion. An amount of $327 million of the total proceeds from the transaction is expected to be utilized to settle the company’s 2015 Amended and Restated Term Loan with various lenders and Bank of America, N.A. The rest would be used to purchase a portion of its 4.05% senior notes due 2020, 4.10% senior notes due 2022 and 4.95% senior notes due 2025. As of Jun 30, 2017, the company’s long-term debt was $6.4 billion, which represented a debt-to-capitalization ratio of 84.9%.

About the company

Southwestern engages in the exploration, development and production of natural gas and crude oil in the United States. The company operates in two segments — Exploration and Production and Midstream Services. The Exploration and Production segment is involved in the development of an unconventional gas reservoir located in the Arkansas side of the Arkoma Basin. It also performs exploration and production activities in Oklahoma, Texas and Pennsylvania. This segment engages in conventional drilling programs in the Arkansas part of the Arkoma Basin, and conducts development drilling and exploration programs in the Oklahoma portion of the Arkoma Basin, Texas and Pennsylvania.

The Midstream Services segment engages in the marketing of its own gas production as well as third party natural gas and the transportation of natural gas.

Price Movement

Year to date, the company’s share price has lost nearly 50% compared with the industry’s decrease of 32.5%.

Zacks Rank & Key Picks

Currently, Southwestern carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy sector include TransCanada Corporation TRP, Transmontaigne Partners LP TLP and Range Resources Corporation RRC. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company delivered an average positive earnings surprise of 4.06% over the last four quarters.

Transmontaigne, headquartered in Denver, CO, involves in transporting and storing refined petroleum products. The firm delivered an average positive earnings surprise of 6.60% over the last four quarters.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 1587.17%.

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