1. Southwestern Energy Company (NYSE:SWN)
Number of Hedge Funds Holders: 49
Share Price: $6.72
Southwestern Energy Company (NYSE:SWN) is an energy firm that explores and produces natural gas, oil, and natural gas liquids in the U.S. The company operates through two segments: Exploration and Production and Marketing. It also develops unconventional reservoirs in Pennsylvania, Ohio, and West Virginia.
Southwestern Energy Company (NYSE:SWN) reported a net loss of $608 million in Q2 2024, down substantially from a net income of $231 million in Q2 2023. The company’s adjusted net income was $113 million after accounting for the impact of several one-time items and a cost ceiling test impairment. While adjusted net income improved, adjusted EBITDA declined from $484 million to $413 million year-over-year.
Southwestern Energy Company produced a total of 379 Bcfe (Billion cubic feet equivalent) with an average production of 4.2 Bcfe per day during the quarter. However, the average price declined from $1.84 to $1.70 per Mcfe (thousand cubic feet equivalent) on a year-over-year basis, due to the impact of fluctuating commodity prices.
The company invested $430 million in capital projects during the quarter. It completed 22 wells, 19 in Appalachia and 3 in Haynesville. Moreover, the company optimized its production capabilities to align with fluctuating commodity prices.
Southwestern Energy Company (NYSE:SWN) announced a merger with Chesapeake Energy in a $7.4 billion deal. The merger is expected to be completed by the first week of October. Following the completion, the combined value of the new company is expected to be $24 billion, with Southwestern shareholders owning 40% of the company. Upon completion of the deal, the merged entity will be the largest natural gas producer in the U.S.
However, the company’s debt stood at $4.2 billion, with a net debt-to-adjusted EBITDA ratio of 2.1 times. This reflects significant financial pressure on the company due to its high leverage. Thus, investors must monitor how the company’s debt position works out following the merger. The stock has surged by nearly 7% in the past month.
As of Q2 2024, 49 hedge funds have collectively invested $941 million in the company, according to Insider Monkey’s database, placing it on our list of the best energy stocks to buy.
SWN is the best oil stock to buy under $20. While we acknowledge the potential of SWN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SWN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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