After the new CEO gave analysts bad news on Friday, SWN has been seriously downgraded, with one analyst projecting a price of $3.00/share. With no wells being drilled in 2016, no reserve adds and production falling, will there be more layoffs in the last three quarters of this year?
Anyone like to comment on what the leadership had to say in today's town hall?
Speaking of slow liquidation, I noticed on the Oil & Gas Clearinghouse site that SWN has placed its Williston Basin, NE Colorado and Brown Dense acreage on the market. Based on its forecast of $2 .35, and its CFO said "that for every $0.25 increase in price it added $200 million to the bottom line. Now, at a $1.65, down $0.75 from projections, or -$600 million, this places the company in a negative cash flow scenario. Unless someone buys the company, it appears that its liquidity is only its $1.9 billion facility. And with that said, the stock is up a buck. Go figure? Everyone at SWN and those let go, good luck!
I hope your right about no more staff changes - but they were adamant about living within cash flow and 2016 forecasts are based on 2.35 gas ---- currently at $1.64 .... Essentially no capital is being spent; so the only thing left is more staff reductions IMHO ... Certainly SVP types will go; I understand Way said as much at townhall.... But I don't see that being enough plus those at company will have to answer ; but what do you do with no plans to drill wells for likely 2 years and resulting further cash flow drops .... It's unfortunate; but don't see a way out for Swn and just slow liquidation of company ..... That's my thought
Um, no. They are not "relying" on the remaining $1.9 billion credit line. They were very clear that they do not intend to borrow more money under current circumstances. If things get worse, that $1.9 billion is still there if absolutely needed. Mr. Way also indicated that current staffing levels are at the right level for the company to survive until prices improve. By nature, he's obviously an optimist and probably a bit of a BS'er, but realistically another significant cut isn't going to help the company much monetarily as laying people off isn't cheap and it also kills the morale and productivity of those who do survive. I'll be surprised if we see another significant layoff before the end of the year.
From what I gathered at the town hall we had in Damascus Monday, they are relying on their 1.9 billion dollar credit line (which they are labeling liquidity). Seems to me that the only plan they have at the moment is to hope like hell that gas prices make a quick turnaround. Which isn't going to happen anytime soon. And with production levels decreasing over the next year, I don't see how they can keep their current staffing levels where they are now.