In Fitch’s SWN ratings release on 5/3/2018, they state base their case model debt/ebitda is 2.7x and 2.5x for 2018 and 2019 respectively. So if SWN is making material progress towards 2.0x, in a 2.75/mcf environment, why sell?
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Care to elaborate as to what “math doesn’t work without selling...”? Does your math not show 2.5x debt/ebitda in 2019? Will that ebitda not continue to grow to 1.7B in 2022? All while keeping debt constant. And although none of us can predict gas prices, is it fair to say there is substantially more upside than downside the further forward we look?
Ssshhh...saw this posted and now we know his compensation secret....
$111,300 raised for Bill Way at the SWN Charity Sporting Clays Shoot! Awesome turnout, thanks to all involved!
From what I understand, there are no economics for drilling. So it will just be a declining asset. If swn keeps it, they could, if competent enough. Reduce costs, (layoffs) , streamline and make a small return.
However, that also has to support a debt load, corporate overhead and return expectations for a public e/p company.
Most of us would be happy with a 8% return — on the asset .. but if you have to pay 6 % commission ( all the corporate overhead ) maybe not.
Also, from some analysis , no math I’ve seen works without selling Fayetteville .. it doesn’t really work then unless they get more than most analysis says they will .
Is it simply because investors are impatient, or is there a case where gas can go and stay lower, so we offload prior to this potentially happening.