Southwestern Energy (SWN) announced on December 18 its capital investment program for 2013. Several projected operating metrics outlined in the press release have positive implications for the stock. The most significant takeaways from the report are the faster than previously guided ramp up of the Marcellus production - which suggests strong expected EURs per well and excellent economics - and the resilience of the Fayetteville volumes - which signals that at $3.50-$4.00/MMBtu Nymex the Fayetteville, in its more productive areas, can earn back the cost of capital.
The announcement validates the thesis that the company's Marcellus assets, in spite of their relatively small current contribution to SWN's production (less than 15%), represent a significant value within...