In a 13G filing, Andreas Halvorsen’s Viking Global reported purchasing a new stake of 35.52 million shares of Southwestern Energy Company (NYSE:SWN), which account for 9.2% of the company’s outstanding shares. It appears that the billionaire investor has become even more bullish on the energy sector, but is Southwestern Energy the right bet on the industry? The independent energy company mainly focuses on the development of unconventional reservoirs in Arkansas, Pennsylvania and West Virginia. The company reported a net loss of $2.5 billion for the nine months that ended September 30, compared with net income of $612 million reported for the same period of 2014. Southwestern Energy’s average price realized for its gas production for the nine-month period, including the effects of the company hedging activities, dropped to $2.47 per Mcf from $3.79 per Mcf. The company has a long-term issuer credit rating of BBB- by Standard & Poor’s as of the end of September, which suggests that the energy company has enough liquidity to meet its financial commitments, but a sustained low crude oil price environment, which is a very real possibility, might hinder its ability to meet those commitments. Southwestern Energy has $15 million in cash and cash equivalents as of September 30, while its long-term debt totals $4.66 billion. Hence, one might find more suitable candidates for a longer-term bet on the energy sector. Meanwhile, the stock has plummeted by 66% over the last year. Israel Englander’s Millennium Management reported owning 9.36 million shares of Southwestern Energy Company (NYSE:SWN) via its 13F for the third quarter.
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According to a separate 13G, Viking Global added a 30.85 million-share position in Cabot Oil & Gas Corporation (NYSE:COG) to its portfolio, which represents 7.5% of the company’s outstanding common stock. It is quite evident that the billionaire investor is primarily betting on a rebound for the natural gas industry, presumably because of weather changes. The company’s natural gas revenue for the nine months that ended September 30 accounted for 75% of its total revenue. Nonetheless, Cabot’s natural gas revenue decreased substantially year-over-year due to lower natural gas prices, which were partly offset by increased production as a result of lower cost reserve additions associated with its Marcellus Shale drilling program. The recent winter storm that has impacted the East Coast might ease up the sector’s supply glut, which could push natural gas prices higher.
Viking Global might share the same line of thought, but it remains to be seen where natural gas prices will head from here. Meanwhile, Cabot Oil & Gas Corporation has $8.77 million in cash and cash equivalents as of September 30, while its debt reaches $2.04 billion. Shares of COG have lost nearly 32% over the past one-year period. The smart money sentiment towards the stock was positive in the September quarter, as the total number of funds tracked by Insider Monkey with positions in the company climbed to 32 from 26 quarter-over-quarter. Ross Margolies’ Stelliam Investment Management acquired a 2.17 million-share stake in Cabot Oil & Gas Corporation (NYSE:COG) during the July-to-September quarter.
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