Tuesday, March 30, 2010

Energy Companies Still Spending Money

By David Wethe
March 29 (Bloomberg) -- Southwestern Energy Co., the largest natural-gas producer in the Fayetteville Shale in Arkansas, rose 8 percent after announcing its first venture outside the United States.
Southwestern, based in Houston, advanced $3.03 to $40.73 at 4:03 p.m. in composite trading on the New York Stock Exchange. The company climbed to as much as $40.95, or 8.6 percent, during the day. Before today, the stock had fallen 22 percent this year.
Southwestern said yesterday it will spend about $47 million during the next three years to search for oil and gas across 2.5 million acres in the Maritimes Basin in New Brunswick, Canada. The company, which got 81 percent of its production last year from the Fayetteville Shale, bid for and won exclusive licenses to explore from the Department of Natural Resources in the province of New Brunswick.
“Overall, this should be received positively,” Bill Herbert, an analyst at Simmons & Co. in Houston, wrote today in a note to investors. The producer “is getting exclusive entry into a very large land base with minimal capital requirements and a low long-term entry cost if they convert to a lease.”
The New Brunswick exploration licenses can be converted to a five-year lease anytime during the three-year agreement, according to Herbert. The move is the “first step in potentially identifying an asset which will be able to replace the Fayetteville Shale,” he wrote.
--Editors: Tina Davis, Susan Warren
To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.
To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.n

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