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Southwestern -6% as BMO says shale sale requires larger cash flow outspend

Published 09/06/2018, 03:11 PM
© Reuters.  Southwestern -6% as BMO says shale sale requires larger cash flow outspend
SWN
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  • Southwestern Energy (SWN -6%) sinks after BMO Capital downgrades shares to Market Perform from Outperform with a $7 price target following this week's announced sale of the company's Fayetteville Shale operation.
  • BMO analyst Dan McSpirit notes the sale leaves SWN as a pure play Appalachian Basin producer with a more capital-intensive business in the immediate term requiring a larger cash flow outspend and points to the still-challenging operating environment for gas producers and BMO's "less than bullish" view on the commodity.
  • “We believe this cash flow-outspending outcome is consistent with the $600M in proceeds from the sale that's been set aside to supplement cash flow to develop the remaining Appalachian Basin asset,” the analyst writes.
  • Now read: Canadian Natural Resources: Examining The Effects Of The Joslyn Takeover


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