Southwest Airlines (TG:SWN)
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Southwestern Energy Co. (SWN) Tuesday said it swung to a loss in the first quarter and trimmed its capital spending plans as natural-gas prices hover near their lowest in more than six years.

Shares of the Houston gas and oil producer rose nearly 10% early Tuesday, however, as adjusted earnings came in ahead of expectations and the company posted a 64% rise in production during the quarter from a year earlier.

Southwestern reported a net loss of $432.8 million, or $1.26 a share, down from net profit of $109.2 million, or 31 cents a share, a year ago. The company's earnings were hit by $558.3 million, pretax, non-cash impairment on the value of its gas and oil properties on the plunge in gas prices.

Excluding the impairment, first-quarter earnings came in at $125.5 million, or 36 cents a share. Analysts polled by Thomson Reuters had forecast, on average, adjusted earnings of 31 cents a share.

Southwestern, which has the biggest position in the Fayetteville Shale in Arkansas, said its gas and oil production rose to 63.9 billion cubic feet of gas equivalent in the first quarter. The Fayetteville is one of several unconventional gas plays, including the Barnett Shale in Texas and the Haynesville Shale in Texas and Louisiana, that have fuelled a boom in U.S. gas output. This big production increase has helped pressure gas prices down from last summer's peaks, just as the recession cut into demand for gas, especially from industry.

Natural gas for May delivery was recently up 1.1 cents, or at $3.264 on the New York Mercantile Exchange. The front-month futures contract fell to a fresh, six-and-a-half-year low Monday, under continued pressure from a surplus of the fuel in inventories and tepid demand.

In response to the drop in gas prices, Southwestern joined many of its gas-producing peers, including Chesapeake Energy Corp. (CHK) and Petrohawk Energy Corp. (HK) by cutting its spending plans for the year. The company trimmed its planned capital expenditures by $100 million to $1.8 billion, which is about flat with last year.

"The important thing to know is that commodity prices move in cycles and with the decreased drilling activity in our industry we are now positioned for an upturn in commodity prices," Southwestern Chairman and Chief Executive Harold Korell said in a press release. "With our growing production volumes and financial flexibility, Southwestern Energy is well positioned to benefit."

Shares of Southwestern were recently up $3.28, or 9.8%, at $36.75.

-By Mark Long, Dow Jones Newswires; (201) 938-4427; mark.long@dowjones.com

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