Industry Analysis of Swn

Guidelines:  Industry Analysis

Due:                         Friday, February 17, 2017 (at class time)

Target length:         3 to 7 pages, double-spaced, including charts/tables

Format:        2 copies, both double-spaced, single-sided. Put in my dropbox outside office and Upload to Canvas

After reading the Oil & Gas for Beginners document that is available on the course website, and having four days of E&P Industry lectures, you should have a fairly good grasp of the drivers in this industry. This section of the Freeman Report will attempt to distill your knowledge into a concise analysis of the Industry and your Company’s role within it. To help contain your discussion, you should focus on the North American E&P Industry and not try to tackle the entire “Global Energy Sector” in your description.

Our friends at Burkenroad Reports graciously shared the following guidelines to help you through this portion of your Freeman Report:

INDUSTRY ANALYSIS:

This is a CRITICAL section for would-be-investors. Many Wall Street reports assume too much prior information on the part of the reader. Write this section so that it can be understood by industry and Wall Street “outsiders.”

Be sure to thoroughly explain:

1. The Size of the Industry
2. The Drivers of the Industry
3. Your Company’s role in the Industry

Additional areas to consider and facts to include in this section are as follows (you may or may not include all of these elements, as your team sees fit):

• In which industry does the Company operate?
• What is the general Industry structure?
• What are the main macroeconomic factors that affect the industry in which the Company operates?
• How do those macroeconomic factors affect the Industry? (Sensitivity Analysis)
• Are there identifiable business cycles in the Industry?
• Is the Industry and/or the Company regulated?
• What is the suppliers’ market structure, if applicable?
• What is the company’s market share of the main products of the Industry?
• What is the nature of the production process that takes place in the Industry?
• What are the key inputs in the production process?
• What is the nature of the marketing & distribution system?
• Is service after sale a significant factor in this Industry?
• What are the key ratios and statistics of the Industry?
• Is the Company’s Industry in equilibrium? Do the companies within the Industry have normal returns?
• What do research studies show about the growth of the industry?
• What are the most important price drivers?

Customers & Suppliers:

It is important to know your Company’s customers and suppliers. Generally, if a company relies too much on a single customer or supplier it adds risks for investors. Getting this information has been a chore in the past but is now available in a very readable form on Bloomberg. Simply type your ticker symbol, then hit the equity button, then type SPLC, and then hit the GO button. This will give you a valuable over view of the company’s operations.