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Newfield Exploration Company (NFX - Analyst Report) reported adjusted third-quarter 2013 earnings of 47 cents per share, falling short of the Zacks Consensus Estimate of 49 cents. The quarterly results also fell by a penny from the year-earlier adjusted profit.

The company’s total revenue including discontinued operations increased to $675.0 million from $615.0 million in year-earlier quarter. It also came above the Zacks Consensus Estimate of $586.0 million.

Operational Performance

Total quarterly production was 12.0 million barrels of oil equivalent (MMBoe), comprising
44% oil, 12% natural gas liquids (NGLs) and 44% natural gas.

Natural gas volumes were 31.8 billion cubic feet (Bcf). Oil, condensate and natural gas liquids (NGLs) volumes were 6.7 million barrels (MMBbls).

Newfield’s third quarter oil and natural gas price realizations (including the effect of hedges) averaged $57.96 per Boe. Natural gas prices were $3.88 per Mcf while liquid prices were $97.26 per barrel.

Recurring lease operating expenses (LOE) were $6.81 per Boe. Production and other taxes were $5.49 per Boe, while general and administrative expenses totaled $5.56 per Boe.


At quarter end, Newfield had cash balance of $89.0 million. Long-term debt was $3,485.0 million, representing a debt-to-capitalization ratio of approximately 49.8%.


For 2013, Newfield increased its estimated output to approximately 48 million barrels of oil equivalent (MMBOE) from its earlier forecast of 46–47 MMBOE.


Newfield Exploration’s diversified portfolio of assets provides both flexibility and significant growth potential. We expect the company’s reserve potential in the Southern Alberta Bakken, Wasatch Oil, Uinta Basin and Williston play to be a liquid-rich catalyst for the stock. The company expects its production from Cana Woodford and Williston Basin to exceed 2013 guidance.

After adjusting the impact of asset sales in 2013, liquids production is expected to increase by over 40%.

Though we remain positive on Newfield Exploration’s emerging resource plays’ development program, we believe that its sensitivity to gas price volatility, as well as drilling results, costs, geo-political risks and project timing delays will weigh on the stock. Increasing cost pressure in the highly competitive shale plays is also a cause of concern.

Newfield Exploration shares currently carry a Zacks Rank #3 (Hold). But there are other stocks in the oil and gas industry that appear more attractive. These include SM Energy Company (SM - Analyst Report), Ocean Rig UDW Inc. (ORIG - Snapshot Report) and TransAtlantic Petroleum Ltd. (TAT - Snapshot Report), which hold a Zacks Rank #1 (Strong Buy).


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