Newfield Exploration Co. (NFX - Analyst Report) reported adjusted second-quarter 2014 earnings of 43 cents per share, which lagged the Zacks Consensus Estimate of 51 cents by nearly 16%. However, the quarterly results increased from the year-earlier adjusted profit of 37 cents.
The company’s total revenue jumped 40.0% year over year to $608.0 million. The top-line also surpassed the Zacks Consensus Estimate of $578.0 million.
Total quarterly production came in at 12.1 million barrels of oil equivalent (MMBoe), comprising 37.2% oil, 16.5% natural gas liquids and 46.3% natural gas.
Natural gas volumes were 33.1 billion cubic feet (Bcf). Oil, condensate and natural gas liquids volumes totaled 6.5 million barrels (MMBbls).
Newfield Exploration’s second-quarter liquid and natural gas price realizations averaged $47.94 per Boe. Natural gas prices were $3.90 per Mcf, oil prices stood at $82.67 per barrel while NGLs prices were $31.11 per barrel.
Recurring lease operating expenses (LOE) came in at $5.54 per Boe. Production and other taxes were $2.58 per Boe, while general and administrative expenses totaled $5.83 per Boe.
At the quarter-end, Newfield Exploration had cash balance of $36.0 million. Long-term debt was $3,077.0 million, representing a debt-to-capitalization ratio of approximately 49%.
For the third quarter of 2014, Newfield Exploration expects output of 12.1–12.3 MMBoe.
For 2014, the company has raised its production estimates in the range of 46.5–48.5 MMBoe from 44.0–48.0 MMBoe. The projection of LOE is $486 million, production & other taxes is $125 million while general & administration expenses are $235 million.
Newfield Exploration’s diversified portfolio of assets provides it 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.
Though we remain positive on Newfield Exploration’s emerging resource plays’ development program, we believe that the company’s sensitivity to gas price volatility, drilling results, costs, geo-political risks and project timing delays could weigh on the stock. Increasing cost pressure in the highly competitive shale plays is also a cause of concern.
Newfield Exploration currently carries a Zacks Rank #1 (Strong Buy). Meanwhile, one can also look at other players in the oil and gas exploration and production sector like Helmerich & Payne, Inc. (HP - Analyst Report), Cameron International Corporation and CNOOC Ltd (CEO - Analyst Report). All the stocks sport a Zacks Rank #1.