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U.S. oil producer Newfield Exploration Co. (NFX - Analyst Report) has made the largest conventional exploratory success in its history with a natural gas find off Sarawak, Malaysia. This success comes at a time when the company is planning divestments of its international business.

Located 50 miles offshore Sarawak in about 250 feet of water, the B-14 well rests on the Block SK 310 production sharing contract area. The probe encountered 1,800 feet of gross column and 1,585 feet of net natural gas pay in the main carbonate objective. The viability of the reservoir was established by a drill stem test.

Newfield, the operator of Block SK 310 holds an interest of 30%. Other partners Mitsubishi Corp. and Petronas Carigali possess 30% and 40%, respectively.

Newfield has estimated the discovery to hold 1.5 trillion to 3 trillion cubic feet of gas initially in place.  The B-14 find lies adjacent to the company’s B-15 discovery with a distance of less than 3 miles between them. The B-15 discovery is estimated to hold recoverable reserves of about 265 billion cubic feet. Both the finds will be developed simultaneously. Newfield intends to continue drilling in the region along with another prospect during the third quarter.

In Feb 2013, the company announced that it received board approval for exploring strategic alternatives for businesses that include offshore developments and related holdings in Malaysia and China. Newfield aims to concentrate on domestic areas including Uinta, Cana Woodford, Williston and Eagle Ford formations.

Newfield is looking to opening a data room for international operations in the second quarter. Based on the current oil prices, the company’s full-year 2013 international cash income taxes are anticipated in the range of $55 million to $65 million.

Newfield holds a Zacks Rank #3 (short-term Hold rating). However, there are other stocks in the sector that appear more rewarding. Among these, NGL Energy Partners LP (NGL - Snapshot Report), Range Resources Corporation (RRC - Analyst Report) and EPL Oil & Gas, Inc. (EPL - Snapshot Report) carry a Zacks Rank #1 (Strong Buy).
 

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