On Jun 4, 2014, we issued an updated research report on
Newfield Exploration Company
). Success at Uinta Basin, South Cana, Bakken and Eagle Ford should
drive the company's performance. We expect the yields from these
plays to nearly double in 2014. Further, Newfield's international
asset divestitures like the Malaysia business, which was a drag on
earnings, will help in improving profitability.
On Apr 30, the independent energy company reported strong
financial results for the first quarter of 2014 with both the top
and the bottom lines beating the Zacks Consensus Estimate.
Adjusted first-quarter earnings of 44 cents per share beat the
Zacks Consensus Estimate of 40 cents by 10.0%. The company's total
revenue jumped 50.0% year over year to $553.0 million, surpassing
the Zacks Consensus Estimate of $533.0 million.
Estimates for this Zacks Rank #3 (Neutral) company mostly moved
upward in response to the solid quarterly results and a bullish
outlook for 2014. The Zacks Consensus Estimate for fiscal 2014 and
2015 increased by a penny over the last 30 days. Newfield failed to
deliver positive earnings surprise in only one of the last four
quarters. The average beat in the trailing four quarters was
For 2014, the company intends to spend capital mostly on
liquid-rich operations and expects to generate about 10-20%
year-over-year growth in oil and liquids domestic production.
Newfield's new STACK and SCCOP plays in the Anadarko basin form
important parts of its portfolio. Production from these plays is
soon expected to touch 31,000 BOE/d. To date, Newfield has drilled
seven wells in STACK and SCCOP, with initial production rates
averaging 961 Boe/d in STACK play.
Newfield has increased its operated rig count in the Anadarko
Basin to eight rigs, with at least two rigs committed to its STACK
development. The results from this area have been encouraging and
are likely to augment earnings going forward.
On the downside, Newfield's Rockies and Gulf Coast-centered
asset portfolio, along with its lack of meaningful exposure to the
emerging shale plays, is a competitive disadvantage. We believe the
company is dependent on the successful development of its
liquid-rich plays in the Uinta Basin, Granite Wash and North Dakota
Bakken to reach its production targets and thereby investor
expectations. Hence, any region-specific recurrence of issues could
adversely affect the company.
Stocks That Warrant a Look
Better-ranked stocks in the oil and gas industry include
Matrix Service Co.
Ultra Petroleum Corp.
). All these sport a Zacks Rank #1 (Strong Buy).
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NEWFIELD EXPL (NFX): Free Stock Analysis Report
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ENERPLUS CORP (ERF): Free Stock Analysis Report
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