Newfield Exploration Co.
) reported adjusted second-quarter 2013 earnings of 37 cents per
share, in line with the Zacks Consensus Estimate. The quarterly
results fell 39.3% from the year-earlier adjusted profit of 61
cents per share. The deterioration can be traced back to lower
The company's total revenue increased nearly 24.3% year over
year to $435.0 million from $350.0 million in year-earlier
quarter. However, it failed to meet the Zacks Consensus Estimate
of $634.0 million.
Total quarterly production was 11.8 million barrels of oil
equivalent (MMBoe), comprising 55.1% crude oil, condensates and
natural gas liquids (NGLs). Natural gas volumes were 31.9 billion
cubic feet (Bcf), down 19.8% year over year. Oil, condensate and
natural gas liquids (NGLs) volume expanded 6.6% year over year to
6.5 million barrels (MMBbls).
Newfield's second quarter oil and natural gas price
realizations (including the effect of hedges) averaged $55.02 per
Boe. Natural gas prices improved 7.1% year over year to $3.91 per
Mcf. Liquid prices also rose 3.4% to $91.36 per barrel.
Recurring lease operating expenses (LOE) were $7.65 per Boe.
Production and other taxes were $7.57 per Boe, while general and
administrative expenses came in at $5.16 per Boe.
At quarter end, Newfield had cash balance of $51 million,
while long-term debt was $3,276 million, representing a
debt-to-capitalization ratio of approximately 53%.
For 2013, Newfield increased its estimated output to the range
of 45.8-47.4 million barrels of oil equivalent (MMBOE) from its
earlier forecast of 44.2-47.2 MMBOE. LOE is expected between
$9.90 and $11.25 per Mcfe.
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 has also
increased its production expectations from Cana Woodford and
Williston Basin for 2013.
After adjusting the impact of asset sales in 2013, liquids
production is expected to increase by over 40% in 2013.
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 retain a Zacks Rank #3
(Hold). But there are other stocks in the oil and gas industry
that appear more attractive. These include
Memorial Production Partners L.P.
Gulfmark Offshore, Inc.
), which hold a Zacks Rank #1 (Strong Buy).
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