Newfield Exploration Co.
) reported adjusted first-quarter 2013 earnings of 45 cents per
share, which was a penny below the Zacks Consensus Estimate. The
quarterly results also fell 50.5% from the year-earlier adjusted
profit of 91 cents per share. The deterioration can be traced
back to lower gas volumes and higher quantum of operating
The company's total revenue dropped nearly 4.0% year over year
to $651.0 million from $678.0 million in year-earlier quarter.
However, it surpassed the Zacks Consensus Estimate of $637.0
Total quarterly production was 11.7 million barrels of oil
equivalent (MMBoe), comprising 55.6% crude oil, condensates and
natural gas liquids (NGLs). Natural gas volumes were 31.2 billion
cubic feet (Bcf), down 23.3% year over year. Oil, condensate and
natural gas liquids (NGLs) volume expanded 10.2% year over year
to 6.5 million barrels (MMBbls).
Newfield's first quarter oil and natural gas price
realizations (including the effect of hedges) averaged $59.79 per
Boe. Natural gas prices improved 10.5% year over year to $4.09
per Mcf. However, liquid prices sank 0.2% to $96.06 per
Recurring lease operating expenses (LOE) were $7.20 per Boe.
Production and other taxes were $10.16 per Boe, while General and
administrative expenses came in at $4.06 per Boe.
At quarter-end, Newfield had a cash balance of $44 million,
while long-term debt was $3,045 million, representing a
debt-to-capitalization ratio of 52.3%.
For 2013, Newfield expects estimated output in the range of
44.2-47.2 million barrels of oil equivalent (MMBOE). LOE is
expected between $11.45 and $12.70 per Mcfe.
The company expects to generate about 60% of its annual
production growth in the first half of 2013.
Newfield Exploration's diversified portfolio of assets
provides both flexibility and a 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.
After adjusting the impact of asset sales in 2013, liquids
production increased about 30% in the first quarter on an
annualized basis. It is expected to grow by 12% in the second
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 for concern.
Newfield Exploration shares currently retain a Zacks Rank #3,
which translates into a short-term Hold rating. But there are
other stocks in the oil and gas industry that appear more
attractive. These include
Range Resources Corporation
Stone Energy Corp
EPL Oil & Gas, Inc.
), which hold a Zacks Rank #1 (Strong Buy).
EPL OIL&GAS INC (EPL): Free Stock Analysis
NEWFIELD EXPL (NFX): Free Stock Analysis
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STONE ENERGY CP (SGY): Free Stock Analysis
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