Houston-based independent energy company
Newfield Exploration Company
), is set to report its first-quarter 2013 results on Apr 23,
2013. Let's see how things are shaping up prior to the
EPL OIL&GAS INC (EPL): Free Stock Analysis
EXTERRAN PTNRS (EXLP): Free Stock Analysis
NEWFIELD EXPL (NFX): Free Stock Analysis
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In the last quarter, the company's earnings of 28 cents per share
decreased 70.5% from 95 cents per share earned in the year-ago
quarter. The results were adversely impacted by lower oil and gas
volume. The results also missed the Zacks Consensus Estimate of
44 cents by 36.4%.
Growth Factors this Past Quarter
In the fourth quarter, Newfield's earnings dipped owing to lower
volumes. Total quarterly production of 71.6 billion cubic feet
equivalent (Bcfe), comprising 47% natural gas, dropped 9.7% year
over year. Natural gas volumes were 33.4 Bcf, down 24.4% year
over year. However, Oil, condensate and natural gas liquids
(NGLs) volume expanded 5.1% year over year to 5.6 million barrels
Newfield's fourth quarterly oil and natural gas price
realizations (including the effect of hedges) averaged $9.44 per
thousand cubic feet equivalent (Mcfe), up 2.2% from the
year-earlier level. Natural gas prices sank 28.8% from the
year-earlier quarter to $3.34 per Mcf. However, liquid prices
improved 7.5% to $94.66 per barrel.
Going forward, Newfield's exposure to emerging resource plays,
along with its shift of resources away from natural gas into
liquids, will help it to grow in the exploration and production
Newfield's overseas operations, especially in Malaysia, hold
immense potential. This is evident from the natural gas find it
made off Sarawak, Malaysia, which is considered as the largest
conventional exploratory success in its history. The company has
estimated the discovery to hold 1.5 trillion to 3 trillion cubic
feet of gas initially in place.
Looking forward, the company intends to focus mostly on
liquids-rich operations and expects to generate about 35%
year-over-year growth in oil and liquids production in 2013. The
company also expects to generate about 60% of the annual
production growth in the first half of 2013. Newfield expects
output in the range of 44.2-47.2 million barrels of oil
equivalent (MMBOE) in 2013.
Though we remain positive on Newfield's emerging resource plays'
development program, we believe that a low natural gas price
environment could weigh on the performance of the company since
most of its reserves are tied up in natural gas. Specifically,
oil and gas prices have been increasingly volatile in recent
years. This volatility tends to impact sector performance in
general and Newfield in particular.
Newfield is expected to report poor first quarter earnings with
analysts expecting a -46.79% drop in earnings from a year ago.
The Zacks Consensus Estimate currently stands at 48 cents per
share, down from earnings of 91 cents per share a year ago.
Our proven model does not conclusively show that Newfield is
likely to beat first quarter earnings. That is because a stock
needs to have both a positive Zacks earnings ESP (Read: Zacks
Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here as you will see below.
Negative Zacks ESP: The ESP, which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is -10.42%. This is because the Most Accurate estimate
stands at 43 cents while the Zacks Consensus Estimate is higher
at 48 cents.
Zacks Rank #3 (Hold): Newfield's Zacks Rank #3 (Hold) lowers the
predictive power of ESP because the Zacks Rank #3 when combined
with an ESP of -10.42% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing a negative estimate revisions momentum.
Stocks to Consider
Exterran Partners, L.P.
) has an earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).
Epl Oil & Gas Inc.
) has an earnings ESP of +12.50% and a Zacks Rank #1 (Strong
SM Energy Company
) has an earnings ESP of +14.29% and a Zacks Rank #1 (Strong