Newfield Exploration Co. (NFX) reported adjusted fourth-quarter 2013 earnings of 49 cents per share, which beat the Zacks Consensus Estimate of 45 cents by 8.9%. The quarterly results also increased 75% from the year-earlier adjusted profit of 28 cents per share. The growth can be traced back to higher oil and gas volume.
The company’s total revenue jumped 41.5% year over year to $498.0 million. However, it lagged the Zacks Consensus Estimate of $592.0 million.
Full-year 2013 adjusted earnings of 94 cents per share decreased 58.8% from the year-ago adjusted profit level of $2.28. Earnings also failed to meet the Zacks Consensus Estimate of $1.94.
Total revenue in 2013 improved 21.2% on a year-over-year basis to $1,789.0 million.
Operational Performance
Total quarterly production was 12.8 million barrels of oil equivalent (MMBoe), comprising 49% oil, 12% natural gas liquids (NGLs) and 39% natural gas.
Natural gas volumes were 29.9 billion cubic feet (Bcf). Oil, condensate and natural gas liquids (NGLs) volumes were 7.8 million barrels (MMBbls).
Newfield’s fourth quarter oil and natural gas price realizations (including the effect of hedges) averaged $59.39 per Boe. Natural gas prices were $3.98 per Mcf, oil prices were $92.15 per barrel while NGLs prices were $33.48 per barrel.
Recurring lease operating expenses (LOE) were $7.29 per Boe. Production and other taxes were $6.83 per Boe, while general and administrative expenses totaled $5.33 per Boe.
Financials
At quarter end, Newfield had cash balance of $95.0 million. Long-term debt was $3,694.0 million, representing a debt-to-capitalization ratio of approximately 55.5%.
Guidance
For the first quarter of 2014, Newfield expects output of 10.1–10.4 million barrels of oil equivalent (MMBOE).
For 2014, Newfield expects output in the range of 44–48 MMBOE. LOE is expected at $421 million, production & other taxes at $118 million while general & administration at $207 million.
Outlook
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.
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 carry a Zacks Rank #3 (Hold). But there are other stocks in the oil and gas industry that appear more attractive. These include Helmerich & Payne, Inc. (HP), Matrix Service Company (MTRX) and Patterson-UTI Energy Inc. (PTEN), which hold a Zacks Rank #1 (Strong Buy).
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