Houston-based independent energy company Newfield Exploration Company (NFX) divested its Granite Wash assets for $588 million. The proceeds will be used to repurchase Newfield's 7.125% Senior Subordinated Notes due 2018. As a result of the sale, Newfield now expects 2014 production of 45.5–47.5 million barrels of oil equivalent (MMBOE), down from prior guidance of 46.5–48.5 MMBOE.
In the second quarter of 2014, Newfield's net production from continuing operations was 12.1 MMBOE versus the projected range of 10.7–11.3 BOE. Liquids comprised approximately 55% of second-quarter volumes. Net liftings from discontinued operations totaled less than 0.1 BOE. Domestic production increased 12% over the first quarter of 2014 and 21% over the comparable quarter of 2013. Domestic liquids production increased 13% over the first quarter of 2014 and 40% over the comparable quarter of 2013.
Newfield expects that its planned 2014 domestic capital investments will now total about $1.7 billion versus the previous guidance of $1.6 billion. The additional investments specifically relate to an improved drilling performance across the company and the addition of new acreage in the Anadarko Basin.
Since late 2013, Newfield has been adding acreage in its SCOOP and STACK plays, located in Oklahoma's Anadarko Basin. Year-to-date, Newfield has added more than 25,000 net acres and now owns interest in more than 250,000 net acres. Due to continued operational efficiencies, Newfield now expects to drill up to 15 additional gross wells across its focus areas in 2014.
Newfield Exploration’s exposure to emerging resource plays, along with its shift of resources away from natural gas and into liquids, is likely to help it to grow in the exploration & production space.
We expect the company’s reserve potential in Southern Alberta Bakken, Wasatch oil, Uinta Basin and Cana Woodford to be liquid-rich catalysts to the stock. Though we remain positive on Newfield Exploration’s emerging resource plays development program, we believe that a volatile natural gas price environment could weigh on the stock since most of its reserves are tied to natural gas. Specifically, oil and gas prices have been increasingly volatile in recent years. This volatility tends to impact this sector stock performance.
Newfield Exploration currently carries a Zacks Rank #3 (Hold). Meanwhile, one can look at better-ranked players in the energy sector like Patterson-UTI Energy Inc. (PTEN), Cameron International Corporation (CAM) and Pioneer Energy Services Corp. (PES). Patterson-UTI and Pioneer Energy sport a Zacks Rank #1 (Strong Buy), while Cameron International hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment