NFX expecting 12% sequential growth in the domestic liquid production
Newfield’s domestic liquids production has been its strong point and this is the area where investors need to focus. Newfield’s core business is liquids production which accounted for 56% of its net production of 11.7 million barrel of oil equivalent (boe) in the previous quarter. Nearly 85% of the total liquids production is crude oil and condensates.
In domestic operations, its liquid production rose 9% sequentially and 30% year-over-year, when adjusted for asset sales. In coming years Newfield will report significant growth in domestic liquids but will scale down its international operation, so its total output could fall. It will spend around $1.8 billion in capital expenditure this year while its domestic liquids volume will grow by 39%.
Newfield’s second quarter results are due on July 24 and it is expecting a 12% sequential growth in the domestic liquid production. In the previous quarter, Newfield posted better than expected operational performance which helped restore investor confidence. The company was able to beat both revenue and earnings estimates. Based on its production plans, such as better well development and additional drilling in oil-rich fields like Uinta, Williston Basin and Cana Woodford, along with capex estimates, I believe the company could very well beat the analysts’ estimates once again in their earnings release.
Its shares have remained under pressure as it reported consecutive earnings misses in the last three quarters of the previous year. However, its most recent earnings beat caused its shares to rally as its stock rose by 9.2% in the final week of April. If it manages to deliver another earnings beat, then this could happen again as there is still considerable room for improvement.