Newfield Exploration Co. (NFX) reported adjusted first-quarter 2014 earnings of 44 cents per share, which beat the Zacks Consensus Estimate of 40 cents by 10.0%. However, the quarterly results fell short of the year-earlier adjusted profit by a penny.
The company’s total revenue jumped 50.0% year over year to $553.0 million. The top-line also surpassed the Zacks Consensus Estimate of $533.0 million.
Total quarterly production came in at 10.7 million barrels of oil equivalent (MMBoe), comprising 38.3% oil, 15.9% natural gas liquids and 45.8% natural gas.
Natural gas volumes were 29.8 billion cubic feet (Bcf). Oil, condensate and natural gas liquids volumes totaled 5.8 million barrels (MMBbls).
Newfield’s first-quarter liquid and natural gas price realizations averaged $54.12 per Boe. Natural gas prices were $3.89 per Mcf, oil prices stood at $87.52 per barrel while NGLs prices were $38.11 per barrel.
Recurring lease operating expenses (:LOE) stood at $6.73 per Boe. Production and other taxes were $4.69 per Boe, while general and administrative expenses totaled $5.32 per Boe.
At quarter end, Newfield had cash balance of $107.0 million. Long-term debt was $3,046.0 million, representing a debt-to-capitalization ratio of approximately 48.4%.
For the second quarter of 2014, Newfield expects output of 10.7–11.3 MMBoe.
For 2014, Newfield continues to expect production in the range of 44.0–48.0 MMBoe. LOE is expected at $440 million, production & other taxes at $120 million while general & administration is projected at $210 million.
Newfield Exploration’s diversified portfolio of assets provides 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 the company’s sensitivity to gas price volatility, 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 currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the oil and gas exploration and production sector like Athlon Energy Inc. (ATHL), Clayton Williams Energy Inc. (CWEI) and RSP Permian Inc. (RSPP). All the stocks sport a Zacks Rank #1 (Strong Buy).