Newfield getting hammered

[dan_s]

NFX's 95 cents EPS is below my forecast ($1.14) but still not that bad. The stock is down almost 10% this morning.

Fourth Quarter 2011

For the fourth quarter of 2011, Newfield recorded net income of $68 million, or $0.51 per diluted share (all per share amounts are on a diluted basis). Net income for the fourth quarter includes a net unrealized loss on commodity derivatives of $93 million ($59 million after-tax), or $0.44 per share. Without the effect of this item, net income for the fourth quarter of 2011 would have been $127 million, or $0.95 per share.

Revenues in the fourth quarter of 2011 were $677 million. Net cash provided by operating activities before changes in operating assets and liabilities was $387 million. See “Explanation and Reconciliation of Non-GAAP Financial Measures” found after the financial statements in this release.

Newfield’s oil and liquids liftings in the fourth quarter of 2011 were 6 MMBbls, or an average of approximately 64,000 BOPD. This is about 9,000 BOPD higher than the third quarter of 2011 and 28% higher than the fourth quarter of 2010. Natural gas production in the fourth quarter of 2011 was 44 Bcf, an average of 478 MMcf/d. When combined, Newfield’s production in the fourth quarter of 2011 was 79 Bcfe, of which 44% was oil and liquids. Capital expenditures in the fourth quarter of 2011 were $479 million.

[dan_s]

..Citigroup downgraded Newfield Exploration following the company's Q4 results and 2012 guidance, which included expectations for no production growth this year. The firm lowered its price target for shares to $46 from $48. Note shares of Newfield Exploration were also downgraded this morning at Deutsche Bank.

Right now NFX is at $37/share.

Even though the overall production growth will be flat, the mix is going to improve with focus on more liquids production.

[dan_s]

THE WOODLANDS, Texas, Feb. 21, 2012 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX - News) today announced a $1.5 – $1.7 billion capital investment program for 2012. The investments will be almost entirely "oil-focused" and are expected to generate more than 20% year-over-year production growth in oil and liquids. Approximately $300 million of the budget will be allocated to an aggressive assessment of a new 125,000 net-acre position in the "liquids-rich" Cana Woodford play, located in Oklahoma's Anadarko Basin.

2012 Capital Investment Highlights

•Total planned 2012 capital investments of $1.5 – $1.7 billion, or approximately $400 million less than 2011 investments of $2.0 billion. Totals exclude acquisitions and capitalized overhead and interest of $210 million and $194 million, respectively;
•Oil and liquids production is expected to grow more than 20%, natural gas production expected to decline as much as 15%;

[dan_s]

An updated Net Income and Cash Flow Forecast model for NFX has been posted under the Watch List Tab.

My take on today's selloff is that the market grossly over-reacted to the company's reduced production guidance. NFX now says 2012 production will be 290-300 Bcfe or flat to 2011. However, their natural gas production is going down 15% to 20% and their liquids production is going down by the same amount. They are now on-track to have more than 50% of production on a boe basis from liquids by the 2nd half of this year. That is a good thing!

From time-to-time, Mr. Market will give us a gift. This could be one.