Newfield Exploration Q3 results top forecast

[dan_s]

For the third quarter, the Company recorded net income of $87 million, or $0.44 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by one time tax benefits of $17 million, or $0.09 per share, due to the carryback of net operating losses, and an unrealized derivative loss of $34 million, or $0.17 per share. After adjusting for the effect of the tax benefit and unrealized derivative loss during the period, net income would have been $104 million, or $0.52 per share.

Adjusted EPS of $0.52 compares to my forecast of $0.38.

Highlights

> Third quarter 2017 net production significantly exceeded guidance expectations.
> Newfield's Anadarko Basin production increased approximately 20% quarter-over-quarter (3Q17 vs 2Q17), averaging approximately 105,000 BOEPD during the third quarter. The Anadarko Basin now comprises approximately two-thirds of total domestic production.
> Newfield's production in the Williston Basin increased during the third quarter, averaging nearly 22,000 BOEPD. Approximately 65% of the production was oil and the average sales price during the quarter was $45.21 per barrel.
> The Company today increased the mid-point of its full-year 2017 production outlook.
> At the end of the third quarter, the Company had approximately $428 million of cash on hand.

I will update my forecast model and post it to the EPG website this afternoon.

[dan_s]

VERY IMPORTANT: Newfield's cash on hand + cash flow from operations will cover 100% of capex through 2018.

[dan_s]

I have updated my forecast model for NFX and it will be on the EPG website this afternoon.

My valuation increases slightly to $48.00/share, which compares to First Call's price target of $35.93. If you listen to their conference call I think you'll understand why I am so high on this one.
Production growth s/b ~20% in 2018, totally paid for with cash flow from operations.

BTW the improving outlook for NGL prices is really good news for NFX

[wilmawatts]

I listened to the conference call

You are right, an impressive firm well positioned that is undervalued