Newfield Exploration (NFX) Q2 Results
Posted: Fri Aug 03, 2018 12:33 pm
Second Quarter 2018 Highlights
For the second quarter, the Company recorded net income of $119 million, or $0.59 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by an unrealized derivative loss of $78 million, or $0.39 per share, and a gain from a favorable legal settlement of $8 million, or $0.04 per share. After adjusting for the effects of the unrealized derivative loss and legal settlement during the period, net income would have been $189 million, or $0.94 per share. < This compares to my Q2 forecast of $0.79 EPS.
•Domestic and Anadarko Basin net production exceeded the high-end of the Company's guidance ranges. Second quarter 2018 domestic net production was 186,700 BOEPD (39% oil and 62% liquids). Stronger than expected production results were driven primarily by the Anadarko Basin which averaged 131,100 BOEPD (mid-point of guidance was 123,000 BOEPD), an increase of 13% relative to the prior quarter and approximately 48% year-over-year. Second quarter average net liquids production in the Anadarko Basin grew approximately 15% relative to the prior quarter to over 80,000 BOEPD. The Company's net crude oil production from the Anadarko Basin averaged over 42,000 BOPD (up more than 40% year-over-year), in line with guidance.
•Consolidated production for the second quarter of 2018 was approximately 195,300 BOEPD (42% oil, and 64% liquids). The Company lifted 782,000 net barrels from its offshore oil field in China. < Compares to my Q2 forecast of 179,500 Boepd
•Second quarter 2018 capital investments were $365 million, or approximately $5 million above original guidance. For the full-year 2018, the Company increased its capital budget by approximately 4% to $1.35 billion, excluding capitalized interest and overhead costs of approximately $114 million.
•Realized prices for crude oil and NGLs remained stable relative to the prior quarter. Specifically, STACK realized crude oil prices during the quarter averaged 100% of NYMEX WTI. Domestic natural gas prices in the quarter averaged approximately 79% of Henry Hub pricing.
•During the second quarter, discretionary cash flow exceeded capital investments by $11 million. As a result, available liquidity expanded to $2.4 billion ($2 billion in undrawn credit facility, $125 million money market lines of credit and nearly $300 million of available cash on hand). Additionally, the Company's ratio of Net Debt to adjusted EBITDA decreased to 1.7x as of June 30, 2018. This is ahead of the prior guidance of decreasing the ratio below 1.8x by year-end 2018. The Company remains focused on further improving its credit profile and reaching sustainable positive free cash flow generation.
•The Company continues to advance its Sycamore, Caney, Osage, Resource Expansion (SCORE) initiative. Recent positive drilling results were released in Northwest STACK, located in northeast Dewey County, Oklahoma, where the Company holds approximately 24,000 net acres (>70% operated). Results on several recent wells can be found in @NFX. By year-end, over 80% of this position is expected to be HBP.
•In the Williston Basin, Newfield's net production in the quarter averaged 21,000 BOEPD. Importantly, the Williston Basin program is expected to deliver discretionary cash flow that exceeds capital expenditures by more than $130 million at today's strip oil prices. Uinta Basin net production averaged approximately 21,000 BOEPD during the quarter.
For the second quarter, the Company recorded net income of $119 million, or $0.59 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by an unrealized derivative loss of $78 million, or $0.39 per share, and a gain from a favorable legal settlement of $8 million, or $0.04 per share. After adjusting for the effects of the unrealized derivative loss and legal settlement during the period, net income would have been $189 million, or $0.94 per share. < This compares to my Q2 forecast of $0.79 EPS.
•Domestic and Anadarko Basin net production exceeded the high-end of the Company's guidance ranges. Second quarter 2018 domestic net production was 186,700 BOEPD (39% oil and 62% liquids). Stronger than expected production results were driven primarily by the Anadarko Basin which averaged 131,100 BOEPD (mid-point of guidance was 123,000 BOEPD), an increase of 13% relative to the prior quarter and approximately 48% year-over-year. Second quarter average net liquids production in the Anadarko Basin grew approximately 15% relative to the prior quarter to over 80,000 BOEPD. The Company's net crude oil production from the Anadarko Basin averaged over 42,000 BOPD (up more than 40% year-over-year), in line with guidance.
•Consolidated production for the second quarter of 2018 was approximately 195,300 BOEPD (42% oil, and 64% liquids). The Company lifted 782,000 net barrels from its offshore oil field in China. < Compares to my Q2 forecast of 179,500 Boepd
•Second quarter 2018 capital investments were $365 million, or approximately $5 million above original guidance. For the full-year 2018, the Company increased its capital budget by approximately 4% to $1.35 billion, excluding capitalized interest and overhead costs of approximately $114 million.
•Realized prices for crude oil and NGLs remained stable relative to the prior quarter. Specifically, STACK realized crude oil prices during the quarter averaged 100% of NYMEX WTI. Domestic natural gas prices in the quarter averaged approximately 79% of Henry Hub pricing.
•During the second quarter, discretionary cash flow exceeded capital investments by $11 million. As a result, available liquidity expanded to $2.4 billion ($2 billion in undrawn credit facility, $125 million money market lines of credit and nearly $300 million of available cash on hand). Additionally, the Company's ratio of Net Debt to adjusted EBITDA decreased to 1.7x as of June 30, 2018. This is ahead of the prior guidance of decreasing the ratio below 1.8x by year-end 2018. The Company remains focused on further improving its credit profile and reaching sustainable positive free cash flow generation.
•The Company continues to advance its Sycamore, Caney, Osage, Resource Expansion (SCORE) initiative. Recent positive drilling results were released in Northwest STACK, located in northeast Dewey County, Oklahoma, where the Company holds approximately 24,000 net acres (>70% operated). Results on several recent wells can be found in @NFX. By year-end, over 80% of this position is expected to be HBP.
•In the Williston Basin, Newfield's net production in the quarter averaged 21,000 BOEPD. Importantly, the Williston Basin program is expected to deliver discretionary cash flow that exceeds capital expenditures by more than $130 million at today's strip oil prices. Uinta Basin net production averaged approximately 21,000 BOEPD during the quarter.