Newfield Exploration (NFX) Update - Aug 20
Posted: Mon Aug 20, 2018 11:54 am
NFX is a classic example of what has been a very frustrating year for the Sweet 16 and investors in the upstream oil & gas subsector.
I am finishing up the profile on the company today that was prepared by our Super Star Texas Tech MBA, David Day. We have five MBAs that help me with the profiles. The other four are graduates of SMU. They are an extremely valuable resource for us.
As of last Friday's closing prices, NFX is down 16.4% YTD. Here is why the share price makes no sense:
Newfield is on-track to one of the best years in the company's long history.
1. 2017 and 1H2018 results beat my forecast.
2. Q2 2018 production came in 11,000 Boepd above the mid-point of the company's production guidance because of VERY GOOD results in STACK.
3. NFX is now on-track for ~24% year-over-year production growth, primarily from STACK.
4. Newfield's capex program is now funded 100% by cash flow from operations ($697 Million in 2H2018 and growing).
5. Newfield has a strong balance sheet and over $2 Billion of liquidity.
6. Last but not least > They have a lot of running room in STACK.
The only reason that I can see for NFX's low share price is because some of the Wall Street Gang still considers the company a "gasser". Newfield's production mix on a BOE basis is approximately 36% natural gas, 42% crude oil and 22% NGLs. However, only 12.6% of their revenues are from natural gas sales.
NFX is currently trading for $26.60, well below the top of its 52-week range ($35.20)
Since the company released Q2 results and detailed guidance for the remainder of 2018 (raising production guidance), two analysts have sent updated forecast/valuation models to Reuters / First Call:
> Rehan Rashid at B.Riley FBR rates it a BUY with a $48.00 price target
> Gabriele Sorbara at Williams Capital rates it a BUY with a $44.00 price target
NOTE: The First Call price target of $37.81 still includes 22 analysts' forecasts that have not been updated since Q2 results came out.
We will be sending out an updated profile on Newfield Exploration (NFX) on August 21.
I am finishing up the profile on the company today that was prepared by our Super Star Texas Tech MBA, David Day. We have five MBAs that help me with the profiles. The other four are graduates of SMU. They are an extremely valuable resource for us.
As of last Friday's closing prices, NFX is down 16.4% YTD. Here is why the share price makes no sense:
Newfield is on-track to one of the best years in the company's long history.
1. 2017 and 1H2018 results beat my forecast.
2. Q2 2018 production came in 11,000 Boepd above the mid-point of the company's production guidance because of VERY GOOD results in STACK.
3. NFX is now on-track for ~24% year-over-year production growth, primarily from STACK.
4. Newfield's capex program is now funded 100% by cash flow from operations ($697 Million in 2H2018 and growing).
5. Newfield has a strong balance sheet and over $2 Billion of liquidity.
6. Last but not least > They have a lot of running room in STACK.
The only reason that I can see for NFX's low share price is because some of the Wall Street Gang still considers the company a "gasser". Newfield's production mix on a BOE basis is approximately 36% natural gas, 42% crude oil and 22% NGLs. However, only 12.6% of their revenues are from natural gas sales.
NFX is currently trading for $26.60, well below the top of its 52-week range ($35.20)
Since the company released Q2 results and detailed guidance for the remainder of 2018 (raising production guidance), two analysts have sent updated forecast/valuation models to Reuters / First Call:
> Rehan Rashid at B.Riley FBR rates it a BUY with a $48.00 price target
> Gabriele Sorbara at Williams Capital rates it a BUY with a $44.00 price target
NOTE: The First Call price target of $37.81 still includes 22 analysts' forecasts that have not been updated since Q2 results came out.
We will be sending out an updated profile on Newfield Exploration (NFX) on August 21.