Energy Prospectus

Newfield Exploration Company (NFX) reported its fourth quarter and full-year 2014 financial results, as well as 2014 year-end proved reserves.
Fourth Quarter and Full-Year 2014 Financial Summary

For the fourth quarter of 2014, the Company posted net income from continuing operations (inclusive of our China operations) of $367 million, or $2.65 per diluted share (all per share amounts are on a diluted basis). Net income in the quarter was impacted by the following items:
•a $510 million ($328 million after-tax, or $2.37 per share) gain related to unrealized gain on commodity derivatives;
•a $14 million ($9 million after-tax, or $0.07 per share) premium to call our Senior Notes Due 2018; and
•a $7 million, ($5 million after tax, or $0.03 per share) inventory writedown.

Excluding the items listed above, net income from continuing operations for the fourth quarter of 2014 would have been $53 million, or $0.38 per share(1). Revenues from continuing operations for the fourth quarter of 2014 were $495 million.

Fourth quarter net cash provided by operating activities before changes in operating assets and liabilities was $337 million. < Above my forecast - Dan

I am updating my forecast model now and will have an adjusted valuation posted here soon. - Dan

One reason I remain high on Gastar Exploration (GST) is because they have a lot of acreage in central Oklahoma near where CLR and NFX are continuing to have great success in their SCOOP and STACK plays. - Dan

Newfield's net production in the Anadarko Basin averaged approximately 54,000 BOEPD in the fourth quarter of 2014. For the full year 2014, net production from the Anadarko Basin increased more than 100%, totaling 15.4 MMBOE. Newfield continues to increase its acreage position in the basin and today has nearly 300,000 net acres.

SCOOP/Springer and STACK will be the primary focus of Newfield's 2015 drilling program. Investments in these plays are expected to total about $820 million, or about 70% of the Company's total 2015 planned capital expenditures. Newfield is currently running 10 operated drilling rigs in the Anadarko Basin and expects that its 2015 production will increase by more than 40% over 2014 levels.

Newfield continues to add acreage in its STACK play and today has approximately 210,000 net acres. Recent drilling results have now "production delineated" approximately 75% of STACK and consistent well results have been demonstrated across a 300 square-mile area. Drilling activities are increasing in STACK, with Newfield expecting to drill more than 50 STACK wells in 2015. This drilling campaign is expected to grow production in the play while holding acreage by production.

I have updated my forecast model which will be posted to the website late this afternoon.

This one should be getting a lot of analysts' upgrades after today's conference call.

My Fair Value Estimate has increased $5.80/share to $50.80, compared to First Call's Price Target of $32.98/share.

They are getting GREAT results in Oklahoma.