Energy Prospectus

NFX had good 2nd quarter results. I am working on the forecast model and it will be posted to the website this afternoon. NFX is one of "Elite Eight" in the Sweet 16 and one of my top picks because of what they have going up in Oklahoma. - Dan

"At mid-year, we are firing on all cylinders," said Lee K. Boothby, Newfield Chairman, President and CEO. "Although the backdrop of low oil prices is presenting very challenging issues for industry, our business plan and strong balance sheet continue to differentiate Newfield in the current environment. Our team is driving down costs, improving margins and realizing efficiencies and attractive returns in the Anadarko Basin. Furthermore, we are well hedged for 2015-16 and have significant liquidity. Our priorities remain a balance of maintaining financial strength, holding our economically resilient STACK acreage position by production and capturing remaining acreage opportunities in the Anadarko Basin. At our current pace, we are accelerating the timing to full-field development and expect to be 100% held-by-production in STACK by the end of 2016. I am confident in our plan and its ability to continue delivering stockholder value."

Stifel on NFX: Reiterate Buy
"We are increasing our NAV $3/share, or 6%, to $54/share to account for the
STACK acreage acquisition and lower well costs ( Exhibit 4). State production data
continues to be supportive of our NAV, as previously noted: STACK and SCOOP
Offer Compelling Upside; Upgrading to Buy. We believe continued delineation of
the STACK and SCOOP holds the potential to unlock significant value, which could
cause us to raise our risked NAV and act as a catalyst for the shares."

I have been engaged to write a special report on the SCOOP/STACK play in Oklahoma. Well economics are very good in these new plays that are controlled by NFX, DVN, CLR, XEC. GST as over 100,000 acres with STACK potential.

I have finished updating my forecast model for NFX. It will be posted to the EPG website later today.

I am raising my valuation $4.50/share to $59.50 per share. This compares to Stifel's price target of $48.00. My FVE increase is primarily the result of their increased production guidance.

Newfield's reported loss for the 2nd quarter included a lot of non-cash charges, which mean nothing. As I have posted here many times, GAAP accounting rules for upstream oil & gas companies are VERY CONFUSING AND MISLEADING to investors during periods of rapidly changing commodity prices. Newfield's "Adjusted EPS" and cash flow from operations beat my forecast for the 2nd quarter.

This company has a strong balance sheet and so much production hedged at good prices that the recent dip in oil prices has very little impact on their cash flow from operations. Approximately 70% of their 2016 forecast oil production is hedged at prices well above the forecast price of $65/bbl that I am using for oil in 2016.

Cash Flow from operations this year will be $7.00 to $7.50 per share, compared to $9.70 CFPS in 2014.

They have HUGE upside in Oklahoma, which we will highlight in our next profile to be published next week.

If you are not aware of what's happening in the SCOOP/STACK play in Oklahoma, you need to educate yourself. This play has good economics even at today's oil and gas prices. Get started by looking at the most recent presentation on the NFX website.