Newfield Exploration

[dan_s]

Newfield Exploration Reports Third Quarter 2015 Results beat my forecast. I was expecting Adjusted loss per share of $-0.07. Production was higher and operating expenses were lower. - Dan

- 3Q15 net domestic production of 12.9 MMBOE exceeded guidance mid-point by 0.4 MMBOE
- Total Company oil production increased 42% year-over-year; domestic oil production up 11% year-over-year adjusted for asset sales
- 3Q15 domestic lease operating expense of $4.51 per BOE was 15% below guidance; full-year 2015 lease operating expense expected to be down nearly 25% year-over-year per BOE
- Adjusted 3Q15 diluted earnings per share of $0.21 topped consensus estimates
- Full-year 2015 net domestic production forecast raised for second time to 50.0 - 50.5 MMBOE (previous forecast: 48.5 - 50.0 MMBOE); 2015 consolidated net production raised to 55.3 - 55.8 (previous forecast: 53.5 - 55.0 MMBOE)
- 3Q15 Anadarko Basin average net production was approximately 68,000 BOEPD; 4Q15 average estimated Anadarko Basin net production increased to 74,000 BOEPD (previous forecast: 71,000 BOEPD)
- Milestone: Anadarko Basin daily net production levels surpassed remainder of Company's combined domestic businesses
- Company reported continued improvements in average production rates from recent STACK wells < This is the best news.
- Newfield sold approximately $77 million in non-strategic assets year-to-date
- Company reiterated 2015 capital investment budget of approximately $1.4 billion

[setliff]

market did not like it! down >5% at this hour. on very high volume.

could you comment, dAN? also, anyone else?

[dan_s]

I just got back from our luncheon in Houston. I will update my forecast model on NFX and comment later.

[dan_s]

I have updated my forecast model for NFX. My valuation increases by $0.80/share to $54.80, compared to First Call's Price target of $43.00. I got an updated report from Stifel this morning and their price target is $48.00. They rate NFX a BUY.

Ignoring the big impairment charge, 3rd quarter results beat my forecast and they raised production guidance for Q4.

We will send out an updated profile on NFX in a few days.

Today's dip in the share price is probably just a reaction to the dip in oil prices.

[setliff]

<Today's dip in the share price is probably just a reaction to the dip in oil prices.>

I thought that at first, but it ended the day much worse than most.

[dan_s]

All I can say is do not over-react to one day moves in any stock. All it takes is one hedge fund manager that wants to harvest a gain and move to something he likes better.

NFX is very well positioned in STACK, where they are getting strong economics even at today's oil price.

[dan_s]

Here is another analyst's opinion:

Newfield Exploration Co. (NYSE: NFX; $40.14; Buy; $45.00 PT) Q3 First Look: Stack continues to shine
EPS beat was primarily driven by solid production (3.7%/3.5% above SGS/consensus), and continued cost control (domestic LOEs have declined 22% since Q1, and are on pace to be down 25% YoY). Performance from the Anadarko Basin continues to surprise to the upside – sequential oil growth clocked in at an impressive ~29%, denoting the strength of the program – 22 new Stack wells registered 14% higher 30-day IPs than the previous 23 completions, coming in at 930 boepd (77% oil). Q4 production guidance is 4% higher at the midpoint than consensus estimates while FY15 capex is reiterated at $1.4B, which should be received well in our opinion.
Mike Kelly, CFA (713) 658-6302 mkelly@seaportglobal.com