Energy Prospectus

My updated forecast model for Newfield Exploration is now on the website under the Sweet 16 Tab. Just click on their logo.

IMO NFX is now oversold. My Fair Value estimate is $82/share which is only 6X 2011 cash flow per share.

Canaccord Genuity has upgraded NFX to a BUY.

I agree. The Market has over-reacted (as usual) to the company's 4th quarter earnings disappointment and their announcement that 1st quarter production will be down slightly due to weather related issues. The freeze related shut-ins are fixed and production is on the rise. Year-over-year Newfield is projecting that production will be up 10% in 2011.

65% of 2011 natural gas production is hedged at over $6/mcf

NFX has a high percentage of their natural gas hedged at very good prices. Since NG prices were higher on 12/31 then on 9/30 the company had to book a non-cash mark-to-market adjustment on their derivatives. IMO these accounting rules are nonsense and very distortive. Since NG prices are likely to be lower on 3/31, NFX will be booking a large gain on the same hedge contracts at the end of Q1. All this does is mix up investors. This is why our focus in on cash flow per share.

Per my forecast model, Newfield will generate $13.68 cash flow per share in 2011. The current share price is ridiculously low at less than 5X projected CFPS.

Now is a good time to accumulate this Core Holding quality stock.

In my opinion, NFX is a "Screaming Buy" at today's price. My Fair Value estimate is $82.