Yahoo Finance What Made NFX Raise Its 2015 Production Guidance?
How Will Oil Prices Affect Newfield Exploration's 4Q15 Earnings?
Newfield Exploration’s guidance for 2015
In its 3Q15 earnings release, Newfield Exploration (NFX) raised its 2015 domestic production guidance range to 50–50.5 MMboe (million barrels of oil equivalent) compared to the previous 2Q15 guidance range of 48.5–50 MMboe. Its total production guidance range was raised to 55.3–55.8 MMboe compared to its previous guidance range of 53.5–50 MMboe.
Key efforts by NFX in a low-oil-price environment
In its 3Q15 earnings release, NFX noted that it had reduced its 3Q15 lease operating expenses (or LOE) by 22% compared to 1Q15. Its general and administrative expenses had fallen by 17% since 1Q15.
On a unit of production basis, NFX’s estimated 2015 LOE is expected to be ~25% lower than 2014 levels. These are expected to fall by an additional 5%–10% in 2016.
NFX expects hedges to have contributed cash flows of ~$490 million in 2015. For 2016, NFX expects hedges to contribute cash flows of ~$250 million.
Upstream companies such as Chesapeake (CHK) and Cabot Oil & Gas (COG) are also hedged in 2016. However, companies such as Devon Energy (DVN) are unhedged in 2016. These companies combined make up ~2.5% of the Vanguard Energy ETF (VDE).
Additionally, Newfield Exploration is focusing on drilling and developing its asset base in the Anadarko Basin, where it has seen strong performance. The company allocated 70% of its 2015 capital expenditure budget to this region.
CEO Lee Boothby said during the company’s 2Q15 earnings report, “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.”
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