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Newfield Exploration's Oil Investments Payoff
Newfield Exploration Company's (NYSE:NFX) recent quarter benefited from an increased investment in oil plays, leading the company to raise full year production estimates to the upper end of its guidance range.
Q3 Summary
Newfield Exploration Company reported production of 71 billion cubic feet equivalent (Bcfe) in the third quarter of 2010, a 9% increase over the same quarter of 2009. The increase was led by oil production during the quarter, which was up 30% year over year. The company also said that production for 2010 would be at the upper end of its guidance range between 286 and 288 Bcfe.
Not all exploration and production companies have been raising guidance recently. EnCana Corporation (NYSE:ECA) reported results for the third quarter of 2010 and reduced its production guidance due to "capacity constraints for completion services."
Monument Butte
Newfield Exploration's core oil investment area is Monument Butte, a relatively unknown oil field in the Rocky Mountain area. The company has production of 25,000 barrels of oil equivalent per day from the Monument Butte field.
Newfield Exploration has a large development program planned for 2010 consisting of 375 wells. Wells here range in cost from $700,000 to $900,000 and can be drilled in an average of four days. The company has increased production from here by 5,000 BOE per day since the beginning of the year and with nearly 5,000 locations on 180,000 acres, Newfield Exploration can milk this field for many years.
Williston Basin
Newfield Exploration's other area for oil production is in the Williston Basin, where the company has 271,000 net acres. The company is currently producing 5,000 BOE per day from here, on the way to 6,500 BOE per day by the end of the year. Growth may accelerate in 2011 as the company moves to 9,000 foot laterals on Bakken wells here.
Another company using long laterals to develop the Bakken is Brigham Exploration Company (Nasdaq:BEXP), which has approximately 368,000 net acres in the Williston Basin.
Early Stage Oil Plays
Newfield Exploration is also working on starting up development programs in the Eagle Ford Shale in Texas, and in the southern Alberta Basin extending into Montana. In the Eagle Ford Shale, the company plans to drill 15 wells on its 300,000 net acre position. The southern Alberta Basin is at an earlier stage of development and the company recently completed its first horizontal well.
Another company with properties in the Alberta Basin is Rosetta Resources (Nasdaq:ROSE), which has 291,000 net acres under lease. The company has drilled three exploratory wells here, and plans an eight well vertical program through 2011 to help plan a development program.
The Bottom Line
Newfield Exploration's investments in various oil plays have started to pay off as the company tries to shift the company toward a more balanced producer of oil and gas. (For more stock analysis, see The Changing Face Of Google.)
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Q3 Summary
Newfield Exploration Company reported production of 71 billion cubic feet equivalent (Bcfe) in the third quarter of 2010, a 9% increase over the same quarter of 2009. The increase was led by oil production during the quarter, which was up 30% year over year. The company also said that production for 2010 would be at the upper end of its guidance range between 286 and 288 Bcfe.
Not all exploration and production companies have been raising guidance recently. EnCana Corporation (NYSE:ECA) reported results for the third quarter of 2010 and reduced its production guidance due to "capacity constraints for completion services."
Monument Butte
Newfield Exploration's core oil investment area is Monument Butte, a relatively unknown oil field in the Rocky Mountain area. The company has production of 25,000 barrels of oil equivalent per day from the Monument Butte field.
Newfield Exploration has a large development program planned for 2010 consisting of 375 wells. Wells here range in cost from $700,000 to $900,000 and can be drilled in an average of four days. The company has increased production from here by 5,000 BOE per day since the beginning of the year and with nearly 5,000 locations on 180,000 acres, Newfield Exploration can milk this field for many years.
Newfield Exploration's other area for oil production is in the Williston Basin, where the company has 271,000 net acres. The company is currently producing 5,000 BOE per day from here, on the way to 6,500 BOE per day by the end of the year. Growth may accelerate in 2011 as the company moves to 9,000 foot laterals on Bakken wells here.
Another company using long laterals to develop the Bakken is Brigham Exploration Company (Nasdaq:BEXP), which has approximately 368,000 net acres in the Williston Basin.
Early Stage Oil Plays
Newfield Exploration is also working on starting up development programs in the Eagle Ford Shale in Texas, and in the southern Alberta Basin extending into Montana. In the Eagle Ford Shale, the company plans to drill 15 wells on its 300,000 net acre position. The southern Alberta Basin is at an earlier stage of development and the company recently completed its first horizontal well.
Another company with properties in the Alberta Basin is Rosetta Resources (Nasdaq:ROSE), which has 291,000 net acres under lease. The company has drilled three exploratory wells here, and plans an eight well vertical program through 2011 to help plan a development program.
The Bottom Line
Newfield Exploration's investments in various oil plays have started to pay off as the company tries to shift the company toward a more balanced producer of oil and gas. (For more stock analysis, see The Changing Face Of Google.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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