Newfield Exploration Company (NYSE:NFX) reported continued progress on the development of various domestic resource plays during the third quarter of 2012, but the stock was nevertheless crushed by investors after the company disclosed that oil production from its international operations will decline in 2013.
Discount Brokers Comparison: Your one-stop shop for finding the perfect broker for your investments.
Newfield Exploration has interests in Malaysia and China and reported net production of 36,000 barrels of oil equivalent (BOE) per day from its International portfolio as of late October 2012. During the earnings conference call, the management of Newfield Exploration said that international oil volumes in 2013 would decline up to 25% from 2012 levels.
Newfield Exploration said that the expected decline in net production volumes in 2013 was due to accelerated oil production from the company's Malaysian oil fields as well as higher than expected realized oil prices in 2012. Newfield Exploration's net production levels in 2013 are determined by production sharing contracts, and the accelerated production will reduce the company's share next year.
Newfield Exploration expects production growth to resume the following year as the company's Pearl oil project in offshore China comes on line in 2014. The company expects peak net production here to reach 15,000 barrels of oil per day.
Investors were not happy with the decline in International oil volumes and punished Newfield Exploration after the earnings report was released, sending the stock down 17%.
SEE: Oil And Gas Industry Primer
Newfield Exploration also disclosed updated operational results on its domestic plays during the third quarter of 2012. The company completed its first horizontal well into the Hogshooter Wash and reported an initial production rate of 5,045 BOE per day, with 90% of the production composed of oil and liquids.
While this was certainly a productive well, it was well below the production rate of a Hogshooter well completed by Chesapeake Energy (NYSE:CHK) in June 2012. The company reported an average production rate of 7,350 BOE per day on this well during the first eight days, and 5,100 BOE per day after two months of production. Newfield Exploration also progressed on its development programs targeting the Bakken play, the Eagle Ford Shale, Woodford Shale and in the Uinta Basin during the third quarter of 2012.
SEE: A Guide To Investing In Oil Markets
Other Malaysian Operators
Other exploration and production companies with operations in Malaysia include Murphy Oil (NYSE:MUR), which has 25% of its total estimated resource base in this country. The company has production from six development projects starting up over the next 12 months and plans to drill two exploration wells in the final months of 2012.
Talisman Energy (NYSE:TLM) has interests in various offshore blocks and reported net production of 36,000 BOE per day from Malaysia at the end of 2011. The company is scheduled to become operator of the Kinabalu project in December 2012 and has exploration prospects across its Malaysian portfolio.
The Bottom Line
Shareholders of Newfield Exploration were not happy with the company's International operations in the third quarter of 2012 earnings report, despite continued progress in the development of domestic plays. Investors should investigate whether the selloff is a good opportunity to initiate or add to a position in this company.
At the time of writing, Eric Fox did not own any shares in any company mentioned in this article.
Stock AnalysisA summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
Options & FuturesInvesting during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
Investing BasicsHeld onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
EconomicsWill remaining calm and staying long present significant risks to your investment health?
Stock AnalysisIs DKS a bargain here?
Investing NewsA third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
Stock AnalysisHome Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
Stock AnalysisYelp investors have had reason to be happy recently. Will the good spirits last?
Stock AnalysisWalmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
Stock AnalysisAs a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>