Imperial Capital Raises Price Target on Newfield Exploration (NFX) to $53; Reiterates Outperform

Imperial Capital reiterated an Outperform rating on Newfield Exploration (NYSE: NFX), and raised the price target to $53.00 (from $42.00), following a continued reduction in service costs and more efficient operations. As a result Imperial raised its 2016 EPS estimate to $0.42 from $0.19, and 2016 EBITDA estimate to $857.9mn from $789.2mn.

Analyst Kim Pacanovsky commented, "NFX remains one of our top picks as the company builds out one of the largest positions in the emerging STACK play following its $470mn acreage acquisition on 5/5/16. NFX recently spoke at an investor conference, highlighting its location in “the best dirt” and executing with a proven team. NFX stresses it is still in the early innings in the STACK and continues to delineate its acreage. Recent well results in its eastern STACK area are mirroring the company’s 950mboe type curve. Better than expected STACK well performance has prompted a modest increase in NFX’s 2016 production guidance. Additionally, economics continue to improve with a further reduction in well costs and drilling days, and NFX recently achieved a record $6.2mn well cost. In addition to the company’s strong balance sheet, near-term catalysts remain for the company, including a transition to full-field development in the STACK, STACK downspacing tests, as well as delineation of STACK formations and divestitures of non-core assets. Also, Marathon Oil’s (MRO) acquisition of PayRock Energy on 6/20/16 for $11.8k per acre (PDP adjusted) illustrates heightened industry focus on the play as the STACK emerges as a competitor to the Permian in the ability to generate the highest onshore unconventional IRRs in the current commodity environment."

For an analyst ratings summary and ratings history on Newfield Exploration click here. For more ratings news on Newfield Exploration click here.

Shares of Newfield Exploration closed at $44.53 yesterday.

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