NFX (OP/A), XTO (OP/A): Updating estimates - Goldman Sachs - February 10, 2006
We are updating our EPS estimates for Newfield Exploration (OP/A) and XTO Energy (OP/A) for full-year 2006, 2007 and 2008-2010 (normalized) to reflect changes in production, the impact of hedging and acquisitions, and other minor company adjustments. We are also introducing quarterly EPS estimates for Q1, Q2, Q3, and Q4 2006 and lowering our Henry Hub natural gas price assumption in 2006 to $9.50/MMBtu from $10.00/MMBtu.
Newfield Exploration
4Q 2005 adjusted EPS below our and consensus extimates Newfield reported 4Q 2005 adjusted EPS of $0.77, below our estimate of $1.02 and the First Call consensus estimate of $1.12. Total production was 547 MMcfe/d, lower than our estimate of 570 MMcf/d and realized oil and gas prices were lower than expected at $41.23 per bbl and $7.16 per Mcf respectively, versus our estimates of $45.31 per bbl and $8.06 per Mcf respectively. Total costs were higher than expected at $4.45 per Mcfe versus our estimate of $3.92 per Mcfe, driven primarily by higher-than-expected production costs and production taxes.
Updated estimates
We are introducing quarterly estimates for 2006, as well as updating our full-year 2006, 2007, and 2008-2010 (normalized) estimates and lowering our Henry Hub natural gas price assumption in 2006 to $9.50/MMBtu from $10.00/MMBtu. Our estimates reflect lower production, changes in hedging and higher interest expense. Our new 1Q, 2Q, 3Q, 4Q estimates for 2006 are $1.26, $1.38, $1.58, and $1.94, respectively. Our updated full-year 2006 and 2007 estimates are $6.16 ($6.98 previously) and $7.42 ($7.67 previously) respectively. Our 2008-2010 (normalized) estimates are $2.88 ($2.97 previously), $3.06 ($3.16 previously), and $3.25 ($3.35 previously) respectively. Due to a modeling inaccuracy, we are adjusting Q1, Q2, and Q3 2005 EPS estimates to $0.96 ($0.97 previously), $1.05 ($1.06 previously), and $1.00 ($1.01 previously). Exhibit 1 shows our summary financial model for Newfield.
XTO Energy
4Q 2005 adjusted EPS above our and consensus estimates XTO Energy reported 4Q 2005 adjusted EPS of $1.18, above our estimate of $1.13 and the First Call consensus estimate of $1.10. While gas production came in slightly below expectations at 1.10 Bcfe/d versus our 1.14 Bcfe/d, realized gas prices were slightly higher at $9.09 per Mcf versus our $8.89 per Mcf. Total costs of $3.41 per Mcfe were generally in-line with our estimate of $3.50 per Mcfe. Production and overall costs for the quarter were within XTO's guidance range. We have kept production flat at 15 MMcfe/d through 2010 from the recently announced asset acquisition from Total. On the conference call, the company mentioned upsides from the newly-acquired Bethany and Maben fields mainly through infill drilling and any indication of this materializing could cause us to revise our production forecasts.
Updated estimates
We are introducing quarterly estimates for 2006, as well as updating our full-year 2007 and 2008-2010 (normalized) estimates. Our estimates reflect increased share count, slightly higher production in 2008-2010, and the impact of the announced asset acquisition from Total. Our new 1Q, 2Q, 3Q, 4Q estimates for 2006 are $1.33, $1.05, $1.14, and $1.36, respectively. Our updated full-year 2007 estimates is $4.72 ($4.80 previously). Our 2008-2010 (normalized) estimates are $2.11 ($2.16 previously), $2.30 ($2.34 previously), and $2.49 ($2.53 previously) respectively. Exhibit 2 shows our summary financial model for XTO.
Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Brian Singer, Arjun Murti. |
