RBC Capital Markets Analyst Leo Mariani recommends Newfield Exploration Co. (NFX) in the current low oil price environment because he says the company is more protected from commodity prices than some of its competitors. Mariani says Newfield sold some assets during 2014 and was able to put away some cash, resulting in a very strong balance sheet.
“Additionally, they also have a strong hedge position for the next few years,” Mariani says. “So this weakness won’t bother the business as much as it may some others.”
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Newfield also has good properties in the Anadarko Basin in the scoop/stack plays, which Mariani says are emerging plays. Since they are not yet as established as the Permian and the Eagle Ford, Mariani says Newfield could see big gains in efficiency in Anadarko over the new few years, as they optimize the drilling and completion in that basin.
“I think if they are able to do that in the next few years, you’ll see much better rates of return on those properties,” Mariani says. “It’s also a very cheap stock with a low multiple. I think if they execute, and they have done a good job, you’ll see some multiple expansion for Newfield over the next year or so.”
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