NEW YORK (TheStreet) -- Shares of Newfield Exploration (NFX) fell sharply, down 6.97% to $33.49, in morning trading Thursday after the oil and natural gas company priced an upsized public offering of common stock.
Newfield announced an offering of 22 million shares, upsized from its previously announced offering of 18 million shares. The company expects gross proceeds from the offering of approximately $726 million. The offering contains a 30-day option for underwriters to purchase up to an additional 3.3 million shares.
Newfield plans to use the net proceeds from the offering to repay amounts outstanding under its credit facility and money market lines of credit, as well as general corporate purposes.
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The stock soared Wednesday after the company announced its capital budget for 2015 would be 40% lower than 2014 investment levels, which would help balance Newfield's expenditures and cash flow. Newfield's 2015 capital budget of $1.2 billion excludes approximately $120 million in capitalized interest and direct internal costs.
Newfield also said it expects total 2015 production to climb approximately 18% year-over-year with an 8% estimated increase in domestic production.
Separately, TheStreet Ratings team rates NEWFIELD EXPLORATION CO as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate NEWFIELD EXPLORATION CO (NFX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 1052.17% and other important driving factors, this stock has surged by 25.07% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although NFX had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 2017.6% when compared to the same quarter one year prior, rising from $17.00 million to $360.00 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, NEWFIELD EXPLORATION CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- NEWFIELD EXPLORATION CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, NEWFIELD EXPLORATION CO increased its bottom line by earning $4.71 versus $0.79 in the prior year. For the next year, the market is expecting a contraction of 76.4% in earnings ($1.11 versus $4.71).
- Net operating cash flow has declined marginally to $317.00 million or 9.42% when compared to the same quarter last year. Despite a decrease in cash flow of 9.42%, NEWFIELD EXPLORATION CO is in line with the industry average cash flow growth rate of -13.29%.
- You can view the full analysis from the report here: NFX Ratings Report