Newfield Exploration’s Transformation to Oil Producer Is Imminent

NEW YORK (TheStreet) -- Newfield Exploration's  (NFX)  transformation to a U.S. producer of oil and and natural-gas liquids, from a gas-focused international exploration and production company, will be complete as soon as it sells its last international asset, which it expects to do this year.

So far, Newfield has sold $2.5 billion of assets that it labeled "non-strategic." Last year, the company sold its Malaysian business for $898 million, and this year, it sold its Granite Wash assets in Oklahoma and the Texas Panhandle for nearly $583 million.

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The company is eyeing the sale of its Chinese assets, which will mark the end of its international operations.

Newfield expects to "have resolution around the China divestiture later this year," company spokeswoman Cindy Hassler wrote in an email.

Shares of Newfield, as well as other oil and gas producers such as Anadarko Petroleum  (APC)  , Continental Resources (CLR) , EOG Resources (EOG)   and Pioneer Natural Resources (PXD)  , have been under pressure due to the recent drop in crude oil prices. Even so, Newfield's shares are still up by more than 60% this year, closing at $39.47 on Tuesday, easily outperforming the broader S&P 500 as well as all its aforementioned peers. The sale of Chinese assets at a good price and improvements in oil prices could act as a catalyst for further upside over the near term.

Until last year, Newfield's output, which came from its U.S. and international operations, was more than 50% natural gas. Back then, the company struggled with billions in dollars of losses and massive write-offs due to the weakness in natural gas prices.

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Newfield then decided to shift its focus to its most promising high-return areas: its four onshore U.S. assets in Utah's Uinta Basin, North Dakota's Williston Basin, Oklahoma's Anadarko Basin and South Texas's Eagle Ford region.

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