Newfield production, reserve potential cited

Newfield Exploration Co.'s shares rose Wednesday after two analysts cited the oil and natural gas producer's potential for production growth and a long-term expansion of reserves.

Newfield increased its 2008 guidance by about 25 percent and anticipates boosting its reserves more than seven times in the next decade, Sterne Agee & Leach Inc. analyst Michael Henzi said. "The stock is very much undervalued," he wrote in a research note.

Calyon Securities analyst Jeb Armstrong said the company's shares have sold off sharply because it issued a lower-than-expected initial 2009 production forecast due to pipeline capacity restrictions in the Rockies.

"We believe NFX (Newfield) shares are likely to rebound strongly as the winter heating season approaches," he wrote in a research note. "NFX has a strong portfolio of assets that should enable it to generate double-digit production growth for several years."

On Tuesday, Houston-based Newfield raised its 2008 production guidance to a range of 238 billion cubic feet to 242 billion cubic feet. The previous range was 232 billion cubic feet to 239 billion cubic feet.

Newfield's shares rose $1.47, or 4.2 percent, to close at $36.66 Wednesday.