One of the major stories in the financial media over the past few years has been the revitalization of energy production in the United States. This revitalization is due to a massive surge in oil and natural gas production, which has been made possible because of new technologies such as horizontal drilling and hydraulic fracturing. The most well known of these areas, and the most widely covered by the media, is the Williston Basin located in North and South Dakota, Montana, and Saskatchewan, which contains shale plays such as the Bakken. Another area that is not so widely known but which could also be important to North America's energy renaissance is the Uinta Basin in eastern Utah.

What is the Uinta Basin?
The Uinta Basin is a geologic structural basin that contains very rich deposits of oil contained in petroleum-bearing formations of low permeability, similar in some respects to the Bakken and Eagle Ford tight oil plays. The resources that this area could contain are tremendous. According to the United States Geological Survey, the Uinta Basin is estimated to contain a total of 1.32 trillion barrels of resources in place, making it one of the richest oil shale deposits in the world.

Source: Rigzone

What companies are exploiting it?
The first companies that entered the Uinta Basin were relatively small exploration and production companies such as Bill Barrett Corp. (NYSE:HPR), Ute Energy Upstream Holdings, LLC, Crescent Point Energy (NYSE:CPG), and others. However, today some of the majors have moved in, primarily through acquisitions. These large companies operating in the area, such as Anadarko Petroleum (NYSE:APC), have such a large footprint and are active in so many areas all over the world that they are far from being a good way to play the basin. Fortunately, there are some companies out there that remain relative pure-plays on the Uinta Basin. However, they are typically smaller and riskier investments than the giant energy companies that operate in the area.

Looking at Newfield Exploration
One of those companies that can help investors gain exposure to the Uinta Basin is the largest oil producer in the state, Newfield Exploration (NYSE:NFX). Newfield Exploration is an independent exploration and production company headquartered in The Woodlands, TX, that operates oil and gas producing properties in the Williston Basin, Anadarko Basin, and Eagle Ford Shale. Therefore, the company is not, strictly speaking, a pure-play on the Uinta Basin. However, a significant portion of the company's current and projected future production comes from the Uinta Basin.

Source: Newfield Exploration

As the chart shows, Newfield expects its production from the Uinta Basin to grow going forward. This has happened historically. In a presentation given in January 2014, Newfield stated that it expects its 2013 production from the Uinta Basin to show 8% year-over-year growth. The impending production growth from the Uinta Basin as well as other areas will give the company more oil and gas to sell, which should lead to growing revenue and cash flow going forward. The company itself projects that this will be the case.

Source: Newfield Exploration

Risks of Newfield Exploration
However, Newfield does come with some risks as a look at the company's balance sheet reveals. According to the company's most recent 10-Q, the company has $3.485 billion in long-term debt. This compares to $2.919 billion in shareholder's equity, giving the company a very high debt-to-equity ratio of 1.19. As the company grows its production and cash flow going forward, it should be able to reduce this high debt-to-equity ratio. However, should this projected production growth not play out as planned, or should the price of oil fall, or should some other problem materialize then this debt could become a real burden.

Hedging program could reduce risks
Like many oil companies, Newfield Exploration uses hedging to protect itself against the risk of seeing a massive cash flow and revenue decline should oil prices fall significantly. Through its hedging program, Newfield has effectively locked in the selling price for a percentage of its total production.

Source: Newfield Exploration

This hedging program also reduces much of the risk from Newfield Exploration since it makes the company's cash flow much more predictable. This is because the company's hedging programs have effectively locked in revenue for the company. While the portion of the company's production that is not covered under this hedging program is still subject to the risk of fluctuating oil prices (and the revenue derived from this production), the fact that a sizable portion of the company's revenues are protected by these hedges removes a significant portion of the risk to the company's cash flow that would otherwise be present. This should provide some confidence in the company's ability to grow its cash flow going forward, assuming the company succeeds in growing its production going forward.