Newfield Exploration (NYSE:NFX) is an independent oil and gas exploration company focused around onshore U.S. drilling. However, that wasn't always the case. With the heavy lifting of a corporate makeover done, it's time for Newfield to shine—and there's good reason to believe its stock will keep heading higher as investors recognize the changes taking place.

Strengthening the core

Since 2009, Newfield Exploration has sold roughly $2 billion of non-core assets. That includes assets in the Gulf of Mexico, Malaysia, and non-core domestic plays. The ultimate goal has been two-fold. First the driller wanted to focus around a smaller number of core plays. Second, it wanted to increase its oil exposure.

Although Newfield still has a drilling investment in China that it's looking to sell (sales plans were delayed by drilling issues that are being worked through), it is now primarily focused around just four U.S. onshore plays. And, with a mixture of sales and select purchases, at the start of 2014 oil and natural gas liquids made up roughly half of the company's portfolio.

(Source: ReubenGBrewer, via Wikimedia Commons)

Unlike natural gas prices, which have been lumbering along at historically low levels, oil prices have been fairly strong. So this shift alone is substantial, with a year-over-year oil production increase of over 30% in the second quarter. However, the other benefit of the company's renewed focus on a smaller number of plays is improving operations. CEO Lee Boothby made a point of saying that, "Newfield's focused portfolio is more alike than different today," during the second quarter conference call.

This is important. For example, the company's Uteland Butte drill time has fallen from an average of about 45 days to 31 days recently. And since Newfield's properties are similar, lessons learned from one area can be used to improve results at its other locations. So continued improvement across the business is highly likely.

Paying its own way

Another big benefit right now is that Newfield has, for the last two years, lived within its own budget. Specifically, it has funded its drilling program via internally generated cash and asset sales. This is big because it means Newfield can pay down debt and avoid diluting shareholders via equity sales.

And with the company recently agreeing to sell another non-core parcel, there's reason to believe this trend will continue. The cash from that sale has been earmarked to lower the company's long-term debt by roughly $600 million. And then there's the Chinese asset sale that has been delayed, but not canceled. That will add even more to the company's coffers once complete.

That said, the company is using asset sales right now to fund its transition, a trend that can't last forever. But that is basically giving this shift time to take hold. For example, internally generated funds were at a five-year high last year. If production growth continues along at the expected annual growth rate of 28%, asset sales could become increasingly less important.

NFX Chart

NFX data by YCharts

A little kick?

While natural gas prices have been historically low, and Newfield expects little to change there, that doesn't mean it won't. Natural gas is increasingly being used in the energy industry, to power vehicles, and the U.S. is on the verge of exporting the fuel to other nations. These changes could lead to higher natural gas prices, which could provide a nice kick to Newfield Exploration's top and bottom lines -- and make investors take a positive view of what now looks like a laggard product.

Clearly, though, the main reason you should consider buying the company is that its refocused business has produced solid results—a fact that investors appear to be finally appreciating. As long as Newfield continues to hit or exceed expectations, investors are likely to reward the shares. That said, keeping an eye on the natural gas market and the company's still notable exposure to the fuel is a good idea as well.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.