THE WOODLANDS, Texas (AP) — Newfield Exploration Co. shares rose Wednesday after the oil and gas company announced a significant natural gas discovery off the coast of Malaysia.
THE SPARK: The Woodlands, Texas-based company said it found a gas reservoir in shallow water about 50 miles offshore that could be tapped for commercial use. President and CEO Lee Boothby said it is the largest conventional exploratory success the company has had in its 25-year history.
THE BIG PICTURE: Newfield said the discovery is less than three miles from its first gas discovery in the area, and they will be developed together. Newfield has identified other prospects in the area and has committed to drill another exploration well there.
The company has a production sharing contract for the area. Newfield holds a 30 percent interest and Partners Diamond Energy Sarawak, a subsidiary of Mitsubishi Corp. and Peteronas Carigali has the rest.
Newfield said in February that it is evaluating strategic alternatives for its international businesses and has hired Goldman Sachs & Co. to help with the process. It said Wednesday that it can move cash from its international businesses to the U.S. without significant tax implications and expects international cash income taxes for 2013 between $55 million and $65 million.
THE ANALYSIS: Raymond James analyst Andrew Coleman said the gas discovery is the largest in Newfield's history and will help the marketability of its international assets. While the news is positive in the short term, he said domestic operations still face some headwinds, including below-average production growth.
SHARE ACTION: Newfield rose 24 cents to $22.34 in afternoon trading. The stock was as high as $23.29 earlier in the session. It has traded in a 52-week trading range of $21.60 to $36.66.