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Analyzing Newfield Exploration’s Debt Position

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Jan. 14 2016, Updated 8:06 a.m. ET

Newfield Exploration’s net debt-to-EBITDA

Newfield Exploration’s (NFX) net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple has mostly remained under 2x in the past nine quarters.

Newfield Exploration’s 3Q15 net debt-to-adjusted EBITDA multiple was ~1.8x. Its EBITDA levels have mostly remained consistent since 3Q13, while its net debt has mostly been falling. This explains its lower net debt-to-EBITDA multiple in the periods when its net debt has fallen, compared to previous quarters.

The company’s 3Q15 net debt was ~$2.5 billion. Its trailing-12-month adjusted EBITDA as of 3Q15 was ~$1.4 billion. A year ago in 3Q14, its net debt stood at $2.6 billion, and its trailing-12-month EBITDA stood at ~$1.5 billion.

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Peer comparison

Unlike Newfield Exploration, many upstream companies saw massive drops in their EBITDAs in 2015 due to lower energy prices. Devon Energy’s (DVN), Hess’s (HES), and ConocoPhillips’s (COP) 3Q15 EBITDAs for the trailing-12-month period fell ~20%, ~60%, and ~67%, respectively, compared to 3Q14. These companies combined make up ~7% of the Energy Select Sector SPDR ETF (XLE).

Newfield Exploration’s liquidity and financial position

Newfield Exploration noted that it had $7 million in cash and cash equivalents as of 3Q15. It also has a revolving credit facility of $1.8 billion. The company’s total long-term debt will come due between 2020 and 2026.

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