Newfield Exploration Is 1 Of Piper Jaffray's Top Mid-Cap E&P Picks

"Specifically, we believe the company has: i) a number of significant catalysts over the 12-month horizon, which should both improve corporate margins and could bias our NAV higher; ii) a reasonable relative valuation with decent upside to our PT, iii) production growth from its focus asset, and iv) a good balance sheet," analyst Kashy Harrison wrote in a note.

Harrison raised the price target on the stock by $4 to $54. The analyst also increased the second quarter EPS view by $0.02 to $0.26, and 2016 EPS estimate by $0.03 to $0.93.

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The analyst believes Newfield Exploration is on the path to transitioning from a resource delineation story to an NAV accretion story.

"It should come as no surprise that NFX is on the path to becoming an Anadarko Basin focused player over time, and we believe investors should view the ancillary assets as option value to expedite the development of the STACK and potentially bias our NAV higher over time," Harrison said.

Harrison expects net production from the Anadarko Basin to represent about 54 percent of '16 total production and the region to generate about 65 percent of unhedged EBITDA.

"As higher margin Anadarko production grows while lower margin ancillary production declines (or is divested), we expect the company's margins to grow on a per boe basis, leading to increased EBITDA generation and multiple compression," Harrison added.

At time of writing, Newfield Exploration shares were up 0.78 percent on the day at $43.66.