HOUSTON, Oct. 21 /PRNewswire-FirstCall/ -- Newfield Exploration
Company (NYSE:NFX) today reported its unaudited third quarter 2009
financial and operating results. Newfield will be hosting a
conference call at 8:30 a.m. (CDT) on October 22. To participate in
the call, dial 719-325-2138 or listen through the website at
http://www.newfield.com/. Third Quarter 2009 For the third quarter
of 2009, Newfield recorded net income of $78 million, or $0.58 per
diluted share (all per share amounts are on a diluted basis). Net
income includes the effect of the following items: -- a net
unrealized loss on commodity derivatives of $243 million ($155
million after-tax); and -- the recognition of a $24 million tax
benefit, or $0.18 per share, associated with deferred tax assets in
Malaysia. Without the effect of these items, net income for the
third quarter of 2009 would have been $209 million, or $1.58 per
share. Revenues in the third quarter of 2009 were $375 million. Net
cash provided by operating activities before changes in operating
assets and liabilities was $451 million. See "Explanation and
Reconciliation of Non-GAAP Financial Measures" found after the
financial statements in this release. Newfield's production in the
third quarter of 2009 was 65.5 Bcfe, an increase of 7% over the
third quarter of 2008. Newfield's oil liftings in the third quarter
were 3.8 MMBbls, or an average of approximately 41,300 BOPD. This
represents a 40% increase over the same period in 2008 and is
primarily attributable to the timing of international oil liftings.
Natural gas production in the third quarter was 42.5 Bcfe, an
average of 462 MMcf/d, and excludes approximately 2.6 Bcfe of
voluntary natural gas curtailments due to low natural gas prices.
Capital expenditures in the third quarter of 2009 were $285
million. Highlights -- Improving Cost Structure - Domestic
recurring lease operating expense for the third quarter of 2009,
stated on a unit of production basis, was $0.81 per Mcfe and
reflects lower service costs, reduced water handling costs due to
deferred completions and the ongoing efforts to lower expenses
throughout the Company's core operating regions. -- Mid-Continent
Production Reaches New Highs, Woodford Production up Nearly 30% -
Gross operated production from the Mid-Continent recently set a new
high and is currently 460 MMcfe/d gross, or 323 MMcfe/d net.
Woodford Shale production is 308 MMcfe/d compared to about 240
MMcfe/d at the end of the second quarter of 2009. Newfield began
returning previously curtailed wells to production during October
2009. Newfield has a 30 well inventory of uncompleted wells that
are expected to be completed by early 2010. -- Woodford Shale - The
Company has 10 operated rigs running under term contracts, with
three of the remaining rigs rolling off of term before the end of
2009. Newfield continues to improve upon efficiency gains in its
Woodford development. Some recent examples are listed below: --
Increasing Lateral Lengths - Newfield expects that its average
lateral length in 2009 will exceed 5,000 feet. By year-end 2009,
the Company expects to have drilled eight "super extended lateral"
wells with horizontal lengths in excess of 8,000 feet. Two of the
wells drilled to date have lateral lengths greater than 10,000
feet. Initial production results from the first super extended
laterals are expected in December 2009. -- Optimizing Fracture
Stimulation Operations - The Company is fracture stimulating its
wells with greater efficiency in 2009. The average number of fracs
per day has increased to more than five on recent pad completions,
compared to three fracs per day in 2008. -- Company Adds Fourth
Operated Rig in Granite Wash Play - Based on the success of the
initial horizontal drilling program in the Granite Wash, Newfield
added a fourth operated rig in October in its Stiles Ranch field,
located in Wheeler County, Texas. In July 2009, Newfield announced
that its first seven horizontal wells in Stiles Ranch had an
average gross initial production rate of 22 MMcfe/d. Recent well
completions have been deferred and the Company expects to have
production results from 6 - 8 additional completions in early 2010.
Newfield has an approximate 80% working interest in Stiles Ranch.
-- Newfield Enters the Marcellus Shale - On October 14, 2009,
Newfield announced the signing of a joint exploration agreement
with Hess Corporation in the Marcellus Shale play. The agreement
covers up to 140,000 gross acres primarily in Susquehanna and Wayne
Counties, Pennsylvania. Newfield will operate the new venture with
each company having a 50 percent interest. The 2009 portion of
Newfield's Marcellus Shale activities will be funded within the
Company's existing $1.45 billion capital budget. Drilling
operations are not expected to commence until 2010. -- Additional
Exploration Test Planned Offshore China - In the third quarter of
2009, the Company announced an oil discovery with its LF 7-1 Pearl
prospect, located in the Pearl River Mouth Basin, offshore China.
Prior to year-end 2009, the Company expects to spud its Jade
prospect to test a fault-separated target to the northeast. The
Newfield operated Pearl development is underway with first
production expected in late 2012. -- Deepwater Gulf of Mexico
Update - Newfield has seven deepwater developments underway in the
deepwater Gulf of Mexico which are expected to provide significant
future production growth. -- Fastball - The Fastball development,
located at Viosca Knoll 1003, commenced production on October 19,
2009. Gross production is expected to ramp up to 40 MMcf/d and
3,200 BOPD. Newfield operates Fastball with a 66% working interest.
-- Pyrenees - In the second quarter of 2009, Newfield announced a
significant operated discovery on its Pyrenees prospect, located at
Garden Banks 293 in approximately 2,100 feet of water. A recent
sidetrack delineated the downdip limits in the three proven pay
sands seen in the discovery well and provided encouragement for the
exploration potential of both the shallow and deep sand sections on
the feature. Additional drilling is planned for 2010. Newfield
operates the development with a 40% working interest. -- Company
Increasing Monument Butte Operated Rig Count to Five - Based on
increased demand, narrowing price differentials and a shift to oil
investments, Newfield recently added a fourth operated rig in its
Monument Butte oil field, located in the Uinta Basin of Utah. The
Company is planning to add a fifth operated rig in the field in the
near future. Gross oil production from Monument Butte is about
16,000 BOPD. A five-rig program in the field is expected to grow
annual field production by at least 10%. The Monument Butte field
area covers approximately 180,000 gross acres, substantially all
held-by-production. -- Company to Add Additional Rigs in Williston
Basin - Newfield expects to add up to two additional operated rigs
in its Williston Basin development areas. The Company has been
running a one-rig program since early 2009. Newfield has
approximately 200,000 net acres in prospective development areas,
located primarily on the Nesson Anticline and west of the Nesson.
An additional 200,000 net acres are located in northern Montana
where several exploration plays are underway. Newfield has drilled
12 successful oil wells in the North Dakota portion of the
Williston Basin since entering the region in late 2007. Two wells
were drilled since the second quarter 2009. The first was an
exploratory well in the Big Valley area, covering more than 50,000
net acres in northern North Dakota. The well recently commenced
production and continues to clean-up following fracture
stimulation. Results warrant additional exploratory drilling to
assess this large area. The second well was drilled in the Catwalk
area, which covers 25,300 net acres. Completion operations on the
well are expected to commence next week. Newfield Exploration
Company is an independent crude oil and natural gas exploration and
production company. The Company relies on a proven growth strategy
of growing reserves through an active drilling program and select
acquisitions. Newfield's domestic areas of operation include the
Mid-Continent, the Rocky Mountains, onshore Texas and the Gulf of
Mexico. The Company has international operations in Malaysia and
China. **This release contains forward-looking information. All
information other than historical facts included in this release,
such as information regarding estimated or anticipated fourth
quarter 2009 results, estimated capital expenditures, cash flow,
production and cost reductions, drilling and development plans and
the timing of activities, is forward-looking information. Although
Newfield believes that these expectations are reasonable, this
information is based upon assumptions and anticipated results that
are subject to numerous uncertainties and risks. Actual results may
vary significantly from those anticipated due to many factors,
including drilling results, oil and gas prices, industry
conditions, the prices of goods and services, the availability of
drilling rigs and other support services, the availability of
refining capacity for the crude oil Newfield produces from its
Monument Butte field in Utah, the availability and cost of capital
resources, labor conditions and severe weather conditions (such as
hurricanes). In addition, the drilling of oil and gas wells and the
production of hydrocarbons are subject to governmental regulations
and operating risks. For information, contact: Investor Relations:
Steve Campbell (281) 847-6081 Media Relations: Keith Schmidt (281)
674-2650 Email: 3Q09 Actual Results 3Q09 Actual Domestic Int'l
Total Production/Liftings(Note 1) Natural gas - Bcf 42.5 - 42.5 Oil
and condensate - MMBbls 1.7 2.1 3.8 Total Bcfe 52.6 12.9 65.5
Average Realized Prices (Note 2) Natural gas - $/Mcf $6.88 $- $6.88
Oil and condensate - $/Bbl $102.95 $66.76 $82.61 Mcf equivalent -
$/Mcfe $8.87 $11.13 $9.31 Operating Expenses:( Note 3) Lease
operating Recurring ($MM) $42.5 $15.2 $57.7 per/Mcfe $0.81 $1.18
$0.88 Major (workovers, repairs, etc.) ($MM) $5.7 $0.7 $6.4
per/Mcfe $0.11 $0.05 $0.10 Production and other taxes ($MM) $4.7
$9.3 $14.0 per/Mcfe $0.09 $0.72 $0.21 General and administrative
(G&A), net ($MM) $38.4 $1.4 $39.8 per/Mcfe $0.73 $0.11 $0.61
Capitalized internal costs ($MM) $(19.3) per/Mcfe $(0.30) Interest
expense ($MM) $31.7 per/Mcfe $0.48 Capitalized interest ($MM)
$(12.5) per/Mcfe $(0.19) Note 1: Domestic natural gas production
includes voluntary curtailments of approximately 2.6 Bcfe related
to low natural gas prices. Note 2: Average realized prices include
the effects of hedging contracts. If the effects of these contracts
were excluded, the average realized price for total gas would have
been $3.14 per Mcf and the total oil and condensate average
realized price would have been $62.72 per barrel. Note 3: Recurring
lease operating expense includes transportation expense. 4Q09
Estimates 4Q09 Estimates Domestic Int'l Total Production/Liftings
Natural gas - Bcf 44.7 - 45.5 - 44.7 - 45.5 Oil and condensate -
MMBbls 1.7 - 1.8 1.4 - 1.5 3.1 - 3.3 Total Bcfe 54.9 - 56.3 8.4 -
9.0 63.3 - 65.3 Average Realized Prices Natural gas - $/Mcf Note 1
Oil and condensate - $/Bbl Note 2 Note 3 Mcf equivalent - $/Mcfe
Operating Expenses: Lease operating Recurring ($MM) $34.2 - $37.8
$18.4 - $20.3 $52.6 - $58.1 per/Mcfe $0.62 - $0.67 $2.19 - $2.25
$0.83 - $0.89 Major (workover, repairs, etc.) ($MM)( Note 4) $13.1
- $14.5 - $13.1 - $14.5 per/Mcfe $0.24 - $0.26 - $0.21 - $0.22
Production and other taxes ($MM)(Note 5) $14.0 - $15.4 $13.3 -
$14.7 $27.3 - $30.1 per/Mcfe $0.26 - $0.27 $1.58 - $1.63 $0.43 -
$0.46 General and administrative (G&A), net ($MM) $29.8 - $33.0
$1.4 - $1.5 $31.2 - $34.5 per/Mcfe $0.54 - $0.59 $0.16 - $0.17
$0.49 - $0.53 Capitalized internal costs ($MM) ($18.5 - $20.4)
per/Mcfe ($0.29 - $0.31) Interest expense ($MM) $29.0 - $32.0
per/Mcfe $0.46 - $0.49 Capitalized interest ($MM) ($11.0 - $12.1)
per/Mcfe ($0.17 - $0.19) Tax rate (%)(Note 6) 36 - 38% Income taxes
(%) Current 14% - 16% Deferred 84% - 86% Note 1: Gas prices in the
Mid-Continent, after basis differentials, transportation and
handling charges, typically average 75-85% of the Henry Hub Index.
Gas prices in the Gulf of Mexico and onshore Gulf Coast, after
basis differentials, transportation and handling charges, typically
averages $0.25-$0.50 per MMBtu less than the Henry Hub Index. Note
2: Oil prices in the Gulf Coast typically average 90-95% of NYMEX
WTI price. Rockies oil prices are currently averaging about $12-$14
per barrel below WTI. Oil production from the Mid-Continent
typically averages 85-90% of WTI. Note 3: Oil in Malaysia typically
sells at a slight discount to Tapis, or about 90-95% of WTI. Oil
production from China typically sells at $6-$8 per barrel less than
WTI. Note 4: Domestic major expense includes approximately $6
million for well workover expense and other projects initiated in
response to higher commodity prices and lower service costs. Note
5: Guidance for production taxes determined using $75/Bbl oil and
$4.50/MMBtu gas. Note 6: Tax rate applied to earnings excluding
unrealized gains or losses on commodity derivatives. CONSOLIDATED
STATEMENT OF INCOME For the For the Three Months Ended Nine Months
Ended (Unaudited, in millions, September 30, September 30, except
per share data) ------------------ ----------------- 2009 2008 2009
2008 ----- ----- ------ ----- Oil and gas revenues $375 $680 $924
$1,887 ----- ----- ------ ----- Operating expenses: Lease operating
64 67 192 184 Production and other taxes 14 51 38 154 Depreciation,
depletion and amortization 144 181 440 504 General and
administrative 40 36 106 105 Ceiling test writedown - - 1,344 -
Other 1 - 8 - ----- ----- ------ ----- Total operating expenses 263
335 2,128 947 ----- ----- ------ ----- Income (loss) from
operations 112 345 (1,204) 940 Other income (expenses): Interest
expense (31) (36) (95) (83) Capitalized interest 13 16 39 43
Commodity derivative income (expense) (8) 726 189 (247) Other (1) 8
4 10 ----- ----- ------ ----- Total other income (expenses) (27)
714 137 (277) ----- ----- ------ ----- Income (loss) before income
taxes 85 1,059 (1,067) 663 Income tax provision (benefit) 7 335
(412) 247 ----- ----- ------ ----- Net income (loss) $78 $724
$(655) $416 ===== ===== ====== ===== Income (loss) per share: Basic
-- $0.59 $5.59 $(5.06) $3.22 ===== ===== ====== ===== Diluted --
$0.58 $5.48 $(5.06) $3.15 ===== ===== ====== ===== Weighted average
number of shares outstanding for basic income (loss) per share 130
129 129 129 Weighted average number of shares outstanding for
diluted income (loss) per share * 132 132 129 132 * Had we
recognized net income for the nine months ended September 30, 2009,
the weighted average number of shares outstanding for the
computation of diluted earnings per share would have increased by 2
million shares. CONDENSED CONSOLIDATED BALANCE SHEET September 30,
December 31, (Unaudited, in millions) 2009 2008 -------------
------------ ASSETS Current assets: Cash and cash equivalents $96
$24 Derivative assets 377 663 Other current assets 469 519 ------
------ Total current assets 942 1,206 Property and equipment, net
(full cost method) 4,940 5,758 Derivative assets 48 247 Other
assets 107 94 ------ ------ Total assets $6,037 $7,305 ======
====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
$805 $1,085 ------ ------ Other liabilities 143 92 Long-term debt
2,106 2,213 Deferred taxes 345 658 ------ ------ Total long-term
liabilities 2,594 2,963 ------ ------ Commitments and contingencies
- - STOCKHOLDERS' EQUITY Common stock 1 1 Additional paid-in
capital 1,375 1,335 Treasury stock (33) (32) Accumulated other
comprehensive loss (14) (11) Retained earnings 1,309 1,964 ------
------ Total stockholders' equity 2,638 3,257 ------ ------ Total
liabilities and stockholders' equity $6,037 $7,305 ====== ======
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in
millions) For the Nine Months Ended September 30, -----------------
2009 2008 ------ ------ Cash flows from operating activities: Net
income (loss) $(655) $416 Adjustments to reconcile net income
(loss) to net cash provided by operating activities: Depreciation,
depletion and amortization 440 504 Deferred tax provision (benefit)
(448) 213 Stock-based compensation 22 17 Ceiling test writedown
1,344 - Commodity derivative (income) expense (189) 247 Cash
receipts (payments) on derivative settlements 701 (783) ------
------ 1,215 614 Changes in operating assets and liabilities 2 8
------ ------ Net cash provided by operating activities 1,217 622
------ ------ Cash flows from investing activities: Additions to
oil and gas properties and other, net (1,061) (1,780) Net
redemptions of investments 18 48 ------ ------ Net cash used in
investing activities (1,043) (1,732) ------ ------ Cash flows from
financing activities: Net proceeds (repayments) under credit
arrangements (107) 285 Net proceeds from issuance of senior
subordinated notes - 592 Other 5 18 ------ ------ Net cash provided
by (used in) financing activities (102) 895 ------ ------ Increase
(decrease) in cash and cash equivalents 72 (215) Cash and cash
equivalents, beginning of period 24 250 ------ ------ Cash and cash
equivalents, end of period $96 $35 ====== ====== Explanation and
Reconciliation of Non-GAAP Financial Measures Earnings Stated
Without the Effect of Certain Items Earnings stated without the
effect of certain items is a non-GAAP financial measure. Earnings
without the effect of these items are presented because they affect
the comparability of operating results from period to period. In
addition, earnings without the effect of these items are more
comparable to earnings estimates provided by securities analysts. A
reconciliation of earnings for the third quarter of 2009 stated
without the effect of certain items to net income is shown below:
3Q09 ------------- (in millions) Net income $78 Net unrealized loss
on commodity derivatives(1) 243 Income tax adjustment for above
item (88) Tax benefit associated with deferred tax assets in
Malaysia (24) ---- Earnings stated without the effect of the above
items $209 ==== ------------- (1) The determination of "Net
unrealized loss on commodity derivatives" for the third quarter of
2009 is as follows: 3Q09 ------------- (in millions) Commodity
derivative expense $(8) Cash receipts on derivative settlements
(242) Option premiums associated with derivatives settled during
the period 7 ----- Net unrealized loss on commodity derivatives
$(243) ===== Net Cash Provided by Operating Activities Before
Changes in Operating Assets and Liabilities Net cash provided by
operating activities before changes in operating assets and
liabilities is presented because of its acceptance as an indicator
of an oil and gas exploration and production company's ability to
internally fund exploration and development activities and to
service or incur additional debt. This measure should not be
considered as an alternative to net cash provided by operating
activities as defined by generally accepted accounting principles.
A reconciliation of net cash provided by operating activities
before changes in operating assets and liabilities to net cash
provided by operating activities is shown below: 3Q09 -------------
(in millions) Net cash provided by operating activities $505 Net
change in operating assets and liabilities (54) ---- Net cash
provided by operating activities before changes in operating assets
and liabilities $451 ==== DATASOURCE: Newfield Exploration Company
CONTACT: Investor Relations, Steve Campbell, +1-281-847-6081, Media
Relations, Keith Schmidt, +1-281-674-2650, both of Newfield
Exploration Company, Web Site: http://www.newfield.com/
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