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Newfield Reports Second Quarter 2011 Financial and Operating Results

July 20, 2011

HOUSTON, July 20, 2011 /PRNewswire/ – Newfield Exploration Company (NYSE: NFX) today reported its unaudited second quarter 2011 financial and operating results. Newfield will be hosting a conference call at 8:30 a.m. CT on July 21, 2011. To participate in the call, dial 719-325-4774 or listen through the investor relations section of our website at http://www.newfield.com.

For the second quarter of 2011, Newfield recorded net income of $219 million, or $1.62 per diluted share (all per share amounts are on a diluted basis). Net income for the second quarter includes a net unrealized gain on commodity derivatives of $129 million ($81 million after-tax), or $0.60 per share. Without the effect of this item, net income for the second quarter of 2011 would have been $138 million, or $1.02 per share.

Revenues in the second quarter of 2011 were $621 million. Net cash provided by operating activities before changes in operating assets and liabilities was $393 million. See “Explanation and Reconciliation of Non-GAAP Financial Measures” found after the financial statements in this release.

Newfield’s production in the second quarter of 2011 was 73 Bcfe. Natural gas production in the second quarter of 2011 was 47 Bcf, an average of 517 MMcf/d. Newfield’s oil liftings and liquids production in the second quarter of 2011 were 4.4 MMBbls, or an average of approximately 48,000 BOPD. Capital expenditures in the second quarter of 2011 were approximately $630 million, excluding the Company’s $300 million acquisition in the Uinta Basin.

2011 Capital Investments, Asset Sales

Newfield reiterated its 2011 capital budget of $1.9 billion. The budget excludes capitalized interest and overhead and the May 2011 closing of the Company’s acquisition in the Uinta Basin. Year-to-date, Newfield has divested approximately $130 million in non-strategic domestic assets. The Company continues to market and sell other certain non-strategic domestic assets with total proceeds during 2011 expected to range from $200 – $300 million.

2011 Production Guidance

The sale of non-strategic assets year-to-date has reduced 2011 production by approximately 3 Bcfe. As previously disclosed, second quarter 2011 production was negatively impacted by approximately 0.2 MMBbls of deferred production due to repairs on the Abu field, located offshore Malaysia. Repairs have been completed and the field is on-line today. For the full year, Newfield expects that its production will exceed 312 Bcfe. The Company’s original production guidance was 312 – 323 Bcfe, or an increase of at least 8% over 2010 volumes. The expectation of at least 8% growth does not include adjustments for any additional sales of non-strategic assets in the second half of 2011. A table on Newfield’s production guidance for 2011 is provided within this release.

Year-to-Date 2011 Operating Highlights:

Rocky Mountains

Uinta Basin – In conjunction with the release of its second quarter earnings and operating results, the Company today provided a comprehensive update on its Uinta Basin drilling programs, including the disclosure of new oil plays available for development. Recent acquisitions have increased the Company’s acreage position to approximately 250,000 net acres. Over the coming months, the Company expects to increase its operated rig count from a historic five-rig program to at least eight rigs in 2012. As a result, oil production growth from the region is expected to increase more than 25% in 2012. A copy of the recent release and other detailed information on the Uinta Basin can be obtained through Newfield’s website.

Williston Basin - During the second quarter of 2011, Newfield completed nine new wells in the Williston Basin. The recent completions boosted net production to 8,000 BOEPD. Newfield continues to run five operated drilling rigs in the Williston Basin where the Company has approximately 150,000 net acres.

Of the recent completions, eight of the nine wells were super extended laterals and had an average lateral length of more than 9,500′. Average gross initial production (24-hour) from the nine wells completed in the second quarter was 2,100 BOEPD. The wells were drilled and completed for an average of approximately $9.8 million (gross).

Recent results include a “Company-best” – the Wiseness Federal 152-96-4-2H, which had gross initial production (24-hour average) of 5,200 BOEPD. The well has a 5,300′ lateral and was drilled and completed for approximately $5.9 million (gross).

Significant flooding, poor road conditions and road closures in the Williston Basin impacted the timing of planned operations during the second quarter. The Company has an inventory of 10 wells that have been drilled and are in various stages of completion. Newfield expects to complete a total of 13 wells in the third quarter of 2011.

Southern Alberta Basin – To date, Newfield has drilled seven vertical wells and has completed and placed on production two horizontal wells. Fracture stimulation services are in the region today executing on a program to stimulate and test multiple geologic horizons in up to four of the vertical wells. All of the wells to date have encountered oil. Newfield has approximately 320,000 net acres in the play, located in Glacier County, Montana.

Mid-Continent

Granite Wash – Newfield recently set a new record high for its Granite Wash production – 190 MMcfe/d gross (135 MMcfe/d net). This is an increase over the 110 MMcfe/d net reported at the end of the first quarter of 2011. Since early 2009, Newfield has maintained a four-rig development drilling program in the Granite Wash, with its activities primarily located in Wheeler County, Texas.

To date, the Company has completed 47 wells in the play with gross initial production averaging approximately 16 MMcfe/d (24-hour rate). The 2011 Granite Wash program is focused on the Marmaton DE and FG intervals. Year-to-date, wells in these “liquids rich” intervals have had average initial gross production of approximately 17 MMcfe/d.

Throughout 2011, the Company’s drilling personnel have continued to deliver efficiency gains. During the second quarter, Newfield drilled and cased a “best in class” well in 24 days and is averaging approximately 28 days with recent wells. Completed well costs vary by lateral length (5,000′ – 8,000′) and range from $8 – $13 million.

For 2011, the Company plans to drill more than 30 wells and grow production more than 25% over 2010. Newfield’s average working interest in the Granite Wash play is approximately 75%.

Onshore Texas

Eagle Ford Shale – Newfield continues to explore and assess its 335,000 net acre position in the Maverick Basin. Oil field services in the region today remain tight. The Company expects that it can meet its contractual drilling obligations and hold its leases by running one to two rigs in the play through the remainder of 2011. By limiting activity to this level, capital can be redirected to the Uinta Basin where the Company is adding operated rigs. We continue to assess and increase our understanding of the Eagle Ford Shale, as well as other prospective formations including the Georgetown and Pearsall.

Year-to-date, the Company has completed 13 wells in the Eagle Ford Shale, four wells in the Georgetown formation and two wells in the Pearsall Shale. Current gross production from the Maverick Basin is approximately 6,500 BOEPD. Newfield’s average working interest in the region is approximately 80%.

Recent drilling activity in the Eagle Ford has focused on the “southern” portion of the Company’s acreage. An area up to 50,000 acres is now being developed along existing infrastructure. A pilot program is underway with recent wells being drilled from pad locations to help determine optimal well spacing. The wells have been drilled in as few as seven days and gross completed well costs have averaged approximately $6.6 million. Initial 24-hour gross production rates from recent wells have ranged from 400 – 1,400 BOEPD.

The Company recently commenced production from a Pearsall Shale horizontal completion at a pipeline-restricted rate of 4.4 MMcf/d and 6,800 psi of flowing tubing pressure (gross). Newfield’s working interest in the Pearsall play averages more than 70%. A recent Georgetown completion commenced production at more than 500 BOEPD (gross). The well was drilled and completed for approximately $1.3 million (gross). Newfield’s working interest in the Georgetown is averages more than 70%.

International Oil Developments

Second quarter 2011 net liftings from the Company’s oil assets in Southeast Asia were 1.2 MMBbls, or an average of about 13,500 BOPD. The largest contributor to Newfield’s international oil production was Malaysia where net liftings during the period averaged approximately 11,200 BOPD. Second quarter 2011 production from Malaysia was negatively impacted by approximately 0.2 MMBbls due to infrastructure damage in the Abu field. Repairs were recently completed and the field has resumed production.

The Company’s production from the East Belumut facility, located at PM 323, has attained recent highs and has averaged approximately 32,000 BOPD (gross) over the last month. On PM 329, the East Piatu development is expected to commence production at about 10,000 BOPD (gross) in late 2011. Newfield has a 70% interest in East Piatu.

Deepwater Gulf of Mexico

The Company’s deepwater Gulf of Mexico production in the second quarter of 2011 was 9 Bcfe, or nearly 95 MMcfe/d. Pyrenees, located at Garden Banks 293, is expected to commence production in late 2011 at approximately 50 MMcf/d and 2,400 BCPD (gross). Outside operated developments, Axe and Dalmatian, are scheduled for first production in 2013.


    TABLE: 2011 Production Guidance
    -------------------------------
                                                           BCFE

    Original Production Guidance                          312-323
         Non-strategic asset sales thru 6/30/11*                    (3)
         Weather related issues YTD (Rockies, Mid-
          Continent)                                                (2)
         Abu FSO repairs                                          (1.2)
         Other                                                     (.8)

    Updated Production Guidance                           312-316
    ---------------------------                           -------
    *Asset sales were not included in the Company's original
     production guidance. Additional sales are anticipated in the
     second half of 2011.

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, Appalachia 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 drilling plans and planned capital expenditures, 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. Other factors that could impact forward-looking statements are described in “Risk Factors” in Newfield’s 2010 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other subsequent public filings with the Securities and Exchange Commission, which can be found at www.sec.gov. Unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Unless legally required, Newfield undertakes no obligation to publicly update or revise any forward-looking statements.


    For information,
     contact:
    ----------------
    Investor Relations:     Steve Campbell (281) 847-6081
                            Danny Aguirre (281) 668-2657
    Media Relations:        Keith Schmidt (281) 674-2650
    Email:                  info@newfield.com

    2Q11 Actual Results
    -------------------
                                                        2Q11 Actual
                                               Domestic      Int'l      Total
     Production/Liftings
        Natural gas - Bcf                          47.0            -     47.0
        Oil, condensate and NGLs -
         MMBbls                                     3.2        1.2      4.4
        Total Bcfe                                 65.9        7.3     73.2

     Average Realized Prices (Note 1)
        Natural gas - $/Mcf                       $5.77 $        -    $5.77
        Oil, condensate and NGLs - $/Bbl         $80.39    $118.72   $91.16
        Mcf equivalent - $/Mcfe                   $8.03     $19.79    $9.24

    Operating Expenses:
      Lease operating ($MM)
        Recurring                                 $56.6      $14.9    $71.5
        Major (workovers, etc.)                   $10.5      $18.8    $29.3
        Transportation                            $23.6 $        -    $23.6

      Lease operating (per Mcfe)
        Recurring                                 $0.88      $2.02    $1.00
        Major (workovers, etc.)                   $0.16      $2.55    $0.41
        Transportation                            $0.37 $        -    $0.33

      Production and other taxes ($MM)            $22.1      $56.9    $79.0
         per/Mcfe                                 $0.34      $7.73    $1.10

      General and administrative
       (G&A), net ($MM)                           $42.6       $1.7    $44.3
         per/Mcfe                                 $0.66      $0.24    $0.62

              Capitalized internal costs ($MM)                       $(27.1)
                 per/Mcfe                                            $(0.38)

    Interest Expense ($MM)                                            $41.7
          per/Mcfe                                                    $0.58

    Capitalized Interest ($MM)                                       $(19.4)
          per/Mcfe                                                   $(0.27)
    Note 1:  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 $4.42 per Mcf
    and the domestic and total oil and condensate average realized
    prices would have been $87.03 and $95.94 per barrel, respectively.


     3Q11 & FY11 Estimates
                                      Domestic
    Production/Liftings           3QE            FY11
                                  ---            ----
       Natural gas - Bcf        45 - 49       188 - 190
       Oil, condensate and
        NGLs - MMBbls          3.4 - 4.0     14.1 - 14.4
       Total Bcfe               65 - 73       273 - 276

    Average Realized
     Prices
       Natural gas - $/Mcf       Note 1         Note 1
       Oil, condensate and
        NGLs - $/Bbl             Note 2         Note 2
       Mcf equivalent -
        $/Mcfe

    Operating Expenses
     (per Mcfe):
        Lease Operating
          Recurring          $0.74 - $0.86  $0.72 - $0.87
          Major (workovers,
           etc.)             $0.21 - $0.29  $0.14 - $0.18
          Transportation     $0.30 - $0.39  $0.31 - $0.40

        Production/Taxes
         (Note 4)            $0.33 - $0.42  $0.29 - $0.39

       G&A, net              $0.62 - $0.75  $0.55 - $0.72

          Capitalized
           internal costs

       Interest Expense

       Capitalized
        Interest

    Tax rate (%) (Note
     5)

    Income taxes (%)
      Current
      Deferred


                                        Int'l
    Production/Liftings           3QE            FY11
                                  ---            ----
       Natural gas - Bcf                 -    0.2  - 0.2
       Oil, condensate and
        NGLs - MMBbls          1.4 - 2.0      6.5  - 6.6
       Total Bcfe                8 - 12         39 - 40

    Average Realized
     Prices
       Natural gas - $/Mcf
       Oil, condensate and
        NGLs - $/Bbl             Note 3         Note 3
       Mcf equivalent -
        $/Mcfe

    Operating Expenses
     (per Mcfe):
        Lease Operating
          Recurring          $1.75 - $2.22  $1.55 - $1.93
          Major (workovers,
           etc.)             $0.36 - $0.48  $0.64 - $0.83
          Transportation                 -              -

        Production/Taxes
         (Note 4)            $4.74 - $5.77  $4.96 - $6.23

       G&A, net              $0.16 - $0.21  $0.15 - $0.19

          Capitalized
           internal costs

       Interest Expense

       Capitalized
        Interest

    Tax rate (%) (Note
     5)

    Income taxes (%)
      Current
      Deferred


                                         Total
    Production/Liftings           3QE           FY11
                                  ---           ----
       Natural gas - Bcf        45 - 49       189 - 190
       Oil, condensate and
        NGLs - MMBbls          4.8 - 5.9    20.6 - 21.0
       Total Bcfe               74 - 84       312 - 316

    Average Realized
     Prices
       Natural gas - $/Mcf
       Oil, condensate and
        NGLs - $/Bbl
       Mcf equivalent -
        $/Mcfe

    Operating Expenses
     (per Mcfe):
        Lease Operating
          Recurring          $0.87 - $1.04  $0.82 - $1.00
          Major (workovers,
           etc.)             $0.23 - $0.31  $0.20 - $0.26
          Transportation     $0.26 - $0.34  $0.27 - $0.35

        Production/Taxes
         (Note 4)            $0.90 - $1.10  $0.86 - $1.11

       G&A, net              $0.56 - $0.68  $0.50 - $0.65

          Capitalized           ($0.33 -       ($0.30 -
           internal costs        $0.40)         $0.38)

       Interest Expense      $0.51 - $0.60  $0.51 - $0.55

       Capitalized              ($0.23 -       ($0.22 -
        Interest                 $0.30)         $0.27)

    Tax rate (%) (Note
     5)                          36% - 38%     36% - 38%

    Income taxes (%)
      Current                    18% - 22%     18% - 22%
      Deferred                   78% - 82%     78% - 82%


            The price that the Company receives for natural gas production
            from 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.  Realized natural gas prices for our Mid-Continent
            properties, after basis differentials, transportation and
            handling charges, typically average 90-95% of the Henry Hub
    Note 1: Index.
            The price the Company receives for its Gulf Coast oil
            production, excluding NGLs, typically averages about 98-102%
            of the NYMEX West Texas Intermediate (WTI) price. The price
            the Company receives for its oil production in the Rocky
            Mountains, excluding NGLs, is currently averaging about $15-
            $17 per barrel below the WTI price. Oil production from the
            Company's Mid-Continent properties, excluding NGLs, typically
    Note 2: averages 90-95% of the WTI price.
            Oil sales from the Company's operations in Malaysia typically
            sell at a slight discount to Tapis, or today about 110-115% of
            WTI. Oil sales from the Company's operations in China
            typically sell at a premium of up to $10 per barrel greater
    Note 3: than the WTI price.
            Guidance for production taxes determined using the average of
    Note 4: the strip at 06/21/11 ($94.54/bbl, $4.50/mcf).
            Tax rate applied to earnings excluding unrealized gains or
    Note 5: losses on commodity derivatives.


    CONSOLIDATED
     STATEMENT OF
     INCOME                       For the Three             For the Six
    (Unaudited, in
     millions,
     except per
     share data)                  -------------             -----------
                                   Months Ended             Months Ended
                                   ------------             ------------
                                     June 30,                 June 30,
                                   --------             --------
                                 2011           2010    2011           2010
                                 ----           ----    ----           ----

    Oil and gas
     revenues                    $621           $448  $1,166           $906
                                 ----           ----  ------           ----

    Operating expenses:
      Lease operating             125             84     218            151
      Production and
       other taxes                 79             31     150             56
      Depreciation,
       depletion and
       amortization               173            160     339            307
      General and
       administrative              44             41      81             77
      Other                         -              2       -             10
                                  ---            ---     ---            ---
         Total operating
          expenses                421            318     788            601
                                  ---            ---     ---            ---

    Income from
     operations                   200            130     378            305

    Other income (expenses):
      Interest expense            (41)           (39)    (81)           (77)
      Capitalized
       interest                    19             16      37             28
      Commodity
       derivative
       income
       (expense)                  169             46     (13)           283
      Other                         -             (1)     (1)             1
                                  ---            ---     ---            ---
         Total other
          income
          (expenses)              147             22     (58)           235
                                  ---            ---     ---            ---

    Income before
     income taxes                 347            152     320            540

    Income tax
     provision                    128             56     118            200
                                  ---            ---     ---            ---

    Net income                   $219            $96    $202           $340
                                 ====            ===    ====           ====

    Earnings per share:
    Basic --                    $1.64          $0.73   $1.52          $2.59
                                =====          =====   =====          =====

    Diluted --                  $1.62          $0.72   $1.50          $2.55
                                =====          =====   =====          =====

    Weighted-
     average number
     of shares
     outstanding                  134            132     133            131
       for basic earnings per
        share
    Weighted-
     average number
     of shares
     outstanding                  135            134     135            133
       for diluted earnings per
        share


    CONDENSED CONSOLIDATED BALANCE SHEET
    (Unaudited, in millions)

                                                    June 30,    December 31,
                                                    --------    ------------
                                                          2011          2010
                                                          ----          ----

    ASSETS
    Current assets:
      Cash and cash equivalents                            $74           $39
      Derivative assets                                    128           197
      Other current assets                                 546           495
         Total current assets                              748           731

    Property and equipment, net (full cost
     method)                                             7,564         6,608
    Derivative assets                                       35            39
    Other assets                                           134           116
         Total assets                                   $8,481        $7,494
                                                        ======        ======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Current liabilities                                 $896          $875
      Derivative liabilities                                65            53
         Total current liabilities                         961           928

    Other liabilities                                      163           153
    Derivative liabilities                                  69            46
    Long-term debt                                       2,889         2,304
    Deferred taxes                                         837           720
         Total long-term liabilities                     3,958         3,223
                                                         -----         -----

    STOCKHOLDERS' EQUITY
    Common stock and additional paid-in capital          1,423         1,410
    Accumulated other comprehensive loss                    (8)          (12)
    Retained earnings                                    2,147         1,945
                                                         -----         -----
         Total stockholders' equity                      3,562         3,343
                                                         -----         -----
         Total liabilities and stockholders' equity     $8,481        $7,494
                                                        ======        ======


    CONDENSED CONSOLIDATED STATEMENT OF CASH
     FLOWS
    (Unaudited, in millions)

                                                           For the
                                                           -------
                                                       Six Months Ended
                                                       ----------------
                                                           June 30,
                                                         --------
                                                      2011             2010
                                                      ----             ----
    Cash flows from operating activities:
      Net income                                      $202             $340
    Adjustments to reconcile net income to net
     cash provided by
        operating activities:
       Depreciation, depletion and amortization        339              307
      Deferred tax provision                            88              173
      Stock-based compensation                          14               12
      Commodity derivative (income) expense             13             (283)
      Cash receipts on derivative settlements, net      95              227
      Other                                              3                -
                                                       754              776
      Net changes in operating assets and
       liabilities                                     (25)             112
                                                       ---              ---
          Net cash provided by operating activities    729              888
                                                       ---              ---

    Cash flows from investing activities:
      Additions to oil and gas properties and
       other, net                                   (1,087)            (774)
      Acquisitions of oil and gas properties          (311)            (219)
      Proceeds from sales of oil and gas properties    130               14
      Redemptions of investments                         1                5
          Net cash used in investing activities     (1,267)            (974)
                                                    ------             ----

    Cash flows from financing activities:
      Net proceeds (repayments) under credit
       arrangements                                    585             (385)
      Net proceeds from issuance of senior
       subordinated notes                                -              694
      Repayment of senior notes                          -             (175)
      Other                                            (12)              (4)
        Net cash provided by financing activities      573              130
                                                       ---              ---

    Increase in cash and cash equivalents               35               44
    Cash and cash equivalents, beginning of
     period                                             39               78

    Cash and cash equivalents, end of period           $74             $122
                                                       ===             ====

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 second quarter of 2011 stated without the effect of certain items to net income is shown below:


                                             2Q11
                                             ----
                                         (in millions)
    Net income                                  $219
       Net unrealized gain on commodity
        derivatives (1)                         (129)
       Income tax adjustment for above
        item                                      48
    Earnings stated without the effect
     of the above items                         $138
                                                ====


    (1) The determination of "Net unrealized gain on commodity
     derivatives" for the second quarter of 2011 is  as follows:


                                                             2Q11
                                                             ----
                                                         (in millions)
        Commodity derivative income                             $169
        Cash receipts on derivative settlements, net             (40)
          Net unrealized gain on commodity derivatives          $129
                                                                ====

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:


                                                             2Q11
                                                             ----
                                                          (in millions)
    Net cash provided by operating activities                   $420
       Net change in operating assets and liabilities            (27)
                                                                 ---
    Net cash provided by operating activities before
     changes                                                    $393
       in operating assets and liabilities                      ====

SOURCE Newfield Exploration Company


Source: newswire