HOUSTON, Jan. 19 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) announced today that it expects to incur a non-cash charge to fourth quarter 1998 earnings of approximately $68 million. The charge is attributable to an anticipated reduction in the carrying value of Newfield's oil and gas properties primarily as a result of lower commodity prices. This after-tax charge results from the application of the full-cost "ceiling test" accounting method as required by the Securities and Exchange Commission. No downward reserve revision is associated with this charge. The Company expects to announce its year-end 1998 results on February 11, 1999.
With regard to 1999, Newfield stated that its production target from existing properties is 106 billion cubic feet of gas equivalent (Bcfe), a 20% increase over 1998 production. About 83% of 1999 production is projected to be natural gas. Approximately half of Newfield's anticipated gas production in the first and second quarters has been hedged at a price not less than $2.25 per Mcf.
Newfield also announced that its capital budget for ordinary course of business capital spending in 1999 is now estimated at $150 million. About $40 million will be for exploration and the remainder for small acquisitions, development, and construction. Because of lower rig costs, the Company believes this will not result in a significant reduction in drilling activity as compared to 1998. The Company remains alert to and well situated to take advantage of larger acquisition opportunities that may materialize during the year.
Newfield explores, develops and acquires oil and gas properties principally in the Gulf of Mexico.
Certain of the statements set forth in this press release regarding
production targets, oil and gas reserves, planned capital expenditures and
operating expenses and activities are forward looking and are based upon
assumptions and anticipated results that are subject to numerous
uncertainties. 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 and the availability of capital resources. In
addition, the drilling of oil and gas wells and the production of hydrocarbons
are subject to governmental regulations and operating risks.
SOURCE Newfield Exploration Company
Web site: http: //www.newfld.com
CONTACT: James P. Ulm, II of Newfield Exploration, 281-847-6000