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Newfield Announces First Quarter Financial and Operating Results

Company Provides Update on Recent Drilling Successes

HOUSTON, April 26 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the first quarter of 2001. The Company posted record quarterly net income and revenues, driven primarily by higher production volumes and commodity prices. Production volumes in the first quarter of 2001 increased nearly 30% over year-ago levels and the Company expects to meet or exceed its 2001 production target of 170 Bcfe, an increase of more than 20% over 2000 production levels.

For the first quarter of 2001, net income was $64.2 million, or $1.34 per share (all per share amounts are on a diluted basis), stated before the effect of a non-cash charge relating to the adoption of SFAS 133. Stated after the effect of the non-cash charge, net income for the first quarter of 2001 was $58.4 million, or $1.22 per share, on revenues of $209.3 million. This compares to net income of $15.2 million, or $0.36 per share, on revenues of $97.8 million in the same period of 2000. Operating cash flow before changes in working capital increased nearly 120% in the first quarter of 2001 to $141.0 million, or $2.91 per share, compared to $64.3 million, or $1.50 per share, for the same period in 2000.

The Company's production in the first quarter of 2001, when stated on a natural gas equivalent basis, increased 27% over the first quarter of 2000. Newfield's production was 39.6 billion cubic feet equivalent (Bcfe), or an average of 440 million cubic feet equivalent per day during the first quarter of 2001. The significant increase in production was due primarily to higher production from the Company's fields in South Texas and the acquisition of Lariat Petroleum, which closed January 23, 2001. The following tables detail quarterly production and average realized prices:

    Production

                                       1Q01            1Q00      % Change
    United States
      Natural gas (Bcf)                30.8            22.7           36%
        Natural gas (MMcf/d)            342             249           37%
      Oil and condensate
       production (MMBbls)             1.24            0.91           36%
        Oil and condensate
         production (BOPD)           17,328          14,969           16%
    Australia
      Oil and condensate
       liftings (MBbls)               240.0           508.2          (53%)
        Oil and condensate
         liftings (BOPD)              2,662           5,646          (53%)
    Total
      Natural gas (Bcf)                30.8            22.7           36%
      Oil and condensate
       liftings (MMBbls)                1.5             1.4            4%
      Total Production (Bcfe)          39.6            31.2           27%

    Average Realized Prices
                                       1Q01             1Q00     % Change

    United States
      Natural gas (per Mcf)          $ 5.56           $ 2.6          107%
      Oil and condensate (per Bbl)   $24.36           $25.89          (6%)
    Australia
      Oil and condensate liftings
       (per Bbl)                     $26.28           $27.06          (3%)
    Total
      Natural gas (per Mcf)          $ 5.56           $ 2.68         107%
      Oil and condensate (per Bbl)   $24.95           $26.31          (5%)


Newfield's lease operating expense (LOE) in the first quarter of 2001, stated on a unit of production basis, was $0.53 per thousand cubic feet equivalent (Mcfe) compared to $0.50 per Mcfe in the same period last year. Production taxes in the first quarter of 2001, including Resource Rent Tax in Australia, increased to $0.18 per Mcfe compared to $0.05 per Mcfe in the same period of 2000. This increase in production taxes is related to significantly higher natural gas prices and the Company's growing U.S. onshore operations. The Company's DD&A expense in the first quarter of 2001 was $1.54 per Mcfe compared to $1.32 per Mcfe in the first quarter of 2000. The increase in DD&A expense primarily reflects the purchase method of accounting for the Company's partially tax-free acquisition of Lariat Petroleum, including the FAS 109 tax gross up. General and administrative expense for the first quarter of 2001 was $0.27 per Mcfe compared to $0.20 per Mcfe in the same period of 2000. The higher G&A expense reflects an increase in performance-based pay and additions to the Company's workforce in the Mid-Continent. Interest expense in the first quarter of 2001 was $0.18 per Mcfe compared to $0.13 per Mcfe in the first quarter of 2000. Capitalized interest expense in the first quarter of 2001 was $1.3 million.

Capital expenditures in the first quarter of 2001 were $99 million, excluding the purchase of Lariat Petroleum.

2001 Activity Update

Newfield has eight company-operated rigs running in the Gulf of Mexico (including workovers and recompletions), three operated rigs running onshore along the U.S. Gulf Coast, seven in the Anadarko Basin of Oklahoma and one in West Texas. In addition, 10 outside-operated rigs are active: two in the Gulf of Mexico, one onshore U.S. Gulf Coast, six in the Anadarko Basin and one in Bohai Bay, China. Highlights from the first quarter 2001 drilling program are outlined below.

Gulf of Mexico To date in 2001, Newfield has drilled five successful wells and one dry hole in the Gulf of Mexico. The Company is operating, or has an interest in, four additional wells that are currently drilling in the Gulf of Mexico.

Areas of significant activity in the Gulf of Mexico include West Cameron 294 and Eugene Island 182 offshore Louisiana, and the High Island region offshore Texas. In the High Island area, Newfield drilled three additional successful wells in the first quarter of 2001 -- the HI 472 #3, HI 489 B-29 and HI 499 C-7. Newfield drilled seven successful wells in the High Island area during 2000 and plans to drill at least five additional wells in the area in 2001. Production from the High Island area has more than doubled over the last year; increasing from 18 MMcfe/d in early 2000 to a current rate of more than 42 MMcfe/d. Completion activity underway is expected to further increase production. Newfield operates substantially all of its activities in the area.

Gulf Coast Year-to date, Newfield drilled or participated in eight successful wells along the Texas coast with no dry holes. Three operated wells and one outside operated well are currently drilling. Newfield plans to drill about 20 wells along the Gulf Coast in 2001.

One of Newfield's most active areas today is South Texas. Newfield strengthened its position in the area in early 2000 with the acquisition of three producing gas fields. At the time of the purchase, net production from the fields was 35 MMcfe/d. Since the acquisition, Newfield has maintained an active drilling campaign in the fields and has increased net production to about 55 MMcfe/d. Development drilling is currently underway in each of the three fields.

The Company's largest producing field in the area is East Sarita, located in Kenedy County, Texas. Newfield drilled four successful wells in the field in the first quarter of 2001 and a fifth well is currently drilling. Net production from the field has more than doubled from about 20 MMcfe/d at the time of purchase in early 2000 to a current rate of 42 MMcfe/d. Additional completions underway are expected to significantly increase production from this field during the second quarter of 2001. Newfield owns a 100% working interest in the East Sarita Field.

Another region of significant activity is the Lower Wilcox play near the Provident City area, located in Lavaca and Colorado Counties, Texas. Newfield recently drilled two successful wells and plans to drill eight additional wells in 2001. Net production from the Provident City area is currently 12 MMcfe/d and is expected to more than double by year-end 2001 as current discoveries are completed and development drilling continues.

Mid-Continent In the first quarter of 2001, the Company drilled or participated in 24 successful wells in the Mid-Continent and only one dry hole. Newfield is currently operating seven rigs in the Anadarko Basin and participating in six outside operated wells. Fifteen wells, five operated and 10 outside operated, are in various stages of completion. The Company plans to participate in up to 150 wells in the area in 2001.

A noteworthy event was the Company's first exploratory discovery in the Texas Panhandle. The success of the well sets up additional drilling locations.

In addition to drilling activity in the Anadarko Basin, the Company has several large 3-D seismic programs underway. In the first quarter, two previously acquired 3-D data sets (84 square miles) were processed and are now being interpreted. Newfield recently spudded its first exploratory well based on this new information. Three additional seismic acquisition programs are ongoing (approximately 160 square miles). All of the programs are projected to be completed by the third quarter of 2001.

China International activity in the first quarter of 2001 was focused on Bohai Bay, China. Newfield and partners drilled the second appraisal well -- the CFD 12-1 #3 -- in the CFD 12-1 Field on Block 05/36 in Bohai Bay. The well was successful and an extensive coring and testing program is underway on the CFD 12-1 #3 well. Newfield owns a 35% interest in Block 05/36. The partners plan to drill up to four additional appraisal wells by mid-2001. The third appraisal well is expected to spud in May 2001.

Second Quarter 2001 Estimates

Below are Newfield's estimates of certain significant operating and financial data for the second quarter of 2001. Although the Company believes the expectations reflected in this forward-looking information are reasonable, such expectations are based upon assumptions and anticipated results that are subject to numerous uncertainties. Please see the forward-looking footnote at the end of this news release.

Natural gas production and pricing Newfield's natural gas production in the second quarter of 2001 is expected to be 31.4 - 34.6 Bcf (345-380 MMcf/d). The Company's average realized gas price on volumes from the Gulf of Mexico and onshore Gulf Coast typically tracks the Henry Hub Index. Gas from our recently acquired Mid-Continent production typically sells at a $0.12 - $0.15 per Mcfe discount to Henry Hub. Hedging gains or losses will affect these realizations. For a description of the Company's recent hedging positions, please see @NFX, located on the Company's web site at www.newfld.com .

Crude oil production and pricing Consolidated oil production in the first quarter of 2001 is expected to be 1.52 - 1.68 million barrels (16,750 - 18,500 BOPD). Australian oil production is expected to be 296 - 327 thousand barrels (3,250 - 3,600 BOPD). The timing of liftings in Australia will impact reported production and revenues. Newfield's average realized U.S. oil price on production typically averages about $2 below the NYMEX WTI price. Australian crude trades based on the Tapis Benchmark and has historically been comparable to WTI. Oil from our recently acquired Mid-Continent production typically sells for a $1.00 - $1.50 per barrel discount to WTI. Hedging gains or losses will affect these realizations. For a description of the Company's recent hedging positions, please see @NFX, located on the Company's web site at www.newfld.com .

For the full-year 2001, Newfield expects to meet or exceed its production target of 170 Bcfe, an increase of more than 20% over 2000 production volumes.

Lease Operating Expense Newfield's lease operating expense, including production, severance and resource rent tax in Australia, is expected to be $32 - $35 million in the second quarter of 2001 ($0.75 - $0.82 per Mcfe). The Company's domestic LOE, including taxes, is expected to be $0.59 - $0.65 per Mcfe in the second quarter of 2001. This estimate includes severance taxes of $0.15 - $0.18 per Mcfe attributable to high commodity prices on increased oil and gas production from the Company's onshore operations. Lease operating expense varies and is subject to impact from the following: production volumes and commodity pricing, tax rates, service costs, the costs of goods and materials and workover activities, among others.

General and Administrative Expense Newfield's G&A expense for the second quarter of 2001 is expected to be $10.4 - $11.5 million ($0.24 - $0.27 per Mcfe). This estimate reflects accrual of our performance based pay program.

Interest Expense The non-capitalized portion of the Company's interest expense for the second quarter of 2001 is expected to be $5.8 - $6.4 million ($0.14 - $0.16 per Mcfe), including a $2.3 million payment on its Convertible Trust Preferred Securities (QUIPS). Current borrowings under the Company's revolving based credit facility are $78 million. The remainder of long-term debt consists of two separate senior notes issues that in the aggregate total $300 million. Capitalized interest for the second quarter of 2001 is expected to be approximately $1.5 million.

Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the second quarter of 2001 to be about 36%. About 45% of the tax provision is expected to be deferred.

Capital Expenditures Newfield has budgeted $710 million for 2001 capital expenditures, including the $333 million acquisition of Lariat Petroleum.

In an effort to provide more timely information at significantly lower cost, Newfield will no longer be printing and mailing traditional quarterly reports. Instead, we will publish a special quarterly edition of our electronic publication -- @NFX. In addition, any publicly announced changes to the above estimates, as well as periodic drilling updates, will also be done through @NFX. This publication can be found on the Company's web page, at www.newfld.com . Through the web page, shareholders can elect to automatically receive @NFX by e-mail distribution.

Newfield Exploration is an independent crude oil and natural gas exploration and production company. The Company has a solid asset base of producing properties and exploration and development drilling opportunities and operations primarily in the Gulf of Mexico, the Anadarko Basin of Oklahoma, along the U.S. Gulf Coast and offshore Australia. Newfield balances its drilling program with acquisitions in select areas in the U.S. and overseas.

Tables with first quarter 2001 summary financials are attached.

* Certain of the statements set forth in this news release regarding estimated or anticipated second quarter operating and financial data, daily, quarterly and yearly production volumes, capital expenditures, drilling plans and prospects 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, labor conditions and other factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2000. In addition, the drilling of oil and gas wells and the production of hydrocarbons are subject to governmental regulations and operating risks.

    Newfield Exploration Company                  For information, contact:
    363 N. Sam Houston Parkway East, Ste. 2020    Steve Campbell
    Houston, TX 77060                             (281) 847-6081
    www.newfld.com                                sccampbell@newfld.com


    CONSOLIDATED STATEMENT OF INCOME
    (Unaudited, in 000's, except per share data)
                                                              For the
                                                        Three Months Ended
                                                              March 31,
                                                        2001           2000

    Oil and gas revenues                            $209,326        $97,822

    Operating expenses:
      Lease operating                                 20,824         15,491
      Production and other taxes                       7,118          1,665
      Transportation                                   1,262          1,536
      Depreciation, depletion and amortization        61,146         41,211
      General and administrative, net                 10,690          6,346
      Stock compensation                                 595            589
        Total operating expenses                     101,635         66,838

    Income from operations                           107,691         30,984
    Other income (expense)                            (7,375)        (4,081)
    Unrealized commodity derivative expense *         (1,558)            --
    Income before income taxes                        98,758         26,903
    Income tax provision                              35,613          9,360

    Income before Cumulative Effect of Change in
     Accounting Principles                            63,145         17,543
    Cumulative Effect of Change in Accounting
     Principles
        Adoption of SAB 101                               --         (2,360)
        Adoption of SFAS 133 *                        (4,794)            --
    Net income                                      $ 58,351        $15,183
    Earnings per share:
      Basic -
       Income before Cumulative Effect of
        Change in Accounting Principles             $   1.43        $  0.42
       Cumulative Effect of Change in
        Accounting Principles                          (0.11)         (0.06)
      Net Income                                    $   1.32        $  0.36
    Diluted -
      Income before Cumulative Effect of
       Change in Accounting Principles              $   1.32        $  0.41
      Cumulative Effect of Change in
       Accounting Principles                           (0.10)         (0.05)
      Net Income                                    $   1.22        $  0.36

    Weighted average shares outstanding
     for basic earnings per share                     44,125         41,882

    Weighted average shares outstanding
     for diluted earnings per share                   48,882         46,764

    PRODUCTION DATA

                                                             For the
                                                        Three Months Ended
                                                             March 31,
                                                        2001           2000
    Average daily production:
      Oil and condensate (Bbls)                       17,328         14,969
      Gas (Mcf)                                      341,710        249,409

    Average realized price:
      Oil and condensate (Bbls)                     $  24.95        $ 26.31

      Gas (Mcf)                                     $   5.56        $  2.68


    * Associated with adoption of SFAS133.


    CONSOLIDATED BALANCE SHEET
    (Unaudited, in thousands of dollars)            March 31,   December 31,
                                                        2001           2000
    ASSETS
    Current assets:
      Cash & cash equivalents                     $   63,606     $   18,451
      Accounts receivable, oil and gas               122,097        147,643
      Inventories                                      9,366          7,164
      Commodity derivatives *                         13,121             --
      Other current assets                             4,208          5,891
        Total current assets                         212,398        179,149

    Oil and gas properties, net
     (full cost method)                            1,309,965        833,315
    Furniture, fixtures and equipment, net             6,049          4,028
    Commodity derivatives *                            6,012             --
    Other assets                                      10,745          6,758
                                                  $1,545,169     $1,023,250

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                           $  187,399     $  141,060
    Commodity derivatives *                           43,571             --
        Total current liabilities                    230,970        141,060

    Other liabilities                                 13,040          6,030
    Commodity derivatives *                           14,880             --
    Long-term debt                                   349,599        133,711
    Deferred taxes                                   173,456         79,244
        Total long-term liabilities                  550,975        218,985

    Company-obligated, mandatorily redeemable,
     convertible preferred securities
     of Newfield Financial Trust I                   143,750        143,750

    STOCKHOLDERS' EQUITY
      Common stock                                   358,835        286,838
      Unearned compensation                           (9,337)        (6,201)
       Accumulated other comprehensive loss
        Foreign currency translation adjustment       (7,941)        (4,644)
       Commodity derivatives *                       (23,896)            --
      Retained earnings                              301,813        243,462
                                                     619,474        519,455
                                                  $1,545,169     $1,023,250

    * Associated with adoption of SFAS133.


    CONSOLIDATED STATEMENT OF
    CASH FLOWS
    (Unaudited, in thousands of dollars)                     For the
                                                        Three Months Ended
                                                             March 31,
                                                        2001           2000
    Cash flows from operating activities:
      Net income                                  $   58,351     $   15,183
      Depreciation, depletion and amortization        61,146         41,211
      Deferred taxes                                  14,524          5,643
      Stock compensation                                 595            589
      Commodity derivatives *                          1,558             --
      Cumulative effect of change in
       accounting principles
         Adoption of SAB 101                              --          2,360
         Adoption of SFAS 133 *                        4,794             --
                                                     140,968         64,986
    Changes in operation assets and liabilities       60,563         (4,371)
      Net cash provided by operating activities      201,531         60,615

    Cash flows from investing activities:
      Acquisition of Lariat Petroleum,
       net of cash acquired                         (264,089)            --
      Additions to oil and gas properties           (107,846)      (181,456)
      Additions to furniture, fixtures and equipment  (1,112)          (303)
        Net cash used in investing activities       (373,047)      (181,759)
    Cash flows from financing activities:
      Proceeds from borrowings                       663,000        120,000
      Repayments of borrowings                      (622,000)       (16,000)
      Proceeds from issuances of senior notes        174,879             --
      Proceeds from issuances of common stock, net       (45)         3,313
        Net cash provided by financing activities    215,834        107,313
    Effect of exchange rate changes on cash
     and cash equivalents                                837         (1,688)

    Increase (decrease) in cash and cash equivalents  45,155        (15,519)
    Cash and cash equivalents, beginning of period    18,451         41,841

    Cash and cash equivalents, end of period      $   63,606     $   26,322

    * Associated with adoption of SFAS133.

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SOURCE Newfield Exploration Company
Web site: http: //www.newfld.com
Company News On-Call: http: //www.prnewswire.com/comp/117962.html or fax, 800-758-5804, ext. 117962
CONTACT: Steve Campbell of Newfield Exploration Company, 281-847-6081, or sccampbell@newfld.com

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