HOUSTON, April 23 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the first quarter of 2003. A conference call to discuss the results is planned for 8:30 a.m. (CDT), Thursday, April 24. To participate in the call, dial 719-457-2621. A listen-only broadcast will also be provided over the Internet. Simply go to the Investor Relations section at www.newfld.com .
For the first quarter of 2003, the Company reported net income of $64.1 million, or $1.17 per diluted share (all per share amounts are on a diluted basis). Earnings for the quarter include the effects of the following two items:
-- A $10.0 million one-time charge ($6.5 million after tax), or $0.12 per share, associated with the unwind of the gas forward sales obligation inherited through the acquisition of EEX Corporation in late 2002; and -- An $8.5 million gain ($5.6 million after tax), or $0.10 per share, resulting from the cumulative effect of adoption of SFAS 143. SFAS 143 changes the manner in which abandonment obligations are reported.
Revenues in the first quarter of 2003 were $279.3 million. Net cash provided by operating activities before changes in operating assets and liabilities* was $175.9 million.
This compares to net income in the first quarter of 2002 of $16.3 million, or $0.37 per share. Revenues in the first quarter of 2002 were $148.0 million. Net cash provided by operating activities before changes in operating assets and liabilities* was $96.7 million in the first quarter of 2002.
The Company's production in the first quarter of 2003, when stated on a
natural gas equivalent basis, increased more than 25% over the first quarter
of 2002. Newfield produced 55.2 billion cubic feet equivalent (Bcfe), or an
average of 614 million cubic feet equivalent per day, during the first quarter
of 2003. The following tables detail quarterly production and average
Production 1Q03 1Q02 % Change United States Natural gas (Bcf) 44.0 34.0 30% Oil and condensate production (MMBbls) 1.52 1.35 12% Australia Oil and condensate liftings (MMBbls) 0.358 0.298 20% Total Production (Bcfe) 55.2 43.8 26% Average Realized Prices 1Q03 1Q02 % Change United States Natural gas (per Mcf) $5.05 $3.26 55% Oil and condensate (per Bbl) $29.03 $22.03 32% Australia Oil and condensate liftings (per Bbl) $31.86 $22.01 45% Total (per Mcfe) $5.03 $3.35 50% Prices shown are net of transportation expense and after hedging. The Company has not entered into hedging transactions specifically relating to Australian production.
Stated on a unit of production basis, Newfield's lease operating expense (LOE) in the first quarter of 2003 was $0.58 per Mcfe. This compares to LOE of $0.53 per Mcfe in the same period of 2002. Higher commodity prices contributed to significantly higher production taxes in the first quarter. Production taxes in the first quarter of 2003 (including resource rent tax in Australia) increased to $0.23 per Mcfe compared to $0.08 per Mcfe in the same period of 2002. DD&A expense, stated on a unit of production basis, in the first quarter of 2003 was $1.75 per Mcfe compared to $1.63 in the first quarter of 2002. The increase in DD&A expense is related primarily to higher cost reserve additions and the impact of adoption of SFAS 143. G&A expenses in the first quarter of 2003 were $0.32 per Mcfe compared to $0.28 per Mcfe in the same period of 2002. Capitalized G&A expenses in the first quarter of 2003 were $6.8 million compared to $2.3 million in the first quarter of 2002. The increase in G&A expense is primarily due to higher incentive compensation expense and the Company's growing workforce. In response to Newfield's increased emphasis on exploration, the Company is capitalizing a greater portion of its G&A expense.
Capital expenditures in the first quarter of 2003 were $122.7 million.
*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:
1Q03 1Q02 Net cash provided by operating activities $ 65,655 $ 98,649 (Increase) Decrease in operating assets and liabilities 110,262 (1,989) Net cash provided by operating activities before changes in operating assets and liabilities $ 175,917 $ 96,660 Second Quarter 2003 Estimates
Below are estimates of production and significant operating and financial data for the second quarter of 2003. 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 discussion regarding forward-looking information at the end of this release.
Natural gas production and pricing Newfield's natural gas production in the second quarter of 2003 is expected to be 42 - 47 Bcf (462 - 511 MMcf/d). The price received by the Company for its natural gas production from the Gulf of Mexico and onshore Gulf Coast has typically tracked the Henry Hub Index. Gas from the Company's Mid-Continent properties has typically sold at a discount of $0.12 - $0.15 per Mcfe to Henry Hub. Hedging gains or losses will affect price realizations.
Crude oil production and pricing Consolidated oil production in the second quarter of 2003 is expected to be 1.6 - 1.8 million barrels (18,000 - 20,000 BOPD). Australian oil production during the second quarter is expected to be 240 - 260 thousand barrels (2,600 - 2,900 BOPD). The timing of liftings in Australia will impact reported production and revenues. The price the Company receives for its Gulf Coast production has typically averaged about $2 below the NYMEX West Texas Intermediate (WTI) price. Oil production from the Mid-Continent has typically sold at a $1.00 - $1.50 per barrel discount to WTI. Australian crude oil sales are based on the Tapis Benchmark, which has historically been comparable to WTI. Hedging gains or losses will affect price realizations.
Lease Operating and Other Expenses Newfield's LOE is expected to be $36 - $39 million ($0.65 - $0.72 per Mcfe) in the second quarter of 2003. The Company's domestic LOE is expected to be $31 - $35 million ($0.59 - $0.65 per Mcfe). Production and other taxes in the second quarter of 2003 (including resource rent tax in Australia) are expected to be $10 - $11 million ($0.18 - $0.20 per Mcfe). These expenses vary and are subject to impact from, among other things, production volumes and commodity pricing, tax rates, service costs, the costs of goods and materials and workover activities.
General and Administrative Expense Newfield's G&A expense for the second quarter of 2003 is expected to be $14 - $16 million ($0.25 - $0.28 per Mcfe), net of capitalized G&A expense. Capitalized G&A expense is expected to be $6 - $8 million. G&A expense includes stock and incentive compensation expense. Incentive compensation expense depends largely on Newfield's net income.
Interest Expense The non-capitalized portion of the Company's interest expense for the second quarter of 2003 is expected to be $11 - $13 million ($0.21 - $0.23 per Mcfe), including a $2.3 million dividend on its convertible trust preferred securities. Current borrowings under the Company's bank facilities are $205 million. The remainder of long-term debt consists of three separate issuances of senior notes that in the aggregate total $550 million principal amount. Capitalized interest for the second quarter of 2003 is expected to be about $2 - $3 million.
Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the second quarter of 2003 to be about 35 - 38%. About 35% of the tax provision is expected to be deferred.
The Company provides information regarding its outstanding hedging positions in its annual report and quarterly reports filed with the SEC and in its electronic publication -- @NFX. This publication can be found on the Company's web page at http://www.newfld.com . Through the web page, interested persons may elect to receive @NFX through e-mail distribution.
Newfield Exploration is an independent crude oil and natural gas exploration and production company. The Company relies on a proven growth strategy that includes balancing acquisitions with drill bit opportunities. Newfield's areas of operation include the Gulf of Mexico, the onshore U.S. Gulf Coast, the Anadarko Basin and offshore northwest Australia.
**Certain of the statements set forth in this release regarding estimated or anticipated second quarter results and production volumes 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, 2002. 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 firstname.lastname@example.org CONSOLIDATED STATEMENT OF INCOME (Unaudited, in thousands, except per share data) For the Three Months Ended March 31, 2003 2002 Oil and gas revenues $ 279,284 $ 148,039 Operating expenses: Lease operating 32,256 23,053 Production and other taxes 12,574 3,410 Transportation 1,563 1,331 Depreciation, depletion and amortization 96,700 71,207 General and administrative 16,903 11,767 Gas sales obligation settlement 9,998 --- Stock compensation 679 578 Total operating expenses 170,673 111,346 Income from operations 108,611 36,693 Other income (expense): Interest expense (16,686) (7,201) Capitalized interest 3,819 2,130 Dividends on preferred securities of Newfield Financial Trust I (2,336) (2,336) Unrealized commodity derivative expense * (1,217) (5,645) Other (1,229) 1,816 (17,649) (11,236) Income before income taxes 90,962 25,457 Income tax provision 32,396 9,131 Income before cumulative effect of change in accounting principle 58,566 16,326 Cumulative effect of change in accounting principle** 5,575 --- Net income $ 64,141 $ 16,326 Earnings per share: Basic Income before cumulative effect of change in accounting principle $ 1.13 $ 0.37 Cumulative effect of change in accounting principle** 0.11 --- Net income $ 1.24 $ 0.37 Diluted Income before cumulative effect of change in accounting principle $ 1.07 $ 0.37 Cumulative effect of change in accounting Principle** 0.10 --- Net income $ 1.17 $ 0.37 Weighted average shares outstanding for basic earnings per share 51,886 44,212 Weighted average shares outstanding for diluted earnings per share 56,208 48,745 PRODUCTION DATA For the Three Months Ended March 31, 2003 2002 Average daily production: Oil and condensate (Bbls) 20,821 18,309 Gas (Mcf) 488.9 376.8 Average realized price: Oil and condensate (Bbls) $ 29.57 $ 22.03 Gas (Mcf) $ 5.05 $ 3.26 * Associated with SFAS 133. ** Associated with the adoption of SFAS 143. CONSOLIDATED BALANCE SHEET (Unaudited, in thousands of dollars) March 31, December 31, 2003 2002 ASSETS Current assets: Cash & cash equivalents $ 42,586 $ 48,898 Accounts receivable, oil and gas 209,864 130,489 Inventories 7,223 7,910 Commodity derivatives * 22,002 2,655 Deferred taxes 18,075 12,801 Other current assets 29,810 36,074 Total current assets 329,560 238,827 Oil and gas properties, net (full cost method) 2,203,105 2,010,005 Assets held for sale 35,000 35,000 Furniture, fixtures and equipment, net 8,747 8,030 Commodity derivatives * 4,533 4,439 Other assets 20,952 19,452 Total assets $2,601,897 $2,315,753 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 213,424 $ 246,197 Commodity derivatives * 69,798 49,610 Total current liabilities 283,222 295,807 Other liabilities 16,906 16,976 Commodity derivatives * 12,777 10,610 Long-term debt 778,903 709,615 Asset retirement obligation ** 155,240 --- Deferred taxes 141,595 129,309 Total long-term liabilities 1,105,421 866,510 Company-obligated, mandatorily redeemable, convertible preferred securities of Newfield Financial Trust I 143,750 143,750 Minority interest --- 455 STOCKHOLDERS' EQUITY Common stock 530 526 Additional paid-in capital 643,970 636,317 Treasury stock (26,552) (26,213) Unearned compensation (12,936) (6,479) Accumulated other comprehensive income (loss) Foreign currency translation adjustment 131 (3,888) Commodity derivatives * (36,043) (27,295) Retained earnings 500,404 436,263 Total stockholders' equity 1,069,504 1,009,231 Total liabilities and stockholders' equity $2,601,897 $2,315,753 * Associated with SFAS 133. ** Associated with the adoption of SFAS 143. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in thousands of dollars) For the Three Months Ended March 31, 2003 2002 Cash flows from operating activities: Net income $ 64,141 $ 16,326 Depreciation, depletion and amortization 96,700 71,207 Deferred taxes 8,757 2,904 Stock compensation 679 578 Commodity derivatives * 1,217 5,645 Cumulative effect of change in accounting principle** (5,575) --- Gas sales obligation settlement 9,998 --- 175,917 96,660 Changes in assets and liabilities 110,262 (1,989) Net cash provided by operating activities 65,655 98,649 Cash flows from investing activities: Additions to oil and gas properties (123,992) (84,489) Additions to furniture, fixtures and equipment (1,891) (826) Net cash used in investing activities (125,883) (85,315) Cash flows from financing activities: Proceeds from borrowings under credit arrangements 744,000 128,000 Repayments of borrowings under credit arrangements (575,000) (146,000) Deliveries under the gas sales obligation (8,442) --- Proceeds from issuance of common stock 726 3,396 Repayments of secured notes (11,215) --- Purchase of secured notes (33,869) --- Gas sales obligation settlement (62,017) --- Purchases of treasury stock (339) (218) Net cash provided by (used in) financing activities 53,844 (14,822) Effect of exchange rate changes on cash and cash equivalents 72 6 Decrease in cash and cash equivalents (6,312) (1,482) Cash and cash equivalents, beginning of period 48,898 26,610 Cash and cash equivalents, end of period $ 42,586 $ 25,128 * Associated with SFAS 133. ** Associated with the adoption of SFAS 143.
SOURCE Newfield Exploration Company