HOUSTON, Nov. 4 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced that its Cumbria Prospect was a dry hole. The well was drilled on License Area 49/4b in the Southern Gas Basin of the U.K. North Sea. Because the results of the well became known prior to Newfield filing its Form 10-Q for the third quarter of 2004, it is required to recognize a ceiling test write down of $6.7 million ($5.0 million after tax) in such quarter. Consequently, Newfield's earnings for the third quarter of 2004 will be reduced from a previously announced $81.6 million, or $1.35 per share (all per share amounts on a diluted basis), to $76.5 million, or $1.27 per share.
Under full cost accounting, all costs incurred in the acquisition, exploration and development of oil and gas properties are capitalized in cost centers on a country-by-country basis. Because the results of the Cumbria well became known prior to Newfield filing its Form 10-Q, full cost accounting rules require that the costs accrued to drill the well through September 30, 2004 ($7.7 million) be included in the U.K. cost pool, subject to the ceiling or limit on such pool. Because the U.K. cost pool including these accrued costs exceeds the full cost ceiling, Newfield is required to recognize a write down.
Subject to the results of planned drilling during the remainder of 2004, the remaining costs to drill the Cumbria prospect will likely result in a further ceiling test write down in the fourth quarter of 2004. The Cumbria well was drilled under a turnkey contract for approximately $13.2 million.
Newfield Exploration Company 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 U.S. onshore Gulf Coast, the Anadarko and Arkoma Basins of the Mid-Continent, the Uinta Basin of the Rocky Mountains, offshore Malaysia and other select international ventures.
Newfield Exploration Company For information, contact: 363 N. Sam Houston Parkway East, Ste. 2020 Steve Campbell Houston, TX 77060 (281) 847-6081 http://www.newfld.com email@example.com
SOURCE Newfield Exploration Company -0- 11/04/2004 /CONTACT: Steve Campbell of Newfield Exploration Company, +1-281-847-6081, or firstname.lastname@example.org / /Web site: http://www.newfld.com / (NFX) CO: Newfield Exploration Company ST: Texas, England IN: OIL SU: ERP JS-CT -- DATH033 -- 2446 11/04/2004 09:27 EST http://www.prnewswire.com