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Newfield Announces Record First Quarter Results**

HOUSTON, April 28 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the first quarter of 2004. A conference call to discuss the results is planned for 8:30 a.m. (CDT), Thursday, April 29. To participate in the call, dial 719-457-2682. 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 2004, Newfield reported net income of $77.9 million, or $1.38 per share (all per share amounts are on a diluted basis). Stated without the effect of a $10.8 million ($7.0 million after-tax), or $0.12 per share, charge related to unrealized commodity derivative transactions, net income for the first quarter of 2004 was $84.9 million, or $1.50 per share. Revenues in the first quarter of 2004 were $305.4 million. Net cash provided by operating activities before changes in operating assets and liabilities was $208.1 million in the first quarter of 2004. See Explanation and Reconciliation of Non-GAAP Financial Measures.

Newfield's results for the first quarter of 2004 compare favorably to the same period of the prior year. Net income from continuing operations in the first quarter of 2003 was $64.9 million, or $1.18 per share. Earnings in the first quarter of 2003 were impacted by 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 $8.6 million gain ($5.6 million after tax), or $0.10 per share, resulting from the cumulative effect of adoption of SFAS No. 143. SFAS No. 143 changed the method of accounting for expected future costs associated with our abandonment obligations. Revenues in the first quarter of 2003 were $267.9 million. Net cash provided by continuing operating activities before changes in operating assets and liabilities was $174.4 million in the first quarter of 2003.

Newfield's production in the first quarter of 2004 was 57.4 Bcfe, an 8% increase over first quarter 2003 production of 53.1 Bcfe. The following tables detail production and average realized prices for the first quarters of 2004 and 2003.

                                  Production

                                         1Q04       1Q03    % Change
    Natural gas (Bcf)                    48.1       44.0        9%
    Oil and condensate (MMBbls)           1.5        1.5      ---
    Total (Bcfe)                         57.4       53.1        8%


                             Average Realized Prices+

                                         1Q04       1Q03    % Change
    Natural gas (per Mcf)               $5.30      $5.05        5%
    Oil and condensate (per Bbl)        31.66      29.04        9%
    Natural gas equivalent (per Mcfe)    5.30       5.02        6%


     +  Prices shown are net of all applicable transportation expenses, which
        reduced the realized price of natural gas by $0.02 per Mcf and the
        realized price of oil and condensate by $0.33 per Bbl in both
        quarters.  Average realized prices include the effects of hedging
        other than our three-way collar contracts, which do not qualify for
        hedge accounting under SFAS No. 133.  Had we included the realized
        loss on our three-way oil contracts our average realized price for oil
        and condensate would have been $30.70 per Bbl for the first quarter of
        2004.  The settlement of our three-way gas contracts had no impact on
        our realized price for natural gas for the first quarter of 2004.  We
        did not enter into any three-way collar contracts prior to August
        2003.

Stated on a unit of production basis, Newfield's lease operating expense (LOE) in the first quarter of 2004 was $0.52 per Mcfe and equal to LOE from continuing operations in the same period of 2003. Production taxes in the first quarter of 2004 decreased to $0.15 per Mcfe compared to production taxes from continuing operations of $0.19 per Mcfe in the same period of 2003. DD&A expense in the first quarter of 2004 was $1.85 per Mcfe compared to DD&A expense from continuing operations of $1.76 per Mcfe in the first quarter of 2003. G&A expense (including stock compensation) in the first quarter of 2004 was $0.32 per Mcfe and equal to G&A expense from continuing operations in the same period of 2003. G&A expense in the first quarter of 2004 is net of capitalized direct internal costs of $6.9 million compared to $6.8 million in the first quarter of 2003.

Capital expenditures in the first quarter of 2004 were $152.3 million.

Explanation and Reconciliation of Non-GAAP Financial Measures

Earnings stated without the effect of unrealized commodity derivative transactions, a non-GAAP financial measure, exclude certain items that effect the comparability of operating results. Earnings without the effect of these items are presented because the timing and amount of these items cannot be reasonably estimated and because earnings without the effect of these items are more comparable to earnings estimates provided by securities analysts. Commodity derivative expense as stated in our consolidated statement of income includes $10.8 million of unrealized commodity derivative transactions and $1.5 million of realized commodity derivative transactions in the first quarter of 2004. A reconciliation of earnings stated without the effect of the unrealized commodity derivative transactions to net income is shown below:

                                                                   1Q04
    Net income                                                    $77.9
      Plus: Unrealized commodity derivative expense                10.8
      Less: Income tax provision adjustment for above item          3.8
    Earnings stated without the effect of unrealized
     commodity derivative transactions                            $84.9


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 from continuing operations before changes in operating assets and liabilities to net cash provided by operating activities from continuing operations is shown below:

                                                           1Q04       1Q03
    Net cash provided by operating activities
     from continuing operations                           $218.7     $61.1
    Less: (Increase) decrease in operating assets
     and liabilities                                        10.6    (113.3)
    Net cash provided by operating activities
     from continuing operations before changes in
     operating assets and liabilities                     $208.1    $174.4


    Second Quarter 2004 Estimates

Natural gas production and pricing The Company's natural gas production in the second quarter of 2004 is expected to be 44 - 48 Bcf (480 - 530 MMcf/d). The price the Company receives for natural gas production from the Gulf of Mexico and onshore Gulf Coast has typically tracked the Henry Hub Index. Gas from Mid-Continent properties has typically sold at a discount of $0.12 - $0.15 per Mcf to Henry Hub. Hedging gains or losses will affect price realizations.

Crude oil production and pricing Oil production in the second quarter of 2004 is expected to be 1.5 - 1.6 million barrels (16,000 - 17,700 BOPD). The price the Company receives for 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. Hedging gains or losses will affect price realizations.

Lease Operating and Other Expenses LOE is expected to be $35 - $39 million ($0.67 - $0.75 per Mcfe) in the second quarter of 2004. Production taxes in the second quarter of 2004 are expected to be $12 - $13 million ($0.22 - $0.25 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 G&A expense for the second quarter of 2004 is expected to be $18 - $20 million ($0.27 - $0.29 per Mcfe), net of capitalized direct internal costs. 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 net income.

Interest Expense The non-capitalized portion of the Company's interest expense for the second quarter of 2004 is expected to be $8 - $9 million ($0.15 - $0.17 per Mcfe). Current borrowings under the Company's credit arrangements are $12 million. The remainder of long-term debt consists of three separate issuances of notes that in the aggregate total $550 million in principal amount. Capitalized interest for the second quarter of 2004 is expected to be about $3 - $4 million.

Income Taxes Including both current and deferred taxes, Newfield expects its consolidated income tax rate in the second quarter of 2004 to be about 35 - 38%. About 40% 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 Newfield's web page at http://www.newfld.com . Through the web page, you may elect to receive @NFX through e-mail distribution.

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 and select international ventures.

**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, the availability of capital resources, labor conditions and other factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. 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                                 info@newfld.com


     CONSOLIDATED STATEMENT OF INCOME
     (Unaudited, in thousands, except
     share and per share data)                             For the
                                                      Three Months Ended
                                                           March 31,
                                                      2004          2003

    Oil and gas revenues                            $305,355      $267,891

    Operating expenses:
      Lease operating                                 29,865        27,807
      Production and other taxes                       8,359        10,207
      Transportation                                   1,440         1,563
      Depreciation, depletion and amortization       105,905        93,318
      General and administrative (A)                  18,560        17,006
      Gas sales obligation settlement                    ---         9,998
          Total operating expenses                   164,129       159,899

    Income from operations                           141,226       107,992

    Other income (expenses):
      Interest expense                               (12,532)      (16,686)
      Capitalized interest                             3,935         3,819
      Dividends on preferred securities of
       Newfield Financial Trust I                        ---        (2,336)
      Commodity derivative expense *                 (12,241)       (1,217)
      Other                                              660           520
                                                     (20,178)      (15,900)
    Income from continuing operations before
     income taxes                                    121,048        92,092

    Income tax provision                              43,140        32,746
    Income from continuing operations                 77,908        59,346
    Loss from discontinued operations, net of tax        ---          (780)
    Income before cumulative effect of change in
     accounting principle                             77,908        58,566
    Cumulative effect of change in accounting
     principle, net of tax**                             ---         5,575

    Net income                                       $77,908       $64,141

    Earnings per share:
      Basic
        Income from continuing operations              $1.39         $1.14
        Loss from discontinued operations                ---         (0.01)
        Cumulative effect of change in accounting
         principle, net of tax**                         ---          0.11
        Net income                                     $1.39         $1.24
      Diluted
        Income from continuing operations              $1.38         $1.08
        Loss from discontinued operations                ---         (0.01)
        Cumulative effect of change in accounting
         principle, net of tax**                         ---          0.10
        Net income                                     $1.38         $1.17

    Weighted average number of shares outstanding
     for basic earnings per share                     55,921        51,886
    Weighted average number of shares outstanding
     for diluted earnings per share                   56,633        56,208

     (A)  Includes stock compensation of $991 and $679 for the three months
          ended March 31, 2004 and 2003, respectively.

     *  Associated with SFAS No. 133.
     ** Associated with the adoption of SFAS No. 143.


     PRODUCTION DATA FROM CONTINUING OPERATIONS
                                                             For the
                                                       Three Months Ended
                                                            March 31,
                                                       2004          2003
    Average daily production:
        Oil and condensate (Bbls)                     16,996        16,849
        Natural gas (Mcf)                              528.4         488.9
    Average realized price:
        Oil and condensate (Bbls)                     $31.66        $29.04
        Natural gas (Mcf)                             $ 5.30        $ 5.05


     CONSOLIDATED BALANCE SHEET
     (Unaudited, in thousands of dollars)           March 31,      Dec. 31,
                                                      2004          2003

    ASSETS
    Current assets:
      Cash and cash equivalents                      $16,933       $15,347
      Accounts receivable, oil and gas               168,733       134,774
      Inventories                                        784           553
      Derivative assets *                              5,889        13,786
      Deferred taxes                                  28,749        12,893
      Other current assets                            33,858        61,563
          Total current assets                       254,946       238,916

    Oil and gas properties, net (full cost method) 2,467,680     2,418,500
    Floating production system and pipelines          35,000        35,000
    Furniture, fixtures and equipment, net             5,489         5,875
    Derivative assets *                                4,154         2,223
    Other assets                                      17,948        16,197
    Goodwill                                          16,378        16,378
          Total assets                            $2,801,595    $2,733,089

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                             $276,364      $255,522
    Derivative liabilities*                           81,559        44,696
          Total current liabilities                  357,923       300,218

    Other liabilities                                 13,154        13,203
    Derivative liabilities *                          13,582        13,244
    Long-term debt                                   575,988       643,459
    Asset retirement obligation **                   153,839       151,548
    Deferred taxes                                   258,580       242,839
          Total long-term liabilities              1,015,143     1,064,293

    Commitments and contingencies                        ---           ---

    STOCKHOLDERS' EQUITY
    Common stock                                         573           571
    Additional paid-in capital                       800,598       796,256
    Treasury stock                                   (27,050)      (26,679)
    Unearned compensation                            (10,506)      (10,912)
    Accumulated other comprehensive income (loss)
      Foreign currency translation adjustment          1,116           851
      Commodity derivatives *                        (49,029)      (26,428)
      Minimum pension liability                         (833)         (833)
    Retained earnings                                713,660       635,752
      Total stockholders' equity                   1,428,529     1,368,578
      Total liabilities and stockholders' equity  $2,801,595    $2,733,089

     *  Associated with SFAS No. 133.
     ** Associated with SFAS No. 143.


     CONDENSED CONSOLIDATED STATEMENT OF
     CASH FLOWS
     (Unaudited, in thousands of dollars)                    For the
                                                      Three Months Ended
                                                            March 31,
                                                       2004          2003
    Cash flows from operating activities:
      Net income                                     $77,908       $64,141
      Loss from discontinued operations, net of tax      ---           780
      Depreciation, depletion and amortization       105,905        93,318
      Deferred taxes                                  12,559         9,890
      Stock compensation                                 991           679
      Commodity derivative expense *                  10,762         1,217
      Gas sales obligation settlement                    ---         9,998
      Cumulative effect of change in accounting
       principle **                                      ---        (5,575)
                                                     208,125       174,448
      Changes in operating assets and liabilities     10,603      (113,365)
         Net cash provided by continuing activities  218,728        61,083
         Net cash provided by discontinued activities    ---         4,572
         Net cash provided by operating activities   218,728        65,655

    Cash flows from investing activities:
      Additions to oil and gas properties           (147,058)     (122,662)
      Additions to furniture, fixtures
       and equipment                                    (702)       (1,779)
         Net cash used in continuing activities     (147,760)     (124,441)
         Net cash used in discontinued activities        ---        (1,442)
         Net cash used in investing activities      (147,760)     (125,883)

    Cash flows from financing activities:
      Proceeds from borrowings under
       credit arrangements                           132,500       744,000
      Repayments of borrowings under
       credit arrangements                          (202,500)     (575,000)
      Repurchases of secured notes                    (2,895)      (33,869)
      Deliveries under the gas sales obligation          ---        (8,442)
      Proceeds from issuances of common stock          3,627           726
      Repayments of secured notes                        ---       (11,215)
      Gas sales obligation settlement                    ---       (62,017)
      Purchases of treasury stock                       (371)         (339)
        Net cash provided by (used in) continuing
         activities                                  (69,639)       53,844
        Net cash provided by (used in) discontinued
         activities                                      ---           ---
        Net cash provided by (used in)
         financing activities                        (69,639)       53,844
    Effect of exchange rate changes on cash
     and cash equivalents                                257            72

    Increase (decrease) in cash and cash equivalents   1,586        (6,312)
    Cash and cash equivalents from continuing
     operations, beginning of period                  15,347        33,798
    Cash and cash equivalents from discontinued
     operations, beginning of period                     ---        15,100

    Cash and cash equivalents, end of period         $16,933       $42,586

     *  Associated with SFAS No. 133.
     ** Associated with the adoption of SFAS No. 143.

SOURCE Newfield Exploration Company

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