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Newfield Announces Second Quarter Results**

Company Increases Its 2001 Production Target

HOUSTON, July 26 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the second quarter and year-to-date 2001.

    Year to Date 2001 Highlights

    *  Strong Production Growth: Newfield today increased its annual
       production target for 2001 to 175-180 Bcfe, representing at least 25%
       production growth over 2000. The Company's prior estimate was 170 Bcfe.
       Stated without the impact of the Company's mid-Continent acquisition,
       production at mid-year 2001 is 15% higher than production in the first
       half of last year.  This growth reflects the success of the Company's
       2001 drilling program and the development of 2000 discoveries.

    *  Share Repurchase Program: In May 2001, Newfield announced a share
       repurchase program of up to $50 million.  During the second quarter,
       Newfield invested $16.4 million to repurchase 512,000 shares of its
       common stock at an average purchase price of $31.97.

    *  Hedging Program Provides Downside Price Protection: For the third
       quarter of 2001, the Company has about 75% of its gas production hedged
       or sold forward in physical sales.  During the third quarter, Newfield
       expects to receive an average price for its hedged and presold gas of
       $4.36 per MMBtu based on current NYMEX prices.  A complete listing of
       the Company's hedging position is available through the @NFX
       publication, found at www.newfld.com .

    Second Quarter 2001

For the second quarter of 2001, Newfield reported net income of $56.7 million, or $1.18 per share (all per share amounts are on a diluted basis). Stated without the effect of a non-cash gain related to SFAS 133, earnings for the second quarter were $53.0 million, or $1.11 per share. Revenues in the second quarter of 2001 were $200.7 million. This compares to second quarter 2000 net income of $27.1 million, or $0.60 per share, on revenues of $114.7 million. For the second quarter of 2001, operating cash flow before changes in working capital increased nearly 90% to $144.7 million, or $2.97 per share, compared to $76.7 million, or $1.65 per share, in the same period of 2000.

Newfield's second quarter 2001 production, when stated on an energy equivalent basis, increased 36% over the same period of 2000 and 16% over the first quarter of 2001. Newfield's second quarter 2001 production was 45.8 billion cubic feet equivalent (Bcfe), or an average of 503 million cubic feet equivalent per day. The following tables detail quarterly production and average realized prices:

    Production
                                               2Q01     2Q00    % Change
    United States
      Natural gas (Bcf)                        35.5     26.8       32%
        Natural gas (MMcf/d)                    390      295       32%
      Oil and condensate production (MMBbls)   1.37     0.96       43%
        Oil and condensate production (BOPD) 15,100   10,563       43%
    Australia
      Oil and condensate liftings (MBbls)     341.9    203.0       68%
        Oil and condensate liftings (BOPD)    3,757    2,230       68%
    Total
      Natural gas (Bcf)                        35.5     26.8       32%
      Oil and condensate liftings (MMBbls)      1.7      1.2       42%
      Total Production (Bcfe)                  45.8     33.8       36%

    Average Realized Prices
                                               2Q01     2Q00    % Change

    United States
      Natural gas (per Mcf)                   $4.39    $3.21       37%
      Oil and condensate (per Bbl)           $24.82   $22.47       10%
    Australia
      Oil and condensate liftings (per Bbl)  $28.02   $28.70       (2%)
    Total
      Natural gas (per Mcf)                   $4.39    $3.21       37%
      Oil and condensate (per Bbl)           $25.16   $23.17        9%

Newfield's lease operating expense (LOE) in the second quarter of 2001, stated on a unit of production basis, was $0.50 per thousand cubic feet equivalent (Mcfe) compared to $0.42 per Mcfe in the same period last year. The increase relates primarily to increased service costs. When compared to the first quarter of 2001, LOE is down slightly from $0.53 per Mcfe. Newfield's DD&A expense in the second quarter of 2001 was $1.56 per Mcfe, up from $1.37 per Mcfe in the second quarter of 2000. The Company's general and administrative (G&A) expense for the second quarter of 2001 was $0.25 per Mcfe compared to $0.19 per Mcfe in the same period of 2000. The increase in G&A expense is a result of the Company's growing workforce and performance-based pay. Net interest expense and dividends were $0.12 per Mcfe in the second quarter of 2001 compared to $0.14 per Mcfe in the second quarter of 2000.

Newfield's capital expenditures in the second quarter of 2001 were $142.8 million.

Year-to-Date 2001

For the first half of 2001, Newfield posted net income of $115.1 million, or $2.41 per share. Stated without the impact of a non-cash gain related to SFAS 133, net income for the first half of 2001 was $117.2 million, or $2.45 per share. Revenues for the first six months of 2001 were $410.1 million. This compares to net income of $42.2 million, or $0.96 per share, on revenues of $212.5 million for the first half of 2000. Operating cash flow before changes in working capital more than doubled to $285.7 million, or $5.88 per share, in the first half of 2001. This compares to operating cash flow of $141.7 million, or $3.08 per share, in the first six months of 2000.

Production volumes for the first half of 2001 were 31% above the same period last year. The Company produced 85.4 Bcfe in the first six months of the year, compared to 65.0 Bcfe in the first half of 2000. Newfield now expects to produce 175-180 Bcfe for the full-year 2001, representing a year-over-year production increase of more than 25%.

Natural gas production in the first half of this year totaled 66.3 Bcf, or an average of 366 MMcf/d. In the first half of 2000, natural gas production totaled 49.5 Bcf, or an average of 272 MMcf/d. Crude oil and condensate production in the first six months of 2001 totaled 3.2 MMBbls, or an average of 17,662 BOPD. This compares to first half 2000 oil production of 2.6 MMBbls, or an average of 14,209 BOPD. The Company's liftings in Australia during the first half of 2001 were 581.4 MBbls compared to 711.1 MBbls, or an average of 3,907 BOPD, in the same period of 2000.

Costs and expenses for the first half of 2001 were higher than the same period last year primarily due to higher drilling and service costs. In the first half of 2001, lease operating expense averaged $0.51 per Mcfe compared to $0.46 per Mcfe in the same period of 2000. DD&A expense in the first half of 2001 was $1.55 per Mcfe compared to $1.34 per Mcfe in the first half of 2000. G&A expense in the first half of 2001 increased to $0.26 per Mcfe compared to $0.19 per Mcfe in the first half of 2000.

Capital spending in the first half of 2001 totaled $575.5 million. The largest component of this was the first quarter acquisition of Lariat Petroleum for $333 million. Including the acquisition, Newfield expects its 2001 capital spending to be about $800 million.

Year-to-Date 2001 Drilling Summary

Year-to-date, Newfield has drilled or participated in a total of 89 wells (47 in the Anadarko Basin, 20 in the Gulf of Mexico, 19 onshore U.S. Gulf Coast and three international). Today, Newfield has 12 company-operated rigs running in the Anadarko Basin, five in the Gulf of Mexico and two onshore. A summary of the Company's year-to-date drilling results by focus area is outlined below.

Gulf of Mexico To date in 2001, Newfield has drilled or participated in 16 successful wells and four dry holes. Significant events include:

West Cameron 294: Newfield and partners made a significant discovery at West Cameron. In early 2001, the WC 294 #3 well found 110' of pay. This success was followed by the WC 294 #4 well, which found 90' of pay and later tested 20 MMcf/d and 250 BCPD. Both wells are now on production at a gross rate of 35 MMcf/d and 345 BCPD. Newfield has approximately a 20% interest in each well.

High Island Area: One of the Company's most active offshore areas has been the South Addition Blocks at High Island, offshore Texas. Over the last 18 months, Newfield has drilled 18 wells in the area and has nearly doubled gross production. Today, the Company is operating more than 100 MMcfe/d (gross) in the region. An additional five successful wells in the area are expected to be on-line in the third quarter. Additional prospects in the region are expected to spud later this year.

Main Pass 138: During the last quarter, Newfield drilled three successful wells at MP 138. The first well is on-line now at about 2 MMcf/d and 135 BCPD and the two additional wells should be on-line during the third quarter. One additional prospect remains on the block and should spud later this year.

The Company plans to drill 10-15 additional wells in the Gulf of Mexico during the second half of 2001.

U.S. Onshore Gulf Coast Year-to-date, Newfield has drilled or participated in 16 successful onshore U.S. Gulf Coast wells and three dry holes and three wells are currently drilling. A summary of activity follows:

One of the most significant areas of onshore activity during the first half of 2001 was the Company's East Sarita Field, located in Kenedy County, Texas. Newfield acquired this field, along with two others, in early 2000. At the time, production from the East Sarita Field was about 25 MMcfe/d. Since the acquisition, Newfield drilled six wells in the field and has increased field production to about 72 MMcfe/d. An additional completion is underway and is expected to increase field production to about 80 MMcfe/d. Newfield operates the East Sarita Field with a 100% working interest.

Year-to-date, Newfield has drilled five successful wells and two dry holes in the Provident City area, located in Lavaca, Colorado and Dewitt Counties of South Texas. Gross production from this focus area has increased to about 25 MMcfe/d, up from about 7 MMcfe/d this time last year.

Two successful development wells were recently drilled near the Company's first quarter Mjerecka discovery. Mjerecka is on-line today at about 5 MMcf/d (gross). The two additional development wells should be on-line late in the third quarter. Newfield is the operator and owns a 66% working interest in the three wells.

Two additional wells are currently drilling in the area -- the Rayburn Prospect and the Hank Prospect. Earlier this week, the Company logged a promising and potentially significant discovery with several indicated pay zones with the Real Deep Prospect.

Two additional exploration wells are planned in South Louisiana in late 2001-early 2002.

Newfield plans to drill five additional wells in the coastal regions of Texas and Louisiana during 2001.

Mid-Continent In the mid-Continent, the Company participated in 47 wells (26 operated wells) in the first half of 2001. Newfield is currently operating 12 rigs in the area and is participating in four outside-operated wells that are now drilling. Only two operated rigs were running at the beginning of 2001. Newfield is one of the five most active drillers in Oklahoma. The Company expects to drill about 120 wells in the area during 2001.

Newfield has three active 3-D seismic programs underway in Oklahoma. Nine wells are currently drilling in areas previously shot with 3-D seismic. A notable success comes from the Cedar Canyon 3-D data, used to drill the Frost #1 well. The well flowed 400 Mcf/d before fracture stimulation. Based on the same data set, a second well is currently drilling and is expected to be down in late July. Drilling is expected to follow in other 3-D seismic project areas later this year and into early 2002.

The Company recently signed an agreement to acquire some producing natural gas properties in the Texas Panhandle for $25 million. The properties are located near the Company's current operations in the area. About a dozen drilling locations have been identified with plans to commence drilling in the fourth quarter of this year. Current production from the fields is 3.5 MMcfe/d. Newfield expects to close the transaction later this week.

International Year-to-date, Newfield has drilled or participated in three appraisal wells in China's Bohai Bay. During the remainder of 2001, at least two additional appraisal wells are planned in China and three to four wildcat wells are expected to be drilled offshore Australia.

On Block 05/36 in China's Bohai Bay, two successful appraisal wells were drilled in the second quarter of 2001 -- the CFD 12-1 #5 and the CFD 12-1 #4. Although both wells were successful and encountered multiple oil zones, the results indicate complex stratigraphy and additional wells are required to accurately estimate reserves. At least two additional appraisal wells are planned for later this year. Newfield owns a 35% interest in Block 05/36, which is operated by Kerr McGee.

In Australia, wildcat drilling is expected to resume late in the third quarter. The first well will be the Newfield operated Backpacker Prospect located on WA-273. Newfield will operate the well with a 70% working interest. The second well will be the outside-operated Hadrosaurus Prospect on AC/P-21 where Newfield has a 30% interest. Two additional wildcat wells could be drilled in late 2001.

Third Quarter 2001 Estimates

Below are Newfield's estimates of certain significant operating and financial data for the third 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 third quarter of 2001 is expected to be 34 - 38 Bcf (375 - 415 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 the Company's recently acquired mid-Continent properties typically sells at a discount of $0.12 - $0.15 per Mcfe to Henry Hub. Hedging gains or losses will affect price 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 third quarter of 2001 is expected to be 1.7 - 1.9 million barrels (19,000 - 21,000 BOPD). Australian oil production during the third quarter is expected to be 310 - 340 thousand barrels (3,400 - 3,750 BOPD). The timing of liftings in Australia will impact reported production and revenues. Newfield's average realized U.S. oil price on Gulf Coast production typically averages about $2 below the NYMEX WTI price. Oil production from the mid-Continent typically sells for a $1.00 - $1.50 per barrel discount to WTI. Australian crude oil trades based on the Tapis Benchmark and has historically been comparable to WTI. Hedging gains or losses will affect price 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 produce 175-180 Bcfe, an increase at least 25% 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 $30.8 - $34.1 million in the third quarter of 2001 ($0.67 - $0.74 per Mcfe). The Company's domestic LOE, including taxes, is expected to be $0.57 - $0.63 per Mcfe in the third quarter of 2001. This estimate includes severance taxes of $0.09 - $0.10 per Mcfe. Lease operating expense varies and is subject to impact from, among others, 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 third quarter of 2001 is expected to be $10 - $11.1 million ($0.24 - $0.26 per Mcfe). This estimate includes accrual of performance-based pay.

Interest Expense The non-capitalized portion of the Company's interest expense for the third quarter of 2001 is expected to be $5.9 - $6.5 million ($0.12 - $0.14 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 $52 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 third quarter of 2001 is expected to be about $2.5 million.

Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the third quarter of 2001 to be about 35%. About one-third of the tax provision is expected to be deferred.

Capital Expenditures Newfield expects to spend about $800 million in 2001, including nearly $360 million in acquisitions.

Any publicly announced changes to the above estimates, as well as periodic drilling updates, will be available 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 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.

A table with second quarter and year-to-date 2001 summary financial information is attached.

**Certain of the statements set forth in this news release regarding estimated or anticipated third quarter 2001 operating and financial data, capital expenditures, drilling plans and other activities 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 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
                                                               June 30,
                                                           2001        2000

    Oil and gas revenues                              $ 200,747   $ 114,704

    Operating expenses:
      Lease operating                                    22,750      14,249
      Transportation                                      1,563       1,567
      Production and other taxes                          5,463         334
      Depreciation, depletion and amortization           71,577      46,182
      General and administrative, net                    11,236       6,257
      Stock compensation                                    703         906
        Total operating expenses                        113,292      69,495

    Income from operations                               87,455      45,209

    Interest income                                         529         407
    Interest expense, net                                (3,817)     (2,913)
    Dividends on preferred securities
     of Newfield Financial Trust I                       (2,336)     (2,336)
    Unrealized commodity derivative income *              5,719          --

    Income before income taxes                           87,550      40,367
    Income tax provision                                 30,813      13,311

    Net income                                        $  56,737   $  27,056

    Earnings per share:
      Basic                                           $    1.27   $    0.64

      Diluted                                         $    1.18   $    0.60

    Weighted average shares outstanding
     for basic earnings per share                        44,651      42,402

    Weighted average shares outstanding
     for diluted earnings per share                      49,314      47,322


    PRODUCTION DATA

                                                              For the
                                                          Three Months Ended
                                                               June 30,
                                                           2001        2000

    Average daily production:
      Oil and condensate (Bbls)                          18,858      12,793
      Gas (Mcf)                                           390.2       294.8

    Average realized price:
      Oil and condensate (Bbls)                       $   25.16   $   23.17
      Gas (Mcf)                                       $    4.39   $    3.21

    * Associated with adoption of SFAS133.


    CONSOLIDATED BALANCE SHEET
    (Unaudited, in thousands of dollars)               June 30,  December 31,
                                                         2001        2000

    ASSETS
    Current assets:
      Cash & cash equivalents                       $   51,789    $   18,451
      Accounts receivable, oil and gas                 113,910       147,643
      Inventories                                        9,677         7,572
      Commodity derivatives *                           55,744            --
      Other current assets                               8,772         5,891
        Total current assets                           239,892       179,557

    Oil and gas properties, net (full cost method)   1,381,798       832,907
    Furniture, fixtures and equipment, net               6,350         4,028
    Commodity derivatives *                              8,973            --
    Other assets                                        10,549         6,758
                                                    $1,647,562    $1,023,250

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                             $  188,062    $  141,060
    Commodity derivatives *                              9,307            --
        Total current liabilities                      197,369       141,060

    Other liabilities                                    9,761         6,030
    Commodity derivatives *                              4,862            --
    Long-term debt                                     351,609       133,711
    Deferred taxes                                     225,038        79,244
        Total long-term liabilities                    591,270       218,985

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

    STOCKHOLDERS' EQUITY
      Common stock                                         447           426
      Additional paid-in capital                       361,001       286,811
      Treasury stock                                   (17,435)         (399)
      Unearned compensation                             (9,287)       (6,201)
      Accumulated other comprehensive loss
        Foreign currency translation adjustment         (6,901)       (4,644)
        Commodity derivatives *                         28,798            --
      Retained earnings                                358,550       243,462
        Total stockholders' equity                     715,173       519,455
        Total liabilities and stockholders' equity  $1,647,562    $1,023,250

    * Associated with adoption of SFAS133.

    CONSOLIDATED STATEMENT OF CASH FLOWS
    (Unaudited, in thousands of dollars)
                                                              For the
                                                          Three Months Ended
                                                               June 30,
                                                           2001        2000

    Cash flows from operating activities:
      Net income                                      $  56,737   $  27,056
      Depreciation, depletion and amortization           71,577      46,182
      Deferred taxes                                     21,414       2,581
      Stock compensation                                    703         906
      Commodity derivatives *                            (5,719)         --
                                                        144,712      76,725
      Changes in operation assets and liabilities         6,299     (24,341)
        Net cash provided by operating activities       151,011      52,384
    Cash flows from investing activities:
      Additions to oil and gas properties              (147,992)    (42,526)
      Additions to furniture, fixtures and equipment       (924)       (537)
        Net cash used in investing activities          (148,916)    (43,063)
    Cash flows from financing activities:
      Proceeds from borrowings                          189,000      33,000
      Repayments of borrowings                         (187,000)    (52,000)
      Proceeds from issuances of common stock, net        1,398       1,625
      Purchases of treasury stock                       (17,036)         --
        Net cash used in financing activities           (13,638)    (17,375)
    Effect of exchange rate changes on cash
     and cash equivalents                                  (274)      1,237

    Decrease in cash and cash equivalents               (11,817)     (6,817)
    Cash and cash equivalents, beginning of period       63,606      26,322

    Cash and cash equivalents, end of period          $  51,789   $  19,505

    * 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
CONTACT: Steve Campbell of Newfield Exploration Company, +1-281-847-6081 or sccampbell@newfld.com

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