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Newfield Announces Second Quarter Results**

Year-to-Date Natural Gas Production Climbs 26%

HOUSTON, July 23 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the second quarter and year-to-date 2003. The Company also issued estimates of certain significant operating and financial data for the third quarter of 2003. A conference call to discuss the results is planned for 8:30 a.m. (CDT), Thursday, July 24. To participate in the call, dial 719-457-2625 (conference code: 316634). A listen-only broadcast will also be provided over the Internet. Simply go to the Investor Relations section at www.newfld.com . An audio replay, as well as a transcript of the call, will be posted to the Company's website as soon as it becomes available following the call.

Second Quarter 2003

For the second quarter of 2003, Newfield reported net income of $45.8 million, or $0.82 per share (all per share amounts are on a diluted basis). Two items negatively impacted results by approximately $0.21 per share for the quarter:

     -- redemption of all of the outstanding 6 1/2% convertible trust
        preferred securities (QUIPS), in the second quarter, resulted in a
        $10.5 million charge ($6.8 million after-tax), approximately
        $6.5 million of which was redemption premium paid to the holders and
        the remainder was the write-off of unamortized issuance costs paid at
        the time of the initial offering of the securities in 1999; and

     -- a ceiling test write-down of $7.3 million ($5.1 million after-tax) of
        producing assets offshore Australia. Based on crude oil prices in
        effect on June 30, 2003, the unamortized cost of the Australian
        properties exceeded the cost center ceiling under full cost accounting
        rules, requiring the ceiling test write-down at the end of the
        quarter.

Revenues in the second quarter of 2003 were $255.6 million. Net cash provided by operating activities before changes in operating assets and liabilities* was $176.3 million in the second quarter of 2003.

This compares to net income in the second quarter of 2002 of $16.3 million, or $0.36 per share. Revenues in the second quarter of 2002 were $161.6 million. Net cash provided by operating activities before changes in operating assets and liabilities* was $99.7 million in the second quarter of 2002.

The Company's production in the second quarter of 2003, when stated on a natural gas equivalent basis, increased nearly 20% over the second quarter of 2002 and was up 2% over the first quarter of this year. Newfield produced 56.2 billion cubic feet equivalent (Bcfe), or an average of 618 million cubic feet equivalent per day, during the second quarter of 2003. The following tables detail quarterly production and average realized prices.

    Production
                                                   2Q03      2Q02   % Change
    United States
      Natural gas (Bcf)                            46.8      37.9      23%
      Oil and condensate production (MMBbls)       1.58      1.33      19%
    Australia
      Oil and condensate liftings (MMBbls)          ---     0.278    (100%)
    Total Production (Bcfe)                        56.2      47.5      18%

    Average Realized Prices
                                                   2Q03      2Q02   % Change
    United States
      Natural gas (per Mcf)                       $4.50     $3.21      40%
      Oil and condensate (per Bbl)               $27.54    $23.84      16%
    Australia
      Oil and condensate liftings (per Bbl)         ---    $25.72     ---
    Total (per Mcfe)                              $4.51     $3.37      34%

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 second quarter of 2003 was $0.47 per Mcfe. This compares to LOE of $0.54 per Mcfe in the same period of 2002. Several non-routine repairs in the Gulf of Mexico increased second quarter 2002 LOE by approximately $4 million. LOE in the second quarter of 2003 was slightly lower than expected due to the timing of expenditures on well workovers in the Gulf of Mexico, which were deferred into the third quarter of 2003. Production taxes in the second quarter of 2003 (including resource rent tax in Australia) were $0.12 per Mcfe compared to $0.08 per Mcfe in the same period of 2002. Higher production taxes primarily relate to significantly higher natural gas prices. DD&A expense, stated on a unit of production basis, in the second quarter of 2003 was $1.77 per Mcfe compared to $1.64 per Mcfe in the second quarter of 2002. The increase in DD&A expense relates primarily to higher cost reserve additions and the impact of the adoption of SFAS 143. G&A expenses in the second quarter of 2003 were $0.28 per Mcfe compared to $0.27 per Mcfe in the same period of 2002. G&A expense in the second quarter of 2003 was negatively impacted by $1.4 million in payments made to employees of EEX Corporation located in San Antonio, Texas, upon the closing of that office. G&A expense in the second quarter of 2003 is net of capitalized direct internal costs of $7.4 million compared to $1.9 million in the second quarter of 2002.

Capital expenditures in the second quarter of 2003 were $106.6 million.

Year-to-Date 2003

For the first six months of 2003, Newfield posted net income of $110.0 million, or $1.98 per share. Revenues for the first half of 2003 were $534.8 million. This compares to net income of $32.6 million, or $0.73 per share, on revenues of $309.7 million for the first half of 2002. Net cash provided by operating activities before changes in operating assets and liabilities* was $352.2 million in the first half of 2003 compared to $196.4 million in the same period of 2002.

Production volumes for the first half of 2003 were more than 20% above the same period last year. The Company produced 111.5 Bcfe in the first six months of 2003 compared to 91.3 Bcfe in the first six months of the prior year. The following tables detail production and average realized prices for the first half of 2003:

    Year-to-Date Production
                                                    1H03      1H02   % Change
    United States
      Natural gas (Bcf)                             90.8      71.8      26%
      Oil and condensate production (MMBbls)        3.10      2.68      16%
    Australia
      Oil and condensate liftings (MMBbls)         0.358     0.576     (38%)
    Total Production (Bcfe)                        111.5      91.3      22%

    Average Realized Prices
                                                    1H03      1H02   % Change
    United States
      Natural gas (per Mcf)                        $4.77     $3.23      48%
      Oil and condensate (per Bbl)                $28.27    $22.93      23%
    Australia
      Oil and condensate liftings (per Bbl)       $31.86    $23.80      34%
    Total (per Mcfe)                               $4.77     $3.36      42%

Prices shown are net of transportation expense and after hedging. The Company has not entered into hedging transactions specifically relating to Australian production.

In the first half of 2003, LOE, stated on a unit of production basis, averaged $0.53 per Mcfe, equal to LOE in the same period of 2002. DD&A expense in the first half of 2003 was $1.76 per Mcfe compared to $1.63 per Mcfe in the same period of the prior year. The increase in DD&A expense relates primarily to higher cost reserve additions and the impact of the adoption of SFAS 143. G&A expense in the first half of 2003 was $0.30 per Mcfe, up 7% when compared to the prior year expense of $0.28 per Mcfe. G&A expense in the first half of 2003 is net of capitalized direct internal costs of $14.2 million compared to $4.2 million in the first half of 2002.

Capital spending in the first half of 2003 totaled $230.7 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:

                                                           2Q03       2Q02
    Net cash provided by operating activities             $211.9     $97.8
      LESS: (Increase) Decrease in operating assets
       and liabilities                                      35.6      (1.9)
    Net cash provided by operating activities
     before changes in operating assets and liabilities   $176.3     $99.7

                                                           1H03       2H02
    Net cash provided by operating activities             $277.5    $196.4
      LESS: (Increase) Decrease in operating assets
      and liabilities                                      (74.7)      ---
    Net cash provided by operating activities
      before changes in operating assets and liabilities  $352.2    $196.4


    Third Quarter 2003 Estimates

Below are estimates of production and significant operating and financial data for the third 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 third quarter of 2003 is expected to be 44 - 48 Bcf (475 - 525 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 third quarter of 2003 is expected to be 1.8 - 2.0 million barrels (19,800 - 22,000 BOPD). Australian oil liftings during the third quarter are expected to be 342 - 378 thousand barrels (3,700 - 4,100 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 $40 - $44 million ($0.69 - $0.76 per Mcfe) in the third quarter of 2003. The Company's domestic LOE is expected to be $33 - $37 million ($0.62 - $0.69 per Mcfe). Production and other taxes in the third quarter of 2003 (including resource rent tax in Australia) are expected to be $12 - $13 million ($0.20 - $0.22 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 third quarter of 2003 is expected to be $13 - $15 million ($0.23 - $0.26 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 Newfield's net income.

Interest Expense The non-capitalized portion of the Company's interest expense for the third quarter of 2003 is expected to be $8 - $10 million ($0.15 - $0.17 per Mcfe). Current borrowings under the Company's bank facilities are $140 million. The remainder of long-term debt consists of three separate issuances of notes that in the aggregate total $550 million principal amount. Capitalized interest for the third 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 third 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 third 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                                info@newfld.com


    CONSOLIDATED STATEMENT OF INCOME
    (Unaudited, in thousands, except per share data)

                                    For the                    For the
                               Three Months Ended          Six Months Ended
                                     June 30,                  June 30,
                                 2003         2002        2003          2002

    Oil and gas revenues     $ 255,552    $ 161,611    $ 534,836    $ 309,650

    Operating expenses:
      Lease operating           26,582       25,706       58,838       48,759
      Production and other
       taxes                     6,532        3,861       19,106        7,271
      Transportation             1,859        1,316        3,422        2,647
      Depreciation, depletion
       and amortization         99,660       78,027      196,360      149,234
      Ceiling test writedown     7,300          ---        7,300          ---
      General and
       administrative           14,865       12,206       31,768       23,973
      Gas sales obligation
       and debt settlements     10,477          ---       20,475          ---
      Stock compensation           807          757        1,486        1,335
          Total operating
           expenses            168,082      121,873      338,755      233,219

    Income from operations      87,470       39,738      196,081       76,431

    Other income (expenses):
      Interest expense         (14,982)      (7,134)     (31,668)     (14,348)
      Capitalized interest       3,899        2,130        7,718        4,273
      Dividends on preferred
       securities of Newfield
       Financial Trust I        (2,245)      (2,336)      (4,581)      (4,672)
      Unrealized commodity
       derivative expense*      (1,629)      (5,880)      (2,846)     (11,525)
      Other                     (3,091)      (1,247)      (4,320)         569
                               (18,048)     (14,467)     (35,697)     (25,703)

    Income before
     income taxes               69,422       25,271      160,384       50,728

    Income tax provision        23,607        9,001       56,003       18,132
    Income before cumulative
     effect of change
     in accounting principle    45,815       16,270      104,381       32,596

    Cumulative effect
     of change in
     accounting principle**        ---          ---        5,575          ---

    Net income               $  45,815    $  16,270    $ 109,956    $  32,596

    Earnings per share:
      Basic
        Income before
         cumulative effect
         of change in
         accounting
         principle           $    0.86    $    0.37    $    1.98    $    0.74
        Cumulative effect
         of change in
         accounting
         principle**               ---          ---         0.11          ---
        Net income           $    0.86    $    0.37    $    2.09    $    0.74
      Diluted
        Income before
         cumulative effect
         of change in
         accounting
         principle           $    0.82    $    0.36    $    1.88    $    0.73
        Cumulative effect
         of change in
         accounting
         principle**               ---          ---         0.10          ---
        Net income           $    0.82    $    0.36    $    1.98    $    0.73

    Weighted average
     shares outstanding
     for basic earnings
     per share                  53,468       44,376       52,679       44,295
    Weighted average
     shares outstanding
     for diluted earnings
     per share                  57,701       48,928       56,956       48,838

     * Associated with SFAS 133.
     ** Associated with the adoption of SFAS 143.

    PRODUCTION DATA
                                      For the                   For the
                                Three Months Ended          Six Months Ended
                                       June 30,                 June 30,
                                  2003         2002        2003          2002

    Average daily production:
      Oil and condensate (Bbls)  17,356       17,651      19,079        17,978
      Gas (Mcf)                   513.8        416.0       501.4         396.5
    Average realized price:
      Oil and condensate (Bbls) $ 27.54      $ 24.17     $ 28.64       $ 23.08
      Gas (Mcf)                 $  4.50      $  3.21     $  4.77       $  3.23


    CONSOLIDATED BALANCE SHEET
    (Unaudited, in thousands of dollars)             June 30,    December 31,
                                                       2003          2002
    ASSETS
    Current assets:
      Cash & cash equivalents                      $   44,423    $   48,898
      Accounts receivable, oil and gas                168,246       130,489
      Inventories                                      14,474         7,910
      Commodity derivatives *                          11,039         2,655
      Deferred taxes                                   15,031        12,801
      Other current assets                             28,301        36,074
        Total current assets                          281,514       238,827

    Oil and gas properties, net (full cost method)  2,216,820     2,010,005
    Assets held for sale                               35,000        35,000
    Furniture, fixtures and equipment, net              7,877         8,030
    Commodity derivatives *                             4,057         4,439
    Other assets                                       17,223        19,452
        Total assets                               $2,562,491    $2,315,753

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                            $  206,781    $  246,197
    Commodity derivatives *                            58,562        49,610
        Total current liabilities                     265,343       295,807

    Other liabilities                                  14,229        16,976
    Commodity derivatives *                            13,513        10,610
    Long-term debt                                    692,943       709,615
    Asset retirement obligation **                    161,691           ---
    Deferred taxes                                    151,455       129,309
        Total long-term liabilities                 1,033,831       866,510

    Company-obligated, mandatorily redeemable,
     convertible preferred securities
     of Newfield  Financial Trust I                       ---       143,750
    Minority interest                                     ---           455

    STOCKHOLDERS' EQUITY
    Common stock                                          567           526
    Additional paid-in capital                        781,243       636,317
    Treasury stock                                    (26,575)      (26,213)
    Unearned compensation                             (12,482)       (6,479)
    Accumulated other comprehensive income (loss)
      Foreign currency translation adjustment           6,722        (3,888)
      Commodity derivatives *                         (32,377)      (27,295)
    Retained earnings                                 546,219       436,263
      Total stockholders' equity                    1,263,317     1,009,231
      Total liabilities and stockholders' equity   $2,562,491    $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                  For the
                               Three Months Ended        Six Months Ended
                                     June 30,                 June 30,
                                 2003         2002        2003          2002
    Cash flows from
     operating activities:
      Net income             $  45,815    $  16,270    $ 109,956    $  32,596
      Depreciation,
       depletion and
       amortization             99,660       78,027      196,360      149,234
      Ceiling test writedown     7,300          ---        7,300          ---
      Gas sales obligation
       and debt settlements     10,477          ---       20,475          ---
      Stock compensation           807          757        1,486        1,335
      Unrealized commodity
       derivative *              1,629        5,880        2,846       11,525
      Deferred taxes            10,576       (1,194)      19,333        1,710
      Cumulative effect
       of change in
       accounting
       principle **                ---          ---       (5,575)         ---
                               176,264       99,740      352,181      196,400
      Changes in operating
       assets and liabilities   35,591       (1,961)     (74,671)          28
        Net cash provided by
         operating activities  211,855       97,779      277,510      196,428

    Cash flows from
     investing activities:
      Additions to oil
       and gas properties     (107,580)     (80,494)    (231,572)    (164,983)
      Additions to furniture,
       fixtures and equipment     (513)        (731)      (2,404)      (1,557)
        Net cash used in
         investing activities (108,093)     (81,225)    (233,976)    (166,540)

    Cash flows from
     financing activities:
      Proceeds from
       borrowings under
       credit arrangements     275,000      133,000    1,019,000      261,000
      Repayments of
        borrowings under
        credit arrangements   (340,000)    (168,000)    (915,000)    (314,000)
      Proceeds from
       issuances of
       common stock            136,957        1,433      137,683        4,829
      Purchases of
       treasury stock              (23)        (118)        (362)        (336)
      Re-purchase of
       secured notes           (25,726)         ---      (59,595)         ---
      Repayments of
       secured notes               ---          ---      (11,215)         ---
      Deliveries under the
       gas sales obligation        ---          ---       (8,442)         ---
      Gas sales obligation
       settlement                  ---          ---      (62,017)         ---
      Repayment of QUIPS      (148,448)         ---     (148,448)         ---
        Net cash used in
         financing activities (102,240)     (33,685)     (48,396)     (48,507)
    Effect of exchange rate
     changes on cash
     and cash equivalents          315         (340)         387         (334)

    Increase (decrease)
     in cash and cash
     equivalents                 1,837      (17,471)      (4,475)     (18,953)
    Cash and cash equivalents,
     beginning of period        42,586       25,128       48,898       26,610

    Cash and cash
     equivalents,
     end of period           $  44,423    $   7,657    $  44,423    $   7,657

     * Associated with SFAS 133.
     ** Associated with the adoption of SFAS 143.

SOURCE Newfield Exploration Company

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