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Newfield Announces Second Quarter Results**

HOUSTON, Jul 27, 2004 /PRNewswire-FirstCall via COMTEX/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the second quarter of 2004. A conference call to discuss the results is planned for 8:30 a.m. (CDT), Wednesday, July 28. To participate in the call, dial 719-457-2665. A listen-only broadcast will also be provided over the Internet. Simply go to the Investor Relations section at http://www.newfld.com .

Second Quarter 2004

For the second quarter of 2004, Newfield reported net income of $67.4 million, or $1.18 per share (all per share amounts are on a diluted basis). Stated without the effect of $1.3 million ($0.8 million after-tax), or $0.01 per share, of income related to unrealized commodity derivative transactions, net income for the second quarter was $66.6 million, or $1.17 per share. Revenues in the second quarter of 2004 were $282.7 million. Net cash provided by operating activities before changes in operating assets and liabilities was $185.1 million in the second quarter of 2004. See Explanation and Reconciliation of Non-GAAP Financial Measures.

Newfield's results for the second quarter of 2004 compare favorably to the same period of the prior year. Net income from continuing operations in the second quarter of 2003 was $53.1 million, or $0.95 per share. Net income from continuing operations in the second quarter of 2003 was impacted by a $10.5 million one-time charge ($6.8 million after tax), related to the redemption of all of the outstanding 6 1/2% convertible trust preferred securities (QUIPS). Revenues in the second quarter of 2003 were $255.6 million. Net cash provided by continuing operating activities before changes in operating assets and liabilities was $178.9 million in the second quarter of 2003.

Newfield's production in the second quarter of 2004 of 56.0 billion cubic feet equivalent (Bcfe) remained flat when compared to the second quarter 2003 production of 56.2 Bcfe. The following tables detail production and average realized prices for the second quarter of 2004 and 2003.

     Production                              2Q04     2Q03  % Change
       Natural gas (Bcf)                     47.5     46.8      1%
       Oil and condensate (MMBbls)            1.4      1.6    (10%)
         Total (Bcfe)                        56.0     56.2    ---

     Average Realized Prices+                2Q04     2Q03  % Change
       Natural gas (per Mcf)                $4.89    $4.50      9%
       Oil and condensate (per Bbl)         34.18    27.54     24%
       Natural gas equivalent (per Mcfe)     5.02     4.51     11%

+Prices shown are net of all applicable transportation expenses, which reduced the realized price of natural gas by $0.03 and $0.02 per Mcf for the three months ended June 30, 2004 and 2003, respectively. The realized price of oil and condensate was reduced by $0.46 and $0.45 per Bbl for the three months ended June 30, 2004 and 2003, respectively. Average realized prices also 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 collar contracts, our average realized price for natural gas would have been $4.82 per Mcf and our average realized price for oil and condensate would have been $31.95 per Bbl for the second quarter of 2004. The settlement of our three-way contracts had no impact on our realized prices for the second quarter of 2003. 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 second quarter of 2004 was $0.52 per Mcfe compared to LOE from continuing operations of $0.48 per Mcfe in the same period of 2003. Production taxes in the second quarter of 2004 increased to $0.16 per Mcfe compared to production taxes from continuing operations of $0.13 per Mcfe in the same period of 2003. DD&A expense in the second quarter of 2004 was $1.88 per Mcfe compared to DD&A expense from continuing operations of $1.76 per Mcfe in the same period of 2003. G&A expense (including stock compensation) in the second quarter of 2004 was $0.34 per Mcfe compared to G&A expense from continuing operations of $0.27 in the same period of 2003. G&A expense in the second quarter of 2004 is net of capitalized direct internal costs of $9.2 million compared to $7.4 million in the second quarter of 2003.

    Capital expenditures in the second quarter of 2004 were $236 million.

Year-to-Date 2004

For the first six months of 2004, Newfield posted net income of $145.3 million, or $2.55 per share. Revenues for the first half of 2004 were $588.1 million. This compares to net income from continuing operations of $112.4 million, or $2.02 per share, on revenues of $523.4 million for the first half of 2003. Net cash provided by continuing operating activities before changes in operating assets and liabilities was $393.2 million in the first half of 2004 compared to $353.3 million in the same period of 2003. See Explanation and Reconciliation of Non-GAAP Financial Measures.

Production volumes for the first half of 2004 increased 4% above the same period last year. The Company produced 113.3 Bcfe in the first six months of 2004 compared to production from continuing operations of 109.3 Bcfe in the first six months of the prior year. The following tables detail production and average realized prices for the first half of 2004 and 2003:

     Production                              1H04     1H03  % Change
       Natural gas (Bcf)                     95.5     90.8     5%
       Oil and condensate (MMBbls)            3.0      3.1    (4%)
         Total (Bcfe)                       113.3    109.3     4%

     Average Realized Prices+                1H04     1H03  % Change
       Natural gas (per Mcf)                $5.10    $4.77     7%
       Oil and condensate (per Bbl)         32.87    28.27    16%
       Natural gas equivalent (per Mcfe)     5.16     4.76     8%

+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 $0.39 per Bbl for the first half of both years. 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 contracts our average realized price for natural gas would have been $5.06 per Mcf and our average realized price for oil and condensate would have been $31.80 per Bbl for the six months ended June 30, 2004. The settlement of our three-way contracts had no impact on our realized prices for the first half of 2003. We did not enter into any three-way collar contracts prior to August 2003.

In the first half of 2004, LOE, stated on a unit of production basis, averaged $0.52 per Mcfe, compared to LOE from continuing operations of $0.50 per Mcfe in the same period of 2003. Production taxes in the first half of 2004 decreased to $0.15 per Mcfe compared to production taxes from continuing operations of $0.16 per Mcfe in the same period of 2003. DD&A expense in the first half of 2004 was $1.86 per Mcfe compared to DD&A expense from continuing operations of $1.76 per Mcfe in the same period of 2003. G&A expense (including stock compensation) in the first half of 2004 was $0.33 per Mcfe compared to G&A expense from continuing operations of $0.29 per Mcfe in the prior year. G&A expense in the first half of 2004 is net of capitalized direct internal costs of $16.0 million compared to $14.2 million in the first half of 2003.

    Capital expenditures in the first half of 2004 totaled $389 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 affect the comparability of operating results. Earnings without the effect of these items are presented because the 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 for the second quarter of 2004 includes an unrealized increase in the fair value of our three-way collar contracts of $0.9 million, a realized loss of $6.9 million for our three-way collar contracts and a decrease in hedge ineffectiveness of $0.4 million associated with our cash flow hedges. A reconciliation of earnings stated without the effect of the unrealized commodity derivative transactions to net income is shown below:

                                                              2Q04
     Net income                                              $67.4
       Unrealized commodity derivative (income) expense       (1.3)
       Income tax provision adjustment for above item          0.5
     Earnings stated without the effect of unrealized
      commodity derivative transactions                      $66.6

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:

                                                     2Q04      2Q03
     Net cash provided by operating activities
      from continuing operations                    $195.5    $215.8
       Less: (Increase) decrease in operating
        assets and liabilities                        10.4      36.9
     Net cash provided by operating activities
      from continuing operations before changes
      in operating assets and liabilities           $185.1    $178.9


                                                     1H04      1H03
     Net cash provided by operating activities
      from continuing operations                    $414.3    $276.8
       Less: (Increase) decrease in operating
        assets and liabilities                        21.1     (76.5)
     Net cash provided by operating activities
      from continuing operations before changes
      in operating assets and liabilities           $393.2    $353.3

Third Quarter 2004 Estimates

Natural Gas Production and Pricing The Company's natural gas production in the third quarter of 2004 is expected to be 47 - 51 Bcf (510 - 560 MMcf/d). The price the Company realizes for natural gas production from the Gulf of Mexico and onshore Gulf Coast typically averages $0.15 - $0.20 less than Henry Hub Index after basis differentials, transportation and handling charges. Realized gas prices for our Mid-Continent properties typically average $0.70 - $0.80 less than Henry Hub Index after basis differentials, transportation and handing charges. Hedging gains or losses will affect price realizations.

Crude Oil Production and Pricing Oil production in the third quarter of 2004 is expected to be 1.8 - 2.0 million barrels (19,000 - 21,000 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 $43 - $48 million ($0.72 - $0.80 per Mcfe) in the third quarter of 2004. Production taxes in the third quarter of 2004 are expected to be $12 - $14 million ($0.20 - $0.24 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 third quarter of 2004 is expected to be $17 - $19 million ($0.29 - $0.32 per Mcfe), net of capitalized direct internal costs. Capitalized G&A expense is expected to be $6 - $7 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 third quarter of 2004 is expected to be $6 - $7 million ($0.10 - $0.11 per Mcfe). As of July 26, 2004, borrowings under the Company's credit arrangements are $265 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 third quarter of 2004 is expected to be about $5 - $7 million.

Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the third quarter of 2004 to be about 35 - 39%. 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 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 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, 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
     http://www.newfld.com                          info@newfld.com


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

                                        For the                 For the
                                 Three Months Ended        Six Months Ended
                                        June 30,                June 30,
                                    2004        2003        2004        2003

    Oil and gas revenues       $  282,737  $  255,552  $  588,092  $  523,443

    Operating expenses:
        Lease operating            28,965      26,917      58,830      54,724
        Production and
         other taxes                9,094       7,463      17,453      17,670
        Transportation              1,942       1,859       3,382       3,422
        Depreciation, depletion
         and amortization         105,172      99,191     211,077     192,509
        General and
         administrative (A)        19,061      15,190      37,621      32,196
        Gas sales obligation
         settlement and
         redemption of securities     ---      10,477         ---      20,475
            Total operating
             expenses             164,234     161,097     328,363     320,996

    Income from operations        118,503      94,455     259,729     202,447

    Other income (expenses):
        Interest expense          (11,935)    (14,982)    (24,467)    (31,668)
        Capitalized interest        4,388       3,899       8,323       7,718
        Dividends on convertible
         preferred securities
         of Newfield Financial
         Trust I                      ---      (2,245)        ---      (4,581)
        Commodity derivative
         expense*                  (5,594)     (1,629)    (17,835)     (2,846)
        Other                         340          (9)      1,000         511
                                  (12,801)    (14,966)    (32,979)    (30,866)
    Income from continuing
     operations before
     income taxes                 105,702      79,489     226,750     171,581

    Income tax provision           38,288      26,434      81,428      59,180
    Income from continuing
     operations                    67,414      53,055     145,322     112,401
    Loss from discontinued
     operations, net of tax           ---      (7,240)        ---      (8,020)
    Income before cumulative
     effect of change in
     accounting principle          67,414      45,815     145,322     104,381
    Cumulative effect of change
     in accounting principle,
     net of tax**                     ---         ---         ---       5,575
    Net income                 $   67,414  $   45,815  $  145,322  $  109,956

    Earnings per share:
        Basic
            Income from
             continuing
             operations        $     1.20  $     1.00  $     2.59  $     2.13
            Loss from
             discontinued
             operations               ---       (0.14)        ---       (0.15)
            Cumulative effect
             of change in
             accounting
             principle, net
             of tax**                 ---         ---         ---        0.11
            Net income         $     1.20  $     0.86  $     2.59  $     2.09
        Diluted
            Income from
             continuing
             operations        $     1.18  $     0.95  $     2.55  $     2.02
            Loss from
             discontinued
             operations               ---       (0.13)        ---       (0.14)
            Cumulative effect
             of change in
             accounting
             principle,
             net of tax**             ---         ---         ---        0.10
            Net income         $     1.18  $     0.82  $     2.55  $     1.98

    Weighted average number
     of shares outstanding
     for basic earnings
     per share                     56,114      53,468      56,019      52,679
    Weighted average number
     of shares outstanding
     for diluted earnings
     per share                     57,029      57,701      56,884      56,956

     (A) Includes non-cash stock compensation of $969 and $807 for the three
         months June 30, 2004 and 2003, respectively, and $1,960 and
         $1,486 for the six months ended June 30, 2004 and 2003, respectively.

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


     PRODUCTION DATA FROM CONTINUING OPERATIONS

                                        For the                 For the
                                 Three Months Ended        Six Months Ended
                                        June 30,                June 30,
                                    2004        2003        2004        2003
    Average daily production:
        Oil and condensate (Bbls)  15,629      17,356      16,312      17,104
        Natural gas (Mcf)           521.4       513.8       524.9       501.4
    Average realized price:
        Oil and condensate (Bbls) $ 34.18     $ 27.54     $ 32.87     $ 28.27
        Natural gas (Mcf)         $  4.89     $  4.50     $  5.10     $  4.77


     CONDENSED CONSOLIDATED BALANCE SHEET
     (Unaudited, in thousands of dollars)                June 30,     Dec. 31,
                                                           2004         2003
    ASSETS
    Current assets:
        Cash and cash equivalents                    $    27,853  $    15,347
        Accounts receivable, oil and gas                 184,359      134,774
        Inventories                                        3,664          553
        Derivative assets*                                12,031       13,786
        Deferred taxes                                    25,431       12,893
        Other current assets                              43,371       61,563
            Total current assets                         296,709      238,916

    Oil and gas properties, net (full cost method)     2,601,795    2,418,500
    Floating production system and pipelines              35,000       35,000
    Furniture, fixtures and equipment, net                 5,369        5,875
    Derivative assets*                                     3,228        2,223
    Other assets                                          17,644       16,197
    Goodwill                                              16,378       16,378
            Total assets                             $ 2,976,123  $ 2,733,089

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                              $   349,284  $   255,522
    Derivative liabilities*                               81,693       44,696
            Total current liabilities                    430,977      300,218

    Other liabilities                                     13,040       13,203
    Derivative liabilities*                               13,190       13,244
    Long-term debt                                       579,559      643,459
    Asset retirement obligation**                        158,283      151,548
    Deferred taxes                                       267,994      242,839
            Total long-term liabilities                1,032,066    1,064,293

    Commitments and contingencies                            ---          ---

    STOCKHOLDERS' EQUITY
    Common stock                                             576          571
    Additional paid-in capital                           811,422      796,256
    Treasury stock                                       (27,081)     (26,679)
    Unearned compensation                                 (9,664)     (10,912)
    Accumulated other comprehensive income (loss):
        Foreign currency translation adjustment            1,124          851
        Commodity derivatives*                           (43,538)     (26,428)
        Minimum pension liability                           (833)        (833)
    Retained earnings                                    781,074      635,752
        Total stockholders' equity                     1,513,080    1,368,578
        Total liabilities and stockholders' equity   $ 2,976,123  $ 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                 For the
                                 Three Months Ended        Six Months Ended
                                        June 30,                June 30,
                                    2004        2003        2004        2003
    Cash flows from operating
     activities:
        Net income             $   67,414  $   45,815  $  145,322  $  109,956
        Loss from
         discontinued
         operations,
         net of tax                   ---       7,240         ---       8,020
        Depreciation,
         depletion and
         amortization             105,172      99,191     211,077     192,509
        Deferred taxes             12,781      13,710      25,340      23,600
        Stock compensation            969         807       1,960       1,486
        Commodity derivative
         (income) expense*         (1,251)      1,629       9,511       2,846
        Gas sales obligation
         settlement and
         redemption of
         securities                   ---      10,477         ---      20,475
        Cumulative effect of
         change in accounting
         principle**                  ---         ---         ---      (5,575)
                                  185,085     178,869     393,210     353,317
        Changes in operating
         assets and liabilities    10,448      36,897      21,051     (76,468)
            Net cash provided
             by continuing
             activities           195,533     215,766     414,261     276,849
            Net cash provided by
             (used in) discontinued
             activities               ---      (3,911)        ---         661
            Net cash provided
             by operating
             activities           195,533     211,855     414,261     277,510

    Cash flows from investing
     activities:
        Additions to oil
         and gas properties      (200,351)   (105,857)   (347,409)   (228,519)
        Additions to furniture,
         fixtures and equipment      (957)       (523)     (1,659)     (2,302)
            Net cash used in
             continuing
             activities          (201,308)   (106,380)   (349,068)   (230,821)
            Net cash used in
             discontinued
             activities               ---      (1,714)        ---      (3,155)
            Net cash used in
             investing
             activities          (201,308)   (108,094)   (349,068)   (233,976)

    Cash flows from financing
     activities:
        Proceeds from
         borrowings under
         credit arrangements      253,000     275,000     385,500   1,019,000
        Repayments of
         borrowings under
         credit arrangements     (244,000)   (340,000)   (446,500)   (915,000)
        Repurchases of secured
         notes                        ---     (25,726)     (2,895)    (59,595)
        Deliveries under the
         gas sales obligation         ---         ---         ---      (8,442)
        Proceeds from issuances
         of common stock            7,694     136,957      11,321     137,683
        Repayments of secured notes   ---         ---         ---     (11,215)
        Gas sales obligation
         settlement                   ---         ---         ---     (62,017)
        Purchases of treasury stock   (31)        (23)       (402)       (362)
        Redemption of trust
         preferred securities         ---    (148,448)        ---    (148,448)
        Net cash provided by
         (used in) continuing
         activities                16,663    (102,240)    (52,976)    (48,396)
        Net cash provided by
         (used in) discontinued
         activities                   ---         ---         ---         ---
        Net cash provided by
         (used in) financing
         activities                16,663    (102,240)    (52,976)    (48,396)
    Effect of exchange rate
     changes on cash and cash
     equivalents                       32         315         289         387

    Increase (decrease) in cash
     and cash equivalents          10,920       1,836      12,506      (4,475)
    Cash and cash equivalents
     from continuing operations,
     beginning of period           16,933      35,951      15,347      33,798
    Cash and cash equivalents
     from discontinued
     operations, beginning
     of period                        ---       6,636         ---      15,100

    Cash and cash equivalents,
     end of period              $  27,853  $   44,423  $   27,853  $   44,423

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

SOURCE Newfield Exploration Company

Steve Campbell of Newfield Exploration Company,
+1-281-847-6081, or info@newfld.com
http://www.newfld.com
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