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Newfield Announces Third Quarter Results**

HOUSTON, Oct. 27 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced its financial and operating results for the third quarter of 2004. A conference call to discuss the results is planned for 8 a.m. (CDT), Thursday, October 28. To participate in the call, dial 719-457-2623. A listen-only broadcast will also be provided over the Internet. Simply go to the Investor Relations section at http://www.newfld.com .

Newfield also announced that it will hold an investor conference in Houston from 8 a.m. - 3:30 p.m. on November 9, 2004. Through the Company's website, slides will be available the day of the conference and a replay will be made available the next day.

Third Quarter 2004

For the third quarter of 2004, Newfield reported net income of $81.6 million, or $1.35 per share (all per share amounts are on a diluted basis). Stated without the effect of $9.7 million ($6.3 million after-tax), or $0.10 per share, of net gain related to unrealized commodity derivative transactions, net income for the third quarter was $75.3 million, or $1.25 per share. Revenues in the third quarter of 2004 were $327.7 million. Net cash provided by operating activities before changes in operating assets and liabilities was $267.7 million in the third quarter of 2004. See Explanation and Reconciliation of Non-GAAP Financial Measures.

Newfield's results for the third quarter of 2004 compare favorably to the same period of the prior year. Net income from continuing operations in the third quarter of 2003 was $58.4 million, or $1.04 per share. Stated without the effect of $3.6 million ($2.3 million after-tax), or $0.04 per share, of net gain related to unrealized commodity derivative transactions, net income from continuing operations for the third quarter was $56.1 million, or $1.00 per share. The loss from discontinued operations was $9.0 million, or $0.16 per share. Revenues in the third quarter of 2003 were $248.7 million. Net cash provided by continuing operating activities before changes in operating assets and liabilities was $185.6 million in the third quarter of 2003.

Newfield's production in the third quarter of 2004 was 60.7 billion cubic feet equivalent (Bcfe), an 8% increase over production of 56.1 Bcfe in the third quarter of 2003. The following tables detail production and average realized prices for the third quarter of 2004 and 2003.


     Quarterly Sales / Production
     For the Three Months Ended September 30
                                           3Q04            3Q03       % Change
    United States
      Natural gas sales (Bcf)              48.6            47.4            3%
      Average natural gas production
       (MMcf/d)                           528.8           514.8            3%
      Oil and condensate sales (MMBbls)    1.59            1.47            8%
      Average oil and condensate
       production (BOPD)                 17,272          15,935            8%
    International
      Natural gas sales (Bcf)             0.113
      Average natural gas production
       (MMcf/d)                             1.2
      Oil and condensate sales (MMBbls)   0.405
      Average oil and condensate
       production (BOPD)                  3,478
    Total
      Natural gas sales (Bcf)              48.8            47.4            3%
      Average natural gas production
       (MMcf/d)                           530.0           514.8            3%
      Oil and condensate sales (MMBbls)    2.00            1.47           36%
      Average oil and condensate
       production (BOPD)                 20,750          15,935           30%
      Total sales (Bcfe)                   60.7            56.1            8%


     Average Realized Prices+
     For the Three Months Ended September 30
                                           3Q04            3Q03       % Change
    United States
      Natural gas (per Mcf)             $  5.10         $  4.40           16%
      Oil and condensate (per Bbl)      $ 36.97         $ 26.50           40%
    International
      Natural gas (per Mcf)             $  3.94
      Oil and condensate liftings
       (per Bbl)                        $ 46.34
    Total
      Natural gas (per Mcf)             $  5.10         $  4.40           16%
      Oil and condensate (per Bbl)      $ 38.85         $ 26.50           47%
      Total (per Mcfe)                  $  5.37         $  4.40           22%

     +Prices shown are net of all applicable transportation expenses, which
     reduced the realized price of natural gas by $0.02 per Mcf for both
     periods and the realized price of oil and condensate by $0.28 and $0.32
     per Bbl for the three months ended September 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 $5.03 per Mcf and our average realized price
     for oil and condensate would have been $36.20 per Bbl for the third
     quarter of 2004.  No three-way contracts were settled in the third
     quarter of 2003.

Stated on a unit of production basis, Newfield's lease operating expense (LOE) in the third quarter of 2004 was $0.66 per Mcfe compared to LOE from continuing operations of $0.55 per Mcfe in the same period of 2003. Production taxes in the third quarter of 2004 increased to $0.21 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 third quarter of 2004 was $1.95 per Mcfe compared to DD&A expense from continuing operations of $1.80 per Mcfe in the same period of 2003. The increase in DD&A expense is due primarily to the third quarter acquisition of Denbury's Gulf of Mexico properties. G&A expense (including stock compensation) in the third quarter of 2004 was $0.36 per Mcfe compared to G&A expense from continuing operations of $0.25 in the same period of 2003. G&A expense in the third quarter of 2004 is net of capitalized direct internal costs of $9.1 million. Capitalized direct internal costs were $6.2 million in the third quarter of 2003.

Capital expenditures in the third quarter of 2004 were $1.2 billion, including $719 million allocated for financial accounting purposes to the oil and gas properties acquired in the $575 million purchase of Inland Resources, Inc. Capital expenditures for the quarter also include the recognition of asset retirement costs of $44 million associated with our recent acquisitions.

Year-to-Date 2004

For the first nine months of 2004, Newfield posted net income of $226.9 million, or $3.91 per share. Revenues for the first nine months of 2004 were $915.8 million. This compares to net income from continuing operations of $170.8 million, or $3.06 per share, on revenues of $772.1 million for the first nine months of 2003. Net cash provided by continuing operating activities before changes in operating assets and liabilities was $660.9 million in the first nine months of 2004 compared to $538.9 million in the same period of 2003. See Explanation and Reconciliation of Non-GAAP Financial Measures.

Production volumes for the first nine months of 2004 increased 5% over the same period last year. The Company produced 174.1 Bcfe in the first nine months of 2004 compared to production from continuing operations of 165.5 Bcfe in the first nine months of the prior year. The following tables detail production and average realized prices for the first nine months of 2004 and 2003:

     Year-to-Date Sales / Production
     For the Nine Months Ended September 30
                                       YTD 09/04       YTD 09/03      % Change

    United States
      Natural gas sales (Bcf)             143.8           138.1            4%
      Average natural gas production
       (MMcf/d)                           524.9           505.9            4%
      Oil and condensate sales (MMBbls)    4.56            4.56           ---
      Average oil and condensate
       production (BOPD)                 16,624          16,703           ---
    International
      Natural gas sales (Bcf)             0.483
      Average natural gas production
       (MMcf/d)                             1.8
      Oil and condensate sales (MMBbls)   0.409
      Average oil and condensate
       production (BOPD)                  3,089
    Total
      Natural gas sales (Bcf)             144.3           138.1            4%
      Average natural gas production
       (MMcf/d)                           526.6           505.9            4%
      Oil and condensate sales (MMBbls)    4.96            4.56            9%
      Average oil and condensate
       production (BOPD)                 18,708          16,703           12%
      Total sales (Bcfe)                  174.1           165.5            5%


     Average Realized Prices+
     For the Nine Months Ended September 30
                                       YTD 09/04        YTD 09/03     % Change
    United States
      Natural gas (per Mcf)             $  5.10         $  4.64           10%
      Oil and condensate (per Bbl)      $ 34.30         $ 27.71           24%
    International
      Natural gas (per Mcf)             $  3.96
      Oil and condensate liftings
       (per Bbl)                        $ 46.06
    Total
      Natural gas (per Mcf)             $  5.10         $  4.64           10%
      Oil and condensate (per Bbl)      $ 35.27         $ 27.71           27%
      Total (per Mcfe)                  $  5.23         $  4.64           13%

     +Prices shown are net of all applicable transportation expenses, which
     reduced the realized price of natural gas by $0.02 per Mcf for both
     periods and the realized price of oil and condensate by $0.35 and $0.37
     per Bbl for the first nine months of 2004 and 2003, respectively.
     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
     $5.05 per Mcf and our average realized price for oil and condensate would
     have been $33.27 per Bbl for the nine months ended September 30, 2004.
     No three-way contracts were settled in the first nine months of 2003.

In the first nine months of 2004, LOE, stated on a unit of production basis, averaged $0.57 per Mcfe, compared to LOE from continuing operations of $0.52 per Mcfe in the same period of 2003. Production taxes in the first nine months of 2004 were $0.17 per Mcfe compared to production taxes from continuing operations of $0.15 per Mcfe in the same period of 2003. DD&A expense in the first nine months of 2004 was $1.89 per Mcfe compared to DD&A expense from continuing operations of $1.77 per Mcfe in the same period of 2003. G&A expense (including stock compensation) in the first nine months of 2004 was $0.34 per Mcfe compared to G&A expense from continuing operations of $0.28 per Mcfe in the prior year. G&A expense in the first nine months of 2004 is net of capitalized direct internal costs of $25.1 million. Capitalized direct internal costs were $20.4 million in the first nine months of 2003.

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 income as stated in our consolidated statement of income for the third quarter of 2004 includes an unrealized increase in the fair value of our three-way collar contracts of $9.2 million, a realized loss of $8.3 million for our three-way collar contracts and a decrease in hedge ineffectiveness of $0.5 million associated with our cash flow hedges. Commodity derivative income as stated in our consolidated statement of income for the third quarter of 2003 includes only changes in hedge ineffectiveness 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:

                                                        3Q04           3Q03

    Net income from continuing operations             $ 81.6         $ 58.4
      Unrealized commodity derivative income            (9.7)          (3.6)
      Income tax provision adjustment for above item     3.4            1.3
    Earnings stated without the effect of unrealized
     commodity derivative transactions                $ 75.3         $ 56.1

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:


                                                       3Q04           3Q03

Net cash provided by operating activities

     from continuing operations                     $  230.3       $  191.1

Less: (Increase) decrease in operating

       assets and liabilities                          (37.4)           5.5

Net cash provided by operating activities

from continuing operations before changes

     in operating assets and liabilities            $  267.7       $  185.6

                                                       YTD04          YTD03

Net cash provided by operating activities

     from continuing operations                     $  644.6       $  458.5

Less: (Increase) decrease in operating

       assets and liabilities                          (16.3)         (80.4)

Net cash provided by operating activities

from continuing operations before changes

     in operating assets and liabilities            $  660.9       $  538.9


2005 Production Estimate

The Company expects to produce 255 - 270 Bcfe in 2005, an increase of 6 - 12% over 2004 estimated production of about 240 Bcfe. Preliminary capital spending for 2005 is estimated at about $850 - 900 million. A final budget is being prepared and will be submitted to the Company's board of directors for approval in February 2005.

Fourth Quarter 2004 Estimates

Natural Gas Production and Pricing The Company's natural gas production in the fourth quarter of 2004 is expected to be 49 - 54 Bcf (533 - 590 MMcf/d). The price the Company realizes for natural gas production from the Gulf of Mexico and onshore Gulf Coast on an Mcf basis after basis differentials, transportation and handling charges, typically averages $0.15 - $0.20 less per MMBtu than the Henry Hub Index. Realized gas prices for our Mid-Continent properties after basis differentials, transportation and handing charges typically average $0.70 - $0.80 per MMBtu less than Henry Hub Index. Hedging gains or losses will affect price realizations.

Crude Oil Production and Pricing Oil production in the fourth quarter of 2004 is expected to be 2.4 - 2.6 million barrels (25,700 - 28,400 BOPD). These estimates include approximately 4,300 BOPD from the Company's Malaysian operations. The price the Company receives for Gulf Coast production typically averages about $2 below the NYMEX West Texas Intermediate (WTI) price. The price the Company receives for its production in the Rocky Mountains averages about $3 below WTI price. Oil production from the Mid- Continent typically sells at a $1.00 - $1.50 per barrel discount to WTI. Oil production from Malaysia typically sells at Tapis, or about even with WTI. Hedging gains or losses will affect price realizations.

Lease Operating and Other Expenses LOE is expected to be $45 - $50 million ($0.67 - $0.75 per Mcfe) in the fourth quarter of 2004. Production taxes in the fourth quarter of 2004 are expected to be $14 - $15 million ($0.21 - $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 fourth quarter of 2004 is expected to be $20 - $22 million ($0.31 - $0.34 per Mcfe), net of capitalized direct internal costs. Capitalized G&A expense is expected to be $8 - $9 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 fourth quarter of 2004 is expected to be $13 - $14 million ($0.10 - $0.11 per Mcfe). As of October 27, 2004, borrowings under the Company's credit arrangements were $182 million. The remainder of long-term debt consists of three separate issuances of notes that in the aggregate total $875 million in principal amount. Capitalized interest for the fourth quarter of 2004 is expected to be about $3 - $5 million.

Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the fourth quarter of 2004 to be about 35 - 39%. About 60% of the tax provision is expected to be deferred.

The Company provides information regarding its outstanding hedging positions in its annual 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 of the Mid-Continent, the Uinta Basin of the Rocky Mountains and select international ventures.

**The statements set forth in this release regarding estimated or anticipated full-year 2005 and fourth quarter 2004 results, production volumes and capital expenditures 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 per share data)

                                       For the                 For the
                                 Three Months Ended       Nine Months Ended
                                     September 30,           September 30,
                                   2004        2003        2004        2003

    Oil and gas revenues        $ 327,725   $ 248,664   $ 915,817   $ 772,107

    Operating expenses:
      Lease operating              39,829      31,083      98,659      85,807
      Production and other taxes   12,706       7,488      30,159      25,159
      Transportation                1,700       1,624       5,082       5,046
      Depreciation, depletion
       and amortization           118,471     100,897     329,548     293,407
      General and
       administrative (A)          21,839      13,815      59,459      46,008
      Gas sales obligation
       settlement and redemption
       of securities                  ---         ---         ---      20,475
        Total operating expenses  194,545     154,907     522,907     475,902

    Income from operations        133,180      93,757     392,910     296,205

    Other income (expenses):
      Interest expense            (14,798)    (13,357)    (39,265)    (45,025)
      Capitalized interest          6,270       4,010      14,593      11,728
      Dividends on preferred
       securities of Newfield
       Financial Trust I              ---         ---         ---      (4,581)
      Commodity derivative income
       (expense) *                  1,371       3,569     (16,464)        723
      Other                         1,330         444       2,330         956
                                   (5,827)     (5,334)    (38,806)    (36,199)
    Income from continuing
     operations before
     income taxes                 127,353      88,423     354,104     260,006

    Income tax provision           45,778      30,072     127,206      89,254
    Income from continuing
     operations                    81,575      58,351     226,898     170,752
    Loss from discontinued
     operations, net of tax           ---      (8,972)        ---     (16,992)
    Income before cumulative
     effect of change in
     accounting principle          81,575      49,379     226,898     153,760
    Cumulative effect of change
     in accounting principle,
     net of tax**                     ---         ---         ---       5,575

    Net income                  $  81,575   $  49,379   $ 226,898   $ 159,335

    Earnings per share:
      Basic
        Income from
         continuing operations  $    1.38   $    1.04   $    3.97   $    3.17
        Loss from discontinued
         operations                   ---       (0.16)        ---       (0.31)
        Cumulative effect
         of change in accounting
         principle, net of tax**      ---         ---         ---        0.10
        Net income              $    1.38   $    0.88   $    3.97   $    2.96
      Diluted
        Income from continuing
         operations             $    1.35   $    1.04   $    3.91   $    3.06
        Loss from discontinued
         operations                   ---       (0.16)        ---       (0.30)
        Cumulative effect
         of change in accounting
         principle, net of tax**      ---         ---         ---        0.10
        Net income              $    1.35   $    0.88   $    3.91   $    2.86

    Weighted average number
     of shares outstanding
     for basic earnings per share  59,290      55,887      57,117      53,785
    Weighted average number of
     shares outstanding for
     diluted earnings per share    60,317      56,347      58,046      56,778

    (A) Includes non-cash stock compensation of $1,043 and $629 for the three
     months September 30, 2004 and 2003, respectively, and $3,003 and
     $2,115 for the nine months ended September 30, 2004 and 2003,
     respectively.
     *   Associated with SFAS No. 133.
     **  Associated with the adoption of SFAS No. 143.


     CONDENSED CONSOLIDATED BALANCE SHEET
     (Unaudited, in thousands of dollars)
                                                    September 30, December 31,
                                                          2004        2003

    ASSETS
    Current assets:
        Cash and cash equivalents                  $    28,856  $    15,347
        Accounts receivable, oil and gas               188,086      134,774
        Inventories                                      7,505          553
        Derivative assets *                             14,936       13,786
        Deferred taxes                                  29,442       12,893
        Other current assets                            75,736       61,563
                Total current assets                   344,561      238,916

    Oil and gas properties, net (full cost method)   3,689,908    2,418,500
    Floating production system and pipelines            35,000       35,000
    Furniture, fixtures and equipment, net              17,676        5,875
    Derivative assets *                                 34,588        2,223
    Other assets                                        20,774       16,197
    Goodwill                                            65,990       16,378
                Total assets                       $ 4,208,497  $ 2,733,089

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                            $   376,776  $   255,522
    Derivative liabilities*                             89,826       44,696
                Total current liabilities              466,602      300,218

    Other liabilities                                   12,988       13,203
    Derivative liabilities *                            61,106       13,244
    Long-term debt                                   1,068,101      643,459
    Asset retirement obligation **                     199,155      151,548
    Deferred taxes                                     528,161      242,839
                Total long-term liabilities          1,869,511    1,064,293

    Commitments and contingencies                          ---          ---

    STOCKHOLDERS' EQUITY
    Common stock                                           632          571
    Additional paid-in capital                       1,095,994      796,256
    Treasury stock                                     (27,155)     (26,679)
    Unearned compensation                               (9,021)     (10,912)
    Accumulated other comprehensive income (loss):
        Foreign currency translation adjustment            225          851
        Commodity derivatives *                        (50,108)     (26,428)
        Minimum pension liability                         (833)        (833)
    Retained earnings                                  862,650      635,752
        Total stockholders' equity                   1,872,384    1,368,578
        Total liabilities and stockholders' equity $ 4,208,497  $ 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
                                                        Nine Months Ended
                                                          September 30,
                                                         2004        2003
    Cash flows from operating activities:
        Net income                                 $   226,898  $   159,335
        Loss from discontinued operations,
         net of tax                                        ---       16,992
        Depreciation, depletion and amortization       329,548      293,407
        Deferred taxes                                 101,710       52,913
        Stock compensation                               3,003        2,115
        Commodity derivative income *                     (212)        (723)
        Gas sales obligation settlement and redemption
         of securities                                     ---       20,475
        Cumulative effect of change in
         accounting principle **                           ---       (5,575)
                                                       660,947      538,939
        Changes in operating assets and liabilities    (16,389)     (80,424)
         Net cash provided by continuing activities    644,558      458,515
         Net cash provided by discontinued activities      ---       10,339

         Net cash provided by operating activities     644,558      468,854

    Cash flows from investing activities:
        Purchases of businesses, net of cash acquired (755,695)     (91,742)
        Proceeds from sale of business                     ---        9,678
        Additions to oil and gas properties           (601,770)    (358,642)
        Sale of oil and gas properties                  16,501          ---
        Additions to furniture, fixtures
         and equipment                                  (4,933)      (2,738)
         Net cash used in continuing activities     (1,345,897)    (443,444)
         Net cash provided by (used in)
          discontinued activities                          ---       (3,085)


          Net cash used in investing activities     (1,345,897)    (446,529)

    Cash flows from financing activities:
        Proceeds from borrowings under
         credit arrangements                         1,021,000    1,285,500
        Repayments of borrowings under
         credit arrangements                          (921,000)  (1,180,500)
        Proceeds from issuance of senior
            subordinated notes                         325,000          ---
        Repurchases of secured notes                    (2,895)     (63,068)
        Deliveries under the gas sales obligation          ---       (8,442)
        Proceeds from issuances of common stock        293,701      142,147
        Repayments of secured notes                        ---      (11,215)
        Gas sales obligation settlement                    ---      (62,017)
        Purchases of treasury stock                       (476)        (403)
        Redemption of trust preferred securities           ---     (148,449)
        Net cash provided by (used in)
         continuing activities                         715,330      (46,447)
        Net cash used in discontinued activities           ---          ---
          Net cash provided by (used in)
           financing activities                        715,330      (46,447)

    Effect of exchange rate changes on cash
     and cash equivalents                                 (482)         194

    Increase (decrease) in cash and cash equivalents    13,509      (23,928)
    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       $    28,856  $    24,970

    *  Associated with SFAS No. 133.
    ** Associated with the adoption of SFAS No. 143.
SOURCE  Newfield Exploration Company
    -0-                             10/27/2004
    /CONTACT:  Steve Campbell of Newfield Exploration Company,
+1-281-847-6081, or info@newfld.com /
    /Web site:  http://www.newfld.com /
    (NFX)

CO:  Newfield Exploration Company
ST:  Texas
IN:  OIL
SU:  ERN ERP CCA MAV

CJ-CD 
-- DAW042 --
1864 10/27/2004 16:31 EDT http://www.prnewswire.com
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