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Newfield Exploration Agrees to Acquire Lariat Petroleum; Adds New Natural Gas Focus Area in Oklahoma

HOUSTON, Dec. 29 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced that it has entered into a definitive agreement to acquire Lariat Petroleum Inc. for approximately $333 million, including the assumption of Lariat's liabilities. Lariat is a private, independent exploration and production company primarily focused in the Anadarko Basin of Oklahoma. As of June 30, 2000, Lariat had a proved reserve base of 256 billion cubic feet equivalent (Bcfe). Approximately 75% of Lariat's proved reserves are natural gas and 90% are located in Oklahoma.

Newfield will hold a conference call at 12:30 p.m. CST on Tuesday, January 2, 2001. A slide presentation will be referenced during the call and is available on Newfield's web page at www.newfld.com. To participate in the call, please dial 719-457-2633 about 10 minutes before the scheduled start time and use access code 657092. The call will also be broadcast in a listen-only mode over the Internet and can be accessed at www.vcall.com. A replay of the call will be available by dialing 888-203-1112 and using the above access code.

    Transaction Highlights:
    --  New focus area in the Anadarko Basin will add quality, long-lived
        natural gas assets with a reserve life index of about 11 years
    --  Lariat's strong management team and talented technical employees have
        a proven track record of adding value and will be retained by Newfield
    --  Transaction is expected to be immediately accretive on a per share
        basis to earnings, cash flow, production and reserves
    --  Lariat's deep inventory of more than 200 drilling locations should
        help continue Newfield's strong record of growth in both reserves and
    --  Lariat operates 80% of its proved reserves and is its operating costs
        are low
    --  Lariat's business principles and culture are very similar to

Under the agreement, Lariat shareholders will receive approximately $180 million in a combination of approximately half cash and half Newfield common stock. The balance of the $333 million total will go toward the assumption and repayment of Lariat's debt and certain other obligations. Newfield plans to finance the cash portion of the acquisition through a combination of cash on hand and borrowings from existing lenders. The transaction will be accounted for as a purchase. The transaction is expected to close in mid-January 2001.

"During the past year, we've talked about adding a new focus area in another major U.S. gas producing basin," said Newfield President and CEO, David A. Trice. "We have emphasized that the best way for Newfield to accomplish this objective would be through the acquisition of an operating E&P company with strong management and quality assets. We found that combination in Lariat, its CEO Randy Foutch and his team. Lariat and Newfield are very much alike ... we have the same business principles and have been successful by combining good people, technology and a balanced approach between acquisitions and exploration. Our financial strength, combined with Lariat's experienced employees in Oklahoma, will allow us to aggressively exploit Lariat's deep inventory of drilling prospects over the next several years. Because of the demonstrated ability of Randy and his team to develop attractive acquisitions and exploration prospects, we're confident that this transaction will lead to future growth."

Following this transaction, Foutch will continue in his current capacity as the President of Lariat and he will be added to the management team of Newfield.

Foutch said, "We are looking forward to becoming part of Newfield's current and future success. Lariat is pleased with the similarities between the two companies' business principles and cultures. These similarities, combined with Newfield's financial strength, will allow us to grow this new focus area for Newfield. I'm pleased to join the Newfield management team."

Company-wide, Lariat drilled nearly 100 wells in 2000 (91 in Oklahoma and seven in the Permian Basin). Lariat's current production is about 45 million cubic feet per day (MMcf/d) of gas and 1,900 barrels of oil per day (BOPD). The Lariat assets are characterized by very low operating costs. Once completed, the transaction is expected to improve Newfield's current lease operating expenses when stated on a unit of production basis.

Newfield's total proved reserves, stated on a pro forma basis, are expected to be more than 900 Bcfe, reflecting Newfield's mid-year 2000 reserve estimate of about 650 Bcfe and Lariat's mid-year reserve estimate of 256 Bcfe. Following the completion of this transaction, Newfield's largest focus area will continue to be the Gulf of Mexico where approximately 60% of the Company's reserves will be located.

Lariat was founded by Randy A. Foutch and incorporated in 1996. In 1997, Lariat obtained Warburg Pincus private equity financing to fund Lariat's continued growth. Warburg Pincus remains Lariat's largest shareholder. Since late 1998, Lariat completed three large acquisitions of properties. The largest was the purchase of Phillips Petroleum Company's Oklahoma properties in mid-1999. Foutch founded Colt Resources in 1992 and sold it in 1995. Prior to Colt, he was the Vice President of Exploration for Dyco Petroleum and the Rocky Mountain Regional Manager for the Anschutz Company. Foutch holds a Bachelor of Science in Geology from the University of Texas and a Master of Science in Petroleum Engineering from the University of Houston. He is on the Board of the Oklahoma Independent Petroleum Association, Chairman of the Oklahoma Energy Resources Board, Past Chairman of the OERB Scholastic Outreach Committee, and Past Chairman of the International Society of Energy Advocates. Foutch received the American Association of Petroleum Geologists' Public Service Award at its 1999 convention.

About Newfield -- 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 and operations primarily in the Gulf of Mexico, 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.

About Lariat -- Lariat is an independent energy company engaged in the exploration, development and production of natural gas and crude oil primarily in the Anadarko Basin of Oklahoma where approximately 90% of its reserves are located. Lariat's remaining reserves are located in the Permian Basin of West Texas.

About Warburg Pincus -- Warburg Pincus provided private equity financing for both Lariat and Newfield in each of the companies' initial years. Today, Warburg Pincus is the largest shareholder of Lariat Petroleum and will become a significant shareholder of Newfield following the closing of this transaction. Warburg Pincus is one of the world's leading private equity and venture capital firms. With over $14 billion of invested and committed capital, and more than $11 billion invested in over 450 growth companies since 1971, Warburg Pincus has considerable experience in building successful companies in a variety of businesses including oil and gas exploration and production, energy and electricity, financial services, basic industries, technology and health care. Committed to maximizing its value-added contribution, Warburg Pincus operates dedicated expert industry groups to source new investment opportunities, provide strategic advice and guidance, and fund the growth of attractive and promising businesses.

Fourth Quarter 2000 Update

Newfield is on target to produce its previously stated goal of 139 Bcfe for the year 2000. This will represent a production increase of 22% over 1999. For the fourth quarter of 2000, Newfield expects to realize an average gas price of about $4.00 per Mcf, net of hedging activities. The Company expects to realize an average crude oil price of about $24.50 per barrel, net of hedging activities, in the fourth quarter of 2000.

For additional information, please see Newfield's home page located at www.newfld.com.

** Certain of the statements set forth in this news release regarding estimated reserves, anticipated production volumes, realized prices and operating expenses, planned capital and drilling activities 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, 1999. 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 (office)
     www.newfld.com                               sccampbell@newfld.com

SOURCE Newfield Exploration Company
Web site: http: //www.newfld.com
CONTACT: Steve Campbell of Newfield Exploration Company, 281-847-6081, or sccampbell@newfld.com

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