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Newfield Reports Financial and Operating Results for First Quarter 2009

HOUSTON, April 22 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited first quarter 2009 financial and operating results. Newfield will be hosting a conference call at 8:30 a.m. (CDT) on April 23. To participate in the call, dial 719-325-4768 or listen through the website at http://www.newfield.com.

"Our first quarter operating results were solid and we're off to a great start in 2009, despite the macro-challenges in our industry today," said President Lee K. Boothby. "Our cost and expenses in the first quarter were within or below our guidance levels, reflecting a continuing reduction in service costs and the diligent efforts of our teams to lower costs and maximize returns throughout the Company. We are confident in our ability to deliver on our 2009 production goals (up 6-10% over 2008) while living within cash flow. More importantly, we have the people and prospects in place today to grow production, while again living within cash flow, in 2010-2011."

First Quarter 2009

For the first quarter of 2009, Newfield recorded a net loss of $694 million, or $5.35 per diluted share (all per share amounts are on a diluted basis). The loss reflects the following items:

  • a $1.3 billion ($854 million after-tax), or $6.59 per share, reduction in the carrying value of oil and gas properties due to significantly lower gas prices at the end of the first quarter of 2009. This non-cash adjustment resulted from the application of full cost accounting rules. Using the quarter-end natural gas price of $3.63 per MMBtu, the Company's total estimated proved reserves were negatively impacted by approximately 400 Bcfe. The revision was primarily related to proved undeveloped reserves in the Mid-Continent and Rocky Mountain regions; and
  • a net unrealized gain on commodity derivatives of $73 million ($49 million after-tax), or $0.38 per share.

Without the effect of the above items, net income for the first quarter of 2009 would have been $112 million, or $0.85 per share.

Revenues in the first quarter of 2009 were $262 million. Net cash provided by operating activities before changes in operating assets and liabilities was $347 million. See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.

Newfield's production in the first quarter of 2009 was 63 Bcfe. Capital expenditures in the first quarter of 2009 were $369 million.

Highlights

  • Williston Basin Acreage Grows, Successful Drilling Results - Newfield recently added an additional 14,400 net acres in the Williston Basin of North Dakota. The Company has approximately 500,000 net acres, with nearly 200,000 acres in prospective development areas. Newfield has drilled 10 successful oil wells in the Williston Basin and gross operated production is approximately 4,800 BOPD. Recent drilling has been focused in North Dakota on the southern end of the Nesson Anticline. Results from the most recent wells are below:
  • The Gladys 1-9H is a Bakken completion with a 24-hour average gross initial production rate of 1,328 BOEPD. This was a 4,000' lateral, located in McKenzie County, North Dakota. Newfield operates the well with a 48% working interest.
  • The Wisness 1-4H is a Bakken completion with a 24-hour average gross initial production rate of 1,256 BOEPD. This was a 4,400' lateral, located in McKenzie County, North Dakota. Newfield operates the well with a 40% working interest.
  • The Moberg 1-29H is currently drilling. The well is expected to have an 8,500' lateral completion. The well, located in McKenzie County, North Dakota, is operated by Newfield, with a 72% working interest.
  • Mid-Continent Region Update - Gross operated production from the Mid-Continent division is about 400 MMcfe/d, or nearly 300 MMcfe/d net. Both metrics are recent Company records.
  • Stiles Ranch Field Achieves Record Production - Production from the Stiles Ranch Field, located in the Texas Panhandle, recently reached record gross production of 145 MMcfe/d. Newfield recently added a rig in the field and has three rigs drilling horizontal wells. Newfield has an approximate 80% working interest in the field.
  • Woodford Shale Update - Newfield recently released an operated rig in the Woodford and now has 11 operated rigs under term contract in the field, with six of the remaining rigs rolling off of term contract in 2009. The timing of rig contract expirations and the fact that more than 90% of the Company's 165,000 net acres now held-by-production provide Newfield with operational flexibility in the second half of 2009. Due to the recent weakness in natural gas prices and a continued decline in service costs, Newfield has been intentionally slowing its pace of new well completions. Gross operated production in the Woodford is approximately 240 MMcfe/d. The average lateral length in 2009 is expected to be more than 5,000' in length.
  • Mid-Continent Express to Improve Realized Gas Prices - Beginning late in the second quarter of 2009, Newfield's realized prices for Mid-Continent properties are expected to improve to 80-85% of the Henry Hub Index as the Company begins to utilize firm transportation agreements that provide guaranteed pipeline capacity at a fixed price to move this natural gas production to the Perryville, Louisiana markets.
  • Monument Butte Update - Gross oil sales from Monument Butte, located in the Uinta Basin of Utah, are currently averaging about 19,000 BOPD, up from approximately 17,000 BOPD at year-end 2008. The increased sales volumes reflect improved demand for Black Wax crude. Differentials have narrowed recently to approximately $12 per barrel below WTI (including transportation expense). Newfield continues to run a three-rig program in the Monument Butte field area, which covers approximately 180,000 gross acres. Substantially all of the acreage is held by production.

Newfield Exploration Company is an independent crude oil and natural gas exploration and production company. The Company relies on a proven growth strategy of growing reserves through an active drilling program and select acquisitions. Newfield's domestic areas of operation include the Anadarko and Arkoma Basins of the Mid-Continent, the Rocky Mountains, onshore Texas and the Gulf of Mexico. The Company has international operations in Malaysia and China.

**This release contains forward-looking information. All information other than historical facts included in this release, such as information regarding estimated or anticipated second quarter 2009 results, estimated 2009 capital expenditures, cash flow, production and cost reductions, drilling and development plans and the timing of activities, is forward-looking information. Although Newfield believes that these expectations are reasonable, this information is based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. 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 refining capacity for the crude oil Newfield produces from its Monument Butte field in Utah, the availability and cost of capital resources, labor conditions and severe weather conditions (such as hurricanes). In addition, the drilling of oil and gas wells and the production of hydrocarbons are subject to governmental regulations and operating risks.

For information, contact: Investor Relations: Steve Campbell (281) 847-6081 Media Relations: Keith Schmidt (281) 674-2650 Email: info@newfield.com

    1Q09 Actual Results

                                                          1Q09 Actual
                                                    Domestic   Int'l   Total
    Production/Liftings Note 1
        Natural gas - Bcf                              44.8        -     44.8
        Oil and condensate - MMBbls                     1.8      1.2      3.0
        Total Bcfe                                     55.4      7.2     62.6

    Average Realized Prices Note 2
        Natural gas - $/Mcf                         $  5.48  $     -  $  5.48
        Oil and condensate - $/Bbl                  $ 97.34  $ 40.67  $ 74.42
        Mcf equivalent - $/Mcfe                     $  7.55  $  6.78  $  7.46

    Operating Expenses:
      Lease operating
        Recurring ($MM)                             $  47.6  $  12.2  $  59.8
          per/Mcfe                                  $  0.85  $  1.70  $  0.95
        Major (workovers, repairs, etc.)
         ($MM) Note 3                               $  10.9  $   0.2  $  11.1
          per/Mcfe                                  $  0.20  $  0.03  $  0.18

      Production and other taxes ($MM) Note 4       $   6.7  $   2.4  $   9.1
          per/Mcfe                                  $  0.12  $  0.34  $  0.15

      General and administrative (G&A), net ($MM)   $  32.2  $   0.2  $  32.4
          per/Mcfe                                  $  0.58  $  0.03  $  0.52

              Capitalized internal costs ($MM)                        $ (16.0)
                per/Mcfe                                              $ (0.26)

    Interest expense ($MM)                                            $  32.1
          per/Mcfe                                                    $  0.51

    Capitalized interest ($MM)                                        $ (14.1)
          per/Mcfe                                                    $ (0.22)

    Note 1: Reflects approximately 2 Bcfe of deferred domestic gas production
            related to GOM storms.
    Note 2: Average realized prices include the effects of hedging contracts.
            If the effects of these contracts were excluded, the average
            realized price for total gas would have been $3.48 per Mcf and the
            total oil and condensate average realized price would have been
            $35.66 per barrel.
    Note 3: Domestic major expense of $4 million was recorded in the first
            quarter related to a non-operated well in deepwater GOM.
    Note 4: Domestic production and other taxes includes refunds related to
            production and severance tax exemptions on some of our onshore
            wells.



    2Q09 Estimates

                                                2Q09 Estimates
                                    Domestic          Int'l          Total
    Production/Liftings
        Natural gas - Bcf           45.0 - 48.6              -    45.0 - 48.6
        Oil and condensate - MMBbls   1.5 - 1.7      1.5 - 1.7      3.0 - 3.4
        Total Bcfe                  54.0 - 58.8     9.0 - 10.2    63.0 - 69.0

    Average Realized Prices
        Natural gas - $/Mcf              Note 1
        Oil and condensate - $/Bbl       Note 2         Note 3
        Mcf equivalent - $/Mcfe

    Operating Expenses:
      Lease operating
        Recurring ($MM)           $46.2 - $51.0  $15.4 - $17.0  $61.6 - $68.0
          per/Mcfe                $0.86 - $0.87  $1.66 - $1.71  $0.97 - $0.99
        Major (workover,
         repairs, etc.) ($MM)     $10.0 - $11.8    $1.1 - $1.3  $11.1 - $13.1
          per/Mcfe                $0.18 - $0.20  $0.12 - $0.14  $0.17 - $0.19

      Production and other taxes
       ($MM) Note 4               $14.5 - $16.1    $5.0 - $5.5  $19.5 - $21.6
          per/Mcfe                $0.27 - $0.28  $0.54 - $0.56  $0.30 - $0.32

      General and administrative
       (G&A), net ($MM)           $30.6 - $33.7    $1.4 - $1.6  $32.0 - $35.3
          per/Mcfe                $0.57 - $0.58  $0.15 - $0.16  $0.50 - $0.52

            Capitalized internal
             costs ($MM)                                       $(18.6 - $20.5)
              per/Mcfe                                         $(0.28 - $0.30)

    Interest expense ($MM)                                      $29.3 - $32.7
          per/Mcfe                                              $0.46 - $0.48

    Capitalized interest ($MM)                                 $(11.8 - $13.0)
          per/Mcfe                                             $(0.18 - $0.20)

    Tax rate (%)Note 5                                                  36-38

    Income taxes (%)
      Current                                                       14% - 16%
      Deferred                                                      84% - 86%

Note 1: Gas prices in the Mid-Continent, after basis differentials, transportation and handling charges, typically average 70 - 80% of the Henry Hub Index. Beginning late in the second quarter of 2009, our realized prices for Mid-Continent properties should improve to 80-85% of the Henry Hub Index as we begin to utilize our agreements that provide guaranteed pipeline capacity at a fixed price to move this natural gas production to the Perryville markets. Gas prices in the Gulf Coast, after basis differentials, transportation and handling charges, are expected to average $0.50 - $0.75 per MMBtu less than the Henry Hub Index.

Note 2: Oil prices in the Gulf Coast typically average 90 - 95% of NYMEX WTI price. Rockies oil prices average about $12 - $14 per barrel below WTI. Oil production from the Mid-Continent typically averages 85 - 90% of WTI.

Note 3: Oil in Malaysia typically sells at a slight discount to Tapis, or about 90% of WTI. Oil production from China typically sells at $8 - $10 per barrel below WTI.

Note 4: Guidance for production taxes determined using $45/Bbl oil and $5/MMBtu gas.

Note 5: Tax rate applied to earnings excluding unrealized gains or losses on commodity derivatives.

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

                                                                 For the
                                                           Three Months Ended
                                                                 March 31,
                                                              2009       2008

    Oil and gas revenues                                   $   262    $   515

    Operating expenses:
      Lease operating                                           71         59
      Production and other taxes                                 9         51
      Depreciation, depletion and amortization                 159        157
      General and administrative                                32         32
      Ceiling test writedown                                 1,344          --
      Other                                                      2          --
          Total operating expenses                           1,617        299

    Income (loss) from operations                           (1,355)       216

    Other income (expenses):
      Interest expense                                         (32)       (19)
      Capitalized interest                                      14         13
      Commodity derivative income (expense)                    278       (321)
      Other                                                      3          3
                                                               263       (324)

    Loss before income taxes                                (1,092)      (108)

    Income tax benefit                                        (398)       (44)

    Net loss                                                 $(694)      $(64)

    Loss per share:
     Basic --                                               $(5.35)    $(0.50)

     Diluted --                                             $(5.35)    $(0.50)

    Weighted average number of shares outstanding
     for basic loss per share                                  130        129
    Weighted average number of shares outstanding
     for diluted loss per share *
                                                               130        129

    * Had we recorded net income for the three months ended March 31, 2009 and
    2008, the weighted average number of shares outstanding for the
    computation of diluted earnings per share would have been 131 million for
    both periods.


    CONDENSED CONSOLIDATED BALANCE SHEET
    (Unaudited, in millions)

                                                       March 31,  December 31,
                                                         2009        2008

    ASSETS
    Current assets:
      Cash and cash equivalents                           $38         $24
      Derivative assets                                   775         663
      Other current assets                                506         519
          Total current assets                          1,319       1,206

    Property and equipment, net (full cost method)      4,622       5,758
    Derivative assets                                     203         247
    Other assets                                           99          94
          Total assets                                 $6,243      $7,305

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                                $1,044      $1,085

    Other liabilities                                     108          92
    Long-term debt                                      2,287       2,213
    Deferred taxes                                        232         658
          Total long-term liabilities                   2,627       2,963

    Commitments and contingencies                           -           -

    STOCKHOLDERS' EQUITY
    Common stock                                            1           1
    Additional paid-in capital                          1,339       1,335
    Treasury stock                                        (25)        (32)
    Accumulated other comprehensive loss                  (13)        (11)
    Retained earnings                                   1,270       1,964
      Total stockholders' equity                        2,572       3,257
      Total liabilities and stockholders' equity       $6,243      $7,305



    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
    (Unaudited, in millions)

                                                             For the
                                                        Three Months Ended
                                                            March 31,
                                                         2009        2008
    Cash flows from operating activities:
      Net loss                                          $(694)       $(64)
    Adjustments to reconcile net loss to net
     cash provided by operating activities:


      Depreciation, depletion and amortization            159         157
      Deferred tax benefit                               (403)        (63)
      Stock-based compensation                              8           5
      Ceiling test writedown                            1,344           -
      Commodity derivative (income) expense              (278)        321
      Cash receipts (payments) on derivative
       settlements                                        211         (40)
                                                          347         316
      Changes in operating assets and liabilities           2         (44)
        Net cash provided by operating activities         349         272

    Cash flows from investing activities:
      Additions to oil and gas properties and
       other, net                                        (414)       (501)
      Net (purchases) redemptions of investments            7          46
        Net cash used in investing activities            (407)       (455)

    Cash flows from financing activities:
      Net proceeds under credit arrangements               73           --
      Other                                                (1)         13
        Net cash provided by financing activities          72          13

    Increase (decrease) in cash and cash equivalents       14        (170)
    Cash and cash equivalents, beginning of period         24         250

    Cash and cash equivalents, end of period            $  38        $ 80



    Explanation and Reconciliation of Non-GAAP Financial Measures

    Earnings Stated Without the Effects of Certain Items
        Earnings stated without the effects of certain items is a non-GAAP
    financial measure. Earnings without the effects of these items are
    presented because they affect the comparability of operating results from
    period to period. In addition, earnings without the effects of these items
    are more comparable to earnings estimates provided by securities analysts.

        A reconciliation of earnings for the first quarter of 2009 stated
    without the effects of certain items to net loss is shown below:

                                                                   1Q09
                                                              (in millions)
    Net loss                                                   $  (694)
        Ceiling test writedown                                   1,344
        Net unrealized gain on commodity derivatives (1)           (73)
        Income tax adjustment for above items                     (465)
    Earnings stated without the effect of the above items         $112

    (1) The determination of "Net unrealized gain on commodity derivatives"
    for the first quarter of 2009 is as follows:

                                                                   1Q09
                                                              (in millions)
        Commodity derivative income                            $   278
        Cash receipts on derivative settlements                   (211)
        Option premiums associated with derivatives settled
         during the period                                           6
          Net unrealized gain on commodity derivatives         $    73


    Net Cash Provided by Operating Activities Before Changes in Operating
    Assets and Liabilities
        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 (used in) 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:

                                                                 1Q09
                                                             (in millions)
    Net cash provided by operating activities                  $   349
        Net change in operating assets and liabilities              (2)
    Net cash provided by operating activities before changes
     in operating assets and liabilities                       $   347

SOURCE Newfield Exploration Company 04/22/2009 CONTACT: Investor Relations, Steve Campbell, +1-281-847-6081, or Media Relations, Keith Schmidt, +1-281-674-2650, both of Newfield Exploration Companyinfo@newfield.com /Web Site: http://www.newfield.com (NFX)

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