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Newfield Reports Financial and Operating Results for Second Quarter 2009

HOUSTON, July 22 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited second quarter 2009 financial and operating results. Newfield will be hosting a conference call at 8:30 a.m. (CDT) on July 23. To participate in the call, dial 719-325-4798 or listen through the website at http://www.newfield.com.

"Our second quarter results show the diligent efforts of our employees to lower costs and improve margins throughout our focus areas," said President & CEO Lee K. Boothby. "We are seeing cost reductions throughout our operations. A combination of improving efficiencies in drilling and completions, falling service costs and a strong hedge position in 2009-2010 provides us with an advantage in today's challenging environment. Our production volumes are strong. In fact, we expect to be in the top half of our guidance range for 2009 AND we intend to continue deferring completions in the Woodford, as well as defer completions on the remainder of our planned Granite Wash wells in 2009.

"We are intensely focused on how we are allocating capital in our business units today, ensuring that dollars are flowing to the areas with the best returns and the highest growth prospects. We intend to meet our production targets in 2009 and are confident that our portfolio will allow us to grow production at similar percentage levels, within cash flow, in 2010-11."

Second Quarter 2009

For the second quarter of 2009, Newfield recorded a net loss of $39 million, or $0.30 per diluted share (all per share amounts are on a diluted basis). The loss reflects a net unrealized loss on commodity derivatives of $322 million ($208 million after-tax), or $1.58 per share.

Without the effect of this item, net income for the second quarter of 2009 would have been $169 million, or $1.28 per share.

Revenues in the second quarter of 2009 were $287 million. Net cash provided by operating activities before changes in operating assets and liabilities was $417 million. See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.

Newfield's production in the second quarter of 2009 was 65 Bcfe, an increase of 12% over the second quarter of 2008. An additional 1 Bcfe was produced in Malaysia during the second quarter of 2009 but was not lifted due to timing of liftings. Capital expenditures in the second quarter of 2009 were $300 million.

    Highlights
    --  Mid-Continent Update - Gross operated production from the
        Mid-Continent division has been running ahead of beginning of the year
        expectations, primarily due to increased production from the Granite
        Wash play. Current gross production from the Mid-Continent is 400
        MMcfe/d, or 292 MMcfe/d net.
        --  Horizontal Drilling Success at Stiles Ranch - Newfield's first
            seven horizontal wells in the Granite Wash play had an average
            initial production rate of 22 MMcfe/d. All of the wells to date
            have been drilled in the Stiles Ranch field, located in Wheeler
            County, Texas. In the second quarter of 2009, Newfield increased
            its activity in the field and is today running three operated
            drilling rigs, all drilling horizontal wells. Newfield has an
            approximate 80% working interest in Stiles Ranch and substantially
            all of the acreage is held-by-production. A complete update on the
            Granite Wash activities can be found in a separate news release
            issued earlier today.
        --  Woodford Shale  - Since the beginning of the year, Newfield has
            released three operated rigs in the Woodford. The Company now has
            10 operated rigs running under term contracts, with four of the
            remaining rigs rolling off of term contracts in the second half of
            2009. The timing of rig contract expirations and the fact that
            more than 90% of the Company's 165,000 net acres are now
            held-by-production provides flexibility. Due to the recent
            weakness in natural gas prices, Newfield has been intentionally
            slowing its pace of new well completions. Newfield has an
            inventory of about 25 wells that have been drilled but not
            completed. The timing of these completions largely depends on
            natural gas prices. Gross operated production in the Woodford is
            approximately 240 MMcfe/d, or about equal to the first quarter
            2009 exit rate.
        --  Woodford Gas Sales Now Flowing Through Mid-Continent Express -
            Last week, Newfield initiated firm gas sales through the new
            Arkoma Connector and into the Mid-Continent Express pipeline.
            Today, 100% of the Company's Woodford gas is being sold under firm
            transportation agreements. Newfield's realized prices for
            Mid-Continent properties are expected to improve to 75-85% of the
            Henry Hub Index as the Company utilizes firm transportation
            agreements that provide guaranteed pipeline capacity at a fixed
            price to move its natural gas production to the Perryville,
            Louisiana markets.
    --  Deepwater Gulf of Mexico Update - Newfield recently announced two
        discoveries in the deepwater Gulf of Mexico -- Pyrenees and Winter.
        Since the beginning of 2008, Newfield has drilled seven successful
        wells out of eight exploration attempts in the deepwater Gulf and now
        has seven deepwater developments underway, providing significant
        future production growth.
        --  Pyrenees Sidetrack Underway - Located at Garden Banks (GB) Block
            293 in approximately 2,100' of water, Pyrenees encountered
            approximately 125' of net hydrocarbon pay in three separate
            intervals. Newfield and its partners recently contracted a
            deepwater rig and are in the process of sidetracking the well to
            test both shallower and deeper objectives. Newfield operates the
            development with a 40% working interest.
        --  Additional Prospects Around Pyrenees Added Through Recent GOM
            Lease Sale - In the most recent GOM lease sale, Newfield picked up
            four additional lease blocks associated with the "Pyrenees
            Complex." New prospects include Mastiff (GB 338, 382) and Saluki
            (GB 381, 425) where Newfield operates with an 85% and a 100%
            working interest, respectively. The Company is in the process of
            selling down a portion of its interest in these prospects on a
            promoted basis. Exploratory drilling could occur as early as 2010.
        --  Winter - Winter (GB 605) is located in approximately 3,400' of
            water. The well encountered approximately 44' of net hydrocarbon
            pay in two sands and was temporarily abandoned. Partners are
            considering various development options, with first production
            anticipated in 2011. Newfield is the operator with a 30% working
            interest.
    --  Monument Butte Update - Gross oil production from Monument Butte,
        located in the Uinta Basin of Utah, is about 16,000 BOPD.
        Differentials have narrowed recently to $12-$13 per barrel below WTI
        (including transportation expense). Newfield is running a three-rig
        program in the Monument Butte field today and plans to add a fourth
        operated rig in the third quarter of 2009. The Monument Butte field
        area covers approximately 180,000 gross acres, substantially all held
        by production.

    --  Williston Basin Update -The Company has approximately 500,000 net
        acres, with nearly 200,000 acres in prospective development areas.
        Newfield has drilled 11 successful oil wells in the North Dakota
        portion of the Williston Basin and gross operated production is about
        4,000 BOEPD. Newfield is currently running one operated rig in the
        basin. The most recent completion was the Moberg 1-29H well, located
        in McKenzie County, North Dakota. The well had initial production of
        1,200 BOEPD. Newfield operates the well with a 72% working interest.

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 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 third 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

    2Q09 Actual Results
                                                          2Q09 Actual
                                                 Domestic     Int'l    Total
     Production/Liftings
        Natural gas - Bcf                           45.2          -     45.2
        Oil and condensate - MMBbls                  1.9        1.3      3.2
        Total Bcfe                                  56.4        8.2     64.6

     Average Realized Prices (Note 1)
        Natural gas - $/Mcf                        $6.21         $-    $6.21
        Oil and condensate - $/Bbl                $97.15     $47.29   $76.09
        Mcf equivalent - $/Mcfe                    $8.21      $7.86    $8.16

    Operating Expenses:
      Lease operating
        Recurring ($MM) (Note 2)                   $40.0      $11.5    $51.5
          per/Mcfe                                 $0.71      $1.40    $0.80
        Major (workovers, repairs,
         etc.) ($MM)                                $5.1       $0.3     $5.4
          per/Mcfe                                 $0.09      $0.04    $0.08

      Production and other taxes ($MM)             $11.8       $2.8    $14.6
         per/Mcfe                                  $0.21      $0.34    $0.23

      General and administrative (G&A), net ($MM)  $32.0       $1.8    $33.8
         per/Mcfe                                  $0.57      $0.22    $0.52

              Capitalized internal costs ($MM)                        $(18.3)
                 per/Mcfe                                             $(0.28)

    Interest expense ($MM)                                             $31.8
          per/Mcfe                                                     $0.49

    Capitalized interest ($MM)                                        $(12.1)
          per/Mcfe                                                    $(0.19)

    Note 1: 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 $2.85 per Mcf and the total oil and
    condensate average realized price would have been $48.42 per barrel.

    Note 2: International recurring lease operating expenses in the second
    quarter of 2009 included a $1 million ($0.12 per Mcfe) benefit associated
    with a prior period adjustment on properties operated by others.

    3Q09 Estimates
                                                  3Q09 Estimates
                                      Domestic         Int'l          Total

    Production/Liftings( )
       Natural gas - Bcf            43.5 - 48.9             -      43.5 - 48.9
       Oil and condensate -
        MMBbls                       1.5 - 1.6     1.7 - 1.9        3.2 - 3.5
       Total Bcfe                   52.5 - 58.5   10.4 - 11.5      62.9 - 70.0

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

    Operating Expenses:
      Lease operating
        Recurring ($MM)         $34.0 - $38.0 $21.7 - $24.0    $55.7 - $62.0
          per/Mcfe              $0.64 - $0.65 $2.08 - $2.10    $0.88 - $0.89
        Major (workover,
         repairs, etc.) ($MM)    $4.0 - $6.0   $0.9 - $1.0      $4.9 - $7.0
          per/Mcfe              $0.08 - $0.10 $0.09 - $0.10    $0.08 - $0.10

      Production and
       other taxes ($MM)
       (Note 4)                 $14.3 - $15.9  $9.6 - $10.6    $23.9 - $26.5
         per/Mcfe               $0.27 - $0.28 $0.92 - $0.93    $0.37 - $0.39

      General and
       administrative (G&A),
       net ($MM)                $29.9 - $33.0   $1.4 - $1.6    $31.3 - $34.6
         per/Mcfe               $0.56 - $0.57 $0.13 - $0.14    $0.49 - $0.50

           Capitalized internal
            costs ($MM)                                       $(18.5 - $20.5)
              per/Mcfe                                        $(0.29 - $0.30)

    Interest expense ($MM)                                     $29.9 - $33.1
       per/Mcfe                                                $0.47 - $0.48

    Capitalized interest ($MM)                                $(11.4 - $12.6)
     per/Mcfe                                                 $(0.18 - $0.19)

    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 in the third quarter of 2009, our realized
    prices for Mid-Continent properties should improve to 75-85% 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 85-90% of WTI. Oil production from China typically sells at $6 - $8
    per barrel below WTI.

    Note 4: Guidance for production taxes determined using $65/Bbl oil and
    $4.50/MMBtu gas.

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



    CONSOLIDATED STATEMENT OF INCOME              For the         For the
    (Unaudited, in millions, except per         Three Months     Six Months
     share data)                                Ended June 30, Ended June 30,
                                                -------------  --------------
                                                 2009    2008    2009    2008
                                                 ----    ----    ----    ----
    Oil and gas revenues                         $287    $691    $549  $1,207
                                                 ----    ----    ----  ------
    Operating expenses:
      Lease operating                              57      58     128     117
      Production and other taxes                   15      52      24     103
      Depreciation, depletion and amortization    137     166     296     323
      General and administrative                   34      37      66      69
      Ceiling test writedown                        -       -   1,344       -
      Other                                         5       -       7       -
                                                  ---     ---     ---     ---
         Total operating expenses                 248     313   1,865     612
                                                  ---     ---   -----     ---

    Income (loss) from operations                  39     378  (1,316)    595

    Other income (expenses):
      Interest expense                            (32)    (28)    (64)    (47)
      Capitalized interest                         12      13      26      27
      Commodity derivative income (expense)       (81)   (652)    197    (973)
      Other                                         2       -       5       2
                                                  ---     ---     ---     ---
                                                  (99)   (667)    164    (991)
                                                  ---    ----     ---    ----

    Loss before income taxes                      (60)   (289) (1,152)   (396)
    Income tax benefit                            (21)    (45)   (419)    (88)
                                                  ---     ---    ----     ---

    Net loss                                     $(39)  $(244)  $(733)  $(308)
                                                 ====   =====   =====   =====

    Loss per share:
    Basic --                                   $(0.30) $(1.89) $(5.66) $(2.39)
                                               ======  ======  ======  ======
    Diluted --                                 $(0.30) $(1.89) $(5.66) $(2.39)
                                               ======  ======  ======  ======

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

    * Had we recognized net income for the three and six months ended June 30,
      2009 and 2008, the weighted average number of shares outstanding for the
      computation of diluted earnings per share would have increased by 2
      million shares for the three and six months ended June 30, 2009 and 3
      million shares for the three and six months ended June 30, 2008.



    CONDENSED CONSOLIDATED BALANCE SHEET         June 30, December 31,
    (Unaudited, in millions)                       2009      2008
                                                   ----      ----
    ASSETS
    Current assets:
      Cash and cash equivalents                     $38       $24
      Derivative assets                             549       663
      Other current assets                          493       519
                                                    ---       ---
         Total current assets                     1,080     1,206

    Property and equipment, net (full cost
     method)                                      4,789     5,758
    Derivative assets                               101       247
    Other assets                                     88        94
                                                     --        --
         Total assets                            $6,058    $7,305
                                                 ======    ======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                            $818    $1,085
                                                   ----    ------

    Other liabilities                               113        92
    Long-term debt                                2,292     2,213
    Deferred taxes                                  288       658
                                                    ---       ---
         Total long-term liabilities              2,693     2,963
                                                  -----     -----

    Commitments and contingencies                     -         -

    STOCKHOLDERS' EQUITY
    Common stock                                      1         1
    Additional paid-in capital                    1,359     1,335
    Treasury stock                                  (33)      (32)
    Accumulated other comprehensive loss            (11)      (11)
    Retained earnings                             1,231     1,964
                                                  -----     -----
      Total stockholders' equity                  2,547     3,257
                                                  -----     -----
      Total liabilities and stockholders' equity $6,058    $7,305
                                                 ======    ======



    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
    (Unaudited, in millions)
                                                                 For the
                                                            Six Months Ended
                                                                 June 30,
                                                                 --------
                                                               2009    2008
                                                               ----    ----
    Cash flows from operating activities:
      Net loss                                                $(733)  $(308)
    Adjustments to reconcile net loss to net cash provided by
     operating activities:
      Depreciation, depletion and amortization                  296     323
      Deferred tax benefit                                     (420)   (113)
      Stock-based compensation                                   15      12
      Ceiling test writedown                                  1,344       -
      Commodity derivative (income) expense                    (197)    973
      Cash receipts (payments) on derivative settlements        459    (668)
                                                                ---    ----
                                                                764     219
      Changes in operating assets and liabilities               (52)    (47)
                                                                ---     ---
          Net cash provided by operating activities             712     172
                                                                ---     ---

    Cash flows from investing activities:
      Additions to oil and gas properties and other, net       (790) (1,320)
      Net redemptions of investments                             14      48
                                                                 --      --
          Net cash used in investing activities                (776) (1,272)
                                                               ----  ------

    Cash flows from financing activities:
      Net proceeds under credit arrangements                     78     268
      Net proceeds from issuance of senior subordinated notes     -     592
      Other                                                       -      18
                                                                ---      --
        Net cash provided by financing activities                78     878
                                                                 --     ---


    Increase (decrease) in cash and cash equivalents             14    (222)
    Cash and cash equivalents, beginning of period               24     250
                                                                 --     ---

    Cash and cash equivalents, end of period                    $38     $28
                                                                ===     ===



    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 second quarter of 2009 stated without
    the effects of certain items to net loss is shown below:


                                                                2Q09
                                                                ----
                                                            (in millions)
    Net loss                                                    $(39)
       Net unrealized loss on commodity derivatives (1)          322
       Income tax adjustment for above item                     (114)
                                                                ----
    Earnings stated without the effect of the above item        $169
                                                                ====

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

                                                                2Q09
                                                                ----
                                                            (in millions)
       Commodity derivative expense                             $(81)
       Cash receipts on derivative settlements                  (248)
       Option premiums associated with derivatives settled
        during the period                                          7
                                                               -----
         Net unrealized loss on commodity derivatives          $(322)
                                                               =====


    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:

                                                                2Q09
                                                                ----
                                                            (in millions)
    Net cash provided by operating activities                   $363
       Net change in operating assets and liabilities             54
                                                                ----
    Net cash provided by operating activities before changes
     in operating assets and liabilities                        $417
                                                                ====

SOURCE Newfield Exploration Company CONTACT: Investor Relations, Steve Campbell, +1-281-847-6081, or Media Relations, Keith Schmidt, +1-281-674-2650, info@newfield.com, both of Newfield Exploration Company/

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