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Newfield Reports First Quarter 2010 Results

HOUSTON, April 27, 2010 /PRNewswire via COMTEX/ --Newfield Exploration Company (NYSE: NFX) today reported its unaudited first quarter 2010 financial results. A separate operational update was released on April 26 and this release and the operational update release are available through the investor relations section of our website at http://www.newfield.com. Newfield will be hosting a conference call at 7:30 a.m. (CDT) on April 28. To participate in the call, dial 719-457-2731 or listen through the investor relations section of our website at http://www.newfield.com.

For the first quarter of 2010, Newfield recorded net income of $244 million, or $1.84 per diluted share (all per share amounts are on a diluted basis). Net income includes the effect of these items:

  • a net unrealized gain on commodity derivatives of $143 million ($91 million after-tax); and
  • an early redemption charge of $10 million ($6 million after-tax) associated with the purchase and payment of approximately $143 million of our $175 million aggregate principal amount of 7 5/8% Senior Notes due 2011 offset by a gain of $2 million ($1 million after-tax) resulting from the termination of the associated interest rate swap.

Without the effect of these items, net income for the first quarter of 2010 would have been $158 million, or $1.19 per share.

Revenues in the first quarter of 2010 were $458 million. Net cash provided by operating activities before changes in operating assets and liabilities was $393 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 2010 was 67 Bcfe. Natural gas production in the first quarter of 2010 was 48 Bcf, an average of 533 MMcf/d. Newfield's oil liftings in the first quarter of 2010 were 3.2 MMBbls, an average of approximately 35,550 BOPD. Capital expenditures in the first quarter of 2010 were approximately $360 million, excluding the previously announced $215 million acquisition of properties in the Maverick Basin from TXCO Resources Inc. (closed February 2010).

2010 Outlook

On Monday, Newfield announced that the Company intends to allocate additional capital in 2010 to its ongoing oil activities in the Uinta and Williston Basins. Newfield now expects to invest approximately $700 million in oil projects in 2010, or nearly 45% of its total budget. At current oil prices, Newfield's growing crude oil volumes are expected to account for approximately 60% of 2010 revenues.

As a result of the re-allocation in expenditures, the Company's 2010 domestic crude oil production is expected to increase throughout the remainder of 2010 and is expected to be at least 20% above 2009 domestic oil production. Spending reductions in planned gas development programs will offset these new oil investments. Newfield maintains its capital budget of $1.6 billion.

For the full year 2010, Newfield expects that its production will be in the upper half of its previous production guidance of 278 - 288 Bcfe, representing an expected increase of at least 10% over 2009 volumes. An intentional reduction in natural gas volumes in the second half of 2010 should be more than offset by our growing crude oil volumes.

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 second quarter and full year 2010 results, estimated 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



    1Q10 Actual Results
    -------------------

                                                        1Q10 Actual
                                               Domestic      Int'l      Total
     Production/Liftings
        Natural gas - Bcf                          48.0            -     48.0
        Oil and condensate - MMBbls                 1.8        1.4      3.2
        Total Bcfe                                 58.6        8.4     67.0

     Average Realized Prices (Note 1)
        Natural gas - $/Mcf                       $6.34 $        -    $6.34
        Oil and condensate - $/Bbl               $88.38     $70.50   $80.45
        Mcf equivalent - $/Mcfe                   $7.91     $11.75    $8.40

    Operating Expenses: (Note 2)
       Lease operating
        Recurring ($MM)                           $49.9      $10.0    $59.9
          per/Mcfe                                $0.87      $1.20    $0.91
        Major (workovers, repairs, etc.) ($MM)     $6.0       $1.2     $7.2
          per/Mcfe                                $0.10      $0.14    $0.11

      Production and other taxes ($MM)            $15.4       $9.3    $24.7
         per/Mcfe                                 $0.27      $1.10    $0.38

      General and administrative (G&A), net
       ($MM)                                      $35.5       $0.9    $36.4
         per/Mcfe                                 $0.62      $0.11    $0.55

              Capitalized internal costs ($MM)                       $(20.3)
                 per/Mcfe                                            $(0.31)

    Interest expense ($MM)                                            $37.7
          per/Mcfe                                                    $0.57

    Capitalized interest ($MM)                                       $(12.3)
          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 $5.04 per Mcf
    and the total oil and condensate average realized price would have
    been $69.82 per barrel.

    Note 2: Recurring lease operating expense includes transportation
    expense.



    2Q10 & FY10 Estimates
    ---------------------


                                         2Q10 & FY10 Estimates
                                                       Domestic
    Production/Liftings                           2Q10              FY10
                                                  ----              ----
       Natural gas - Bcf                        50 - 52           199 - 202
       Oil and condensate - MMBbls             1.9 - 2.0          8.5 - 8.7
       Total Bcfe                               62 - 64           250 - 254

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

    Operating Expenses:
      Lease operating
        Recurring ($MM)                              $35 - $39    $148 - $157
          per/Mcfe                               $0.57 - $0.61  $0.59 - $0.62
        Transportation ($MM)                         $18 - $20      $70 - $73
          per/Mcfe                               $0.25 - $0.27  $0.28 - $0.29
        Recurring w/ trans ($MM)                     $53 - $59    $218 - $230
          per/Mcfe                               $0.86 - $0.92  $0.87 - $0.92
        Major (workovers, etc.) ($MM)                $15 - $20      $34 - $38
          per/Mcfe                               $0.26 - $0.28  $0.14 - $0.15

      Production/Taxes ($MM) (Note 4)                $15 - $18      $59 - $72
         per/Mcfe                                $0.25 - $0.26  $0.25 - $0.27

      G&A, net ($MM)                                 $31 - $37    $129 - $143
        per/Mcfe                                 $0.54 - $0.55  $0.54 - $0.55

        Capitalized internal costs ($MM)
          per/Mcfe

    Interest expense ($MM)
          per/Mcfe

    Capitalized interest ($MM)
          per/Mcfe

    Tax rate (%) (Note 5)

    Income taxes (%)
      Current
      Deferred




                                         2Q10 & FY10 Estimates
                                                        Int'l
    Production/Liftings                           2Q10              FY10
                                                  ----              ----
       Natural gas - Bcf                                     -             -
       Oil and condensate - MMBbls             1.4 - 1.5         5.6 - 5.7
       Total Bcfe                                 8 - 9           33 - 34

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

    Operating Expenses:
      Lease operating
        Recurring ($MM)                              $12 - $14     $43 - $45
          per/Mcfe                               $1.43 - $1.48 $1.30 - $1.34
        Transportation ($MM)                                 -             -
          per/Mcfe                                           -             -
        Recurring w/ trans ($MM)                     $12 - $14     $43 - $45
          per/Mcfe                               $1.43 - $1.48 $1.30 - $1.34
        Major (workovers, etc.) ($MM)                  $2 - $4     $20 - $22
          per/Mcfe                               $0.34 - $0.36 $0.61 - $0.64

      Production/Taxes ($MM) (Note 4)                $15 - $19     $53 - $65
         per/Mcfe                                $1.93 - $1.97 $1.73 - $1.76

      G&A, net ($MM)                                   $1 - $2       $4 - $5
        per/Mcfe                                 $0.13 - $0.14 $0.12 - $0.13

        Capitalized internal costs ($MM)
          per/Mcfe

    Interest expense ($MM)
          per/Mcfe

    Capitalized interest ($MM)
          per/Mcfe

    Tax rate (%) (Note 5)

    Income taxes (%)
      Current
      Deferred




                                         2Q10 & FY10 Estimates
                                                         Total
    Production/Liftings                           2Q10             FY10
                                                  ----             ----
       Natural gas - Bcf                         50 - 52         199 - 202
       Oil and condensate - MMBbls              3.3 - 3.5      14.1 - 14.4
       Total Bcfe                                70 - 73         283 - 288

    Average Realized Prices
       Natural gas - $/Mcf
       Oil and condensate - $/Bbl
       Mcf equivalent - $/Mcfe

    Operating Expenses:
      Lease operating
        Recurring ($MM)                              $47 - $53   $191 - $202
          per/Mcfe                               $0.67 - $0.72 $0.67 - $0.72
        Transportation ($MM)                         $18 - $20     $70 - $73
          per/Mcfe                               $0.25 - $0.27 $0.28 - $0.29
        Recurring w/ trans ($MM)                     $65 - $73   $261 - $275
          per/Mcfe                               $0.93 - $0.99 $0.93 - $0.97
        Major (workovers, etc.) ($MM)                $17 - $24     $54 - $60
          per/Mcfe                               $0.27 - $0.29 $0.19 - $0.20

      Production/Taxes ($MM) (Note 4)                $30 - $37   $112 - $137
         per/Mcfe                                $0.46 - $0.47 $0.42 - $0.45

      G&A, net ($MM)                                 $32 - $39   $133 - $148
        per/Mcfe                                 $0.49 - $0.50 $0.49 - $0.50

        Capitalized internal costs ($MM)      ($19 - $23)      ($75 - $92)
                                                 ($0.29 -         ($0.29 -
          per/Mcfe                                $0.30)           $0.30)

    Interest expense ($MM)                           $35 - $43   $137 - $168
          per/Mcfe                               $0.54 - $0.55 $0.53 - $0.54

    Capitalized interest ($MM)                ($11 - $13)      ($41 - $51)
                                                 ($0.16 -         ($0.15 -
          per/Mcfe                                $0.17)           $0.16)

    Tax rate (%) (Note 5)                            35% - 37%    35% - 37%

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



    Note 1: The price that we receive for natural gas production from the
    Gulf of Mexico and onshore Gulf Coast, after basis differentials,
    transportation and handling charges, typically averages $0.25 -
    $0.50 per MMBtu less than the Henry Hub Index.  Realized natural gas
    prices for our Mid-Continent properties, after basis differentials,
    transportation and handling charges, typically average 85-90% of
    the Henry Hub Index.
    Note 2: The price we receive for our Gulf Coast oil production
    typically averages about 90-95% of the NYMEX West Texas
    Intermediate (WTI) price. The price we receive for our oil
    production in the Rocky Mountains is currently averaging about $12-
    $14 per barrel below the WTI price. Oil production from our Mid-
    Continent properties typically averages 88-92% of the WTI price.
    Note 3: Oil sales from our operations in Malaysia typically sell at a
    slight discount to Tapis, or about 90-95% of WTI. Oil sales from our
    operations in China typically sell at $4-$6 per barrel less than the
    WTI price.
    Note 4: Guidance for production taxes determined using $75/Bbl oil
    and $5.00/MMBtu gas.
    Note 5: Tax rate applied to earnings excluding unrealized gains or
    losses on commodity derivatives.


    CONSOLIDATED STATEMENT OF INCOME                       For the
    (Unaudited, in millions, except per
     share data)                                           -------
                                                      Three Months Ended
                                                      ------------------
                                                          March 31,
                                                          ---------
                                                       2010           2009
                                                       ----           ----

    Oil and gas revenues                               $458           $262
                                                       ----           ----

    Operating expenses:
       Lease operating                                   67             71
       Production and other taxes                        25              9
       Depreciation, depletion and amortization         147            159
       General and administrative                        36             32
       Ceiling test writedown                             -          1,344
       Other                                              8              2
                                                        ---            ---
          Total operating expenses                      283          1,617
                                                        ---          -----

    Income (loss) from operations                       175         (1,355)

    Other income (expenses):
       Interest expense                                 (38)           (32)
       Capitalized interest                              12             14
       Commodity derivative income                      237            278
       Other                                              2              3
                                                        ---            ---
          Total other income (expenses)                 213            263
                                                        ---            ---

    Income (loss) before income taxes                   388         (1,092)

    Income tax provision (benefit)                      144           (398)
                                                        ---           ----

    Net income (loss)                                  $244          $(694)
                                                       ====          =====

    Income (loss) per share:
    Basic --                                          $1.87         $(5.35)
                                                      =====         ======

    Diluted --                                        $1.84         $(5.35)
                                                      =====         ======

    Weighted average number of shares
     outstanding or basic income (loss) per
     share                                              130            130
    Weighted average number of shares
     outstanding for diluted income (loss)
     per share *                                        133            130



    * Had we recognized net income for the three month period ended March
    31, 2009, the weighted average number of shares outstanding for the
    computation of diluted earnings per share would have increased by 1
    million shares



    CONDENSED CONSOLIDATED BALANCE SHEET          March 31,   December 31,
    (Unaudited, in millions)                      ---------   ------------
                                                        2010          2009
                                                        ----          ----

    ASSETS
    Current assets:
       Cash and cash equivalents                        $112           $78
       Derivative assets                                 349           269
       Other current assets                              517           546
          Total current assets                           978           893

    Property and equipment, net (full cost
     method)                                           5,671         5,247
    Derivative assets                                     75            19
    Other assets                                         103            95
          Total assets                                $6,827        $6,254
                                                      ======        ======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                                 $890          $873
    Current debt                                          32             -
          Total current liabilities                      922           873

    Other liabilities                                    159           142
    Long-term debt                                     2,189         2,037
    Deferred taxes                                       537           434
          Total long-term liabilities                  2,885         2,613
                                                       -----         -----

    Commitments and contingencies                          -             -

    STOCKHOLDERS' EQUITY
    Common stock                                           1             1
    Additional paid-in capital                         1,410         1,389
    Treasury stock                                       (47)          (33)
    Accumulated other comprehensive loss                 (10)          (11)
    Retained earnings                                  1,666         1,422
                                                       -----         -----
       Total stockholders' equity                      3,020         2,768
                                                       -----         -----
       Total liabilities and stockholders' equity     $6,827        $6,254
                                                      ======        ======





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


                                                           For the
                                                           -------
                                                      Three Months Ended
                                                      ------------------
                                                          March 31,
                                                          ---------
                                                      2010             2009
                                                      ----             ----
    Cash flows from operating activities:
       Net income (loss)                              $244            $(694)
    Adjustments to reconcile net income (loss) to
     net cash provided by
        operating activities:
       Depreciation, depletion and amortization        147              159
       Deferred tax provision (benefit)                131             (403)
       Stock-based compensation                          6                8
       Ceiling test writedown                            -            1,344
       Commodity derivative income                    (237)            (278)
       Cash receipts on derivative settlements         102              211
                                                       393              347
       Changes in operating assets and liabilities      21                2
                                                       ---              ---
          Net cash provided by operating activities    414              349
                                                       ---              ---

    Cash flows from investing activities:
       Additions to oil and gas properties and other,
        net                                           (340)            (405)
       Acquisitions of oil and gas properties         (217)              (9)
       Redemptions of investments                        1                7
          Net cash used in investing activities       (556)            (407)
                                                      ----             ----

    Cash flows from financing activities:
       Net proceeds (repayments) under credit
        arrangements                                  (364)              73
       Net proceeds from issuance of senior
        subordinated notes                             686                -
       Repayment of senior notes                      (143)               -
       Other                                            (3)              (1)
         Net cash provided by financing activities     176               72
                                                       ---              ---


    Increase in cash and cash equivalents               34               14
    Cash and cash equivalents, beginning of period      78               24

    Cash and cash equivalents, end of period          $112              $38
                                                      ====              ===



Explanation and Reconciliation of Non-GAAP Financial Measures

Earnings Stated Without the Effect of Certain Items

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

A reconciliation of earnings for the first quarter of 2010 stated without the effect of certain items to net income is shown below:



                                                             1Q10
                                                             ----
                                                              (in
                                                          millions)
    Net income                                                  $244
       Net unrealized gain on commodity derivatives (1)         (143)
       Early redemption charge                                    10
       Termination of interest rate swap                          (2)
       Income tax adjustment for above items                      49
    Earnings stated without the effect of the above
     items                                                      $158
                                                                ====



    (1) The determination of "Net unrealized gain on commodity
    derivatives" for the first quarter of 2010 is as follows:


                                                                 1Q10
                                                                 ----
                                                                  (in
                                                              millions)
        Commodity derivative income                                 $237
        Cash receipts on derivative settlements                     (102)
        Option premiums associated with derivatives settled
         during the period                                             8
                                                                     ---
             Net unrealized gain on commodity derivatives           $143
                                                                    ====


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 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:



                                                             1Q10
                                                             ----
                                                              (in
                                                           millions)
    Net cash provided by operating activities                   $414
       Net change in operating assets and liabilities            (21)
                                                                 ---
    Net cash provided by operating activities before
     changes in operating assets and liabilities                $393
                                                                ====



SOURCE Newfield Exploration Company

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