HOUSTON, Feb. 14 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced financial and operating results for the fourth quarter and full-year 2001. The Company will hold a conference call at 8:30 a.m. CST on February 14, 2002. To participate in the call, please visit the Company's web site at www.newfld.com .
2001 highlights include: -- Production volumes increased 25% over 2000 levels. Growth was balanced between acquisitions and drilling success. -- Year-end proved reserves increased 36% over 2000 levels to 936 billion cubic feet equivalent (Bcfe). About 57% of the Company's reserves are now located in the Gulf of Mexico. -- 242% of 2001 production replaced with 424 Bcfe of reserve additions. -- Completed largest-ever acquisition, establishing a new focus area in the Anadarko Basin. -- Continued exploratory success in the Gulf of Mexico with significant discovery in deep shelf gas play at West Cameron 294 and traditional shelf drilling success at Eugene Island 251 and High Island 472. -- Nearly doubled onshore Gulf Coast production volumes. Successful development drilling efforts followed early 2000 property acquisition in South Texas. -- Continued to appraise the CFD 12-1 Field discovery on Block 05/36 in China's Bohai Bay. Discovered a separate field -- CFD 12-1 South -- in mid-2001. Fourth Quarter 2001
For the fourth quarter of 2001, the Company reported a net loss of $39.1 million, or $0.89 per share (all per share amounts are on a diluted basis). These results include a non-cash impairment charge of $106.0 million ($68.1 million after tax) and a non-cash gain related to hedging transactions (FAS 133). Without the net effect of these items, net income would have been $22.8 million, or $0.50 per share. Revenues for the fourth quarter of 2001 were $156.1 million. This compares to net income in the fourth quarter of 2000 of $46.6 million, or $1.01 per share, on revenues of $163.7 million.
Operating cash flow before changes in working capital in the fourth quarter of 2001 was $111.1 million, or $2.32 per share. This compares to operating cash flow of $133.2 million, or $2.84 per share, in the same period of 2000.
Fourth Quarter 2001 Impairment
The $68 million after-tax impairment in the fourth quarter is primarily the result of lower commodity prices at year-end 2001 and is entirely related to Newfield's early 2001 acquisition in the Mid-Continent. The Company's cost pool includes purchase accounting adjustments related to this acquisition, making the book basis of these assets significantly higher than the $333 million purchase price. The impairment will have no significant impact on Newfield's capital structure.
Newfield uses the full-cost method of accounting. Under this method, the Company compares the net capitalized costs of its oil and gas properties on a country by country basis against the present value (discounted at 10%) of future net cash flows from those reserves, generally using the commodity prices on the last day of the quarter, held flat for the life of the reserves. Future net revenues are calculated assuming a continuation of prices and costs in effect at the time of the calculation. If this valuation is lower than the net capitalized costs, the Company must record a charge to earnings equal to the difference.
The Mid-Continent acquisition was completed at a time when natural gas prices were significantly higher. Mid-Continent producing properties have a reserve life of about 11 years. Upon closing, Newfield utilized hedging to lock in natural gas prices on some of the anticipated volumes associated with this transaction. The Company hedged natural gas production equal to the anticipated acquired volumes in 2001 at nearly $6 per thousand cubic feet (Mcf). In addition, gas hedges were put in place for nearly all of the acquired company's anticipated 2002 production with floor positions of $4 per Mcf or greater, and a substantial portion of 2003 anticipated volumes were hedged at $3.50 per Mcf or higher. With the concurrence of the Securities and Exchange Commission, the determination of the impairment amount took into account the value of the Company's hedge positions at year-end 2001, which was about $78 million.
Fourth Quarter Production
In the fourth quarter of 2001, Newfield voluntarily curtailed about 5 Bcfe
of its production in response to lower prices. Despite curtailments,
Newfield's production increased 17% over volumes in the same period of the
prior year. The following tables detail production by area and average
realized prices for the fourth quarters of 2001 and 2000.
4Q01 4Q00 % Change United States Natural gas (Bcf) 31.9 28.0 14% Natural gas (MMcf/d) 347 304 14% Oil and condensate production (MMBbls) 1.49 1.03 45% Oil and condensate production (BOPD) 16,183 11,148 45% Australia Oil and condensate liftings (MBbls) 534.8 590.1 (9%) Oil and condensate liftings (BOPD) 5,813 6,414 (9%) Total Natural gas (Bcf) 31.9 28.0 14% Oil and condensate liftings (MMBbls) 2.0 1.6 25% Total Production (Bcfe) 44.0 37.7 17% Fourth Quarter Average Realized Prices* 4Q01 4Q00 % Change United States Natural gas (per Mcf) $3.47 $4.30 (19%) Oil and condensate (per Bbl) $22.54 $22.61 --- Australia Oil and condensate liftings (per Bbl) $19.34 $32.15 (40%) Total Natural gas (per Mcf) $3.47 $4.30 (19%) Oil and condensate (per Bbl) $21.70 $26.09 (17%) Total per Mcfe $3.51 $4.31 (19%)
* Prices shown net of transportation expense and after hedging. The
Company has not entered into hedging transactions specifically relating to
Stated on a unit of production basis, Newfield's lease operating expense in the fourth quarter of 2001 increased to $0.66 per Mcfe compared to $0.47 per Mcfe in the same period of 2000. Due primarily to lower commodity prices, production taxes in the fourth quarter of 2001 (including resource rent tax in Australia) decreased to $0.04 per Mcfe compared to $0.17 per Mcfe in the same period of 2000. DD&A expense in the fourth quarter of 2001 increased on a unit of production basis to $1.72 per Mcfe compared to $1.40 per Mcfe in the same period of 2000. The significant increase in DD&A is related primarily to higher cost reserve additions.
Newfield posted net income of $119.0 million, or $2.56 per share, for 2001. These results include a non-cash impairment charge and a non-cash gain and a cumulative effect of change in accounting principle related to hedging transactions (FAS 133). Without the net effect of these items, net income would have been $170.9 million, or $3.62 per share. This compares to 2000 net income of $132.3 million, or $2.93 per share. Revenues for 2001 were $749.4 million compared to $526.6 million in the prior year. Operating cash flow before changes in working capital in 2001 increased 37% to $526.8 million, or $10.90 per share, compared to $383.5 million, or $8.25 per share, in 2000.
Production volumes reached record levels in 2001, rising 25% over 2000
levels. Nearly half of the increase in production came from drilling programs
with the remainder attributable to acquisitions. Newfield produced 175 Bcfe
in 2001 compared to 140 Bcfe in 2000.
2001 2000 % Change United States Natural gas (Bcf) 133.2 105.4 26% Natural gas (MMcf/d) 365 288 27% Oil and condensate production (MMBbls) 5.5 4.1 35% Oil and condensate production (BOPD) 15,130 11,175 35% Australia Oil and condensate liftings (MBbls) 1.5 1.7 (12%) Oil and condensate liftings (BOPD) 4,043 4,573 (12%) Total Natural gas (Bcf) 133.2 105.4 26% Oil and condensate liftings (MMBbls) 7.0 5.8 21% Total Production (Bcfe) 175.2 140.0 25% 2001 Average Realized Prices* 2001 2000 % Change United States Natural gas (per Mcf) $4.32 $3.56 21% Oil and condensate (per Bbl) $24.01 $23.33 3% Australia Oil and condensate liftings (per Bbl) $23.96 $30.08 (20%) Total Natural gas (per Mcf) $4.32 $3.56 21% Oil and condensate (per Bbl) $24.00 $25.29 (5%) Total per Mcfe $4.25 $3.72 14%
* Prices shown net of transportation expense and after hedging. The
Company has not entered into hedging transactions specifically relating to
Stated on a unit of production basis, Newfield's lease operating expense in 2001 increased to $0.59 per Mcfe compared to $0.47 in 2000. Production taxes in 2001, including resource rent tax in Australia, were $0.10 per Mcfe compared to $0.07 per Mcfe in 2000. DD&A expense in 2001 increased on a unit of production basis to $1.61 per Mcfe compared to $1.37 per Mcfe in the prior year. The increase in DD&A expense is primarily related to higher cost reserve additions in 2001.
Finding and Development Costs
Newfield's cost to find and develop reserves, stated on a per Mcfe basis, was $1.97 in 2001. This compares to finding and development costs of $1.58 per Mcfe during 2000. The Company's five-year average finding and development cost is $1.61 per Mcfe.
Internationally, the Company continued to appraise its CFD 12-1 Field on Block 05/36 in China's Bohai Bay. In 2001, two successful appraisal wells were drilled in the CFD 12-1 Field and two successful wells were drilled in a new discovery, the CFD 12-1 South Field. Newfield has not yet booked any proved reserves with respect to these discoveries or declared the fields commercial. International capital expenditures, mainly in Australia and China, totaled $21 million in 2001.
Reserve Replacement and Proved Reserves
During 2001, Newfield's worldwide reserve replacement was 242% of total production, which was 175 Bcfe. The Company's reserve replacement in 2000 was 166% of total production. 2001 marks the 12th consecutive year that Newfield has more than replaced annual production with proved reserves.
At the end of 2001, Newfield had proved reserves of 936.4 Bcfe, which included a 14 Bcfe negative revision primarily attributable to unsuccessful drilling of proved undeveloped locations and lower prices. Proved reserves at year-end 2001 increased 36% over the 687.3 Bcfe the Company had at the end of the prior year. At year-end 2001, Newfield's reserves were 77% natural gas compared to 76% natural gas at year-end 2000. Nearly 80% of the Company's U.S. reserves are natural gas and 97% of the Company's total proved reserves are located in the U.S.
Newfield's year-end 2001 present value of estimated future net revenues from its oil and gas properties was $1,170 million. This compares to $3,874 million at year-end 2000. The value for 2001 was derived using commodity prices on December 31, 2001, which were $2.65 per MMBtu (Gas Daily - Henry Hub) and $19.84 per barrel (Platt's - WTI at Cushing). Comparable prices at year-end 2000 were $9.52 per MMBtu and $26.75 per barrel.
For the full-year 2001, Newfield invested $855 million, including $435 million in acquisitions, $302 million in development, $97 million in exploration and $21 million internationally. This compares to 2000 capital spending of $379 million, including $139 million for acquisitions, $129 million for development activities, $91 million for exploration and $20 million in the international arena.
For 2002, Newfield announced a capital budget of $360 million. This includes $135 million for exploration -- the largest exploratory budget in the Company's history. Development spending is estimated at $200 million and $25 million is allocated for international. The lower capital budget was built using estimated 2002 cash flow and is in response to lower oil and gas prices.
Newfield uses hedging as a tool to manage cash flow and rates of return on acquisitions. The Company has approximately 75% of its anticipated first half 2002 natural gas production hedged at a volume-weighted average price of about $3.35 per Mcf. Newfield has also hedged approximately 54% of its third quarter and 17% of its fourth quarter 2002 anticipated natural gas production. When including all natural gas and crude oil hedge positions in place, Newfield has nearly $83 million of hedging gains when marked-to-market at today's NYMEX futures prices. For additional information on the Company's hedge positions, please go to www.newfld.com .
First Quarter 2002 Estimates
Below are estimates of certain significant operating and financial data for the first quarter of 2002. Although the Company believes the expectations reflected in this forward-looking information are reasonable, such expectations are based upon assumptions and anticipated results that are subject to numerous uncertainties. Please see the discussion regarding forward-looking information at the end of this release.
Natural gas production and pricing Newfield's natural gas production in the first quarter of 2002 is expected to be 32 - 36 Bcf (360 - 400 MMcf/d). The Company's average realized gas price on volumes from the Gulf of Mexico and onshore Gulf Coast typically tracks the Henry Hub Index. Gas from the Company's Mid-Continent properties typically sells at a discount of $0.12 - $0.15 per Mcfe to Henry Hub. Hedging gains or losses will affect price realizations.
Crude oil production and pricing Consolidated oil production in the first quarter of 2002 is expected to be 1.6 - 1.8 million barrels (18,000 - 20,000 BOPD). Australian oil production during the first quarter is expected to be 310 - 341 thousand barrels (3,450 - 3,800 BOPD). The timing of liftings in Australia will impact reported production and revenues. Newfield's average realized U.S. oil price on Gulf Coast production typically averages about $2 below the NYMEX WTI price. Oil production from the Mid- Continent typically sells for a $1.00 - $1.50 per barrel discount to WTI. Australian crude oil sales are based on the Tapis Benchmark, which has historically been comparable to WTI. Hedging gains or losses will affect price realizations.
For the full-year 2002, the Company expects to produce 180-185 Bcfe, an increase of 3-6% over 2001 production volumes. However, decisions to curtail production in response to low oil and gas prices could adversely impact the Company's growth projections.
Lease Operating Expense Newfield's LOE, including domestic production and severance taxes and resource rent tax in Australia, is expected to be $26 - $29 million in the first quarter of 2002 ($0.60 - $0.66 per Mcfe). The Company's domestic LOE, including taxes, is expected to be $0.55 - $0.59 per Mcfe in the first quarter of 2002. This estimate includes severance taxes of $0.06 - $0.08 per Mcfe. LOE varies and is subject to impact from, among other things, production volumes and commodity pricing, tax rates, service costs, the costs of goods and materials and work over activities.
General and Administrative Expense Newfield's G&A expense for the first quarter of 2002 is expected to be $11 - $13 million ($0.25 - $0.29 per Mcfe). This estimate includes accrual of performance-based pay.
Interest Expense The non-capitalized portion of the Company's interest expense for the first quarter of 2002 is expected to be $6 - $8 million ($0.14 - $0.18 per Mcfe), including a $2.3 million payment on its convertible trust preferred securities. Current borrowings under the Company's bank facilities are $129 million. The remainder of long-term debt consists of two separate issuances of senior notes that in the aggregate total $300 million. Capitalized interest for the first quarter of 2002 is expected to be about $2.0 million.
Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the first quarter of 2002 to be about 35%. About 60% of the tax provision is expected to be deferred.
Any publicly announced changes to these estimates would be made available on Newfield's electronic publication -- @NFX. This publication can be found on the Company's web page at www.newfld.com . Through the web page, shareholders can elect to receive @NFX through e-mail distribution.
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. Onshore Gulf Coast, in the Anadarko and Permian Basins, offshore Australia and in China's Bohai Bay. Newfield balances its drilling program with acquisitions in select areas in the U.S. and overseas.
** Certain of the statements set forth in this release regarding estimated or anticipated first quarter 2002 results, capital spending and activity levels, future commodity prices, service costs and yearly production volumes are forward looking and 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, 2000. 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 www.newfld.com firstname.lastname@example.org CONSOLIDATED STATEMENT OF INCOME (Unaudited, in 000's, except per share data) For the For the Three Months Ended Twelve Months Ended December 31, December 31, 2001 2000 2001 2000 Oil and gas revenues $156,073 $163,685 $749,405 $526,642 Operating expenses: Lease operating 29,103 17,852 102,922 65,372 Transportation 1,419 1,313 5,569 5,984 Production and other taxes 1,631 6,487 17,523 10,288 Depreciation, depletion and amortization 75,585 52,800 282,567 191,182 Ceiling test write-down 106,011 --- 106,011 503 General and administrative 7,872 8,398 41,204 29,037 Stock compensation 724 785 2,751 3,047 Total operating expenses 222,345 87,635 558,547 305,413 Income (loss) from operations (66,272) 76,050 190,858 221,229 Other income (expense): Interest income 2,535 622 3,993 2,124 Interest expense (7,339) (3,120) (27,859) (14,673) Capitalized interest 2,383 1,414 8,891 5,353 Dividends on preferred securities of Newfield Financial Trust I (2,336) (2,336) (9,344) (9,344) Unrealized commodity derivative income * 9,559 --- 24,821 --- 4,802 (3,420) 502 (16,540) Income (loss) before income taxes (61,470) 72,630 191,360 204,689 Income tax provision (benefit) (22,360) 26,072 67,612 69,980 Cumulative effect of change in accounting principles --- --- (4,794) (2,360) Net income (loss) $(39,110) $46,558 $118,954 $132,349 Earnings (loss) per share: Basic $(0.89) $1.09 $2.69 $3.13 Diluted $(0.89) $1.01 $2.56 $2.93 Weighted average shares outstanding for basic earnings per share 44,018 42,566 44,258 42,333 Weighted average shares outstanding for diluted earnings per share 44,018 ** 47,450 48,894 47,228 PRODUCTION DATA For the For the Three Months Ended Twelve Months Ended December 31, December 31, 2001 2000 2001 2000 Average daily production: Oil and condensate (Bbls) 21,996 17,561 19,173 15,748 Gas (Mcf) 346.5 304.1 364.8 288.1 Average realized price: Oil and condensate (Bbls) $21.70 $26.09 $24.00 $25.29 Gas (Mcf) $3.47 $4.30 $4.32 $3.56 * Associated with adoption of SFAS 133. ** Absent a loss in this period, the outstanding shares would have been 48,552. CONSOLIDATED BALANCE SHEET (Unaudited, in thousands of dollars) December 31, December 31, 2001 2000 ASSETS Current assets: Cash & cash equivalents $26,610 $18,451 Accounts receivable, oil and gas 92,644 147,643 Inventories 7,332 7,572 Commodity derivatives * 79,012 --- Other current assets 25,006 5,891 Total current assets 230,604 179,557 Oil and gas properties, net (full cost method) 1,408,579 832,907 Furniture, fixtures and equipment, net 6,807 4,028 Commodity derivatives * 7,409 --- Other assets 9,972 6,758 $1,663,371 $1,023,250 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $134,636 $141,060 Commodity derivatives * 4,217 --- Total current liabilities 138,853 141,060 Other liabilities 6,288 6,030 Commodity derivatives * 1,813 --- Long-term debt 428,631 133,711 Deferred taxes - oil and gas 197,234 79,244 Deferred taxes - commodity derivatives * 36,824 --- Total long-term liabilities 670,790 218,985 Company-obligated, mandatorily redeemable, convertible preferred securities of Newfield Financial Trust I 143,750 143,750 STOCKHOLDERS' EQUITY Common stock 449 426 Additional paid-in capital 364,734 286,811 Treasury stock (25,794) (399) Unearned compensation (7,845) (6,201) Accumulated other comprehensive income (loss) Foreign currency translation adjustment (8,918) (4,644) Commodity derivatives * 24,936 --- Retained earnings 362,416 243,462 Total stockholders' equity 709,978 519,455 Total liabilities and stockholders' equity $1,663,371 $1,023,250 * Associated with adoption of SFAS 133. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in thousands of dollars) For the For the Three Months Ended Twelve Months Ended December 31, December 31, 2001 2000 2001 2000 Cash flows from operating activities: Net income (loss) $(39,110) $46,558 $118,954 $132,349 Depreciation, depletion and amortization 75,585 52,800 282,567 191,182 Deferred taxes (22,506) 33,069 36,505 54,083 Stock compensation 724 785 2,751 3,047 Commodity derivatives * (9,559) --- (24,821) --- Cumulative effect of change in accounting principles --- --- 4,794 2,360 Ceiling test write-down 106,011 --- 106,011 503 111,145 133,212 526,761 383,524 Changes in operating assets and liabilities (71,864) (64,315) (24,389) (67,080) Net cash provided by operating activities 39,281 68,897 502,372 316,444 Cash flows from investing activities: Acquisition, net of cash acquired --- --- (264,089) --- Additions to oil and gas properties (79,804) (66,075) (497,610) (353,856) Additions to furniture, fixtures and equipment (655) (594) (4,123) (1,691) Net cash used in investing activities (80,459) (66,669) (765,822) (355,547) Cash flows from financing activities: Proceeds from borrowings 378,000 61,000 1,448,000 219,000 Repayments of borrowings (343,000) (90,000) (1,368,000) (210,000) Proceeds from issuance of senior notes --- --- 174,879 --- Proceeds from issuances of common stock, net 1,848 1,058 3,643 6,933 Purchases of treasury stock (43) --- (25,395) --- Net cash provided by (used in) financing activities 36,805 (27,942) 273,127 15,933 Effect of exchange rate changes on cash and cash equivalents (2,211) 212 (1,518) (220) Increase (decrease) in cash and cash equivalents (6,584) (25,502) 8,159 (23,390) Cash and cash equivalents, beginning of period 33,194 43,953 18,451 41,841 Cash and cash equivalents, end of period $26,610 $18,451 $26,610 $18,451 * Associated with adoption of SFAS 133. 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CAPTION: NFXLOGO-b NEWFIELD EXPLORATION LOGO Newfield Exploration Company. (PRNewsFoto)[AG] HOUSTON, TX USA 01/22/2001