HOUSTON, Feb. 12 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today announced financial and operating results for the fourth quarter and full-year 2002. A 2003 capital spending budget of $450 million (excluding acquisitions) also was announced, as well as financial and operational guidance for the year. The Company will hold a conference call at 8:30 a.m. CST on Thursday, February 13, 2003. To participate in the call, please visit the Company's web site at www.newfld.com .
Newfield also disclosed that it plans to hold an investor conference in Houston from 8 a.m. - 2 p.m. on March 19, 2003. Through the Company's website, slides will be available the day of the conference and a replay will be made available the next day.
Highlights include: -- Replaced 255% of 2002 production. Year-end proved reserves increased nearly 30% to 1.2 trillion cubic feet equivalent (Tcfe). Asset diversification continued, with about 54% of the Company's total reserves now located onshore, 44% in the Gulf of Mexico and 2% internationally. -- Increased 2002 production volumes 5%. The Company met production targets in 2002 despite shutting in 4 Bcfe of production in the second half of the year due to storms in the Gulf of Mexico and voluntarily curtailing about 1 Bcf of natural gas production in February in response to low prices. -- Acquired EEX Corporation, significantly increasing acreage and production in South Texas. The Company also gained an acreage base in deepwater Gulf of Mexico, a recently added focus area. -- Reduced commodity price volatility in 2002 through hedging and captured $28.5 million in additional revenue. -- Announced 2003 capital spending budget of $450 million, an increase of 34% over 2002. The program includes $200 million for exploration -- a record level. Drilling plans include 25-35 wells in Gulf of Mexico (including 7-10 deep shelf wells and 2-3 deepwater wells), 45-50 wells onshore Gulf Coast, 40-50 wells in the Mid-Continent and one to three wells overseas. -- Recent recognition: Newfield was nominated for the 2002 National Safe Award for Excellence (SAFE) by the Minerals Management Service for its operations in the Gulf of Mexico. The Company won this award in 1997 and was a finalist in 1998 and 2000. Newfield was also recognized in 2002 as "Best in Class" by the National Association of Petroleum Investment Analysts (NAPIA) for its corporate governance and disclosure practices.
Newfield President and CEO David A. Trice said, "2002 was a good year for Newfield. We posted solid earnings and revenues, driven by growth in our production and higher than expected commodity prices in the second half of 2002. But more importantly, we enter 2003 a stronger, better company. We continued to diversify our asset base and closed our largest-ever acquisition. Today, more than half of our proved reserves are located onshore in longer- lived basins that offer additional opportunities for growth and consolidation. We built our prospect inventory during the year and took advantage of low rig rates and service costs with an active drilling program. It was a good environment to explore in and our teams delivered good results with the drill bit. We are excited about our 2003 program, which includes a record budget for exploration."
Fourth Quarter 2002 Financial Results
For the fourth quarter of 2002, the Company reported net income of $34.3 million, or $0.69 per (all per share amounts are on a diluted basis), stated without the effect of a non-cash charge related to hedging transactions (SFAS 133) of $3.7 million ($2.4 million after-tax). Stated with the effect of the charge, net income was $31.9 million, or $0.65 per share. Revenues for the fourth quarter of 2002 were $199.5 million. Operating cash flow before changes in working capital in the fourth quarter of 2002 was $130.0 million.
This compares to a net loss in the fourth quarter of 2001 of $39.1 million, or $0.89 per share. The 2001 results include a non-cash impairment charge of $106.0 million ($68.1 million after tax) and a non-cash gain related to SFAS 133 of $9.6 million ($6.2 million after-tax). Without the net effect of these items, net income in the fourth quarter of 2001 was $22.8 million, or $0.50 per share. Revenues for the fourth quarter of 2001 were $156.1 million. Operating cash flow before changes in working capital in the fourth quarter of 2001 was $111.1 million.
Fourth Quarter 2002 Production
Newfield's production in the fourth quarter of 2002 was 48.6 Bcfe, a 10% increase over 2001 production in the same period. Fourth quarter 2002 volumes reflect the shut-in of 2.5 Bcfe due to a storm in the Gulf of Mexico. Newfield closed its acquisition of EEX Corporation on November 26, 2002, which contributed approximately 4 Bcfe to fourth quarter production.
The following tables detail production by country and average realized prices for the fourth quarters of 2002 and 2001.
4Q02 4Q01 % Change United States Natural gas (Bcf) 38.2 31.9 20% Oil and condensate production (MMBbls) 1.37 1.49 (8%) Australia Oil and condensate liftings (MMBbls) 0.376 0.535 (30%) Total Production (Bcfe) 48.6 44.0 10% Fourth Quarter Average Realized Prices* 4Q02 4Q01 % Change United States Natural gas (per Mcf) $3.98 $3.47 15% Oil and condensate (per Bbl) $26.21 $22.54 16% Australia Oil and condensate liftings (per Bbl) $28.12 $19.34 45% Total per Mcfe $4.08 $3.51 16% * Prices shown are net of transportation expense and after realized gains and losses from hedging. The Company has not entered into hedging transactions specifically relating to Australian production.
Stated on a unit of production basis, Newfield's lease operating expense (LOE) in the fourth quarter of 2002 was flat with the same period of 2001 at $0.66 per Mcfe. Higher commodity prices contributed to significantly higher production taxes in the fourth quarter. Production taxes in the fourth quarter of 2002 (including resource rent tax in Australia) increased to $0.09 per Mcfe compared to $0.04 per Mcfe in the same period of 2001. DD&A expense, stated on a unit of production basis, in the fourth quarter of 2002 was $1.68 per Mcfe compared to $1.72 per Mcfe in the fourth quarter of 2001. DD&A during 2002 was slightly lower as a result of the ceiling test writedown in the fourth quarter of 2001. At year-end 2002, the Company's DD&A rate was $1.71 per Mcfe, which includes the effects of the EEX transaction under purchase accounting.
Full-Year 2002 Financial Results
For 2002, Newfield posted net income of $92.8 million, or $1.99 per share, stated before the effect of a non-cash charge related to SFAS 133 of $29.1 million ($18.9 million after-tax). Stated after the effect of the non- cash charge, net income for 2002 was $73.8 million, or $1.61 per share. Revenues in 2002 were $661.8 million, a 12% decrease from 2001 revenues. Operating cash flow before changes in working capital in 2002 was $412.6 million.
For 2001, Newfield earned $119.0 million, or $2.56 per share, after a non- cash impairment charge of $106.0 million ($68.1 million after-tax), a non-cash gain and a cumulative effect of change in accounting principle related to the adoption of SFAS 133 of $20.0 million ($11.3 million after-tax). Without the net effect of these items, net income was $175.7 million, or $3.72 per share. Revenues in 2001 were $749.4 million. Operating cash flow before changes in working capital in 2001 was $526.8 million.
Production volumes in 2002 increased 5% over 2001 and totaled 184.1 Bcfe. Production was negatively impacted by two factors: About 4 Bcfe was shut-in in the second half of 2002 due to storms in the Gulf of Mexico, and, in February 2002, approximately 1 Bcf was curtailed in response to low gas prices.
2002 2001 % Change United States Natural gas (Bcf) 144.7 133.2 9% Oil and condensate production (MMBbls) 5.2 5.5 (5%) Australia Oil and condensate liftings (MMBbls) 1.34 1.48 (9%) Total Production (Bcfe) 184.1 175.2 5% 2002 Average Realized Prices* 2002 2001 % Change United States Natural gas (per Mcf) $3.42 $4.32 (21%) Oil and condensate (per Bbl) $24.22 $24.01 1% Australia Oil and condensate liftings (per Bbl) $26.05 $23.96 9% Total per Mcfe $3.56 $4.25 (16%) * Prices shown net of transportation expense and after realized gains and losses from hedging. The Company has not entered into hedging transactions specifically relating to Australian production.
Stated on a unit of production basis, Newfield's LOE in 2002 decreased to $0.57 per Mcfe compared to $0.59 per Mcfe in 2001. Production taxes in 2002, including resource rent tax in Australia, were $0.09 per Mcfe compared to $0.10 per Mcfe in 2001. DD&A expense in 2002 increased on a unit of production basis to $1.65 per Mcfe compared to $1.61 per Mcfe in the prior year. The increase in DD&A expense is primarily related to the cost of reserve additions and the acquisition of EEX in late 2002.
Finding and Development Costs
United States: Excluding the acquisition of EEX, Newfield added 181.2 Bcfe with its core domestic program, replacing 105% of 2002 production (excluding a 4 Bcfe contribution from EEX in late 2002). Total domestic investment was $308.8 million, including other acquisitions made primarily to capture drilling opportunities. U.S. finding and development costs for 2002 were $1.70 per Mcfe.
"Our domestic finding and development costs were in line with our targets and well below last year," said Trice. "I am particularly pleased with the results posted by our Gulf of Mexico teams, which added substantial reserves below their targeted unit costs. Successful results from our deep shelf drilling program contributed to our lower unit costs."
EEX Acquisition: Under purchase accounting, $571.5 million of the acquisition's total consideration was allocated to EEX's oil and gas properties. Of this amount, $88.5 million (16%) has been assigned to unproved properties, undeveloped leasehold (including 59 deepwater blocks and 29 shelf blocks associated with the deep exploratory concept known as Treasure Island) and fee minerals interests. As of closing, Newfield booked 287.8 Bcfe of proved reserves attributable to the EEX properties. During 2002, EEX's onshore drilling program was focused on developing proved undeveloped reserves rather than finding new reserves.
International: Newfield invested $28 million in international operations in 2002, mainly in China and Australia where expenditures were related to appraisal of the 12-1 South Field in Bohai Bay and the Montara Field, offshore Australia. Neither of these projects has yet been sanctioned for development and, accordingly, no reserves have been booked for these properties.
Reserve Replacement and Proved Reserves
During 2002, Newfield's worldwide reserve replacement was 255% of total production of 184.1 Bcfe. The Company's reserve replacement in 2001 was 242% of total production. 2002 marks the 13th consecutive year that Newfield has more than replaced annual production with proved reserves.
At the end of 2002, Newfield had proved reserves of 1.2 Tcfe, which is net of the impact of U.S. property sales of approximately 16 Bcfe. Proved reserves at year-end 2002 increased nearly 30% over 2001 proved reserves of 936 Bcfe. At year-end 2002, Newfield's reserves were 81% natural gas compared to 77% natural gas at year-end 2001. Approximately 83% of the Company's domestic reserves are natural gas and 98% of the Company's total proved reserves are located in the U.S. Only 7% of Newfield's proved reserves are "proved undeveloped," among the lowest percentage in the industry.
2003 Planned Capital Spending
Newfield announced a 2003 capital budget of $450 million. The Company expects that approximately 55 - 60% of the budget will be invested in the Gulf of Mexico (including deepwater), 35 - 40% onshore U.S. and the balance on international projects.
Trice said, "We announced an increased capital budget in 2003, which reflects the quality and depth of our inventory. Despite our higher budget, we estimate that cash flow will exceed the budget by $100 - 150 million, based on our current hedges and today's market prices. We should have the flexibility to pay down bank debt, repurchase some of our common stock or make a meaningful acquisition."
Below are production estimates for the full-year 2003 and estimates for significant operating and financial data for the first quarter of 2003. 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.
2003 Production Newfield expects its 2003 production to be in the range of 215 - 225 Bcfe, an increase of 17 - 22% over 2002 production of 184.1 Bcfe. Newfield's 2003 production forecast does not include any production that may result from exploration success. Approximately 80% of production is expected to be natural gas (166 - 184 Bcfe, or an average of 455 - 504 MMcf/d). Crude oil, including 1.1 - 1.3 MMBbls from Australia, should total 6.7 - 7.4 MMBbls, or an average of 18,400 - 20,400 BOPD in 2003.
About 53% of Newfield's production in 2003 is expected to come from the Gulf of Mexico, its largest focus area. Approximately 32% of its total production in 2003 is expected to come from the onshore Gulf Coast region. The Mid-Continent region accounts for about 12% of expected 2003 production. About 3% of Newfield's production is expected to come from Australia, all of which is crude oil.
First Quarter 2003 Estimates
Natural gas production and pricing Newfield's natural gas production in the first quarter of 2003 is expected to be 42 - 46 Bcf (462 - 510 MMcf/d). The price received by the Company for its natural gas production from the Gulf of Mexico and onshore Gulf Coast has typically tracked the Henry Hub Index. Gas from the Company's Mid-Continent properties has typically sold 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 2003 is expected to be 1.7 - 1.9 million barrels (18,600 - 20,600 BOPD). Australian oil production during the first quarter is expected to be 325 - 360 thousand barrels (3,500 - 3,900 BOPD). The timing of liftings in Australia will impact reported production and revenues. The price the Company receives from its Gulf Coast production has typically averaged about $2 below the NYMEX WTI price. Oil production from the Mid-Continent has typically sold at a $1.00 - $1.50 per barrel discount to West Texas Intermediate (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.
Lease Operating and Other Expenses Newfield's LOE is expected to be $32 - $35 million ($0.59 - $0.65 per Mcfe) in the first quarter of 2003. The Company's domestic LOE is expected to be $28 - $31 million ($0.52 - $0.58 per Mcfe). Production taxes in the first quarter of 2003 (including resource rent tax in Australia) is expected to be $14 - $16 million ($0.26 - $0.28 per Mcfe). Higher LOE in the first quarter relates to non-recurring expenses, primarily workovers, scheduled for the first quarter. 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 workover activities.
General and Administrative Expense Newfield's G&A expense for the first quarter of 2003 is expected to be $14 - $18 million ($0.25 - $0.32 per Mcfe) including stock and incentive compensation, which depends largely on Newfield's net income.
Interest Expense The non-capitalized portion of the Company's interest expense for the first quarter of 2003 is expected to be $12 - $13 million ($0.22 - $0.24 per Mcfe), including a $2.3 million payment on its convertible trust preferred securities. Current borrowings under the Company's bank facilities are $36 million. The remainder of long-term debt consists of three separate issuances of senior notes that in the aggregate total $575 million. Capitalized interest for the first quarter of 2003 is expected to be about $2 - $3 million.
Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the first quarter of 2003 to be about 35 - 38%. About 40% of the tax provision is expected to be deferred.
The Company provides information regarding its outstanding hedging positions in its annual report and quarterly reports filed with the SEC and in its electronic publication -- @NFX. This publication can be found on the Company's web page at http://www.newfld.com . Through the web page, interested persons may 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 2003 results, capital spending and activity levels and production forecasts 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, 2001. 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, 2002 2001 2002 2001 Oil and gas revenues $ 199,490 $ 156,073 $ 661,750 $ 749,405 Operating expenses: Lease operating 32,036 29,103 105,860 102,922 Production and other taxes 4,380 1,631 17,286 17,523 Transportation 1,331 1,419 5,708 5,569 Depreciation, depletion and amortization 81,746 75,585 303,274 282,567 Ceiling test write-down --- 106,011 --- 106,011 General and administrative 16,298 7,872 53,316 41,204 Stock compensation 735 724 2,801 2,751 Total operating expenses 136,526 222,345 488,245 558,547 Income (loss) from operations 62,964 (66,272) 173,505 190,858 Other income (expenses): Interest expense (13,158) (7,339) (34,555) (27,859) Capitalized interest 2,286 2,383 8,839 8,891 Dividends on preferred securities of Newfield Financial Trust I (2,336) (2,336) (9,344) (9,344) Unrealized commodity derivative income (expense)* (3,670) 9,559 (29,147) 24,821 Other (328) 2,535 1,587 3,993 (17,206) 4,802 (62,620) 502 Income (loss) before income taxes 45,758 (61,470) 110,885 191,360 Income tax provision (benefit) 13,878 (22,360) 37,038 67,612 Cumulative effect of change in accounting principles* --- --- --- (4,794) Net income (loss) $ 31,880 $ (39,110) $ 73,847 $ 118,954 Earnings (loss) per share: Basic $ 0.68 $ (0.89) $ 1.64 $ 2.69 Diluted $ 0.65 $ (0.89) $ 1.61 $ 2.56 Weighted average shares outstanding for basic earnings (loss) per share 47,227 44,018 45,096 44,258 Weighted average shares outstanding for diluted earnings (loss) per share 51,713 44,018** 49,589 48,894 PRODUCTION DATA For the For the Three Months Twelve Months Ended Ended December 31, December 31, 2002 2001 2002 2001 Average daily production: Oil and condensate (Bbls) 18,935 21,996 17,997 19,173 Gas (Mcf) 414.7 346.5 396.4 364.8 Average realized price: Oil and condensate (Bbls) $ 26.63 $ 21.70 $ 24.60 $ 24.00 Gas (Mcf) $ 3.98 $ 3.47 $ 3.42 $ 4.32 * Associated with SFAS 133. ** Absent a loss in this period, the outstanding shares would have been 48,552. CONSOLIDATED BALANCE SHEET December 31 December 31 (Unaudited, in thousands of dollars) 2002 2001 ASSETS Current assets: Cash & cash equivalents $48,898 $26,610 Accounts receivable, oil and gas 130,489 92,644 Inventories 7,910 7,332 Commodity derivatives * 2,464 79,012 Deferred taxes 12,801 --- Other current assets 36,074 25,006 Total current assets 238,636 230,604 Oil and gas properties, net (full cost method) 2,010,005 1,408,579 Assets held for sale 35,000 --- Furniture, fixtures and equipment, net 8,030 6,807 Commodity derivatives * 4,439 7,409 Other assets 19,452 9,972 $2,315,562 $1,663,371 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 256,099 $ 160,814 Commodity derivatives * 39,517 4,217 Total current liabilities 295,616 165,031 Other liabilities 16,976 6,288 Commodity derivatives * 10,610 1,813 Long-term debt 709,615 428,631 Deferred taxes 129,309 207,880 Total long-term liabilities 866,510 644,612 Company-obligated, mandatorily redeemable, convertible preferred securities of Newfield Financial Trust I 143,750 143,750 Minority Interest 455 --- STOCKHOLDERS' EQUITY Common stock 526 449 Additional paid-in capital 636,317 364,734 Treasury stock (26,213) (25,794) Unearned compensation (6,479) (7,845) Accumulated other comprehensive income (loss) Foreign currency translation adjustment (3,888) (8,918) Commodity derivatives * (27,295) 24,936 Retained earnings 436,263 362,416 Total stockholders' equity 1,009,231 709,978 Total liabilities and stockholders' equity $2,315,562 $ 1,663,371 * Associated with SFAS 133. CONSOLIDATED STATEMENT OF For the For the CASH FLOWS Three Months Ended Twelve Months Ended (Unaudited, in thousands of December 31, December 31, dollars) 2002 2001 2002 2001 Cash flows from operating activities: Net income (loss) $ 31,880 $ (39,110) $ 73,847 $ 118,954 Depreciation, depletion and amortization 81,746 75,585 303,274 282,567 Deferred taxes 11,927 (22,506) 3,515 36,505 Stock compensation 735 724 2,801 2,751 Unrealized commodity derivative * 3,670 (9,559) 29,147 (24,821) Cumulative effect of change in accounting principle --- --- --- 4,794 Ceiling test write-down --- 106,011 --- 106,011 129,958 111,145 412,584 526,761 Changes in operating assets and liabilities (21,862) (71,864) (9,125) (24,389) Net cash provided by operating activities 108,096 39,281 403,459 502,372 Cash flows from investing activities: Acquisition, net of cash acquired (204,411) --- (204,411) (264,089) Additions to oil and gas properties (77,459) (79,804) (311,045) (497,610) Additions to furniture, fixtures and equipment (408) (655) (2,657) (4,123) Net cash used in investing activities (282,278) (80,459) (518,113) (765,822) Cash flows from financing activities: Proceeds from borrowings 164,700 378,000 654,700 1,488,000 Repayments of borrowings (189,700) (343,000) (747,700) (1,368,000) Deliveries under the gas sales obligation (1,672) --- (1,672) --- Proceeds from issuance of senior notes 247,920 --- 247,920 174,879 Proceeds from issuances of common stock, net 1,957 1,848 7,787 3,643 Purchase of secured notes payable (23,586) --- (23,586) --- Purchases of treasury stock (53) (43) (419) (25,395) Net cash provided by financing activities 199,566 36,805 137,030 273,127 Effect of exchange rate changes on cash and cash equivalents (180) (2,211) (88) (1,518) Increase (decrease) in cash and cash equivalents 25,204 (6,584) 22,288 8,159 Cash and cash equivalents, beginning of period 23,694 33,194 26,610 18,451 Cash and cash equivalents, end of period $48,898 $26,610 $48,898 $26,610 * Associated with SFAS 133.
SOURCE Newfield Exploration Company