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Newfield Reports Third Quarter Results

HOUSTON, Oct. 31 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced financial and operating results for the third quarter and first nine months of 2001. A summary of the Company's most recent operations activity is available at www.newfld.com , under the publication @NFX.

Third Quarter 2001

Stated without the effect of a non-cash gain related to SFAS 133, Newfield reported net income for the third quarter of 2001 of $35.8 million, or $0.76 per share (all per share amounts are on a diluted basis). Stated with the effect of the gain, earnings for the third quarter were $43.0 million, or $0.91 per share. Earnings for the third quarter were impacted by a non- recurring workover expense on a Gulf of Mexico well, which increased lease operating expense (LOE) and decreased earnings by $0.07 per share (after tax). This compares to net income in the third quarter of 2000 of $43.6 million, or $0.95 per share.

Revenues for the third quarter of 2001 were $183.3 million compared to revenues of $150 million in the third quarter of 2000. Operating cash flow before changes in working capital increased 20% for the third quarter of 2001 to $129.9 million, or $2.69 per share, compared to $108.6 million, or $2.32 per share, in the third quarter of 2000.

Stated on a billion cubic feet equivalent (Bcfe) basis, Newfield's total production for the third quarter of 2001 increased 22% over the same period of 2000 to 45.7 Bcfe, or 497 million cubic feet equivalent per day (MMcfe/d). The following tables detail quarterly production and average realized prices:

     Production
                                               3Q01         3Q00    % Change
    United States
      Natural gas (Bcf)                         35.0          27.9     25%
        Natural gas (MMcf/d)                     381           304     25%
      Oil and condensate production (MMBbls)    1.42          1.19     19%
        Oil and condensate production (BOPD)  15,414        12,930     19%
    Australia
      Oil and condensate liftings (MBbls)      359.5         372.4     (3%)
        Oil and condensate liftings (BOPD)     3,908         4,048     (3%)
    Total
      Natural gas (Bcf)                         35.0          27.9     25%
      Oil and condensate liftings (MMBbls)      1.78          1.56     14%
      Total Production (Bcfe)                   45.7          37.3     22%

     Average Realized Prices*
                                               3Q01         3Q00    % Change
    United States
      Natural gas (per Mcf)                    $3.94         $3.86      2%
      Oil and condensate (per Bbl)            $24.52        $24.66     (1%)
    Australia
      Oil and condensate liftings (per Bbl)   $25.40        $31.68    (20%)
    Total
      Natural gas (per Mcf)                    $3.94         $3.86      2%
    Oil and condensate (per Bbl)              $24.70        $26.33     (6%)

    * Prices shown net of transportation expense


Newfield's LOE in the third quarter of 2001, stated on a unit of production basis, was $0.66 per thousand cubic feet equivalent (Mcfe) compared to $0.48 per Mcfe in the third quarter of 2000. Higher LOE reflects increased service costs throughout our operations and a one-time expense ($5.5 million) related to an unexpected well workover program at South Marsh Island 160 in the Gulf of Mexico. Fourth quarter LOE is expected to drop significantly. Please see the fourth quarter guidance provided at the end of this release. DD&A expense for the third quarter of 2001 was $1.63 per Mcfe compared to $1.37 per Mcfe in the same period of 2000. The increase in DD&A expense reflects higher drilling and service costs and the addition of Lariat's reserves under purchase accounting rules. Newfield's general and administrative expense (including stock compensation) in the third quarter of 2001 was $0.27 per Mcfe compared to $0.24 per Mcfe in the third quarter of 2000. Higher G&A expense reflects the Company's growing workforce. Due to increased debt levels, net interest expense and dividends increased to $0.14 per Mcfe in the third quarter of 2001 compared to $0.11 per Mcfe in the same period of 2000.

Year-to-Date 2001

Stated without the effect of a non-cash gain related to SFAS 133, Newfield reported net income for the first nine months of 2001 of $148.1 million, or $3.12 per share. Stated with the effect of a non-cash gain related to SFAS 133, earnings for the first nine months of 2001 were $158.1 million, or $3.32 per share. This compares to net income in the first nine months of 2000 of $85.8 million, or $1.92 per share.

Revenues for the first nine months of 2001 were $593.3 million compared to revenues of $363.0 million for the same period of 2000. Operating cash flow before changes in working capital increased more than 65% for the first nine months of 2001 to $415.6 million, or $8.57 per share, compared to $250.3 million, or $5.40 per share, in the first nine months of 2000.

Year-to-date 2001, oil and gas production has increased 28% over 2000 levels to 131.1 Bcfe. This compares to production in the first nine months of 2000 of 102.4 Bcfe. Year-over-year, natural gas production increased more than 30% to 101.3 Bcf, or 371 MMcf/d. Crude oil volumes year-to-date increased 20% over the same period of 2000 to 5.0 MMBbls, or an average of 18,221 BOPD. Crude oil production in the first nine months of 2000 was 4.1 MMBbls, or an average of 15,139 BOPD.

The Company's average realized natural gas price for the first nine months of 2001 was $4.59 per Mcf compared to $3.29 per Mcf in the same period of 2000. Newfield's average crude oil price for the first three quarters of 2001 was $24.93 compared to $24.97 per barrel in the same period of 2000. The Company's average realized price in Australia was $26.58 per barrel in the first nine months of 2001.

For the first nine months of 2001, the Company's LOE averaged $0.56 per Mcfe compared to $0.46 per Mcfe in the first nine months of 2000. Increased LOE is primarily related to significant increases in industry service costs. DD&A expense reflects higher drilling and service costs and increased to $1.58 per Mcfe compared to $1.35 per Mcfe for the first three quarters of 2000. Year-to-date, G&A expense (including stock compensation) per Mcfe averaged $0.27 compared to $0.22 in the same period of last year. The increase reflects the Company's growing workforce.

Capital expenditures through the end of the third quarter were $741 million, including $407 million in acquisitions. For the full-year 2001, Newfield expects to invest about $850 million.

Tables with third quarter and year-to-date 2001 summary financial information are attached.

Fourth Quarter 2001 Estimates

Below are estimates of certain significant operating and financial data for the fourth quarter of 2001. 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 fourth quarter of 2001 is expected to be 31 - 36 Bcf (340 - 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 recently acquired 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 fourth quarter of 2001 is expected to be 1.7 - 1.9 million barrels (19,000 - 21,000 BOPD). Australian oil production during the fourth quarter is expected to be 314 - 346 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 2001, the Company expects to produce at least 175 Bcfe, an increase of more than 25% over 2000 production volumes. This reflects Newfield's fourth quarter natural gas production curtailment detailed in a recent 8-K filing with the SEC.

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 fourth quarter of 2001 ($0.58 - $0.64 per Mcfe). The Company's domestic LOE, including taxes, is expected to be $0.53 - $0.58 per Mcfe in the fourth quarter of 2001. This estimate includes severance taxes of $0.05 - $0.07 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 workover activities.

General and Administrative Expense Newfield's G&A expense for the fourth quarter of 2001 is expected to be $11 - $12 million ($0.24 - $0.26 per Mcfe). This estimate includes accrual of performance-based pay.

Interest Expense The non-capitalized portion of the Company's interest expense for the fourth quarter of 2001 is expected to be $5.6 - $6.3 million ($0.12 - $0.14 per Mcfe), including a $2.3 million payment on its convertible trust preferred securities. Current borrowings under the Company's bank facilities are $94 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 fourth quarter of 2001 is expected to be about $2.4 million.

Income Taxes Including both current and deferred taxes, the Company expects its consolidated income tax rate in the fourth quarter of 2001 to be about 35%. About 60% of the tax provision is expected to be deferred.

Any publicly announced changes to these estimates will 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. Gulf Coast and offshore Australia. Newfield balances its drilling program with acquisitions in select areas in the U.S. and overseas.

**Certain of the statements set forth in this news release regarding estimated or anticipated fourth quarter operating and financial data, future commodity prices and service costs, daily, quarterly and yearly production volumes, capital expenditures and drilling plans are forward looking and are 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                               sccampbell@newfld.com


    CONSOLIDATED STATEMENT OF INCOME
     (Unaudited, in 000's, except per share data)

                                       For the                 For the
                                  Three Months Ended      Nine Months Ended
                                    September 30,           September 30,
                                    2001       2000       2001       2000

    Oil and gas revenues          $183,259  $150,431    $593,332   $362,957

    Operating expenses:
      Lease operating               30,245    17,780      73,819     47,520
      Transportation                 1,325     1,568       4,150      4,671
      Production and other taxes     3,311     1,802      15,892      3,801
      Depreciation, depletion
       and amortization             74,259    50,989     206,982    138,382
      Ceiling test write-down          ---       503         ---        503
      General and administrative,
       net                          11,406     8,036      33,332     20,639
      Stock compensation               729       767       2,027      2,262
        Total operating expenses   121,275    81,445     336,202    217,778

    Income from operations          61,984    68,986     257,130    145,179

    Other income (expense):
      Interest income                  316       580       1,458      1,502
      Interest expense, gross       (6,897)   (3,815)    (20,520)   (11,552)
      Capitalized interest           2,354     1,374       6,508      3,938
      Dividends on preferred
       securities of Newfield
       Financial Trust I            (2,336)   (2,336)     (7,008)    (7,008)
      Unrealized commodity
       derivative income *          11,101       ---      15,262        ---
                                     4,538    (4,197)     (4,300)   (13,120)

    Income before income taxes      66,522    64,789     252,830    132,059

    Income tax provision            23,546    21,237      89,972     43,908

    Cumulative effect of change
     in accounting principles          ---       ---      (4,794)    (2,360)

    Net income                     $42,976   $43,552    $158,064    $85,791

    Earnings per share:
      Basic                          $0.97     $1.02       $3.56      $2.03

      Diluted                        $0.91     $0.95       $3.32      $1.92

    Weighted average shares
     outstanding for basic
     earnings per share             44,219    42,493      44,344     42,260

    Weighted average shares
     outstanding for diluted
     earnings per share             48,798    47,366      49,014     47,158


    PRODUCTION DATA

                                         For the                For the
                                    Three Months Ended     Nine Months Ended
                                      September 30,          September 30,
                                     2001      2000        2001       2000
    Average daily production:
      Oil and condensate (Bbls)     19,322    16,978      18,221     15,139
      Gas (Mcf)                      380.7     303.7       371.0      282.7

    Average realized price:
      Oil and condensate (Bbls)     $24.70    $26.33      $24.93     $24.97
      Gas (Mcf)                      $3.94     $3.86       $4.59      $3.29

    * Associated with adoption of SFAS 133.


     CONSOLIDATED BALANCE SHEET
     (Unaudited, in thousands of dollars)

                                               September 30,    December 31,
                                                   2001             2000
    ASSETS
      Current assets:
        Cash & cash equivalents                      $33,195        $18,451
        Accounts receivable, oil and gas             103,641        147,643
        Inventories                                   10,796          7,572
        Commodity derivatives *                       75,001            ---
        Other current assets                          13,347          5,891
          Total current assets                       235,980        179,557

    Oil and gas properties, net
     (full cost method)                            1,473,357        832,907
    Furniture, fixtures and equipment, net             7,049          4,028
    Commodity derivatives *                           16,254            ---
    Other assets                                      10,260          6,758
                                                  $1,742,900     $1,023,250

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                             $172,003       $141,060
    Commodity derivatives *                            4,719            ---
          Total current liabilities                  176,722        141,060

    Other liabilities                                  7,926          6,030
    Commodity derivatives *                            3,117            ---
    Long-term debt                                   393,620        133,711
    Deferred taxes                                   258,603         79,244
          Total long-term liabilities                663,266        218,985

    Company-obligated, mandatorily
     redeemable, convertible preferred
     securities of Newfield
     Financial Trust I                               143,750        143,750

    STOCKHOLDERS' EQUITY
      Common stock                                       448            426
      Additional paid-in capital                     361,663        286,811
      Treasury stock                                 (25,751)          (399)
      Unearned compensation                           (8,535)        (6,201)
      Accumulated other comprehensive income (loss)
        Foreign currency translation adjustment       (8,106)        (4,644)
        Commodity derivatives *                       37,917            ---
      Retained earnings                              401,526        243,462
        Total stockholders' equity                   759,162        519,455
        Total liabilities and
         stockholders' equity                     $1,742,900     $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     Nine Months Ended
                                     September 30,          September 30,
                                     2001      2000       2001        2000
    Cash flows from
     operating activities:
      Net income                   $42,976  $43,552     $158,064    $85,791
      Depreciation, depletion
       and amortization             74,259   50,989      206,982    138,382
      Deferred taxes                23,073   12,790       59,011     21,014
      Stock compensation               729      767        2,027      2,262
      Commodity derivatives *      (11,101)     ---      (15,262)       ---
      Cumulative effect of change
       in accounting principles        ---      ---        4,794      2,360
      Ceiling test write-down          ---      503          ---        503
                                   129,936  108,601      415,616    250,312
      Changes in operating assets
       and liabilities             (19,387)  25,947       47,475     (2,765)
        Net cash provided by
         operating activities      110,549  134,548      463,091    247,547
    Cash flows from
     investing activities:
      Acquisition, net of
       cash acquired                   ---      ---     (264,089)       ---
      Additions to oil and
       gas properties             (161,968) (63,799)    (417,806)  (287,781)
      Additions to furniture,
       fixtures and equipment       (1,432)    (257)      (3,468)    (1,097)
        Net cash used in
         investing activities     (163,400) (64,056)    (685,363)  (288,878)
    Cash flows from
     financing activities:
      Proceeds from borrowings     258,000    5,000    1,110,000    158,000
      Repayments of borrowings    (216,000) (52,000)  (1,025,000)  (120,000)
      Proceeds from issuance
       of senior notes                 ---      ---      174,879        ---
      Proceeds from issuances
       of common stock, net            443      937        1,795      5,875
      Purchases of treasury stock   (8,316)     ---      (25,352)       ---
        Net cash provided by
         (used in) financing
         activities                 34,127  (46,063)     236,322     43,875
    Effect of exchange rate
     changes on cash
     and cash equivalents              130       19          694       (432)

    Increase (decrease) in cash
     and cash equivalents          (18,594)  24,448       14,744      2,112
    Cash and cash equivalents,
     beginning of period            51,789   19,505       18,451     41,841

    Cash and cash equivalents,
     end of period                 $33,195  $43,953      $33,195    $43,953

    * Associated with adoption of SFAS 133.


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SOURCE Newfield Exploration Company
Photo: NewsCom: http: //www.newscom.com/cgi-bin/prnh/20010122/NFXLOGO-b AP Archive: http://photoarchive.ap.org PRN Photo Desk, +1-888-776-6555 or +1-212-782-2840
Web site: http: //www.newfld.com
Company News On-Call: http: //www.prnewswire.com/comp/117962.html
CONTACT: Steve Campbell of Newfield Exploration Company, +1-281-847-6081, or sccampbell@newfld.com
CAPTION: NFXLOGO-b NEWFIELD EXPLORATION LOGO Newfield Exploration Company. (PRNewsFoto)[AG] HOUSTON, TX USA 01/22/2001

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