Newfield Exploration Announces 2008 Capital Program
February 04 2008 - 9:03AM
PR Newswire (US)
Company Outlines 2008 Woodford Shale Program, Largest Investment
Area HOUSTON, Feb. 4 /PRNewswire-FirstCall/ -- Newfield Exploration
Company (NYSE:NFX) today announced a $1.6 billion capital
investment program for 2008. More than 80% of the 2008 budget is
allocated to development activities. The 2008 capital program,
detailed below, will be substantially funded through cash flow and
cash on hand. Following the sale of $1.8 billion in assets in 2007,
Newfield exited the year with approximately $370 million in cash.
Approximately 75% of Newfield's 2008 natural gas production is
hedged at a NYMEX floor price of approximately $8 per MMBtu.
Newfield's debt-to-book capitalization ratio at year-end 2007 was
approximately 23% and the Company's $1.25 billion revolver is
undrawn. "Our '08 budget will deliver organic production growth of
13-21%," said Newfield Chairman, President and CEO David A. Trice.
"We expect to produce 215 - 230 Bcfe in '08, compared to
approximately 190 Bcfe in 2007, adjusted for our '07 asset sales
and acquisitions. Our growth is largely coming from growing onshore
resource plays and new oil developments offshore Malaysia. Because
of the quality of our asset portfolio, we have visible production
and reserve growth for the next several years." Woodford Shale
Update The Mid-Continent region is now Newfield's largest division
in terms of proved reserves -- representing 1.1 Tcfe at year-end
2007, or about 45% of the Company's proved reserves. Planned
investments in the region approximate 40% of Newfield's total 2008
budget, or $620 million. The largest portion of spending will be in
the Woodford Shale, located in southeastern Oklahoma's Arkoma
Basin. Trice said, "We plan to invest approximately $460 million in
the Woodford Shale. We expect to drill about 100 operated
horizontal wells this year and participate in another 60-70 outside
operated wells. About 50% of our operated wells will be drilled
with lateral lengths greater than 3,000', over 50% will be drilled
from multi-well pads and 90% of the wells will be drilled with the
benefit of 3-D seismic data. With this level of activity, our gross
operated Woodford Shale production is expected to exit 2008 at
approximately 250 MMcfe/d, an increase of 50% over the 2007 exit
rate of 165 MMcfe/d." Now in the early stages of the development
phase, Newfield continues to be encouraged with the results of its
extended lateral wells in the Woodford. To date, the Company has
drilled 14 wells with lateral lengths greater than 3,000'. The 10
most recent extended lateral completions were drilled and completed
for an average of $7.0 million gross and are expected to have an
average EUR of at least 4.5 Bcfe gross. The net revenue interest
averages about 81%. For a chart on recent well performance in the
Woodford please see Newfield's website at http://www.newfield.com/.
Newfield already has processed 3-D seismic coverage on more than
60% of its net acreage. By the end of 2008, approximately 95% of
Newfield's acreage will have 3-D seismic coverage. The 3-D data is
instrumental in selecting well locations and planning extended
laterals. The Company has now spud 160 operated horizontal wells in
the play. Industry has now spud 460 horizontal wells (NFX has an
interest in approximately 60% of total wells). There are 42 active
drilling rigs in the Woodford Shale play today. Newfield has
approximately 165,000 net acres in the Woodford Shale. The
Company's average investment in its position is approximately $500
per acre. Production recently hit a new high of 97 MMcf/d in the
Company's Stiles Ranch Field, located in the Texas Panhandle. The
2008 budget has a 2-4 rig program in 2008. Newfield's working
interest is predominately 100%. Newfield has approximately 50,000
net acres in its Granite Wash Play area. Rocky Mountains Investment
in the Rocky Mountain region is expected to total $310 million in
2008, or approximately 20% of the total budget. The most
significant investment area will be the Monument Butte Field,
located in northeast Utah's Uinta Basin. Newfield expects to drill
about 200 wells at Monument Butte in 2008. Newfield has drilled
more than 500 wells on 40-acre spacing since acquiring this field
in 2004. Today, there are more than 1,100 producing wells and
between 500 and 1,000 remaining locations on 40-acre spacing. Gross
production has increased 75% from approximately 8,000 BOPD in 2004
to nearly 14,000 BOPD today. Trice said, "In late 2006, we began an
infill 20-acre pilot program at Monument Butte and to date we've
drilled more than 50 wells across a large portion of the field.
Keep in mind, these wells are between 40-acre producers and are
very low risk. The success of the 20-acre program indicates the
potential to drill more than 1,000 additional locations. So in
total we have as many as 2,000 wells remaining to drill at Monument
Butte which should result in increases in production over the next
decade and more than 100 MMBbls of additional proved reserves. In
addition to our activities in the shallow Green River oil sands, we
are encouraged by recent drilling to test deep gas targets in the
region." Newfield recently signed an agreement with a third party
to test deep gas targets below the shallow oil producing zones in
its Monument Butte Field. Targets include the Wasatch, Mesa Verde,
Blackhawk and Mancos Shale. Drilling is planned for the first half
of 2008. The agreement allows for promoted exploratory drilling and
progressive earning in approximately 71,000 net acres in which
Newfield will retain a majority of the interest. Approximately
10,000 net acres in the immediate vicinity of recent deep gas tests
were excluded from the agreement. Several Newfield operated wells
are planned on this acreage in 2008. In the Williston Basin,
Newfield now has an interest in approximately 170,000 acres. The
Company plans to drill at least 10 wells in 2008 to test Bakken oil
structures, as well as targets in the Madison, Red River and
Duperow formations. Planned investments total about $50 million in
2008 on drilling and new seismic data. In the Wyoming's Green River
Basin, Newfield remains active in the Pinedale and Jonah Fields. At
Pinedale, Newfield is planning to drill approximately 10 wells in
2008. Through an agreement reached in 2007, Newfield will operate
the 2008 program with an 85% interest. Five wells are planned in
the Jonah Field. Onshore Texas Newfield will invest approximately
$245 million, or 15% of the total budget, on projects located in
Texas. Under an existing South Texas joint venture with
Exxon-Mobil, Newfield expects to drill 10-12 additional wells in
2008 in the Sarita Field area of Kenedy County. Newfield has
drilled 21 successful wells under the agreement to date and current
gross production is more than 75 MMcfe/d. In the Val Verde Basin of
West Texas, Newfield is planning to drill 12-15 wells targeting
primarily the Ellenberger, Canyon and Strawn formations. Current
production from the region is approximately 80 MMcfe/d (NFX
interest is predominately 100%). In East Texas, the Company is
planning to drill at least three wells under a joint venture with a
private company. The JV covers 11,000 acres in Shelby and St.
Augustine Counties. Potential targets are James Lime and Pettit
formations. Gulf of Mexico Approximately $240 million, or 15% of
the budget, is allocated to the Gulf of Mexico. This includes 4-5
deepwater wells, new seismic and a significant allocation for 2008
Federal lease sales. Approximately $60 million is related to the
development of the PowerPlay (Anadarko operated) and Fastball
(Newfield operated) fields. International Approximately 10% of the
budget, or $155 million, is allocated to international activities.
The largest area of investment will be Malaysia where Newfield has
four active field developments underway. The Puteri and East
Belumut/Chermingat fields are expected to commence production in
mid-2008 and ramp to a combined rate of more than 22,000 BOPD
(gross). Newfield will also drill an exploration well on Block 2C
in the third quarter of 2008. The well is located in deepwater
offshore Sarawak. The 2008 budget excludes estimated capitalized
interest and overhead of $113 million. The budget is subject to
Board of Director approval on February 8. **The statements set
forth in this release regarding estimated or anticipated production
volumes and rates, drilling and development programs and capital
expenditures 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, the
availability of capital resources, the availability of refining
capacity for the crude oil Newfield produces from its Monument
Butte Field in Utah and labor conditions. 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: DATASOURCE: Newfield
Exploration Company CONTACT: investors, Steve Campbell,
+1-281-847-6081, or media, Keith Schmidt, +1-281-674-2650, both of
Newfield Exploration Company, Web site: http://www.newfield.com/
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