HOUSTON, July 22 /PRNewswire-FirstCall/ -- Newfield
Exploration Company (NYSE: NFX) today reported its unaudited
second quarter 2010 financial results. A separate operational
update was released on July 21 and
this release and the operational update release are available
through the investor relations section of the Company's website.
Newfield will host a conference call at 8:30
a.m. (CDT) on Friday, July 23.
To participate in the call, dial 719-325-2187 or listen through the
investor relations section of the website at
http://www.newfield.com.
For the second quarter of 2010, Newfield recorded net income of
$96 million, or $0.72 per diluted share (all per share amounts
are on a diluted basis). Net income includes the effect of these
items:
- a net unrealized loss on commodity derivatives of $71 million ($45
million after-tax); and
- an early redemption premium of $2
million ($1 million after-tax)
associated with the purchase and payment of the remaining
$32 million of our $175 million aggregate principal amount of 7 5/8%
Senior Notes due 2011. All of these notes have now been
redeemed.
Without the effect of these items, net income for the second
quarter of 2010 would have been $142
million, or $1.06 per
share.
Revenues in the second quarter of 2010 were $448 million. Net cash provided by operating
activities before changes in operating assets and liabilities was
$383 million. See
"Explanation and Reconciliation of Non-GAAP Financial
Measures" found after the financial statements in this
release.
Newfield's production in the second quarter of 2010 was 73 Bcfe,
or 9% over first quarter 2010 production. Natural gas production in
the second quarter of 2010 was 51 Bcf, an average of 564 MMcf/d.
Newfield's oil liftings in the second quarter of 2010 were 3.6
MMBbls, an average of approximately 40,000 BOPD. Capital
expenditures in the second quarter of 2010 were approximately
$441 million.
On July 8, Newfield's credit
rating was raised to investment grade BBB- with a stable outlook by
Standard & Poor's. The Company's subordinated debt rating
from S&P remains BB+. The Company currently has a Ba2 credit
rating from Moody's Investor Services and a BB+ rating from Fitch
Ratings.
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 third
quarter and full year 2010 results, estimated capital expenditures,
cash flow, production and cost reductions, drilling and development
plans and the timing of activities and liftings, 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
|
|
|
2Q10 Actual
Results
|
|
|
2Q10 Actual
|
|
|
Domestic
|
Int'l
|
Total
|
|
Production/Liftings
|
|
|
|
|
Natural gas –
Bcf
|
51.3
|
–
|
51.3
|
|
Oil and condensate
– MMBbls
|
2.1
|
1.5
|
3.6
|
|
Total
Bcfe
|
64.0
|
8.9
|
72.9
|
|
|
|
|
|
|
Average Realized Prices Note
1
|
|
|
|
|
Natural gas –
$/Mcf
|
$
|
5.47
|
$
|
–
|
$
|
5.47
|
|
Oil and condensate
– $/Bbl
|
$
|
84.90
|
$
|
72.90
|
$
|
79.94
|
|
Mcf equivalent –
$/Mcfe
|
$
|
7.25
|
$
|
12.15
|
$
|
7.86
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Lease
operating
|
|
|
|
|
|
|
|
Recurring
($MM)
|
$
|
36.4
|
$
|
12.2
|
$
|
48.6
|
|
per/Mcfe
|
$
|
0.58
|
$
|
1.36
|
$
|
0.68
|
|
Transportation
($MM)
|
$
|
20.0
|
$
|
–
|
$
|
20.0
|
|
per/Mcfe
|
$
|
0.32
|
$
|
–
|
$
|
0.28
|
|
Recurring w/ trans
($MM)
|
$
|
56.4
|
$
|
12.2
|
$
|
68.6
|
|
per/Mcfe
|
$
|
0.90
|
$
|
1.36
|
$
|
0.96
|
|
Major (workovers,
etc.) ($MM)
|
$
|
15.1
|
$
|
0.7
|
$
|
15.8
|
|
per/Mcfe
|
$
|
0.24
|
$
|
0.08
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
Production and other taxes
($MM)
|
$
|
15.1
|
$
|
16.1
|
$
|
31.2
|
|
per/Mcfe
|
$
|
0.24
|
$
|
1.80
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
General and
administrative (G&A), net ($MM)
|
$
|
38.5
|
$
|
2.5
|
$
|
41.0
|
|
per/Mcfe
|
$
|
0.61
|
$
|
0.28
|
$
|
0.57
|
|
|
|
|
|
|
|
|
|
Capitalized internal costs ($MM)
|
|
|
|
|
$
|
(15.2)
|
|
per/Mcfe
|
|
|
|
|
$
|
(0.21)
|
|
|
|
|
|
|
|
|
|
Interest expense
($MM)
|
|
|
|
|
$
|
39.6
|
|
per/Mcfe
|
|
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
Capitalized interest
($MM)
|
|
|
|
|
$
|
(15.4)
|
|
per/Mcfe
|
|
|
|
|
$
|
(0.21)
|
|
|
|
|
|
|
|
|
|
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
$3.88
per Mcf and the total oil and
condensate average realized price would have been $69.72
per barrel.
|
|
|
|
|
|
|
|
|
|
|
3Q10 & FY10
Estimates
|
|
|
3Q10 & FY10
Estimates
|
|
|
Domestic
|
Int'l
|
Total
|
|
Production/Liftings
|
3QE
|
FY10
|
3QE
|
FY10
|
3QE
|
FY10
|
|
Natural gas –
Bcf
|
50 – 52
|
200 – 202
|
–
|
–
|
50 – 52
|
200 – 202
|
|
Oil and condensate –
MMBbls Note 1
|
2.3 – 2.5
|
8.8 – 9.2
|
1.0 – 1.1
|
5.0 – 5.2
|
3.3 – 3.6
|
13.8 – 14.4
|
|
Total Bcfe
|
64 – 67
|
253 – 257
|
6 – 7
|
30 – 31
|
70 – 74
|
283 – 288
|
|
|
|
|
|
|
|
|
|
Average Realized
Prices
|
|
|
|
|
|
|
|
Natural gas –
$/Mcf
|
Note 2
|
Note 2
|
|
|
|
|
|
Oil and condensate –
$/Bbl
|
Note 3
|
Note 3
|
Note 4
|
Note 4
|
|
|
|
Mcf equivalent –
$/Mcfe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Lease
operating
|
|
|
|
|
|
|
|
Recurring
($MM)
|
$33 - $40
|
$141 - $147
|
$9 - $11
|
$38 - $47
|
$42 - $51
|
$179 - $194
|
|
per/Mcfe
|
$0.54 - $0.58
|
$0.55 - $0.58
|
$1.47 - $1.53
|
$1.38 - $1.43
|
$0.63 - $0.67
|
$0.64 - $0.68
|
|
Transportation
($MM)
|
$17 - $21
|
$72 - $75
|
-
|
-
|
$17 - $21
|
$72 - $75
|
|
per/Mcfe
|
$0.28 - $0.31
|
$0.28 - $0.30
|
-
|
-
|
$0.25 - $0.28
|
$0.25 - $0.28
|
|
Recurring w/ trans
($MM)
|
$50 - $61
|
$213 - $222
|
$9 - $11
|
$38 - $47
|
$59 - $72
|
$251 - $269
|
|
per/Mcfe
|
$0.82 - $0.89
|
$0.83 - $0.89
|
$1.47 - $1.53
|
$1.38 - $1.43
|
$0.88 - $0.95
|
$0.89 - $0.96
|
|
Major (workovers,
etc.) ($MM)
|
$10 - $13
|
$35 - $43
|
$4 - $6
|
$9 - $10
|
$14 - $19
|
$44 - $53
|
|
per/Mcfe
|
$0.16 - $0.18
|
$0.14 - $0.16
|
$0.77 - $0.81
|
$0.30 - $0.32
|
$0.22 - $0.24
|
$0.16 - $0.18
|
|
|
|
|
|
|
|
|
|
Production/Taxes ($MM) Note
5
|
$15 - $18
|
$57 - $70
|
$10 - $13
|
$44 - $54
|
$25- $31
|
$101 - $124
|
|
per/Mcfe
|
$0.24 - $0.26
|
$0.24 - $0.26
|
$1.77 - $1.81
|
$1.60 - $1.63
|
$0.38 - $0.40
|
$0.38 - $0.41
|
|
|
|
|
|
|
|
|
|
G&A, net
($MM)
|
$35 - $42
|
$143 - $158
|
$1 - $2
|
$6 - $7
|
$36 - $44
|
$149 - $165
|
|
per/Mcfe
|
$0.58 - $0.60
|
$0.59 - $0.61
|
$0.19 - $0.21
|
$0.19 - $0.20
|
$0.54 - $0.56
|
$0.54 - $0.56
|
|
|
|
|
|
|
|
|
|
Capitalized
internal costs ($MM)
|
|
|
|
|
($18 - $22)
|
($67 - $82)
|
|
per/Mcfe
|
|
|
|
|
($0.27 - $0.28)
|
($0.26 - $0.27)
|
|
|
|
|
|
|
|
|
|
Interest expense
($MM)
|
|
|
|
|
$35 - $43
|
$140 - $171
|
|
per/Mcfe
|
|
|
|
|
$0.53 - $0.54
|
$0.54 - $0.55
|
|
|
|
|
|
|
|
|
|
Capitalized interest
($MM)
|
|
|
|
|
($10 - $12)
|
($45 - $55)
|
|
per/Mcfe
|
|
|
|
|
($0.15 - $0.16)
|
($0.17 - $0.18)
|
|
|
|
|
|
|
|
|
|
Tax rate (%) Note
6
|
|
|
|
|
36% - 38%
|
36% - 38%
|
|
|
|
|
|
|
|
|
|
Income taxes (%)
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
14% - 16%
|
14% - 16%
|
|
Deferred
|
|
|
|
|
84% - 86%
|
84% - 86%
|
|
|
|
|
|
|
|
|
|
Note
1:
|
Includes 0.5 – 0.6 MMBbls of
deferred Malaysian oil production associated with a damaged export
pipeline.
|
|
Note
2:
|
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
3:
|
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
4:
|
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
5:
|
Guidance for production taxes
determined using $75/Bbl oil and $4.50/MMBtu gas.
|
|
Note
6:
|
Tax rate applied to earnings
excluding unrealized gains or losses on commodity
derivatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF
INCOME
(Unaudited, in millions, except
per share data)
|
For the
Three Months
Ended
June 30,
|
|
For the
Six Months Ended
June 30,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Oil and gas
revenues
|
$ 448
|
|
$ 287
|
|
$ 906
|
|
$ 549
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Lease operating
|
84
|
|
57
|
|
151
|
|
128
|
|
Production and other
taxes
|
31
|
|
15
|
|
56
|
|
24
|
|
Depreciation, depletion and
amortization
|
160
|
|
137
|
|
307
|
|
296
|
|
General and
administrative
|
41
|
|
34
|
|
77
|
|
66
|
|
Ceiling test
writedown
|
—
|
|
—
|
|
—
|
|
1,344
|
|
Other
|
2
|
|
5
|
|
10
|
|
7
|
|
Total operating
expenses
|
318
|
|
248
|
|
601
|
|
1,865
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
130
|
|
39
|
|
305
|
|
(1,316)
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
Interest expense
|
(39)
|
|
(32)
|
|
(77)
|
|
(64)
|
|
Capitalized interest
|
16
|
|
12
|
|
28
|
|
26
|
|
Commodity derivative income
(expense)
|
46
|
|
(81)
|
|
283
|
|
197
|
|
Other
|
(1)
|
|
2
|
|
1
|
|
5
|
|
Total other income
(expenses)
|
22
|
|
(99)
|
|
235
|
|
164
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
152
|
|
(60)
|
|
540
|
|
(1,152)
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit)
|
56
|
|
(21)
|
|
200
|
|
(419)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$ 96
|
|
$ (39)
|
|
$ 340
|
|
$ (733)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic --
|
$ 0.73
|
|
$ (0.30)
|
|
$ 2.59
|
|
$ (5.66)
|
|
|
|
|
|
|
|
|
|
|
Diluted --
|
$ 0.72
|
|
$ (0.30)
|
|
$ 2.55
|
|
$ (5.66)
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding
for basic income (loss) per
share
|
132
|
|
130
|
|
131
|
|
129
|
|
Weighted
average number of shares outstanding
for diluted income (loss) per
share *
|
134
|
|
130
|
|
133
|
|
129
|
|
* Had we
recognized net income for the three and six month periods ended
June 30, 2009, the weighted average number
of shares outstanding for the
computation of diluted earnings per share would have increased by 2
million shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEET
(Unaudited, in
millions)
|
June 30,
2010
|
|
December 31,
2009
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 122
|
|
$ 78
|
|
Derivative assets
|
278
|
|
269
|
|
Other current assets
|
504
|
|
546
|
|
Total current assets
|
904
|
|
893
|
|
|
|
|
|
|
Property and equipment, net
(full cost method)
|
5,949
|
|
5,247
|
|
Derivative assets
|
61
|
|
19
|
|
Other assets
|
94
|
|
95
|
|
Total assets
|
$ 7,008
|
|
$ 6,254
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current liabilities
|
$ 921
|
|
$ 873
|
|
|
|
|
|
|
Other liabilities
|
188
|
|
142
|
|
Long-term debt
|
2,169
|
|
2,037
|
|
Deferred taxes
|
602
|
|
434
|
|
Total long-term
liabilities
|
2,959
|
|
2,613
|
|
|
|
|
|
|
Commitments and
contingencies
|
—
|
|
—
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common stock
|
1
|
|
1
|
|
Additional paid-in
capital
|
1,418
|
|
1,389
|
|
Treasury stock
|
(40)
|
|
(33)
|
|
Accumulated other comprehensive
loss
|
(13)
|
|
(11)
|
|
Retained earnings
|
1,762
|
|
1,422
|
|
Total stockholders'
equity
|
3,128
|
|
2,768
|
|
Total liabilities and
stockholders' equity
|
$ 7,008
|
|
$ 6,254
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
(Unaudited, in
millions)
|
For the
Six Months Ended
June 30,
|
|
|
2010
|
|
2009
|
|
Cash flows from operating
activities:
|
|
|
|
|
Net income (loss)
|
$ 340
|
|
$ (733)
|
|
Adjustments to reconcile net
income (loss) to net cash provided by
operating
activities:
|
|
|
|
|
Depreciation, depletion
and amortization
|
307
|
|
296
|
|
Deferred tax provision
(benefit)
|
173
|
|
(420)
|
|
Stock-based
compensation
|
12
|
|
15
|
|
Ceiling test
writedown
|
—
|
|
1,344
|
|
Commodity derivative
income
|
(283)
|
|
(197)
|
|
Cash receipts on derivative
settlements
|
227
|
|
459
|
|
|
776
|
|
764
|
|
Changes in operating assets and
liabilities
|
112
|
|
(52)
|
|
Net cash provided by operating
activities
|
888
|
|
712
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
Additions to oil and gas
properties and other, net
|
(774)
|
|
(781)
|
|
Acquisitions of oil and gas
properties
|
(219)
|
|
(9)
|
|
Proceeds from sales of oil and
gas properties
|
14
|
|
—
|
|
Redemptions of
investments
|
5
|
|
14
|
|
Net cash used in investing
activities
|
(974)
|
|
(776)
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Net proceeds (repayments) under
credit arrangements
|
(385)
|
|
78
|
|
Net proceeds from issuance of
senior subordinated notes
|
686
|
|
—
|
|
Repayment of senior
notes
|
(175)
|
|
—
|
|
Other
|
4
|
|
—
|
|
Net cash
provided by financing activities
|
130
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash
equivalents
|
44
|
|
14
|
|
Cash and cash equivalents,
beginning of period
|
78
|
|
24
|
|
|
|
|
|
|
Cash and cash equivalents, end
of period
|
$ 122
|
|
$ 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 second quarter of 2010
stated without the effect of certain items to net income is shown
below:
|
|
|
2Q10
|
|
|
|
|
(in millions)
|
|
Net income
|
$ 96
|
|
|
|
Net unrealized loss on commodity
derivatives (1)
|
71
|
|
|
|
Early redemption
charge
|
2
|
|
|
|
Income tax adjustment for above
items
|
(27)
|
|
|
|
Earnings stated without the
effect of the above items
|
$ 142
|
|
|
|
(1) The
determination of "Net unrealized loss on commodity derivatives" for
the second quarter of 2010
is as follows:
|
|
|
|
|
|
|
|
|
2Q10
|
|
|
|
|
(in millions)
|
|
Commodity
derivative income
|
$ 46
|
|
|
|
Cash receipts on
derivative settlements
|
(124)
|
|
|
|
Option premiums
associated with derivatives settled
during the
period
|
7
|
|
|
|
Net unrealized loss on
commodity derivatives
|
$ (71)
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
2Q10
|
|
|
|
|
(in millions)
|
|
Net cash provided by operating
activities
|
$ 474
|
|
|
|
Net change in operating assets
and liabilities
|
(91)
|
|
|
|
Net cash provided by operating
activities before changes
in operating assets and
liabilities
|
$ 383
|
|
|
|
|
|
|
|
|
|
SOURCE Newfield Exploration Company