HOUSTON, Nov. 15, 2010 /PRNewswire-FirstCall/ --
Newfield Exploration Company (NYSE: NFX) today announced the
signing of a purchase and sale agreement with EOG Resources, Inc.,
for approximately 50,000 net acres in the Marcellus Shale.
Substantially all the acreage is located in Bradford County, Pennsylvania, in the
Susquehanna River Basin. This transaction, valued at $405 million, will more than double Newfield's
current acreage position in the Marcellus Shale and will provide a
deep inventory of future development drilling locations. The
closing is expected before year-end 2010 and is subject to
customary terms and conditions.
Newfield plans to finance the transaction under the Company's
revolving credit facility (an undrawn $1.25
billion facility). Longer term, borrowings under the credit
facility would be reduced with proceeds from the sale of certain
non-strategic assets.
Gross production from the properties is approximately 7 MMcf/d
from five wells. There is an inventory of 11 uncompleted wells and
plans to drill 10 additional wells by year-end 2010. Current
gathering capacity is 25 MMcf/d with capability to expand to 95
MMcf/d in early 2011. Newfield estimates that more than 400
gross operated well locations exist on the acreage and that net
unrisked reserve potential is 1.5 – 2.0 Tcfe.
Newfield plans to run two operated rigs and invest approximately
$100 million in 2011 to substantially
hold the acreage by production. The Company plans to defer
exploratory drilling in the deepwater Gulf of Mexico in 2011, allowing for a
re-allocation of approximately $70
million to its Appalachian development program. Net
production in 2011 from the acquired Marcellus properties is
expected to exceed the production associated with the non-strategic
assets planned for divestment in 2011.
"This transaction doubles our footprint in the Marcellus and
adds core acreage with attractive development drilling
opportunities," said Lee K. Boothby,
Newfield Chairman, President and CEO. "This Marcellus acreage is
high-quality and has a low cost structure. It will complement our
portfolio of oil assets and provide us with greater flexibility in
future commodity price cycles. The deal is consistent with our
strategy of building a business in the Appalachian region, just as
we have done in the Mid-Continent and the Rocky Mountains. The
acreage is contiguous and has a gathering system in place that will
allow us to access markets and grow production."
Newfield entered the Appalachian Region in October 2009 and assembled a team of
professionals with experience in assessing and developing resource
plays. The Company's initial entry into the region came through a
joint venture with Hess Corporation covering approximately 70,000
gross acres primarily in Wayne County,
Pennsylvania. The partnership has drilled three exploratory
wells in Wayne County to date.
Newfield operates the venture with a 50 percent interest.
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, Appalachia 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 drilling
plans, capital expenditures and asset sales, 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:
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Investor Relations: Steve
Campbell (281) 847-6081
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Media Relations: Keith Schmidt
(281) 674-2650
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Email:
info@newfield.com
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SOURCE Newfield Exploration Company