Company Raises 2005 Production Guidance
HOUSTON, Feb. 9 /PRNewswire-FirstCall/ -- Newfield Exploration Company
(NYSE: NFX) today announced financial and operating results for the fourth
quarter and full-year 2004. A conference call to discuss the results is
planned for 8:30 a.m. (CST), Thursday, February 10. To participate in the
call, dial 719-457-2680. A listen-only broadcast will also be provided over
the Internet. Simply go to the Investor Relations section at
http://www.newfld.com .
Highlights include:
* Increased 2004 production volumes 10%. Company today raised 2005
production guidance to 262-272 Bcfe, an increase of 8-12% over 2004
production.
* Added 725 Bcfe of proved reserves, nearly three times 2004 production.
Reserves increased 35% to 1.78 Tcfe. Approximately 70% of proved
reserves now located onshore.
* Acquisitions continue diversification of assets, create balanced
portfolio. Invested approximately $900 million in acquisitions in
2004. Largest transaction was the $575 million Inland Resources
acquisition, adding 326 Bcfe of proved reserves and establishing a new
focus area in Rocky Mountains.
* Signed ventures to drill two ultra-deep exploration wells in our
Treasure Project, located on the Gulf of Mexico shelf. First well -
Blackbeard West - spud Feb. 9. Newfield has a 23% interest and
substantially all of the costs are carried by partners.
* Announced 2005 capital budget of $950 million. About $280 million
earmarked for exploration across diverse drilling inventory. Total
program includes about 500 wells.
Fourth Quarter 2004 Financial Results
For the fourth quarter of 2004, Newfield reported net income of
$90 million, or $1.43 per share (all per share amounts are on a diluted
basis). Earnings in the quarter were negatively affected by the two items
listed below. Without the effect of these items, earnings in the quarter
would have been $123 million, or $1.96 per share.
* As previously announced, Newfield fully wrote off the $35 million book
value associated with the Enserch Garden Banks floating production
facility (EGB) and related pipelines and processing facility. As a
result, an after-tax net charge of $23 million, or $0.36 per diluted
share, was recorded in the fourth quarter of 2004.
* A ceiling test writedown of $10 million, or $0.16 per diluted share,
was recorded for the remaining dry hole expenses in the fourth quarter
associated with the Cumbria Prospect in the U.K. North Sea.
Revenues in the fourth quarter of 2004 were $437 million. Net cash
provided by operating activities before changes in operating assets and
liabilities was $304 million in the fourth quarter of 2004. See Explanation
and Reconciliation of Non-GAAP Financial Measures.
Net income from continuing operations in the fourth quarter of 2003 was
$40 million, or $0.71 per share. Revenues in the fourth quarter of 2003 were
$245 million. Net cash provided by continuing operating activities before
changes in operating assets and liabilities was $195 million in the fourth
quarter of 2003.
Newfield's production in the fourth quarter of 2004 was 69.5 billion cubic
feet equivalent (Bcfe), a 26% increase over production of 55.1 Bcfe in the
fourth quarter of 2003. The following tables detail production and average
realized prices for the fourth quarter of 2004 and 2003.
Quarterly Production
For the Three Months Ended December 31
4Q04 4Q03 % Change
United States
Natural gas (Bcf) 53.8 46.1 17%
Oil and condensate (MMBbls) 2.1 1.5 40%
International (A)
Natural gas (Bcf) 0.1 ---
Oil and condensate (MMBbls) 0.5 ---
Total
Natural gas (Bcf) 53.9 46.1 17%
Oil and condensate (MMBbls) 2.6 1.5 73%
Total (Bcfe) 69.5 55.1 26%
Average Realized Prices (B)
For the Three Months Ended December 31
4Q04 4Q03 % Change
United States
Natural gas (per Mcf) $6.10 $4.39 39%
Oil and condensate (per Bbl) $40.81 $27.47 49%
International
Natural gas (per Mcf) $6.15 ---
Oil and condensate liftings (per Bbl) $42.51 ---
Total
Natural gas (per Mcf) $6.10 $4.39 39%
Oil and condensate (per Bbl) $41.12 $27.47 50%
Total (per Mcfe) $6.27 $4.42 42%
(A) Represents volumes sold regardless of when produced.
(B) Prices shown are net of all applicable transportation expense.
Domestic average realized prices also include the effects of hedging
other than our three-way collar contracts, which do not qualify for
hedge accounting under SFAS No. 133. Had we included the realized
loss on our three-way collar contracts, our average realized price
for total natural gas would have been $6.09 per Mcf and our average
realized price for total oil and condensate would have been
$38.44 per Bbl for the fourth quarter of 2004. No three-way
contracts were settled in the fourth quarter of 2003.
Stated on a unit of production basis, Newfield's lease operating expense
(LOE) in the fourth quarter of 2004 was $0.68 per Mcfe compared to LOE from
continuing operations of $0.61 per Mcfe in the same period of 2003.
Production and other taxes in the fourth quarter of 2004 increased to
$0.17 per Mcfe compared to production and other taxes from continuing
operations of $0.12 per Mcfe in the same period of 2003. DD&A expense in the
fourth quarter of 2004 was $2.04 per Mcfe compared to DD&A expense from
continuing operations of $1.84 per Mcfe in the same period of 2003. G&A
expense in the fourth quarter of 2004 was $0.35 per Mcfe compared to G&A
expense from continuing operations of $0.28 per Mcfe in the same period of
2003. G&A expense in the fourth quarter of 2004 is net of capitalized direct
internal costs of $9 million. Capitalized direct internal costs were
$6 million in the fourth quarter of 2003.
Capital expenditures in the fourth quarter of 2004 were $238 million.
Full-Year 2004 Financial Results
For 2004, Newfield posted net income of $312 million, or $5.26 per share.
Revenues for 2004 were $1.35 billion. This compares to net income from
continuing operations of $211 million, or $3.77 per share, on revenues of
$1.02 billion. Net cash provided by continuing operating activities before
changes in operating assets and liabilities was $965 million in 2004 compared
to $734 million in the same period of 2003. See Explanation and
Reconciliation of Non-GAAP Financial Measures.
Production volumes for 2004 increased 10% over the same period last year.
The Company produced 243.6 Bcfe in 2004 compared to production from continuing
operations of 220.6 Bcfe in the prior year. The following tables detail
production and average realized prices for 2004 and 2003:
Full-Year Production
For the Year Ended December 31
2004 2003 % Change
United States
Natural gas (Bcf) 197.6 184.2 7%
Oil and condensate (MMBbls) 6.7 6.1 10%
International (A)
Natural gas (Bcf) 0.6 ---
Oil and condensate (MMBbls) 0.9 ---
Total
Natural gas (Bcf) 198.2 184.2 8%
Oil and condensate (MMBbls) 7.6 6.1 25%
Total (Bcfe) 243.6 220.6 10%
Average Realized Prices (B)
For the Year Ended December 31
2004 2003 % Change
United States
Natural gas (per Mcf) $5.37 $4.58 17%
Oil and condensate (per Bbl) $36.37 $27.65 32%
International
Natural gas (per Mcf) $4.38 ---
Oil and condensate liftings (per Bbl) $44.26 ---
Total
Natural gas (per Mcf) $5.37 $4.58 17%
Oil and condensate (per Bbl) $37.29 $27.65 35%
Total (per Mcfe) $5.53 $4.58 21%
(A) Represents volumes sold regardless of when produced.
(B) Prices shown are net of all applicable transportation expense.
Domestic average realized prices include the effects of hedging other
than our three-way collar contracts, which do not qualify for hedge
accounting under SFAS No. 133. Had we included the realized loss on
our three-way contracts our average realized price for total natural
gas would have been $5.33 per Mcf and our average realized price for
total oil and condensate would have been $35.05 per Bbl for 2004. No
three-way contracts were settled in 2003.
In 2004, LOE, stated on a unit of production basis, averaged $0.60 per
Mcfe compared to LOE from continuing operations of $0.54 per Mcfe in 2003.
Production and other taxes in 2004 were $0.17 per Mcfe compared to production
and other taxes from continuing operations of $0.14 per Mcfe in 2003. DD&A
expense in 2004 was $1.94 per Mcfe compared to DD&A expense from continuing
operations of $1.79 per Mcfe in 2003. G&A expense in 2004 was $0.34 per Mcfe
compared to G&A expense from continuing operations of $0.28 per Mcfe in the
prior year. G&A expense in 2004 is net of capitalized direct internal costs
of $32 million. Capitalized direct internal costs were $27 million in 2003.
Proved Reserves and Capital Activity
Newfield's total reserves at year-end 2004 were 1.78 Tcfe, an increase of
35% over year-end 2003 reserves. Reserve additions from all sources were
725 Bcfe and included 458 Bcfe from acquisitions and 267 Bcfe from
discoveries, extensions and other revisions/additions. Sales of reserves in
2004 totaled 14 Bcfe.
Total oil and gas capital costs in 2004 were $1.85 billion, which includes
a non-cash $144 million step-up in the booked fair value of the assets
acquired in the Inland transaction and $49 million associated with asset
retirement cost.
Oil and Gas Reserves*
MMBbls Bcf Bcfe
December 31, 2003 37.8 1,090 1,317
Purchases of properties 54.4 131 458
Extensions, discoveries and other additions 5.2 231 262
Revisions 1.2 (2) 5
Reserve additions 60.8 360 725
Sales of properties (0.6) (11) (14)
Production (7.5) (198) (244)
December 31, 2004 90.5 1,241 1,784
* As a requirement of our revolving credit facility, independent reserve
engineers prepare separate reserve reports with respect to properties holding
at least 80% of our proved reserves. For December 31, 2004, the independent
reserve engineers' reports covered properties representing 86% of our proved
reserves and for such properties, the reserves were within 1% of the reserves
we reported for such properties.
Capital Expenditures
(In millions) 2004
Property acquisitions (A):
Unproved $ 439
Proved 603
Exploration (B) 158
Development 570
Asset retirement cost 49
Capitalized interest 26
Total costs incurred $ 1,845
Less:
Step-up in booked fair value of Inland assets (144)
Asset retirement cost (49)
$ 1,652
(A) Includes $37 million of unproved leasehold and $7 million of proved
leasehold expenditures.
(B) Includes $37 million of seismic expenditures.
Explanation and Reconciliation of Non-GAAP Financial Measures
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
from continuing operations before changes in operating assets and liabilities
to net cash provided by operating activities from continuing operations is
shown below:
(In millions) 4Q04 4Q03
Net cash provided by operating activities
from continuing operations $353 $201
Net change in operating assets
and liabilities (49) (6)
Net cash provided by operating activities
from continuing operations before changes in
operating assets and liabilities $304 $195
(In millions) 2004 2003
Net cash provided by operating activities
from continuing operations $998 $659
Net change in operating assets
and liabilities (33) 75
Net cash provided by operating activities
from continuing operations before changes in
operating assets and liabilities $965 $734
First Quarter 2005 Estimates
Natural Gas Production and Pricing
The Company's natural gas production in the first quarter of 2005 is
expected to be 49 - 54 Bcf (538 - 593 MMcf/d). The price the Company realizes
for natural gas production from the Gulf of Mexico and onshore Gulf Coast,
after basis differentials, transportation and handling charges, typically
averages $0.15 - $0.20 less per MMBtu than the Henry Hub Index. Realized gas
prices for our Mid-Continent properties, after basis differentials,
transportation and handing charges, typically average $0.70 - $0.80 less per
MMBtu than the Henry Hub Index. Hedging gains or losses will affect price
realizations.
Crude Oil Production and Pricing
The Company's oil production, including international liftings, in the
first quarter of 2005 is expected to be 2.1 - 2.3 million barrels (23,000 -
25,000 BOPD). Newfield expects to produce approximately 4,200 BOPD from its
Malaysian operations. The timing of liftings in Malaysia may affect our total
reported production. The price the Company receives for Gulf Coast production
typically averages about $2 per barrel below the NYMEX West Texas Intermediate
(WTI) price. The price the Company receives for its production in the Rocky
Mountains averages about $3 per barrel below WTI price. Oil production from
the Mid-Continent typically sells at a $1.00 - $1.50 per barrel discount to
WTI. Oil production from Malaysia typically sells at Tapis, or about even
with WTI. Hedging gains or losses will affect price realizations.
Lease Operating and Other Expenses
LOE is expected to be $43 - $48 million ($0.68 - $0.75 per Mcfe) in the
first quarter of 2005. Production taxes in the first quarter of 2005 are
expected to be $12 - $13 million ($0.19 - $0.21 per Mcfe). These expenses
vary and are 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
G&A expense for the first quarter of 2005 is expected to be
$23 - $25 million ($0.36 - $0.40 per Mcfe), net of capitalized direct internal
costs. Capitalized direct internal costs are expected to be $9 - $11 million.
G&A expense includes stock and incentive compensation expense. Incentive
compensation expense depends largely on net income.
Interest Expense
The non-capitalized portion of the Company's interest expense for the
first quarter of 2005 is expected to be $7 - $8 million ($0.10 - $0.11 per
Mcfe). As of February 9, 2005, borrowings under the Company's credit
arrangements were $78 million. The remainder of long-term debt consists of
four separate issuances of notes that in the aggregate total $875 million in
principal amount. Capitalized interest for the first quarter of 2005 is
expected to be about $11 - $12 million.
Income Taxes
Including both current and deferred taxes, the Company expects its
consolidated income tax rate in the first quarter of 2005 to be about
35 - 39%. About 70% of the tax provision is expected to be deferred.
The Company provides information regarding its outstanding hedging
positions in its annual and quarterly reports filed with the SEC and in its
electronic publication -- @NFX. This publication can be found on Newfield's
web page at http://www.newfld.com . Through the web page, you may elect to
receive @NFX through e-mail distribution.
Newfield Exploration Company is an independent crude oil and natural gas
exploration and production company. The Company relies on a proven growth
strategy that includes balancing acquisitions with drill bit opportunities.
Newfield's areas of operation include the Gulf of Mexico, the U.S. onshore
Gulf Coast, the Anadarko and Arkoma Basins of the Mid-Continent, the Uinta
Basin of the Rocky Mountains and select international ventures.
** The statements set forth in this release regarding estimated or
anticipated full-year 2005 production volumes and capital expenditures and
first quarter 2005 results 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, labor conditions and
other factors set forth in the Company's Annual Report on Form 10-K for the
year ended December 31, 2003. 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
http://www.newfld.com info@newfld.com
CONSOLIDATED STATEMENT OF INCOME
(Unaudited, in millions, except per share data)
For the For the
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
Oil and gas revenues $ 436.9 $ 244.9 $ 1,352.7 $ 1,017.0
Operating expenses:
Lease operating 47.0 33.5 145.7 119.3
Production and
other taxes 12.1 6.6 42.3 31.7
Transportation 1.2 1.3 6.3 6.4
Depreciation, depletion
and amortization 141.9 101.3 471.4 394.7
Ceiling test writedown 10.3 --- 17.0 ---
General and
administrative 24.6 15.6 84.0 61.6
Writedown of EGB, gas
sales obligation
settlement and
redemption of securities 35.0 --- 35.0 20.5
Total operating
expenses 272.1 158.3 801.7 634.2
Income from operations 164.8 86.6 551.0 382.8
Other income (expenses):
Interest expense (18.4) (12.8) (57.7) (57.8)
Capitalized interest 11.2 4.2 25.8 15.9
Dividends on preferred
securities of Newfield
Financial Trust I --- --- --- (4.6)
Commodity derivative
expense (7.3) (6.8) (23.8) (6.1)
Other 1.2 0.4 3.6 1.4
(13.3) (15.0) (52.1) (51.2)
Income from continuing
operations before
income taxes 151.5 71.6 498.9 331.6
Income tax provision 61.3 31.4 186.8 120.7
Income from continuing
operations 90.2 40.2 312.1 210.9
Loss from discontinued
operations, net of tax --- --- --- (17.0)
Income before cumulative
effect of change in
accounting principle 90.2 40.2 312.1 193.9
Cumulative effect of change
in accounting principle,
net of tax* --- --- --- 5.6
Net income $ 90.2 $ 40.2 $ 312.1 $ 199.5
Earnings per share:
Basic
Income from continuing
operations $ 1.46 $ 0.72 $ 5.35 $ 3.88
Loss from discontinued
operations --- --- --- (0.31)
Cumulative effect of
change in accounting
principle, net of tax* --- --- --- 0.10
Net income $ 1.46 $ 0.72 $ 5.35 $ 3.67
Diluted
Income from continuing
operations $ 1.43 $ 0.71 $ 5.26 $ 3.77
Loss from discontinued
operations --- --- --- (0.30)
Cumulative effect of
change in accounting
principle, net of tax* --- --- --- 0.10
Net income $ 1.43 $ 0.71 $ 5.26 $ 3.57
Weighted average number of
shares outstanding for
basic earnings per share 61.9 56.1 58.3 54.3
Weighted average number of
shares outstanding for
diluted earnings per share 63.0 56.6 59.3 56.7
* Associated with the adoption of SFAS No. 143.
CONDENSED CONSOLIDATED
BALANCE SHEET December 31, December 31,
(Unaudited, in millions) 2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 58.3 $ 15.3
Accounts receivable, oil and gas 247.7 134.8
Inventories 7.8 0.5
Derivative assets 54.5 13.8
Deferred taxes 1.0 12.9
Other current assets 22.3 61.6
Total current assets 391.6 238.9
Oil and gas properties, net (full cost method) 3,775.3 2,418.5
Floating production system and pipelines --- 35.0
Furniture, fixtures and equipment, net 18.3 5.9
Derivative assets 55.6 2.2
Other assets 21.4 16.2
Goodwill 65.3 16.4
Total assets $ 4,327.5 $ 2,733.1
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 427.0 $ 255.5
Derivative liabilities 47.0 44.7
Total current liabilities 474.0 300.2
Other liabilities 15.8 13.2
Derivative liabilities 83.1 13.2
Long-term debt 992.4 643.5
Asset retirement obligation 194.2 151.6
Deferred taxes 551.1 242.8
Total long-term liabilities 1,836.6 1,064.3
Commitments and contingencies --- ---
STOCKHOLDERS' EQUITY
Common stock 0.6 0.5
Additional paid-in capital 1,102.5 796.2
Treasury stock (27.3) (26.7)
Unearned compensation (9.5) (10.9)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment 2.6 0.9
Commodity derivatives 0.1 (26.4)
Minimum pension liability --- (0.8)
Retained earnings 947.9 635.8
Total stockholders' equity 2,016.9 1,368.6
Total liabilities and stockholders' equity $ 4,327.5 $ 2,733.1
CONDENSED CONSOLIDATED For the
STATEMENT OF CASH FLOWS Twelve Months Ended
(Unaudited, in millions) December 31,
2004 2003
Cash flows from operating activities:
Net income $ 312.1 $ 199.5
Loss from discontinued operations,
net of tax --- 17.0
Depreciation, depletion and amortization 471.4 394.7
Deferred taxes 125.7 99.1
Stock compensation 4.1 3.0
Commodity derivative income (expense) (0.4) 6.1
Writedown of EGB, gas sales obligation
settlement and redemption of securities 35.0 20.5
Ceiling test writedown 17.0 ---
Cumulative effect of change in
accounting principle * --- (5.6)
964.9 734.3
Changes in operating assets and liabilities 32.6 (75.1)
Net cash provided by continuing activities 997.5 659.2
Net cash provided by discontinued activities --- 10.3
Net cash provided by operating activities 997.5 669.5
Cash flows from investing activities:
Purchases of businesses,
net of cash acquired (755.7) (90.2)
Proceeds from sale of business --- 9.7
Additions to oil and gas properties (853.0) (530.9)
Proceeds from sale of oil and gas properties 16.7 ---
Additions to furniture,
fixtures and equipment (6.8) (3.3)
Net cash used in continuing activities (1,598.8) (614.7)
Net cash used in discontinued activities --- (3.1)
Net cash used in investing activities (1,598.8) (617.8)
Cash flows from financing activities:
Proceeds from borrowings under
credit arrangements 1,254.0 1,569.0
Repayments of borrowings under
credit arrangements (1,229.0) (1,510.0)
Proceeds from issuance of senior
subordinated notes 325.0 ---
Repurchases of secured notes (2.9) (63.1)
Deliveries under the gas sales obligation --- (8.4)
Proceeds from issuances of common stock 297.3 149.3
Repayments of secured notes --- (11.2)
Gas sales obligation settlement --- (62.0)
Purchases of treasury stock (0.6) (0.5)
Redemption of trust preferred securities --- (148.5)
Net cash provided by (used in)
continuing activities 643.8 (85.4)
Net cash used in discontinued activities --- ---
Net cash provided by (used in)
financing activities 643.8 (85.4)
Effect of exchange rate changes
on cash and cash equivalents 0.5 0.1
Increase (decrease) in cash
and cash equivalents 43.0 (33.6)
Cash and cash equivalents from continuing
operations, beginning of period 15.3 33.8
Cash and cash equivalents from discontinued
operations, beginning of period --- 15.1
Cash and cash equivalents, end of period $ 58.3 $ 15.3
* Associated with the adoption of SFAS No. 143.
SOURCE Newfield Exploration Company
 back to top
Related links:
http://www.newfld.com
CONTACT:
Steve Campbell of Newfield Exploration
Company, +1-281-847-6081, or info@newfld.com
|
