HOUSTON, June 21 /PRNewswire-FirstCall/ -- Newfield Exploration Company
(NYSE: NFX) today announced the signing of a purchase and sale agreement to
sell all of its producing properties in the shallow water Gulf of Mexico to
McMoRan Exploration Co. (NYSE: MMR) for a total cash consideration of $1.1
billion and the assumption of liabilities associated with future
abandonment of wells and platforms. The sale is expected to close in July
2007, subject to customary closing conditions.
"Today's announcement is a significant step in our on-going plan to
create a longer-lived reserve base with sustainable and predictable
production growth," said David A. Trice, Newfield Chairman, President and
CEO. "The sale of our shelf properties is the first in a series of planned
divestitures that also include our assets in Bohai Bay China, the North Sea
and select properties in Texas and Oklahoma. Pro-forma for these
transactions, our reserve life should increase to approximately 11 years
and we will have visible production growth from the development of our
in-hand assets. Newfield has a long history in the Gulf of Mexico and we
will continue to focus on growing our deepwater portfolio where we have an
interest in three producing fields and two field developments underway that
will create future production growth.
"McMoRan has acquired some very good properties in this transaction,"
said Trice. "But the most valuable assets will be the people who will join
McMoRan's team. Their efforts are responsible for Newfield's success in the
Gulf of Mexico. We will be retaining our shelf exploration team and we will
continue to explore and drill shelf prospects."
Current net production from the properties to be sold is approximately
270 MMcfe/d. Newfield's net production from its shelf properties in the
first six months of 2007 is expected to be approximately 46 Bcfe. The
effective date of this transaction is July 1, 2007.
This transaction also provides McMoRan with an undivided interest in
Newfield's ultra-deep acreage in its Treasure Island and Treasure Bay
exploration program. Newfield will retain a working interest ranging from
10-25% in the Treasure Island and Treasure Bay acreage, which encompasses
85 lease blocks. Upon closing, McMoRan will assume operatorship of the
Treasure Island leasehold, subject to customary approvals. In addition,
McMoRan will join Newfield in a 50-50 joint venture on Newfield's primary
term shelf acreage. This venture will cover 19 lease blocks, or nearly
100,000 gross acres.
Newfield expects to utilize Internal Revenue Code Section 1031 Tax
Deferred Exchange rules for the sale of its Gulf of Mexico shelf assets and
the recent $575 million acquisition of Rocky Mountain assets from Stone
Energy. As a result, after-tax proceeds from the sale of the Gulf of Mexico
assets are expected to be more than $1 billion. Utilization of Sec 1031
rules creates nearly $30 million of additional value in these transactions.
Newfield will use the proceeds from the sale of the Gulf of Mexico
assets to finance the Rocky Mountain acquisition, pay down existing debt
and fund the remainder of its 2007 capital expenditures.
Jefferies Randall & Dewey and Morgan Stanley & Co. Incorporated acted
as financial advisors to Newfield in connection with its Gulf of Mexico
asset sale.
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 the drilling of a balanced
risk/reward portfolio and select acquisitions. Newfield's domestic areas of
operation include the onshore Gulf Coast, the Anadarko and Arkoma Basins of
the Mid-Continent, the Uinta Basin of the Rocky Mountains and the Gulf of
Mexico. The Company has international operations in Malaysia, the U.K.
North Sea and China.
**The statements set forth in this release regarding the anticipated
closing and the closing date for the acquisition and proposed divestitures
are forward looking and are based upon assumptions and anticipated results
that are subject to numerous uncertainties, including the satisfaction of
closing conditions. Failure to satisfy these conditions or delay in
satisfying these conditions could result in the termination of the
transaction or delay the closing of the transaction. Completion of
Newfield's other proposed divestitures is subject to Newfield receiving
offers that it considers acceptable for the properties.
For information, contact:
Investor Relations: Steve Campbell (281) 847-6081
Media Relations: Keith Schmidt (281) 674-2650
Email: info@newfield.com
SOURCE Newfield Exploration Company
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Related links:
http://www.newfield.com
CONTACT:
investor relations, Steve Campbell,
+1-281-847-6081, or media relations, Keith Schmidt,
+1-281-674-2650, both of Newfield Exploration Company,
info@newfield.com
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