2009 Capital Spending Plans Aligned with Estimated Cash Flow
HOUSTON, Oct. 21 /PRNewswire-FirstCall/ -- Newfield Exploration Company
(NYSE: NFX) today reported third quarter 2008 financial and operating
results. Newfield will be hosting a conference call at 3:30 p.m. CDT,
Wednesday, October 22. To participate in the call, dial 719-325-2179 or
listen through the website at http://www.newfield.com.
Third Quarter 2008
Newfield's production in the third quarter of 2008 was 61.4 Bcfe.
Production during the third quarter reflects the impact of the deferral of
more than 2 Bcfe of production as a result of recent storms in the Gulf of
Mexico. Based on the pace of storm recovery, Newfield was today able to
slightly increase its full-year 2008 expected range of production to
235-238 Bcfe, an increase of approximately 25% over 2007 pro forma
production (adjusted for asset sales and acquisitions). Previous guidance
was 234-238 Bcfe.
For the third quarter of 2008, Newfield reported net income of $724
million, or $5.48 per diluted share (all per share amounts are on a diluted
basis). Income for the third quarter of 2008 includes a net unrealized gain
on commodity derivatives of $846 million ($589 million after-tax), or $4.46
per share.
Without the effect of this item, net income was $135 million, or $1.02
per share.
Revenues in the third quarter of 2008 were $680 million. Net cash
provided by operating activities before changes in operating assets and
liabilities was $396 million. See "Explanation and Reconciliation of
Non-GAAP Financial Measures" found after the financial statements in this
release.
Capital Investments, Financial Update
"Both operationally and financially, Newfield is performing very well
in 2008," said David Trice, Chairman, President and CEO. "Unfortunately,
the realities of today's broader markets have shifted investor focus away
from most traditional valuation metrics. Over the last 20 years, we have
weathered many cycles and each time have relied on our strong balance
sheet, hedging, ample access to liquidity and the proven track record of
our management team. We are focused on what matters in 2009. We will fund
the best projects. Our reduction in 2009 planned capital expenditures, $450
million less than our initial planned capital expenditures, will help
ensure that we balance current growth expectations with our consistent goal
of building long-term value for our shareholders. We have a diverse
portfolio of assets which provide us with multiple options in today's
environment."
Capital expenditures in the third quarter of 2008 were $514 million.
Newfield reiterated that it expects 2008 capital investments to total
approximately $2.2 billion, which includes a $226 million acquisition in
the first half of the year.
Newfield today disclosed a significant reduction in its planned
spending levels in 2009. For 2009, Newfield plans to invest $1.65 billion
-- matching its capital budget with cash flow expectations. The 2009 budget
includes approximately $100 million for capitalized interest and overhead.
This reduced budget compares to preliminary guidance of approximately $2.1
billion (including capitalized interest and overhead), announced on
September 9, 2008. Newfield expects 8-13% production growth in 2009, or a
range of 255-267 Bcfe. A detailed budget overview will be presented during
Newfield's conference call with analysts and investors at 3:30 p.m. CDT,
October 22, 2008.
For 2009, Newfield has hedged nearly 60% of its expected natural gas
production and about 90% of expected domestic oil production. These hedge
positions, which help ensure cash flow in 2009, are detailed in the
Company's @NFX publication on the Company's website.
Newfield has a $1.25 billion credit revolver funded through 18
financial institutions. The largest commitment by a member of the syndicate
of financial institutions is 8% of the facility. At the end of the third
quarter, Newfield had $285 million of outstanding borrowings under the
facility.
For an operational update on Newfield's focus areas, please see the
@NFX publication on the Company's website.
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.newfield.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 of growing reserves through an active drilling program and
select acquisitions. Newfield's domestic areas of operation include the
Anadarko and Arkoma Basins of 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 fourth quarter 2008 results, estimated
full-year 2008 production, estimated 2009 capital expenditures, cash flow
and production growth, drilling and development plans and the timing of
activities, 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 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
3Q08 Actual Results
3Q08 Actual
Domestic Int'l Total
Production/Liftings*
Natural gas - Bcf 44.9 - 44.9
Oil and condensate - MMBbl 1.6 1.1 2.7
Total Bcfe 54.7 6.7 61.4
Average Realized Prices Note 1
Natural gas - $/Mcf $7.25 $- $7.25
Oil and condensate - $/Bbl $70.57 $106.87 $85.44
Mcf equivalent - $/Mcfe $8.05 $17.81 $9.12
Operating Expenses:
Lease operating
Recurring ($MM) $44.8 $13.1 $57.9
per/Mcfe $0.82 $1.94 $0.94
Major ($MM) $9.5 $- $9.5
per/Mcfe $0.17 $- $0.16
Production and other taxes ($MM) $20.5 $30.1 $50.6
per/Mcfe $0.38 $4.46 $0.82
General and administrative (G&A),
net ($MM) $34.6 $1.5 $36.1
per/Mcfe $0.63 $0.23 $0.59
Capitalized G&A ($MM) $(17.9)
per/Mcfe $(0.29)
Interest expense ($MM) $36.2
per/Mcfe $0.59
Capitalized interest ($MM) $(16.8)
per/Mcfe $(0.27)
*Reflects approximately 2 Bcfe of deferred domestic gas production
related to GOM storms.
Note 1: Actual 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 $8.67 per Mcf
and the total oil and condensate average realized price would have
been $106.04 per barrel.
4Q08 Estimates
4Q08 Estimates
Domestic Int'l Total
Production/Liftings*
Natural gas - Bcf 42.0 - 44.2 - 42.0 - 44.2
Oil and condensate - MMBbl 1.8 - 1.9 1.4 - 1.5 3.2 - 3.4
Total Bcfe 52.8 - 54.6 8.3 - 8.7 61.1 - 63.3
Average Realized Prices
Natural gas - $/Mcf Note 1
Oil and condensate - $/Bbl Note 2 Note 3
Mcf equivalent - $/Mcfe
Operating Expenses:
Lease operating
Recurring ($MM) $39.4 - $43.6 $13.3 - $14.7 $52.7 - $58.3
per/Mcfe $0.75 - $0.80 $1.60 - $1.69 $0.86 - $0.92
Major (workover,
repairs, etc.) ($MM) $8.3 - $9.1 $0.7 - $0.8 $9.0 - $9.9
per/Mcfe $0.16 - $0.17 $0.08 - $0.09 $0.14 - $0.16
Production and other
taxes ($MM) Note 4 $19.7 - $21.8 $15.8 - $17.5 $35.5 - $39.3
per/Mcfe $0.37 - $0.40 $1.90 - $2.00 $0.58 - $0.62
General and administrative
(G&A), net ($MM) $35.4 - $39.1 $1.5 - $1.7 $36.9 - $40.8
per/Mcfe $0.67 - $0.72 $0.18 - $0.20 $0.60 - $0.64
Capitalized G&A ($MM) ($17.2 - $19.1)
per/Mcfe ($0.28 - $0.30)
Interest expense ($MM) $32.0 - $36.0
per/Mcfe $0.52 - $0.57
Capitalized interest ($MM) ($15.0 - $17.0)
per/Mcfe ($0.25 - $0.27)
Tax rate (%) Note 5 37 - 40%
Income taxes (%)
Current 15 - 20%
Deferred 80 - 85%
*Reflects approximately 3 Bcfe of deferred domestic gas production related
to GOM storms.
Note 1: Gas prices in the Mid-Continent, after basis differentials,
transportation and handling charges, typically average 75 - 85% of
the Henry Hub Index. Gas prices in the Gulf Coast, after basis
differentials, transportation and handling charges, are expected
to average $0.40 - $0.60 per MMBtu less than the Henry Hub Index.
Note 2: Oil prices in the Gulf Coast typically equal the NYMEX WTI price.
Rockies oil prices average about $15 per barrel below WTI. Oil
production from the Mid-Continent typically averages 96 - 98% of
WTI.
Note 3: Oil in Malaysia typically sells at a slight discount to Tapis, or
about 90% of WTI. Oil production from China typically sells at
$10 - $15 per barrel below WTI.
Note 4: Guidance for production taxes determined using $70/Bbl oil and
$7/MMBtu gas.
Note 5: Tax rate applied to earnings excluding unrealized gains or losses
on commodity derivatives.
CONSOLIDATED STATEMENT For the For the
OF INCOME Three Months Ended Nine Months Ended
(Unaudited, in millions, September 30, September 30,
except per share data) 2008 2007 2008 2007
Oil and gas revenues $680 $419 $1,887 $1,384
Operating expenses:
Lease operating 67 64 184 268
Production and other taxes 51 25 154 63
Depreciation, depletion
and amortization 181 162 504 539
General and administrative 36 37 105 107
Total operating expenses 335 288 947 977
Income from operations 345 131 940 407
Other income (expenses):
Interest expense (36) (29) (83) (80)
Capitalized interest 16 13 43 35
Commodity derivative income
(expense) 726 38 (247) (43)
Other 8 1 10 3
714 23 (277) (85)
Income from continuing operations
before income taxes 1,059 154 663 322
Income tax provision 335 62 247 125
Income from continuing operations 724 92 416 197
Loss from discontinued operations,
net of tax - (9) - (60)
Net income $724 $83 $416 $137
Earnings (loss) per share:
Basic --
Income from continuing operations $5.59 $0.72 $3.22 $1.54
Loss from discontinued operations,
net of tax - (0.07) - (0.47)
$5.59 $0.65 $3.22 $1.07
Diluted --
Income from continuing operations $5.48 $0.70 $3.15 $1.51
Loss from discontinued operations,
net of tax - (0.06) - (0.46)
$5.48 $0.64 $3.15 $1.05
Weighted average number of shares
outstanding for basic earnings
(loss) per share 129 128 129 127
Weighted average number of shares
outstanding for diluted earnings
(loss) per share 132 131 132 130
CONDENSED CONSOLIDATED BALANCE SHEET September 30, December 31,
(Unaudited, in millions) 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $35 $250
Short-term investments - 120
Other current assets 765 557
Total current assets 800 927
Oil and gas properties, net (full cost method) 7,180 5,923
Other assets 452 136
Total assets $8,432 $6,986
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $1,003 $929
Other liabilities 206 322
Long-term debt 1,936 1,050
Deferred taxes 1,253 1,104
Total long-term liabilities 3,395 2,476
Commitments and contingencies - -
STOCKHOLDERS' EQUITY
Common stock 1 1
Additional paid-in capital 1,322 1,278
Treasury stock (32) (32)
Accumulated other comprehensive loss (10) (3)
Retained earnings 2,753 2,337
Total stockholders' equity 4,034 3,581
Total liabilities and stockholders' equity $8,432 $6,986
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the
(Unaudited, in millions) Nine Months Ended
September 30,
2008 2007
Cash flows from operating activities:
Net income $416 $137
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss from discontinued operations, net of tax - 60
Depreciation, depletion and amortization 504 539
Stock-based compensation 17 18
Commodity derivative expense 247 43
Cash (payments) receipts on derivative
settlements (783) 174
Deferred taxes 213 47
614 1,018
Changes in operating assets and liabilities 8 (75)
Net cash provided by continuing activities 622 943
Net cash used in discontinued activities - (12)
Net cash provided by operating activities 622 931
Cash flows from investing activities:
Additions to oil and gas properties and other (1,551) (1,539)
Acquisition of oil and gas properties (231) (578)
Proceeds from sale of oil and gas properties 2 1,281
Purchases of short-term investments (22) (43)
Redemption of short-term investments 70 24
Net cash used in continuing activities (1,732) (855)
Net cash used in discontinued activities - (41)
Net cash used in investing activities (1,732) (896)
Cash flows from financing activities:
Net proceeds under credit arrangements 285 -
Net proceeds from issuance of senior
subordinated notes 592 -
Payments to discontinued operations - (38)
Proceeds from issuances of common stock 18 18
Stock-based compensation excess tax benefit - 8
Purchases of treasury stock - (1)
Net cash provided by (used in) continuing
activities 895 (13)
Net cash provided by discontinued activities - 38
Net cash provided by financing activities 895 25
Effect of exchange rate changes on cash and
cash equivalents - 1
Increase (decrease) in cash and cash equivalents (215) 61
Cash and cash equivalents from continuing
operations, beginning of period 250 52
Cash and cash equivalents from discontinued
operations, beginning of period - 28
Cash and cash equivalents, end of period $35 $141
Explanation and Reconciliation of Non-GAAP Financial Measures
Earnings stated without the effects of certain items is a non-GAAP
financial measure. Earnings without the effects of these items are
presented because they affect the comparability of operating results from
period to period. In addition, earnings without the effects of these items
are more comparable to earnings estimates provided by securities analysts.
A reconciliation of earnings for the third quarter of 2008 stated
without the effects of certain items to net income is shown below:
3Q08
(in millions)
Net income $724
Net unrealized gain on commodity derivatives (1) (846)
Income tax adjustment for above item 257
Earnings stated without the effect of the above items $135
(1) The determination of "Net unrealized gain on commodity derivatives"
for the third quarter of 2008 is as follows:
3Q08
(in millions)
Commodity derivative income $726
Cash payments on derivative settlements 116
Option premiums associated with derivatives
settled during the period 4
Net unrealized gain on commodity derivatives $846
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 (used in) 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:
3Q08
(in millions)
Net cash provided by operating activities $451
Net change in operating assets and liabilities (55)
Net cash provided by operating activities before
changes in operating assets and liabilities $396
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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