HOUSTON, Oct. 26 /PRNewswire-FirstCall/ -- Newfield Exploration Company
(NYSE: NFX) today announced financial and operating results for the third
quarter of 2005. A conference call to discuss the results is planned for
8:30 a.m. (CDT), Thursday, October 27. To participate in the call, dial
719-457-2657. A listen-only broadcast also will be provided over the
Internet. Simply go to the Investor Relations section at
http://www.newfld.com .
Third Quarter 2005
For the third quarter of 2005, Newfield reported a net loss of
$0.2 million. The loss for the quarter reflects the following items:
* A $205 million charge ($133 million after tax), or $1.04 per share
(all per share amounts are on a diluted basis), associated with
changes in the fair market value of open three-way collar contracts,
charges related to other contracts that no longer qualify for hedge
accounting and hedge ineffectiveness; and
* A $7 million gain ($5 million after-tax), or $0.04 per share on the
sale of the Enserch Garden Banks floating production facility (EGB).
Without the effects of these items, net income for the quarter would have
been $128 million, or $1.00 per share.
"A significant portion of our expected winter Gulf of Mexico production
was hedged in various instruments. Hurricanes forced the deferral of 18-20
Bcfe of our 2005 production, triggering the loss of hedge accounting for some
of our winter contracts. As a result, accounting rules dictated that we take
a charge on those contracts," said David A. Trice, Newfield Chairman,
President and CEO. "Higher commodity prices in the wake of the storms should
offset the revenues associated with our deferred production."
Revenues in the third quarter of 2005 were $460 million. Net cash
provided by operating activities before changes in operating assets and
liabilities was $296 million. See Explanation and Reconciliation of Non-GAAP
Financial Measures.
By comparison, Newfield's net income for the third quarter of 2004 was
$77 million, or $0.63 per share. Without the effect of unrealized commodity
derivative income of $10 million ($7 million after tax) net income for the
third quarter of 2004 would have been $70 million, or $0.58 per share.
Revenues in the same period were $328 million. Net cash provided by operating
activities before changes in operating assets and liabilities was $268 million
in the third quarter of 2004. See Explanation and Reconciliation of Non-GAAP
Financial Measures.
Newfield's production in the third quarter of 2005 was 59.2 Bcfe,
reflecting an estimated 6 Bcfe deferred production related to hurricanes in
the Gulf of Mexico. Production in the third quarter of 2004 was 60.7 Bcfe.
The following tables detail production and average realized prices for the
third quarters of 2005 and 2004.
Quarterly Production (A) 3Q05 3Q04 % Change
United States
Natural gas (Bcf) 46.8 48.6 (4%)
Oil and condensate (MMBbls) 1.8 1.6 11%
International
Natural gas (Bcf) --- 0.1 (100%)
Oil and condensate (MMBbls) 0.3 0.4 (26%)
Total
Natural gas (Bcf) 46.8 48.8 (4%)
Oil and condensate (MMBbls) 2.1 2.0 4%
Total (Bcfe) 59.2 60.7 (2%)
Average Realized Prices (B) 3Q05 3Q04 % Change
United States
Natural gas (per Mcf) $7.60 $5.12 48%
Oil and condensate (per Bbl) $47.73 $37.32 28%
International
Natural gas (per Mcf) --- $3.90 (100%)
Oil and condensate (per Bbl) $62.27 $46.34 34%
Total
Natural gas (per Mcf) $7.60 $5.12 48%
Oil and condensate (per Bbl) $49.83 $39.15 27%
Total (per Mcfe) $7.75 $5.40 44%
(A) Represents volumes sold regardless of when produced.
(B) Average realized prices include the effects of hedging other than
(a) three-way collar contracts, which do not qualify for hedge
accounting under SFAS No. 133, and (b) other contracts that no
longer qualify for hedge accounting as a result of the storms. Had
we included the effect of these contracts, our average realized
price for total gas would have been $6.97 per Mcf and $5.06 per Mcf
for the third quarter of 2005 and 2004, respectively. Our total oil
and condensate average realized price would have been $47.83 per Bbl
and $36.50 per Bbl for the third quarter of 2005 and 2004,
respectively.
Stated on a unit of production basis, Newfield's lease operating expense
(LOE) in the third quarter of 2005 was $0.88 per Mcfe, compared to LOE of
$0.66 per Mcfe in the third quarter of 2004. LOE per Mcfe in the third
quarter of 2005 was adversely impacted by deferred production of approximately
6 Bcfe related to hurricanes in the Gulf of Mexico. Production and other
taxes in the third quarter of 2005 reflect significantly higher commodity
prices and were $0.30 per Mcfe compared to production and other taxes of $0.21
per Mcfe in the same period of 2004. DD&A expense in the third quarter of
2005 was $2.14 per Mcfe compared to DD&A expense of $1.95 per Mcfe in the same
period of 2004. G&A expense in the third quarter of 2005 was $0.43 per Mcfe
compared to G&A expense of $0.36 per Mcfe in the same period of 2004. G&A
expense in the third quarter of 2005 is net of capitalized direct internal
costs of $12 million. Capitalized direct internal costs were $8 million in
the third quarter of 2004.
Capital expenditures in the third quarter of 2005 were $282 million.
Year-to-Date 2005
For the first nine months of 2005, Newfield posted net income of
$164 million, or $1.29 per share, on revenues of $1.3 billion. Earnings for
the nine months of 2005 reflect the following items:
* A $357 million charge ($232 million after tax), or $1.81 per share,
associated with changes in the fair market value of open three-way
collar contracts, charges related to other contracts that no longer
qualify for hedge accounting and hedge ineffectiveness;
* An $8 million benefit, or $0.06 per share, related to a reversal of
the valuation allowance on Newfield's U.K. net operating loss
carryforwards because of a substantial increase in estimated future
taxable income as a result of Newfield's Grove discovery in the U.K.
North Sea; and
* A $7 million gain ($5 million after-tax), or $0.04 per share, on the
sale of the EGB.
Without the effects of these items, net income for the first nine months
of 2005 would have been $383 million, or $3.00 per share.
By comparison, in the first nine months of 2004, net income was
$222 million, or $1.91 per share, on revenues of $916 million. Net cash
provided by operating activities before changes in operating assets and
liabilities was $935 million in the first nine months of 2005 compared to
$661 million in the same period of 2004. See Explanation and Reconciliation
of Non-GAAP Financial Measures.
Despite the deferral of an estimated 6 Bcfe due to hurricanes in the Gulf
of Mexico, production volumes for the first nine months of 2005 increased 10%
above the same period of 2004. The Company produced 191.4 Bcfe in the first
nine months of 2005 compared to 174.1 Bcfe in the first nine months of 2004.
The following tables detail production and average realized prices for the
first nine months of 2005 and 2004:
Production (A) YTD 09/05 YTD 09/04 % Change
United States
Natural gas (Bcf) 151.3 143.8 5%
Oil and condensate (MMBbls) 5.9 4.6 28%
International
Natural gas (Bcf) 0.1 0.5 (80%)
Oil and condensate (MMBbls) 0.8 0.4 98%
Total
Natural gas (Bcf) 151.4 144.3 5%
Oil and condensate (MMBbls) 6.7 5.0 34%
Total (Bcfe) 191.4 174.1 10%
Average Realized Prices (B) YTD 09/05 YTD 09/04 % Change
United States
Natural gas (per Mcf) $6.72 $5.13 31%
Oil and condensate (per Bbl) $43.78 $34.67 26%
International
Natural gas (per Mcf) $4.87 $3.94 24%
Oil and condensate (per Bbl) $53.45 $46.29 15%
Total
Natural gas (per Mcf) $6.71 $5.12 31%
Oil and condensate (per Bbl) $44.95 $35.63 26%
Total (per Mcfe) $6.88 $5.26 31%
(A) Represents volumes sold regardless of when produced.
(B) Average realized prices include the effects of hedging other than
(a) three-way collar contracts, which do not qualify for hedge
accounting under SFAS No. 133, and (b) other contracts that no
longer qualify for hedge accounting as a result of the storms. Had
we included the effect of these contracts, our average realized
price for total gas would have been $6.52 per Mcf and $5.07 per Mcf
for the nine months ended September 30, 2005 and 2004, respectively.
Our total oil and condensate average realized price would have been
$43.84 per Bbl and $33.62 per Bbl for the nine months ended
September 30, 2005 and 2004, respectively.
In the first nine months of 2005, LOE, stated on a unit of production
basis, averaged $0.74 per Mcfe, compared to LOE of $0.57 per Mcfe in the same
period of 2004. Production taxes in the first nine months of 2005 were $0.21
per Mcfe compared to production taxes of $0.17 per Mcfe in the same period of
2004. DD&A expense in the first nine months of 2005 was $2.11 per Mcfe
compared to DD&A expense of $1.89 per Mcfe in the same period of 2004. G&A
expense in the first nine months of 2005 was $0.40 per Mcfe compared to G&A
expense of $0.34 per Mcfe in the prior year. G&A expense in the first nine
months of 2005 is net of capitalized direct internal costs of $34 million
compared to $23 million in the same period of 2004.
Capital expenditures in the first nine months of 2005 totaled
$799 million.
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 the timing and amount of these items cannot be reasonably estimated
and 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.
Our quarterly consolidated statement of income for 2005 and 2004 includes
the effects of these items:
- Commodity derivative income (expense) for the third quarter of 2005
and 2004 is comprised of (a) $205 million of expense and $10 million
of income, respectively, associated with unrealized commodity
derivative gain (loss) resulting from changes in the fair market value
of open three-way collar contracts, other contracts that no longer
qualify for hedge accounting and hedge ineffectiveness and (b)
$33 million and $8 million, respectively, of realized losses related
to the monthly settlement of certain of those contracts.
- A $7 million gain on the sale of the EGB in the third quarter of 2005.
A reconciliation of earnings stated without the effect of certain items to
net income is shown below:
3Q05 3Q04
(in millions)
Net income (loss) $(0.2) $76.5
Less: Unrealized commodity derivative
income (expense) (204.6) 9.7
Less: Gain on sale of the EGB 7.2 ---
Less: Income tax adjustment for
above items 69.1 (3.4)
Earnings stated without the effects of
the above items $128.1 $70.2
In the first nine months of 2005 and 2004 our consolidated statement of
income includes the effects of the following items:
- Commodity derivative income (expense) for the first nine months of
2005 and 2004 is comprised of (a) $357 million of expense and
$0.2 million of income, respectively, associated with unrealized
commodity derivative gain (loss) resulting from changes in the fair
market value of open three-way collar contracts, other contracts that
no longer qualify for hedge accounting and hedge ineffectiveness and
(b) $37 million and $16.7 million, respectively, of realized losses
related to the monthly settlement of certain of those contracts.
- A $7 million gain on the sale of the EGB in the third quarter of 2005.
- Income tax provision for 2005 includes an $8 million benefit related
to a reversal of the valuation allowance on Newfield's U.K. net
operating loss carryforwards because of a substantial increase in
estimated future taxable income as a result of Newfield's Grove
discovery in the U.K. North Sea.
A reconciliation of earnings stated without the effects of certain items
to net income is shown below:
YTD05 YTD04
(in millions)
Net income $164.0 $221.9
Less: Unrealized commodity derivative
income (expense) (356.6) 0.2
Less: Gain on sale of the EGB 7.2 ---
Less: Income tax adjustment for above items 122.3 ---
Less: Tax benefit related to U.K. net
operating loss valuation allowance 7.8 ---
Earnings stated without the effects of the
above items $383.3 $221.7
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:
3Q05 3Q04
(in millions)
Net cash provided by operating activities $270 $230
Net change in operating assets and liabilities 26 38
Net cash provided by operating activities
before changes in operating assets and
liabilities $296 $268
YTD05 YTD04
(in millions)
Net cash provided by operating activities $887 $645
Net change in operating assets and liabilities 48 16
Net cash provided by operating activities
before changes in operating assets and
liabilities $935 $661
Fourth Quarter 2005 Estimates
Natural Gas Production and Pricing The Company's natural gas production
in the fourth quarter of 2005 is expected to be 40 - 47 Bcf (435 - 510
MMcf/d). Based on recent gas price escalations, Newfield estimates that its
realized price for natural gas production from the Gulf of Mexico and onshore
Gulf Coast, after basis differentials, transportation and handling charges,
will average $0.40 - $0.60 less per MMBtu than the Henry Hub Index. Realized
gas prices for the Company's 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 fourth quarter of 2005 is expected to be 1.8 -
2.0 million barrels (20,000 - 22,000 BOPD). Newfield expects to produce
approximately 4,200 BOPD from its Malaysian operations. The timing of
liftings in Malaysia may affect 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. 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 Expense and Production Taxes LOE is expected to be $42 -
$46 million ($0.77 - $0.85 per Mcfe) in the fourth quarter of 2005.
Production taxes in the fourth quarter of 2005 are expected to be $25 - $28
million ($0.48 - $0.53 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. The increased LOE estimate for the fourth quarter reflects the
deferral of about 13 Bcfe of Gulf production and other costs related to recent
hurricanes.
General and Administrative Expense G&A expense for the fourth quarter of
2005 is expected to be $29 - $32 million ($0.54 - $0.59 per Mcfe), net of
capitalized direct internal costs. Capitalized direct internal costs are
expected to be $16 - $18 million. G&A expense includes stock and incentive
compensation expense. Incentive compensation expense depends largely on
adjusted net income (as defined in the Company's incentive compensation plan),
which excludes unrealized gains and losses on commodity derivatives.
Interest Expense The non-capitalized portion of the Company's interest
expense for the fourth quarter of 2005 is expected to be $4 - $5 million
($0.07 - $0.09 per Mcfe). As of October 26, 2005, Newfield had $10 million in
outstanding borrowings under its credit arrangements. 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 fourth
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 fourth quarter of 2005 to be
about 35 - 39%. About 75% 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 offshore Malaysia. The Company has
international development projects underway in the U.K. North Sea and in Bohai
Bay, China.
**The statements set forth in this release regarding estimated or
anticipated fourth quarter results and production volumes 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. Newfield's ability to produce oil and gas
from the Gulf of Mexico is dependent on infrastructure (such as host
platforms, pipelines and onshore processing facilities) owned by third
parties. Much of this infrastructure was damaged by Hurricanes Katrina and
Rita. As a result, it is difficult to predict when production will be
permitted to resume. Other factors include 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 and labor conditions. 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 For the For the
(Unaudited, in millions, except Three Months Ended Nine Months Ended
per share data) September 30, September 30,
2005 2004 2005 2004
Oil and gas revenues $460.3 $327.7 $1,319.2 $915.8
Operating expenses:
Lease operating 52.9 39.8 143.8 98.7
Production and other taxes 17.8 12.7 41.1 30.2
Transportation 1.8 1.7 6.0 5.1
Depreciation, depletion and
amortization 126.7 118.5 403.0 329.5
General and administrative 25.6 21.9 76.1 59.4
Ceiling test writedown --- 6.7 --- 6.7
Gain on sale of floating
production system (7.2) --- (7.2) ---
Total operating expenses 217.6 201.3 662.8 529.6
Income from operations 242.7 126.4 656.4 386.2
Other income (expenses):
Interest expense (17.8) (14.8) (54.4) (39.3)
Capitalized interest 11.7 6.3 34.4 14.6
Commodity derivative income
(expense) (238.3) 1.4 (393.5) (16.5)
Other 1.7 1.3 3.0 2.4
(242.7) (5.8) (410.5) (38.8)
Income before income taxes --- 120.6 245.9 347.4
Income tax provision 0.2 44.1 81.9 125.5
Net income (loss) $(0.2) $76.5 $164.0 $221.9
Earnings per share:
Basic $ --- $0.65 $1.31 $1.94
Diluted $ --- $0.63 $1.29 $1.91
Weighted average number of shares
outstanding for basic earnings
per share 125.6 118.6 125.1 114.2
Weighted average number of shares
outstanding for diluted earnings
per share 128.4 120.6 127.6 116.1
CONDENSED CONSOLIDATED
BALANCE SHEET September 30, December 31,
(Unaudited, in millions) 2005 2004
ASSETS
Current assets:
Cash and cash equivalents $102.3 $58.3
Accounts receivable 259.4 247.7
Inventories 19.6 7.8
Derivative assets 2.9 54.5
Deferred taxes 129.6 1.0
Other current assets 47.4 22.3
Total current assets 561.2 391.6
Oil and gas properties, net (full cost method) 4,170.3 3,775.3
Furniture, fixtures and equipment, net 19.0 18.3
Derivative assets 20.5 55.6
Other assets 20.3 21.4
Deferred taxes 9.0 ---
Goodwill 62.3 65.3
Total assets $4,862.6 $4,327.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $432.9 $427.0
Derivative liabilities 325.6 47.0
Total current liabilities 758.5 474.0
Other liabilities 25.3 15.8
Derivative liabilities 242.6 83.1
Long-term debt 870.1 992.4
Asset retirement obligation 207.8 194.2
Deferred taxes 651.7 551.1
Total long-term liabilities 1,997.5 1,836.6
Commitments and contingencies --- ---
STOCKHOLDERS' EQUITY
Common stock 1.3 1.3
Additional paid-in capital 1,164.6 1,101.8
Treasury stock (27.9) (27.3)
Unearned compensation (24.5) (9.5)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment (1.9) 2.6
Commodity derivatives (116.9) 0.1
Retained earnings 1,111.9 947.9
Total stockholders' equity 2,106.6 2,016.9
Total liabilities and stockholders' equity $4,862.6 $4,327.5
CONDENSED CONSOLIDATED For the
STATEMENT OF CASH FLOWS Nine Months Ended
(Unaudited, in millions) September 30,
2005 2004
Cash flows from operating activities:
Net income $164.0 $221.9
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 403.0 329.5
Deferred taxes 13.6 100.0
Stock compensation 5.4 3.0
Ceiling test writedown --- 6.7
Gain on sale of floating production system (7.2) ---
Commodity derivative (income) expense 356.6 (0.2)
935.4 660.9
Changes in operating assets and liabilities (48.1) (16.3)
Net cash provided by operating activities 887.3 644.6
Cash flows from investing activities:
Purchases of businesses, net of cash acquired --- (755.7)
Additions to oil and gas properties (761.5) (601.8)
Proceeds from sale of oil and gas properties 10.7 16.5
Proceeds from sale of floating production
system 7.2 ---
Additions to furniture, fixtures and equipment (4.4) (4.9)
Net cash used in investing activities (748.0) (1,345.9)
Cash flows from financing activities:
Proceeds from borrowings under
credit arrangements 604.0 1,021.0
Repayments of borrowings under
credit arrangements (724.0) (921.0)
Proceeds from issuances of senior
subordinated notes --- 325.0
Proceeds from issuances of common stock 28.3 293.7
Purchases of treasury stock (0.6) (0.5)
Repurchases of secured notes --- (2.9)
Net cash provided by (used in) financing
activities (92.3) 715.3
Effect of exchange rate changes on cash
and cash equivalents (3.0) (0.5)
Increase in cash and cash equivalents 44.0 13.5
Cash and cash equivalents, beginning of period 58.3 15.3
Cash and cash equivalents, end of period $102.3 $28.8
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
|
