Newfield Exploration Announces Second Quarter 2012 Financial Results

THE WOODLANDS, Texas, July 24, 2012 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited second quarter 2012 financial results. Newfield will host a conference call at 7:30 a.m. CDT on July 25, 2012. To participate in the call, dial 719-457-2087 or listen through the investor relations section of Newfield's website at http://www.newfield.com.

For the second quarter of 2012, Newfield recorded net income of $135 million, or $1.00 per diluted share (all per share amounts are on a diluted basis). Net income for the second quarter includes a net unrealized gain on commodity derivatives of $83 million ($53 million after-tax), or $0.39 per share.  Without the effect of this item, net income for the second quarter of 2012 would have been $82 million, or $0.61 per share.

Revenues for the second quarter of 2012 were $628 million. Net cash provided by operating activities before changes in operating assets and liabilities was $330 million. See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.

"Substantially all of our capital in 2012 is being allocated to oil and liquids projects within our portfolio," said Lee K. Boothby, Chairman, President and CEO. "We are driving strong oil and liquids growth – now estimated to increase nearly 30% over 2011 levels."

Newfield's second quarter 2012 production was 76.4 Bcfe, of which 49% was oil and liquids. Newfield's oil and liquids liftings in the second quarter of 2012 increased 40% over the comparable period in 2011 to 6.1 MMBbls, or an average of more than 67,000 BOPD. Natural gas liquids accounted for approximately 4% of second quarter total production. Natural gas production in the second quarter of 2012 was approximately 40 Bcf, an average of about 440 MMcf/d.

For the year 2012, Newfield expects its total Company production will range between 296 – 304 Bcfe and that its capital investments in 2012 will approximate $1.7 billion. Capital expenditures in the second quarter of 2012 were approximately $400 million.

Full-Year 2012 Guidance

Newfield raised its 2012 expectations for total Company production to 296 – 304 Bcfe (previous guidance was 292 – 302 Bcfe). Our cost structure per Mcfe during 2012 is expected to be within 5% of the amounts listed below.

Note 1: Production/liftings is subject to timing and will vary by quarter.

Note 2: The timing of "major expense" items varies and includes well workovers and repairs and related expenses. While the annual unit costs for international major expense are unchanged, third quarter per unit costs are expected to be approximately $0.85 due to planned production facility upgrades.

Note 3: The DD&A rate per Mcfe is reflective of the composition of the investments and reserves associated with our existing asset base and the assumed cost to add new reserves during the year. The timing and impact of the Company's activities on this rate will vary by quarter.

Note 4: Annually, the Company updates its capitalization of internal costs related to the assessment, development, exploration and related activities of its current asset base.  The decrease in annual Capitalized Internal costs per Mcfe and corresponding increase in annual net G&A per Mcfe reflects this most recent update.

Note 5: Interest expense does not include approximately $14 million of premium payments associated with the July 2012 tender and redemption of $550 million of 6⅝% senior subordinate notes due 2016. This amount will be recorded as Other Expense in the third quarter 2012.  

Newfield Exploration Company is an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids.  Our principal domestic areas of operation include the Mid-Continent, the Rocky Mountains and onshore Texas.  Internationally, we focus on offshore oil developments 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 and planned capital expenditures, 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 in the Uinta Basin, the availability and cost of capital resources, new regulations or changes in tax legislation, labor conditions and severe weather conditions (such as hurricanes). In addition, the drilling of oil and natural gas wells and the production of hydrocarbons are subject to numerous governmental regulations and operating risks. Other factors that could impact forward-looking statements are described in "Risk Factors" in Newfield's 2011 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other subsequent public filings with the Securities and Exchange Commission, which can be found at www.sec.gov. Unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Unless legally required, Newfield undertakes no obligation to publicly update or revise any forward-looking statements.

For additional information, please contact Newfield's Investor Relation's department.
Phone: 281-210-5201
Email: info@newfield.com

Explanation and Reconciliation of Non-GAAP Financial Measures
Earnings Stated Without the Effect of Certain Items
Earnings stated without the effect of certain items is a non-GAAP financial measure. Earnings without the effect of these items are presented because they affect the comparability of operating results from period to period. In addition, earnings without the effect of these items are more comparable to earnings estimates provided by securities analysts.

A reconciliation of earnings for the second quarter of 2012 stated without the effect of certain items to net income is shown below:

Net Cash Provided by Operating Activities Before Changes in Operating Assets and Liabilities
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 natural 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:

SOURCE Newfield Exploration Company