Newfield Exploration Reports Results for First Quarter 2016

Domestic

China

Total

Production:

  Oil (Mmbls)

20.0 – 20.6

4.5

24.5 – 25.1

  NGLs (Mmbls)

9.2 – 9.6

–

9.2 – 9.6

  Natural gas (Bcf)

125 – 130

–

125 – 130

Total (Mmboe)

50.0 – 52.0

4.5

54.5 – 56.5

Expenses ($ mm)¹

  LOE²

$200

$54

$254

  Transportation³

260

–

260

  Production & other taxes

45

1

46

  General & administrative (G&A), net

$165

$7

$172

  Interest expense

154

–

154

Capitalized interest and direct internal costs

($103)

–

($103)

Effective Tax rate⁴

2%

1%

1%

Note:  Based on strip commodity prices in 2016

¹Cost and expenses are expected to be within 5% of the estimates above

²Total LOE includes recurring, major expense and non E&P operating expenses

³Estimated transportation / processing fees include ~$52MM Arkoma unused firm gas transportation and ~$21MM Uinta oil and gas delivery shortfall fees

⁴The effective tax rate reflects expected future valuation allowances recorded against deferred tax assets generated by ceiling test impairments.

Domestic

China

Total

Production:

  Oil (Mmbls)

5.0 – 5.2

1.4

6.4 – 6.6

  NGLs (Mmbls)

2.5 – 2.8

–

2.5 – 2.8

  Natural gas (Bcf)

33

–

33

Total (Mmboe)

13.0 – 13.5

1.4

14.4 – 14.9

Expenses ($ mm)¹

  LOE²

$50

$14

$64

  Transportation³

66

–

66

  Production & other taxes

11

–

11

  General & administrative (G&A), net

$42

2

$44

  Interest expense

38

–

38

Capitalized interest and direct internal costs

($26)

–

($26)

Effective Tax rate⁴

2%

1%

1%

Note:  Based on strip commodity prices in 2016

¹Cost and expenses are expected to be within 5% of the estimates above

²Total LOE includes recurring, major expense and non E&P operating expenses

³Estimated transportation / processing fees include ~$13MM Arkoma unused firm gas transportation and ~$3MM Uinta oil and gas delivery shortfall fees

⁴ The effective tax rate reflects expected future valuation allowances recorded against deferred tax assets generated by ceiling test impairments.

1Q16 Actual Results 

 Domestic

China

Total

 Production/Liftings¹

Crude oil and condensate (MMBbls) 

5.3

1.7

7.0

Natural gas (Bcf) 

34.4

—

34.4

NGLs (MMBbls) 

2.5

—

2.5

     Total (MMBOE)

13.5

1.7

15.2

 Average Realized Prices^{2, 3}

Crude oil and condensate (per Bbl) 

$

38.96

$

29.89

$

36.82

Natural gas (per Mcf) 

2.18

—

2.18

NGLs (per Bbl) 

14.75

—

14.75

     Crude oil equivalent (per BOE)

$

23.79

$

29.89

$

24.46

 Operating Expenses:³

Lease operating (in millions)

Recurring

$

43.0

$

14.3

$

57.3

Major (workovers, etc.)

$

3.6

$

—

$

3.6

Lease operating (per BOE)

Recurring

$

3.24

$

8.69

$

3.84

Major (workovers, etc.)

$

0.27

$

0.03

$

0.25

Transportation and processing (in millions)

$

63.4

$

—

$

63.4

     per BOE

$

4.77

$

—

$

4.25

Production and other taxes (in millions)

$

9.5

$

0.2

$

9.7

per BOE

$

0.71

$

0.11

$

0.65

General and administrative (G&A), net (in millions)

$

42.5

$

1.4

$

43.9

per BOE

$

3.20

$

0.85

$

2.94

   Capitalized direct internal costs (in millions)

$

(17.2)

       per BOE

$

(1.15)

Other operating expenses, net (in millions)

$

0.9

       per BOE

$

0.06

Interest expense (in millions)

$

41.1

per BOE

$

2.75

Capitalized interest (in millions)

$

(9.3)

per BOE

$

(0.62)

Other non-operating (income) expense (in millions)

$

(0.5)

per BOE

$

(0.03)

____

Note 1: Represents volumes lifted and sold regardless of when produced. Includes natural gas produced and consumed in operations of 1.5 Bcf during the three months ended March 31, 2016.

Note 2: Average realized prices include the effects of derivative contracts. Excluding these effects, the average realized price for domestic and total natural gas would have been $1.83 per Mcf and the average realized price for our domestic and total crude oil and condensate would have been $25.72 per barrel and $26.70 per barrel, respectively. We did not have any derivative contracts associated with our NGL or China production as of March 31, 2016.

Note 3: All per unit pricing and expenses exclude natural gas produced and consumed in operations.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended

March 31,

2016

2015

Oil, gas and NGL revenues

$

284

$

349

Operating expenses:

   Lease operating

61

75

   Transportation and processing

63

49

   Production and other taxes

10

13

   Depreciation, depletion and amortization

177

237

   General and administrative

44

63

   Ceiling test and other impairments

506

792

   Other

1

4

      Total operating expenses

862

1,233

Income (loss) from operations

(578)

(884)

Other income (expense):

   Interest expense

(41)

(44)

   Capitalized interest

9

7

   Commodity derivative income (expense)

(17)

153

   Other, net

1

8

      Total other income (expense)

(48)

124

Income (loss) before income taxes

(626)

(760)

Income tax provision (benefit)

(2)

(280)

      Net income (loss)

$

(624)

$

(480)

Earnings (loss) per share:

    Basic

$

(3.52)

$

(3.30)

    Diluted

$

(3.52)

$

(3.30)

Weighted-average number of shares outstanding for basic earnings (loss) per share

177

145

Weighted-average number of shares outstanding for diluted earnings (loss) per share

177

145

CONDENSED CONSOLIDATED BALANCE SHEET

 (Unaudited, in millions)

March 31,

December 31,

2016

2015

ASSETS

Current assets:

     Cash and cash equivalents

$

537

$

5

     Derivative assets

234

284

     Other current assets

317

336

         Total current assets

1,088

625

Oil and gas properties, net (full cost method)

3,403

3,819

Derivative assets

65

105

Other assets

221

219

         Total assets

$

4,777

$

4,768

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Derivative liabilities

$

24

$

13

     Other current liabilities

501

634

         Total current liabilities

525

647

Other liabilities

59

48

Derivative liabilities

7

9

Long-term debt

2,429

2,467

Asset retirement obligations

193

192

Deferred taxes

26

26

         Total long-term liabilities

2,714

2,742

Stockholders' equity:

Common stock, treasury stock and additional paid-in capital

3,199

2,416

Accumulated other comprehensive gain (loss)

(2)

(2)

Retained earnings (deficit)

(1,659)

(1,035)

         Total stockholders' equity

1,538

1,379

         Total liabilities and stockholders' equity

$

4,777

$

4,768

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, in millions)

Three Months Ended

March 31,

2016

2015

Cash flows from operating activities:

  Net income (loss)

$

(624)

$

(480)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

  Depreciation, depletion and amortization

177

237

  Deferred tax provision (benefit)

—

(283)

  Stock-based compensation

8

15

  Unrealized (gain) loss on derivative contracts

99

(32)

  Ceiling test and other impairments

506

792

  Other, net

4

6

170

255

Changes in operating assets and liabilities

(98)

(50)

      Net cash provided by (used in) operating activities

72

205

Cash flows from investing activities:

   Additions and acquisitions of oil and gas properties and other

(278)

(515)

   Proceeds from sales of oil and gas properties

3

29

      Net cash provided by (used in) investing activities

(275)

(486)

Cash flows from financing activities:

   Net proceeds (repayments) of borrowings under credit arrangements

(39)

(446)

   Proceeds from issuance of senior notes

—

691

   Debt issue costs

—

(8)

   Proceeds from issuances of common stock, net

776

815

   Other, net

(2)

(2)

      Net cash provided by (used in) financing activities

735

1,050

Increase (decrease) in cash and cash equivalents

532

769

Cash and cash equivalents, beginning of period

5

14

Cash and cash equivalents, end of period

$

537

$

783

1Q16

(in millions)

Net Income (loss)

$

(624)

Ceiling test impairments

506

Unrealized (gain) loss on derivative contracts

99

Credit facility amendment fees

3

Income tax adjustment for above items⁽¹⁾

—

Earnings stated without the effect of the above items

$

(16)

(1)  Our effective tax rate is less than 1% due to valuation allowances on our deferred tax assets.

1Q16

(in millions)

Net cash provided by operating activities

$

72

Net changes in operating assets and liabilities

98

Net cash provided by operating activities before changes in operating assets and liabilities

$

170