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Newfield Updates on Q2 Results, Field Operations in U.S., Malaysia

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Newfield Exploration Company has reported second quarter 2008 financial and operating results. Newfield's production in the second quarter of 2008 was 57.6 Bcfe, exceeding the upper end of guidance for the quarter.

Newfield has raised its 2008 expected range of production twice year-to-date and estimates that its full year volumes will be 232-239 Bcfe, an increase of 22-26% over 2007 pro forma production (adjusted for asset sales and acquisitions).

Newfield's production in the second quarter of 2008 was approximately 20% higher than pro forma production in the second quarter of 2007. For the second quarter of 2008, Newfield reported a net loss of $244 million, or $1.89 per diluted share (all per share amounts are on a diluted basis).

The loss for the second quarter of 2008 includes a net unrealized loss on commodity derivatives of $508 million ($384 million after-tax), or $2.95 per share. Without the effects of this item, net income was $140 million, or $1.06 per diluted share. Revenues in the second quarter of 2008 were $691 million.

Net cash used in operating activities before changes in operating assets and liabilities was $98 million. Net cash was negatively impacted by the $488 million cash payment to reset the Company's 2009-10 crude oil hedges.

Excluding this cash payment, net cash provided by operating activities before changes in operating assets and liabilities in the second quarter of 2008 was $390 million. Capital expenditures in the second quarter of 2008 were $730 million. This includes a previously announced $226 million South Texas acquisition.

Operational Update

The Woodford -- Newfield is continuing to lower its finding and development costs in the Woodford. Recent highlights include:

-- Newfield's Woodford production set a second quarter 2008 high of more than 200 MMcfe/d (gross operated). This represents an increase of more than 20% since year-end 2007. Newfield expects its gross operated Woodford production to exceed 250 MMcfe/d by year end 2008, representing a more than 50% increase in production when compared to 2007 exit rates.
-- The Woodford remains the most active play in Oklahoma with 46 industry rigs currently running. To date, Newfield has spud 205 horizontal wells and the industry as a whole has spud 641 horizontal wells.

Monument Butte Oil Field -- The field is producing approximately 15,600 BOPD (gross) and is expected to exit 2008 producing in excess of 16,500 BOPD (gross). Demand for black wax crude oil remains strong and Newfield expects to run five drilling rigs for the remainder of 2008. Newfield expects to drill approximately 240 wells in 2008 in the Monument Butte field.

One of the five operated rigs is dedicated to drilling 20-acre spaced development wells. To date, the Company has drilled 82 wells on 20-acre spacing. The success of this program indicates the potential to drill an additional 1,000-2,500 wells in the field, in addition to the more than 1,000 locations remaining to be drilled on 40-acre spacing. The field has nearly 1,100 producing oil wells and encompasses 100,000 gross acres.
The estimated number of future development drilling locations excludes the Company's activities to the north of Monument Butte on lands controlled by the Ute Indian Tribe. The Company has drilled 30 successful wells on this acreage. Newfield recently added 15,000 acres to its agreement with Ute Energy LLC and now has 62,000 gross acres under this alliance.

Newfield is assessing a deep gas play beneath Monument Butte. The first deep gas test under an agreement signed earlier this year with Red Technology Alliance has reached its proposed total depth and testing is underway. The well, drilled to more than 16,600 feet, targeted the Mancos Shale, as well as shallower, known productive horizons including the Wasatch, Mesa Verde and Blackhawk. The agreement allows for promoted exploratory drilling and progressive earnings in approximately 71,000 net acres in which Newfield will retain a greater than 70% interest. A second well under this agreement has begun drilling and results are expected in the third quarter of 2008.

Approximately 10,700 net acres in the immediate vicinity of recent deep gas tests drilled by Newfield in 2007 were excluded from the agreement. Newfield retains an 85% average interest in this area, where Newfield is currently participating (NFX 58% working interest) in the testing of two Mancos Shale wells. Based on encouraging information from this play to date, Newfield has contracted an additional operated rig and is drilling a well with an 85% working interest. This new well is excluded from the agreement described above. Newfield expects to drill several operated wells in this excluded area in the second half of 2008.

Williston Basin -- Newfield has nearly 250,000 gross acres (160,000 net) in the Williston Basin. The Company's acreage position, which was built over the last three years, has prospective targets that include the Bakken, as well as the Madison, Red River and Three Forks/Sanish formations. The Company has three wells that are currently completing or testing and an additional well drilling. These wells all target the Bakken formation and complete results are expected in the third quarter. Newfield expects to drill 10 operated wells in the area in 2008 and to participate in several outside operated wells. The Company also plans to test the Three Forks/Sanish formation in a well planned for the third quarter. Current net production from the area is approximately 2,300 BOEPD.

Malaysia -- Newfield's production in Malaysia is currently 34,000 BOPD (gross), reflecting new oil production from the East Belumut, Chermingat (PM 323) and Puteri (PM 318) fields. Malaysian production is expected to further increase to 45,000 BOPD (gross) later this year as the fields increase to expected rates. Newfield has a 50% interest in PM 318 and a 60% operated interest in PM 323.

Texas -- Newfield is operating eight rigs in Texas, including five in South Texas, where the Company is drilling under two separate joint ventures with ExxonMobil covering nearly 140,000 gross acres. Newfield expects to remain active under these JVs for the next several years. Newfield's interest in these ventures is approximately 50%. Production from the Sarita field area is approximately 65 MMcfe/d (gross) and three additional wells are awaiting completion.
 

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