Newfield Exploration Company today announced that its proved oil reserves at year-end 2010 totaled more than 200 MMBbls, a 20% increase over year-end 2009 proved oil reserves. The significant rise in the quantity of proved oil reserves contributed to more than an 80% increase in the present value of Newfield's proved reserves, discounted at 10%, (PV-10 Value), which totaled $6.8 billion at year-end 2010.
Year-end 2010 Reserve Highlights:
Proved and probable (2P) reserves at December 31, 2010 were 6.2 Tcfe, a 12% increase over 2P reserves at year-end 2009. On a 2P basis, Newfield replaced more than 350% of its 2010 production with the addition of new reserves.
Proved reserves at December 31, 2010 were 3.7 Tcfe, an increase of approximately 3% over proved reserves at year-end 2009. Proved developed reserves increased to approximately 58% as compared to 53% at year-end 2009. At year-end 2010, 33% of proved reserves were oil as compared to 28% at year-end 2009. The Company's reserve life index is approximately 13 years.
Newfield assumed development of its 3.7 Tcfe of proved reserves would occur during the five-year period ending December 31, 2015, and that planned activities would be funded solely through internally generated cash flow from operations.
Of the 2.5 Tcfe of probable reserves at year-end 2010, approximately 54% otherwise meet the definition of proved undeveloped reserves except for the fact that they will be developed beyond the five-year horizon, and as such they have been classified as probable reserves in accordance with SEC regulations.
Due to higher margins in oil over natural gas investments, Newfield has shifted significant capital toward oil projects within its portfolio. The Company's year-end reserve report reflects this business strategy. The significant increase in PV-10 at year-end 2010 was primarily related to: a) increased commodity prices; b) improved margins through increased activity in oil projects; c) the reclassification of proved natural gas reserves to probable reserves; and d) an increased percentage of proved oil reserves at year-end 2010.
As a result of the shift towards oil investments, Newfield reclassified approximately 315 Bcfe of proved reserves (nearly all natural gas), primarily in the Mid-Continent, to "probable" reserves because the deferral of development activity placed them beyond the five-year development horizon.
The significant growth in oil reserves during 2010 was primarily attributed to the Company's Rocky Mountain business unit where total proved reserves grew nearly 30% (Monument Butte and Williston Basin increased 22% and 157%, respectively), compared to year-end 2009.
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