Newfield Unveils New Gas Find, Looks to Sell International Business

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Newfield Exploration Co. said it has made a significant natural-gas discovery off Sarawak, Malaysia, and said it is looking to sell its international business.

Shares rose 7.2% to $23.70 in after-hours trading Tuesday. The stock is down 37% over the past 12 months.

The oil and gas producer said the discovery was found on the Block SK 310 production sharing contract area located 50 miles offshore of Sarawak, in water depth of about 250 feet. The company said this is its second pinnacle reef natural-gas discovery in the region.

The B-14 well encountered 1,800 feet of gross column and 1,585 feet of net natural gas pay in the main carbonate objective, the company said, adding that a drill stem test confirmed commerciality of the reservoir.

Newfield holds a 30% interest in Block SK 310. Mitsubishi Corp. (MSBHY) unit Diamond Energy Sarawak and Petroliam Nasional Bhd subsidiary Petronas Carigali hold 30% and 40% interests, respectively.

The company said the B-14 discovery is located less than three miles from its first pinnacle reef gas discovery, B-15, which holds roughly 265 billion cubic feet of recoverable reserves that will be developed in conjunction with the B-14 discovery.

Chairman, President and Chief Executive Lee K. Boothby said the latest find was the largest conventional exploratory success that Newfield had made in its 25-year history. He cited recent amendments to gas terms in Malaysia that made natural-gas developments economically competitive with oil developments.

Newfield also said that it plans open a data room, which will allow potential acquirers to conduct due diligence, for its international businesses in the second quarter. The company said in February that its board approved the evaluation of strategic alternatives for the businesses, which consist of offshore developments and related projects in Malaysia and China.

The company's main domestic areas of operation include the Mid-Continent, the Rocky Mountains and onshore Texas.

Newfield Exploration two months ago reported a massive fourth-quarter loss, driven by a $1.5 billion noncash ceiling test write-down associated with the carrying value of its domestic proved reserves. Analysts at Jefferies noted the adjusted per-share earnings were well below analyst views, a result of cited higher depreciation, depletion and amortization.

Copyright (c) 2012 Dow Jones & Company, Inc.

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