Newfield Exploration Company announced a $1.6 billion capital investment program for 2008. More than 80% of the 2008 budget is allocated to development activities.
The 2008 capital program will be substantially funded through cash flow and cash on hand. Following the sale of $1.8 billion in assets in 2007, Newfield exited the year with approximately $370 million in cash.
"Our '08 budget will deliver organic production growth of 13-21%," said Newfield Chairman, President and CEO David A. Trice. "We expect to produce 215 - 230 Bcfe in '08, compared to approximately 190 Bcfe in 2007, adjusted for our '07 asset sales and acquisitions. Our growth is largely coming from growing onshore resource plays and new oil developments offshore Malaysia. Because of the quality of our asset portfolio, we have visible production and reserve growth for the next several years."
The Mid-Continent region is now Newfield's largest division in terms of proved reserves -- representing about 45% of the Company's proved reserves. Planned investments in the region approximate 40% of Newfield's total 2008 budget, or $620 million. The largest portion of spending will be in the Woodford Shale, located in southeastern Oklahoma's Arkoma Basin.
Now in the early stages of the development phase, Newfield continues to be encouraged with the results of its extended lateral wells in the Woodford. To date, the Company has drilled 14 wells with lateral lengths greater than 3,000ft. The 10 most recent extended lateral completions were drilled and completed for an average of $7.0 million gross and are expected to have an average EUR of at least 4.5 Bcfe gross. The net revenue interest averages about 81%.
Investment in the Rocky Mountain region is expected to total $310 million in 2008, or approximately 20% of the total budget. The most significant investment area will be the Monument Butte Field, located in northeast Utah's Uinta Basin. Newfield expects to drill about 200 wells at Monument Butte in 2008. Newfield has drilled more than 500 wells on 40-acre spacing since acquiring this field in 2004.
Newfield will invest approximately $245 million, or 15% of the total budget, on projects located in Texas. Under an existing South Texas joint venture with Exxon-Mobil, Newfield expects to drill 10-12 additional wells in 2008 in the Sarita Field area of Kenedy County. Newfield has drilled 21 successful wells under the agreement to date and current gross production is more than 75 MMcfe/d.
Approximately $240 million, or 15% of the budget, is allocated to the Gulf of Mexico. This includes 4-5 deepwater wells, new seismic and a significant allocation for 2008 Federal lease sales. Approximately $60 million is related to the development of the PowerPlay (Anadarko operated) and Fastball (Newfield operated) fields.
Approximately 10% of the budget, or $155 million, is allocated to international activities. The largest area of investment will be Malaysia where Newfield has four active field developments underway. The Puteri and East Belumut/Chermingat fields are expected to commence production in mid-2008 and ramp to a combined rate of more than 22,000 BOPD (gross). Newfield will also drill an exploration well on Block 2C in the third quarter of 2008. The well is located in deepwater offshore Sarawak.
The 2008 budget excludes estimated capitalized interest and overhead of $113 million. The budget is subject to Board of Director approval on February 8.
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