Newfield Slashes 2009 Capital Budget by $450MM, Posts 3Q Results
Newfield has reported third quarter 2008 financial and operating results.
Third Quarter 2008
Newfield's production in the third quarter of 2008 was 61.4 Bcfe. Production during the third quarter reflects the impact of the deferral of more than 2 Bcfe of production as a result of recent storms in the Gulf of Mexico. Based on the pace of storm recovery, Newfield was today able to slightly increase its full-year 2008 expected range of production to 235-238 Bcfe, an increase of approximately 25% over 2007 pro forma production (adjusted for asset sales and acquisitions). Previous guidance was 234-238 Bcfe.
For the third quarter of 2008, Newfield reported net income of $724 million, or $5.48 per diluted share (all per share amounts are on a diluted basis). Income for the third quarter of 2008 includes a net unrealized gain on commodity derivatives of $846 million ($589 million after-tax), or $4.46 per share. Without the effect of this item, net income was $135 million, or $1.02 per share.
Revenues in the third quarter of 2008 were $680 million. Net cash provided by operating activities before changes in operating assets and liabilities was $396 million.
Capital Investments, Financial Update
"Both operationally and financially, Newfield is performing very well in 2008," said David Trice, Chairman, President and CEO. "Unfortunately, the realities of today's broader markets have shifted investor focus away from most traditional valuation metrics. Over the last 20 years, we have weathered many cycles and each time have relied on our strong balance sheet, hedging, ample access to liquidity and the proven track record of our management team. We are focused on what matters in 2009. We will fund the best projects.
"Our reduction in 2009 planned capital expenditures, $450 million less than our initial planned capital expenditures, will help ensure that we balance current growth expectations with our consistent goal of building long-term value for our shareholders. We have a diverse portfolio of assets which provide us with multiple options in today's environment."
Capital expenditures in the third quarter of 2008 were $514 million. Newfield reiterated that it expects 2008 capital investments to total approximately $2.2 billion, which includes a $226 million acquisition in the first half of the year.
Newfield has disclosed a significant reduction in its planned spending levels in 2009. For 2009, Newfield plans to invest $1.65 billion -- matching its capital budget with cash flow expectations. The 2009 budget includes approximately $100 million for capitalized interest and overhead. This reduced budget compares to preliminary guidance of approximately $2.1 billion (including capitalized interest and overhead), announced on September 9, 2008. Newfield expects 8-13% production growth in 2009, or a range of 255-267 Bcfe.
For 2009, Newfield has hedged nearly 60% of its expected natural gas production and about 90% of expected domestic oil production. These hedge positions, which help ensure cash flow in 2009, are detailed in the Company's @NFX publication on the Company's website.
Newfield has a $1.25 billion credit revolver funded through 18 financial institutions. The largest commitment by a member of the syndicate of financial institutions is 8% of the facility. At the end of the third quarter, Newfield had $285 million of outstanding borrowings under the facility.
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