Newfield Exploration Reports 3Q Financial, Operating Results

Newfield Exploration has reported its unaudited third quarter 2009 financial and operating results.

Third Quarter 2009

For the third quarter of 2009, Newfield recorded net income of $78 million, or $0.58 per diluted share (all per share amounts are on a diluted basis). Net income includes the effect of the following items:

• a net unrealized loss on commodity derivatives of $243 million ($155 million after-tax); and
• the recognition of a $24 million tax benefit, or $0.18 per share, associated with deferred tax assets in Malaysia.

Without the effect of these items, net income for the third quarter of 2009 would have been $209 million, or $1.58 per share.

Revenues in the third quarter of 2009 were $375 million. Net cash provided by operating activities before changes in operating assets and liabilities was $451 million.

Newfield's production in the third quarter of 2009 was 65.5 Bcfe, an increase of 7% over the third quarter of 2008. Newfield's oil liftings in the third quarter were 3.8 MMBbls, or an average of approximately 41,300 BOPD. This represents a 40% increase over the same period in 2008 and is primarily attributable to the timing of international oil liftings. Natural gas production in the third quarter was 42.5 Bcfe, an average of 462 MMcf/d, and excludes approximately 2.6 Bcfe of voluntary natural gas curtailments due to low natural gas prices. Capital expenditures in the third quarter of 2009 were $285 million.

Highlights

Improving Cost Structure -- Domestic recurring lease operating expense for the third quarter of 2009, stated on a unit of production basis, was $0.81 per Mcfe and reflects lower service costs, reduced water handling costs due to deferred completions and the ongoing efforts to lower expenses throughout the Company's core operating regions.

Mid-Continent Production Reaches New Highs, Woodford Production up Nearly 30% -- Gross operated production from the Mid-Continent recently set a new high and is currently 460 MMcfe/d gross, or 323 MMcfe/d net. Woodford Shale production is 308 MMcfe/d compared to about 240 MMcfe/d at the end of the second quarter of 2009. Newfield began returning previously curtailed wells to production during October 2009. Newfield has a 30 well inventory of uncompleted wells that are expected to be completed by early 2010.

Woodford Shale -- The Company has 10 operated rigs running under term contracts, with three of the remaining rigs rolling off of term before the end of 2009. Newfield continues to improve upon efficiency gains in its Woodford development. Some recent examples are listed below:

• Increasing Lateral Lengths -- Newfield expects that its average lateral length in 2009 will exceed 5,000 feet. By year-end 2009, the Company expects to have drilled eight "super extended lateral" wells with horizontal lengths in excess of 8,000 feet. Two of the wells drilled to date have lateral lengths greater than 10,000 feet. Initial production results from the first super extended laterals are expected in December 2009.
• Optimizing Fracture Stimulation Operations -- The Company is fracture stimulating its wells with greater efficiency in 2009. The average number of fracs per day has increased to more than five on recent pad completions, compared to three fracs per day in 2008.

Company Adds Fourth Operated Rig in Granite Wash Play -- Based on the success of the initial horizontal drilling program in the Granite Wash, Newfield added a fourth operated rig in October in its Stiles Ranch field, located in Wheeler County, Texas. In July 2009, Newfield announced that its first seven horizontal wells in Stiles Ranch had an average gross initial production rate of 22 MMcfe/d. Recent well completions have been deferred and the Company expects to have production results from 6 - 8 additional completions in early 2010. Newfield has an approximate 80% working interest in Stiles Ranch.

Newfield Enters the Marcellus Shale -- On October 14, 2009, Newfield announced the signing of a joint exploration agreement with Hess Corporation in the Marcellus Shale play. The agreement covers up to 140,000 gross acres primarily in Susquehanna and Wayne Counties, Pennsylvania. Newfield will operate the new venture with each company having a 50 percent interest. The 2009 portion of Newfield's Marcellus Shale activities will be funded within the Company's existing $1.45 billion capital budget. Drilling operations are not expected to commence until 2010.

Additional Exploration Test Planned Offshore China -- In the third quarter of 2009, the Company announced an oil discovery with its LF 7-1 Pearl prospect, located in the Pearl River Mouth Basin, offshore China. Prior to year-end 2009, the Company expects to spud its Jade prospect to test a fault-separated target to the northeast. The Newfield operated Pearl development is underway with first production expected in late 2012.

Deepwater Gulf of Mexico Update -- Newfield has seven deepwater developments underway in the deepwater Gulf of Mexico which are expected to provide significant future production growth.

• Fastball -- The Fastball development, located at Viosca Knoll 1003, commenced production on October 19, 2009. Gross production is expected to ramp up to 40 MMcf/d and 3,200 BOPD. Newfield operates Fastball with a 66% working interest.
• Pyrenees -- In the second quarter of 2009, Newfield announced a significant operated discovery on its Pyrenees prospect, located at Garden Banks 293 in approximately 2,100 feet of water. A recent sidetrack delineated the downdip limits in the three proven pay sands seen in the discovery well and provided encouragement for the exploration potential of both the shallow and deep sand sections on the feature. Additional drilling is planned for 2010. Newfield operates the development with a 40% working interest.

Company Increasing Monument Butte Operated Rig Count to Five -- Based on increased demand, narrowing price differentials and a shift to oil investments, Newfield recently added a fourth operated rig in its Monument Butte oil field, located in the Uinta Basin of Utah. The Company is planning to add a fifth operated rig in the field in the near future. Gross oil production from Monument Butte is about 16,000 BOPD. A five-rig program in the field is expected to grow annual field production by at least 10%. The Monument Butte field area covers approximately 180,000 gross acres, substantially all held-by-production.

Company to Add Additional Rigs in Williston Basin -- Newfield expects to add up to two additional operated rigs in its Williston Basin development areas. The Company has been running a one-rig program since early 2009. Newfield has approximately 200,000 net acres in prospective development areas, located primarily on the Nesson Anticline and west of the Nesson. An additional 200,000 net acres are located in northern Montana where several exploration plays are underway. Newfield has drilled 12 successful oil wells in the North Dakota portion of the Williston Basin since entering the region in late 2007. Two wells were drilled since the second quarter 2009. The first was an exploratory well in the Big Valley area, covering more than 50,000 net acres in northern North Dakota. The well recently commenced production and continues to clean-up following fracture stimulation. Results warrant additional exploratory drilling to assess this large area. The second well was drilled in the Catwalk area, which covers 25,300 net acres. Completion operations on the well are expected to commence next week.