Newfield Raises 2012 Expectations for Production

Newfield Exploration on Tuesday reported its unaudited first quarter 2012 financial results and provided an update on its operations.

For the first quarter of 2012, Newfield recorded net income of $116 million, or $0.86 per diluted share (all per share amounts are on a diluted basis). Net income for the first quarter includes a net unrealized loss on commodity derivatives of $10 million ($6 million after-tax), or $0.05 per share. Without the effect of this item, net income for the first quarter of 2012 would have been $122 million, or $0.91 per share.

Revenues for the first quarter of 2012 were $678 million. Net cash provided by operating activities before changes in operating assets and liabilities was $387 million.

Newfield's oil and liquids liftings in the first quarter of 2012 were 5.9 MMBbls, or an average of nearly 65,000 BOPD. This represents a 35 percent increase in oil and liquids production over the comparable period in 2011. Natural gas production in the first quarter of 2012 was 41 Bcf, an average of 447 MMcf/d. When combined, Newfield's production in the first quarter of 2012 was 76 Bcfe, of which 47 percent was oil and liquids. Natural gas liquids accounted for approximately 5 percent of first quarter total production. Capital expenditures in the first quarter of 2012 were approximately $500 million.

Following the strength of first quarter production results and operations, Newfield raised its 2012 expectations for total company production to 292 – 302 Bcfe (previous guidance was 290 – 300 Bcfe). The Company reiterated its 2012 capital budget of $1.5 – $1.7 billion.

"I am pleased with our operational performance in early 2012," said Lee K. Boothby, Chairman, President and CEO. "Our entire capital investment program this year is oil-focused, and we expect more than a 20 percent increase in our oil/liquids production in 2012. Our active drilling programs in the Uinta Basin and Williston Basin are yielding encouraging results and improved efficiencies.

"We are fortunate that our natural gas assets are held-by-production and that about 85 percent of our expected 2012 gas production is hedged at prices well above today's market. We believe we are making the right economic choices today to add value for our shareholders."

Operational Highlights:

Rocky Mountains

Uinta Basin – Newfield plans to invest about one-third of its total capital budget in 2012, or about $500 million, toward the development of its assets in the Uinta Basin. The Company today owns interest in approximately 230,000 net acres in the Uinta Basin, where drilling is focused on the development of known oil targets and the assessment of emerging vertical and horizontal high-potential oil plays. Current net production in the Uinta Basin is a record 24,000 BOEPD. Production from the Uinta Basin is expected to grow about 20 percent over 2011 levels.

Four of the Company's seven operated rigs in the region are drilling in the Central Basin -- an area adjacent and immediately north of the Greater Monument Butte Unit. The Company recently commenced production from a record vertical Wasatch well, which had initial gross production of nearly 2,500 BOEPD and has averaged more than 2,100 BOEPD gross over its first 10 days of production. Excluding this record well, the most recent seven wells each averaged initial gross production of nearly 900 BOEPD. The Company's first two horizontal Wasatch tests are currently drilling with results expected around mid-year.

The Company expects to drill about 60 wells in the Central Basin in 2012, of which more than 20 wells are expected to be horizontal tests. Although five less gross wells than earlier expectations, the Company's planned wells in 2012 have a higher working interest. The Company's first two horizontal tests of the pressured Uteland Butte formation have been drilled and are in various stages of completion.

Williston Basin – The Company expects to run 2-4 operated rigs in the Bakken throughout 2012. Since the beginning of the year, Newfield has completed eight Bakken wells with average initial gross production (24-hour rates) of approximately 2,600 BOEPD. The Company continues to improve drilling efficiencies and recently drilled an 11,000' lateral well in 24 days. Approximately two-thirds of the planned 25 wells in 2012 will be drilled from multi-well pads and additional efficiency gains are anticipated. Newfield owns approximately 100,000 net acres in the Williston Basin (includes 40,000 acres in Elm Coulee) where current net production is approximately 8,000 BOEPD. Full-year 2012 production from the Williston Basin is expected to increase about 35 percent over 2011 levels.


Current net daily production from the Mid-Continent region is approximately 340 MMcfe/d.

Granite Wash – Production in the Granite Wash in early 2012 reached a record high of 215 MMcfe/d gross, or 143 MMcfe/d net. The higher than anticipated production was driven by well performance and the completion of wells drilled in 2011 and deferred into 2012. The Company does not expect to drill any additional dry gas wells in the Granite Wash play in 2012.

Woodford Shale – Current net production in the Arkoma Woodford is approximately 180 MMcfe/d. The Company does not plan to drill any additional wells in the Arkoma Woodford in 2012.

Cana Woodford – Newfield has shifted drilling activities from the Granite Wash and Arkoma Woodford to its new efforts in the oil and "liquids rich" Cana Woodford, located in the Anadarko Basin. The Company has a 125,000 net-acre lease position in the play and is running five operated rigs to assess the acreage with plans to increase to as many as seven rigs in late 2012. Results-to-date are in line with assessment expectations and the Company plans to provide an update on the initial drilling program around mid-year 2012.

Onshore Gulf Coast

Current net daily production from the Onshore Gulf Coast region is approximately 87 MMcfe/d. Newfield has more than 250,000 net acres in the Maverick Basin and is running a single-rig program. The Company recently commenced production from two of four planned super extended laterals (approximately 7,500' laterals) in the Eagle Ford Shale with encouraging results.


Production from Malaysia in 2012 is expected to increase approximately 30% over 2011 levels. Newfield's net oil production in Malaysia is at an all-time high of more than 30,000 BOPD. Production from the Company's East Belumut/Chermingat complex is benefiting from recent pipeline optimizations and is today producing a record 40,000 BOPD gross, or approximately 17,000 BOPD net. Production commenced in late 2011 from two new offshore developments – East Piatu and Puteri. East Piatu is today producing 11,700 BOPD gross and Puteri is producing 6,800 BOPD gross. In late May, second phase development drilling is planned from the East Piatu production facility.

In 2012, approximately $100 million will be invested in the development of the Pearl oil field, located offshore China in the Pearl River Mouth Basin. First production is expected in late 2013 or early 2014.