Newfield Exploration Reports Third Quarter 2014 Results
3Q14 production 500,000 BOE above guidance mid-point
Four key investment regions expected to grow more than 50% year-over-year
2014 production expected to reach "upper end" of guidance range
Company adds activity and 25,000 net acres in STACK
THE WOODLANDS, Texas, Oct. 28, 2014 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited third quarter 2014 financial results and provided an update on its operations. Recent operational highlights are detailed in the Company's @NFX publication, located on its website. Newfield will host a conference call at 10 a.m. CDT, October 29, 2014. To listen to the call, visit Newfield's website at http://www.newfield.com. To participate in the call, dial 913-312-1403.
With the sale of Newfield's Malaysia business earlier this year and the process underway to divest its China business, the financial and operating results for the Company's international businesses are reported as "discontinued operations."
For the third quarter of 2014, Newfield reported consolidated net income of $278 million, or $2.02 per diluted share (all per share amounts are on a diluted basis). Net income from continuing operations would have been $72 million, or $0.52 per share, excluding an unrealized gain on commodity derivatives of $323 million ($207 million after-tax), or $1.50 per share.
Third quarter consolidated net cash provided by operating activities before changes in operating assets and liabilities was $321 million. See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.
During the third quarter, the Company closed on the sale of non-strategic assets and received proceeds totaling $602 million. Proceeds were used to retire our $600 million of 2018 Senior Subordinated Notes in October 2014.
Newfield's net production from continuing operations in the third quarter of 2014 was approximately 12.7 MMBOE, exceeding the mid-point of quarterly guidance by approximately 0.5 MMBOE. There were no liftings from discontinued operations. Domestic liquids production in the third quarter was up 7% compared to the second quarter of 2014 and 38% over the comparable period in 2013. Liquids comprised approximately 56% of total third quarter domestic production.
Newfield invested approximately $450 million in the third quarter and year-to-date 2014 investments have totaled $1.3 billion. For the full year 2014, Newfield's planned capital expenditures, excluding capitalized internal costs, are estimated to be approximately $1.75 billion (previous guidance was $1.7 billion). The increase is primarily related to the addition of 25,000 net acres and increased drilling activity in STACK, and a significant increase in SCOOP non-operated drilling activity.
Operational Highlights
For complete highlights and a summary of wells completed in the third quarter of 2014, see the Company's @NFX publication located on its website. Newfield published a detailed update on its focus areas, including the following table, which compares current estimates from each area to original guidance:
| Focus Area |
2013 Production (MMBOE) |
2014 Original Guidance (MMBOE) |
2014 Current Guidance (MMBOE) |
Delta |
Change |
Y-o-Y Growth |
| Anadarko Basin |
7.2 |
14.3 |
14.8 |
.5 |
3% |
106% |
| Uinta Basin |
8.2 |
8.6 |
9.4 |
.8 |
9% |
15% |
| Williston Basin |
4.4 |
6.0 |
6.5 |
.5 |
8% |
48% |
| Eagle Ford |
3.0 |
4.0 |
4.2 |
.2 |
5% |
40% |
| TOTAL |
22.8 |
32.9 |
34.9 |
2.0 |
6% |
53% |
Anadarko Basin
Newfield's acreage in the Anadarko Basin has grown to approximately 275,000 net acres, up 25,000 acres since the second quarter update. Newfield recently achieved its expected year-end exit rate for net production of 50,000 BOEPD and expects that its fourth quarter 2014 net production will now average more than 49,000 BOEPD. Net production from the Anadarko Basin in 2014 is expected to more than double year-over-year to approximately 14.8 MMBOE.
The Company's third quarter 2014 production from the Anadarko Basin increased more than 15% over the second quarter of 2014. With the continued expansion of mid-stream gathering infrastructure, Newfield's third quarter net production in the Anadarko Basin averaged 45,000 BOEPD, up from an average of 39,000 BOEPD in the second quarter of 2014. The Anadarko Basin is Newfield's largest investment region in 2014 (approximately $800 million), constituting approximately 45% of planned total investments.
The "Briar" development, located in SCOOP Oil, recently commenced production from four SXL wells (10,088' avg. lateral length). The Briar 1 and 2 wells had individual average 60-day production rates of approximately 1,250 BOEPD gross, of which 53% was oil. The Briar 3 and 4 wells had individual average 30-day production rates of approximately 1,375 BOEPD gross, of which 50% was oil.
In the third quarter, Newfield announced its position in a new play within the SCOOP oil fairway– the Springer Shale. Newfield's SCOOP play is today largely held by production. The Springer Shale is an unconventional resource play that lies above the Woodford Shale at a vertical depth of approximately 11,000 – 14,000 feet.
Newfield's first operated well in the Springer play, the Jarred, commenced production in the third quarter with a 24-hour initial gross production rate of 1,950 BOEPD and a 30-day average gross rate of approximately 1,220 BOEPD (81% oil). The Jarred had a lateral length of less than 5,000 feet. Newfield has an interest in nine outside operated Springer wells drilled to date and expects to drill or participate in up to 12 additional wells during the remainder of 2014. Early returns in the Springer are competitive with returns in SCOOP. Newfield expects to conduct an active operated drilling campaign in the Springer in 2015.
Newfield has approximately 190,000 net acres in its STACK play, up 25,000 net acres since the second quarter update. Today's efforts are focused on holding acreage through drilling, testing optimal well spacing patterns for full-field development and the potential for developing multiple geologic horizons.
The John well, a significant step-out to the northwest, recently commenced production and had a 30-day average of 821 BOEPD gross (84% oil). The 2014 drilling campaign is extending the play's areal extent and the Company estimates that its drilling to date, along with industry activity, has production-delineated about two-thirds of the Company's STACK acreage.
Newfield recently commenced production from the Company's first "stacked lateral" spacing test in the Meramec Shale. The Connie and Freeman wells were spaced 880' apart on the surface and were "stacked" vertically about 275' apart in the Meramec. The wells had a 30-day gross average of 935 and 680 BOEPD, respectively, and the average oil percentage was 86%.
Uinta Basin
Uinta Basin third quarter net production averaged 25,800 BOEPD. Recent well performance is above planning expectations and full-year growth expectations from the Uinta were increased to 15% (compared to 5% at the beginning of the year). Newfield expects its Uinta Basin production to be 9.4 MMBOE in 2014.
In the first half of 2014, Newfield released results from five SXL wells in the Central Basin, an area north of the large Greater Monument Butte Unit. Newfield is encouraged by early production results from its recent SXL wells in the Central Basin and expects to release an update on several wells with up to 90 days of production history in early 2015.
The Company has been working to improve drilling efficiencies and lower completed well costs in the Central Basin. In the third quarter, Newfield recorded a new "best-in-class" SXL well, which was drilled and completed for $10.8 million gross.
Williston Basin
Williston Basin net production in the third quarter of 2014 averaged 19,400 BOEPD. Based on the strength of well performance and field-level execution, Newfield increased its 2014 Williston Basin growth outlook to 6.5 MMBOE net and the Company expects its 2014 volumes in the Williston Basin to increase nearly 50% over 2013 levels.
Newfield continues to see drilling efficiencies through execution of its SXL development campaign in the Williston Basin. Year-to-date, SXL wells (10,000' laterals) are averaging $7.5 million, including about $0.8 million in artificial lift and facilities. Today, most SXL wells are being drilled in less than 20 days. The Company recently drilled and completed a new "best-in-class" SXL well for $6.8 million gross. The well had initial gross production (24-hour) of nearly 2,800 BOEPD and averaged nearly 900, 700 and 600 BOEPD over the first 30, 60 and 90-day periods, respectively.
Eagle Ford
The Company is running a single-rig program to develop its West Asherton field and Fashing area. Production is expected to grow approximately 40% year-over-year. Newfield expects to drill about 20 wells during 2014.
Production, Costs and Expenses
The following table depicts our actual production and costs and expenses from continuing operations for the third quarter of 2014, as well as our fourth quarter and full-year 2014 estimates.
| 3Q14 |
4Q14e |
2014e |
||||
| Production:1 |
||||||
| Oil (MMBO) |
4.8 |
5.0 |
18.4 |
|||
| NGLs (MMBbls) |
2.2 |
2.1 |
8.0 |
|||
| Natural Gas (Bcf) |
33.7 |
29.4 |
126 |
|||
| Total (MMBOE) |
12.72 |
12.02 |
47.4 |
|||
| Costs and Expenses:1 |
||||||
| Total LOE ($MM) |
$126 |
$127 |
$483 |
|||
| Production & Other Taxes ($MM)3 |
$31 |
$30 |
$115 |
|||
| DD&A Expense ($MM) |
$228 |
$217 |
$845 |
|||
| General & Administrative (G&A), net ($MM) |
$48 |
$50 |
$222 |
|||
| Capitalized Internal Costs ($MM) |
($23) |
($25) |
($134) |
|||
| Other Operating Expenses ($MM) |
$8 |
-- |
$8 |
|||
| Interest Expense ($MM) |
$51 |
$42 |
$195 |
|||
| Capitalized Interest ($MM) |
($13) |
($13) |
($52) |
|||
| Premium on Call of Notes ($MM)4 |
-- |
$14 |
$14 |
| 1 |
Production, Costs and Expenses are based on continuing operations and Costs and Expenses are expected to be within 7% of the estimates above. |
| 2 |
Third quarter actual results and reported guidance reflect the removal of 0.1 MMBOE in 3Q14 and 0.9 MMBOE in 4Q14e due to the sale of Granite Wash. |
| 3 |
Table assumes 1Q14 – 3Q14 actual commodity prices and strip commodity prices for 4Q14. |
| 4 |
4Q14e amount relates to a one-time premium payment to call our $600MM 71/8 % Senior Subordinated Notes in 4Q14. |
Newfield Exploration Company is an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. We are focused on North American resource plays and our principal areas of operation include the Mid-Continent, the Rocky Mountains and onshore Gulf Coast.
This release contains forward-looking information. All information other than historical facts included in this release, such as information regarding estimated or anticipated drilling plans, planned capital expenditures, and estimated production, is forward-looking information. Although Newfield believes that these expectations are reasonable, this information is based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. Actual results may vary significantly from those anticipated due to many factors, including drilling results, oil and gas prices, industry conditions, the prices of goods and services, the availability of drilling rigs and other support services, the availability of refining capacity for the crude oil Newfield produces in the Uinta Basin, the availability and cost of capital resources, new regulations or changes in tax legislation, labor conditions and severe weather conditions. In addition, the drilling of oil and natural gas wells and the production of hydrocarbons are subject to numerous governmental regulations and operating risks. Other factors that could impact forward-looking statements are described in "Risk Factors" in Newfield's 2013 Annual Report on Form 10-K and other subsequent public filings with the Securities and Exchange Commission, which can be found at www.sec.gov. Unpredictable or unknown factors, not discussed in this press release, could also have material adverse effects on forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Unless legally required, Newfield undertakes no obligation to publicly update or revise any forward-looking statements.
For additional information, please contact Newfield's Investor Relations department.
Phone: 281-210-5321
Email: [email protected]
| 3Q14 Actual |
||||||||||
| 3Q14 Actual Results |
Domestic (Continuing Operations) |
Int'l (Discontinued Operations) |
Total |
|||||||
| Production/LiftingsNote 1 |
||||||||||
| Crude oil and condensate - MMBbls |
4.8 |
— |
4.8 |
|||||||
| Natural gas - Bcf |
33.7 |
— |
33.7 |
|||||||
| NGLs - MMBbls |
2.2 |
— |
2.2 |
|||||||
| Total MMBOE |
12.7 |
— |
12.7 |
|||||||
| Average Realized PricesNote 2 |
||||||||||
| Crude oil and condensate - $/Bbl |
$ |
81.41 |
$ |
— |
$ |
81.41 |
||||
| Natural gas - $/Mcf |
$ |
3.79 |
$ |
— |
$ |
3.79 |
||||
| NGLs - $/Bbl |
$ |
34.16 |
$ |
— |
$ |
34.16 |
||||
| Bbl equivalent - $/BOE |
$ |
47.90 |
$ |
— |
$ |
47.90 |
||||
| Operating Expenses: |
||||||||||
| Lease operating ($MM) |
||||||||||
| Recurring |
$ |
66.3 |
$ |
1.2 |
$ |
67.5 |
||||
| Major (workovers, etc.) |
$ |
9.1 |
$ |
0.1 |
$ |
9.2 |
||||
| Transportation |
$ |
50.5 |
$ |
— |
$ |
50.5 |
||||
| Lease operating (per BOE) |
||||||||||
| Recurring |
$ |
5.38 |
$ |
— |
$ |
5.48 |
||||
| Major (workovers, etc.) |
$ |
0.74 |
$ |
— |
$ |
0.75 |
||||
| Transportation |
$ |
4.09 |
$ |
— |
$ |
4.09 |
||||
| Production and other taxes ($MM) |
$ |
30.5 |
$ |
0.7 |
$ |
31.2 |
||||
| per BOE |
$ |
2.47 |
$ |
— |
$ |
2.53 |
||||
| General and administrative (G&A), net ($MM) |
$ |
48.4 |
$ |
— |
$ |
48.4 |
||||
| per BOE |
$ |
3.97 |
$ |
— |
$ |
3.97 |
||||
| Capitalized internal costs ($MM) |
$ |
(25.1) |
||||||||
| per BOE |
$ |
(2.04) |
||||||||
| Interest expense ($MM) |
$ |
51.1 |
||||||||
| per BOE |
$ |
4.15 |
||||||||
| Capitalized interest ($MM) |
$ |
(13.4) |
||||||||
| per BOE |
$ |
(1.09) |
||||||||
| ______ |
| Note 1: Represents volumes lifted and sold regardless of when produced. Includes natural gas produced and consumed in our operations of 2.0 Bcf during the three months ended September 30, 2014. |
| Note 2: Average realized prices include the effects of hedging contracts. If the effects of these contracts were excluded, the average realized price for domestic natural gas would have been $3.85 per Mcf and the domestic and total crude oil and condensate average realized prices would have been $85.07 per barrel. We did not have any hedging contracts associated with NGL production as of September 30, 2014. |
| CONSOLIDATED STATEMENT OF OPERATIONS |
|||||||||||||
| (Unaudited, in millions, except per share data) |
|||||||||||||
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
||||||||||||
| 2014 |
2013 |
2014 |
2013 |
||||||||||
| Oil, gas and NGL revenues |
$ |
610 |
$ |
486 |
$ |
1,771 |
$ |
1,291 |
|||||
| Operating expenses: |
|||||||||||||
| Lease operating |
126 |
104 |
356 |
299 |
|||||||||
| Production and other taxes |
31 |
19 |
85 |
52 |
|||||||||
| Depreciation, depletion and amortization |
228 |
171 |
628 |
482 |
|||||||||
| General and administrative |
48 |
61 |
172 |
160 |
|||||||||
| Other |
8 |
— |
8 |
— |
|||||||||
| Total operating expenses |
441 |
355 |
1,249 |
993 |
|||||||||
| Income (loss) from operations |
169 |
131 |
522 |
298 |
|||||||||
| Other income (expense): |
|||||||||||||
| Interest expense |
(51) |
(52) |
(153) |
(153) |
|||||||||
| Capitalized interest |
13 |
13 |
39 |
40 |
|||||||||
| Commodity derivative income (expense) |
303 |
(99) |
33 |
(66) |
|||||||||
| Other, net |
1 |
1 |
4 |
5 |
|||||||||
| Total other income (expense) |
266 |
(137) |
(77) |
(174) |
|||||||||
| Income (loss) from continuing operations before income taxes |
435 |
(6) |
445 |
124 |
|||||||||
| Income tax provision (benefit) |
156 |
(2) |
165 |
47 |
|||||||||
| Income (loss) from continuing operations |
279 |
(4) |
280 |
77 |
|||||||||
| Income (loss) from discontinued operations, net of tax |
(1) |
31 |
260 |
53 |
|||||||||
| Net income (loss) |
$ |
278 |
$ |
27 |
$ |
540 |
$ |
130 |
|||||
| Earnings per share: |
|||||||||||||
| Basic |
|||||||||||||
| Income (loss) from continuing operations |
$ |
2.04 |
$ |
(0.03) |
$ |
2.06 |
$ |
0.57 |
|||||
| Income (loss) from discontinued operations |
— |
0.08 |
1.90 |
0.24 |
|||||||||
| Basic earnings (loss) per share |
$ |
2.04 |
$ |
0.05 |
$ |
3.96 |
$ |
0.81 |
|||||
| Diluted |
|||||||||||||
| Income (loss) from continuing operations |
$ |
2.02 |
$ |
(0.03) |
$ |
2.04 |
$ |
0.57 |
|||||
| Income (loss) from discontinued operations |
— |
0.08 |
1.88 |
0.24 |
|||||||||
| Diluted earnings (loss) per share |
$ |
2.02 |
$ |
0.05 |
$ |
3.92 |
$ |
0.81 |
|||||
| Weighted-average number of shares outstanding for basic income (loss) per share |
137 |
136 |
137 |
135 |
|||||||||
| Weighted-average number of shares outstanding for diluted income (loss) per share |
138 |
136 |
138 |
136 |
|||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET |
|||||
| (Unaudited, in millions) |
|||||
| September 30, |
December 31, |
||||
| 2014 |
2013 |
||||
| ASSETS |
|||||
| Current assets: |
|||||
| Cash and cash equivalents |
$ |
396 |
$ |
95 |
|
| Restricted cash |
— |
90 |
|||
| Derivative assets |
48 |
— |
|||
| Other current assets |
462 |
716 |
|||
| Total current assets |
906 |
901 |
|||
| Oil and gas properties, net (full cost method) |
7,871 |
8,101 |
|||
| Derivative assets |
56 |
26 |
|||
| Other assets |
235 |
293 |
|||
| Total assets |
$ |
9,068 |
$ |
9,321 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
| Current liabilities: |
|||||
| Derivative liabilities |
1 |
62 |
|||
| Other current liabilities |
924 |
1,228 |
|||
| Total current liabilities |
925 |
1,290 |
|||
| Other liabilities |
40 |
38 |
|||
| Long-term debt |
3,046 |
3,694 |
|||
| Asset retirement obligations |
105 |
201 |
|||
| Deferred taxes |
1,427 |
1,142 |
|||
| Total long-term liabilities |
4,618 |
5,075 |
|||
| STOCKHOLDERS' EQUITY |
|||||
| Common stock, treasury stock and additional paid-in capital |
1,556 |
1,527 |
|||
| Accumulated other comprehensive gain (loss) |
2 |
2 |
|||
| Retained earnings |
1,967 |
1,427 |
|||
| Total stockholders' equity |
3,525 |
2,956 |
|||
| Total liabilities and stockholders' equity |
$ |
9,068 |
$ |
9,321 |
|
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||||
| (Unaudited, in millions) |
|||||||
| For the Nine Months Ended September 30, |
|||||||
| 2014 |
2013 |
||||||
| Cash flows from operating activities: |
|||||||
| Net income (loss) |
$ |
540 |
$ |
130 |
|||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|||||||
| Depreciation, depletion and amortization |
665 |
664 |
|||||
| Deferred tax provision (benefit) |
308 |
89 |
|||||
| Stock-based compensation |
15 |
35 |
|||||
| Commodity derivative (income) expense |
(33) |
66 |
|||||
| Cash receipts (payments) on derivative settlements, net |
(106) |
45 |
|||||
| Gain on from sale of Malaysia business |
(388) |
— |
|||||
| Other, net |
1 |
7 |
|||||
| 1,002 |
1,036 |
||||||
| Changes in operating assets and liabilities |
68 |
59 |
|||||
| Net cash provided by (used in) operating activities |
1,070 |
1,095 |
|||||
| Cash flows from investing activities: |
|||||||
| Additions to oil and gas properties and other |
(1,557) |
(1,466) |
|||||
| Acquisitions of oil and gas properties |
(21) |
(64) |
|||||
| Proceeds from sales of oil and gas properties |
616 |
25 |
|||||
| Proceeds received from sale of Malaysia business, net |
809 |
— |
|||||
| Redemptions of investments |
39 |
1 |
|||||
| Net cash provided by (used in) investing activities |
(114) |
(1,504) |
|||||
| Cash flows from financing activities: |
|||||||
| Net proceeds under credit arrangements |
(649) |
440 |
|||||
| Other |
(6) |
(30) |
|||||
| Net cash provided by (used in) financing activities |
(655) |
410 |
|||||
| Increase (decrease) in cash and cash equivalents |
301 |
1 |
|||||
| Cash and cash equivalents, beginning of period |
95 |
88 |
|||||
| Cash and cash equivalents, end of period |
$ |
396 |
$ |
89 |
|||
Explanation and Reconciliation of Non-GAAP Financial Measures
Earnings Stated Without the Effect of Certain Items
Earnings stated without the effect of certain items is a non-GAAP financial measure. Earnings without the effect of these items are presented because they affect the comparability of operating results from period to period. In addition, earnings without the effect of these items are more comparable to earnings estimates provided by securities analysts.
A reconciliation of earnings for the third quarter of 2014 for our continuing operations stated without the effect of certain items to net income is shown below:
| 3Q14 |
|||
| (in millions) |
|||
| Net Income (loss) |
$ |
278 |
|
| Income (loss) from discontinued operations, net of tax |
(1) |
||
| Income (loss) from continuing operations |
279 |
||
| Net unrealized gain on commodity derivatives(1) |
(323) |
||
| Income tax adjustment for above items |
116 |
||
| Earnings stated without the effect of the above items |
$ |
72 |
|
| (1) The determination of "Net unrealized gain on commodity derivatives" for the third quarter 2014 is as follows: |
| 3Q14 |
|||
| (in millions) |
|||
| Commodity derivative income |
$ |
303 |
|
| Cash payments on derivative settlements, net |
20 |
||
| Net unrealized gain on commodity derivatives |
$ |
323 |
|
Net Cash Provided by Operating Activities Before Changes in Operating Assets and Liabilities
Net cash provided by operating activities before changes in operating assets and liabilities is presented because of its acceptance as an indicator of an oil and gas exploration and production company's ability to internally fund exploration and development activities and to service or incur additional debt. This measure should not be considered as an alternative to net cash provided by operating activities as defined by generally accepted accounting principles.
A reconciliation of net cash provided by operating activities before changes in operating assets and liabilities to net cash provided by operating activities is shown below:
| 3Q14 |
||||
| (in millions) |
||||
| Net cash provided by operating activities |
$ |
337 |
||
| Net change in operating assets and liabilities |
(16) |
|||
| Net cash provided by operating activities before changes in operating assets and liabilities |
$ |
321 |
||
SOURCE Newfield Exploration Company
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article