Newfield Exploration Reports Third Quarter 2015 Results

- 3Q15 net domestic production of 12.9 MMBOE exceeded guidance mid-point by 0.4 MMBOE

- Total Company oil production increased 42% year-over-year; domestic oil production up 11% year-over-year adjusted for asset sales

- 3Q15 domestic lease operating expense of $4.51 per BOE was 15% below guidance; full-year 2015 lease operating expense expected to be down nearly 25% year-over-year per BOE

- Adjusted 3Q15 diluted earnings per share of $0.21 topped consensus estimates

- Full-year 2015 net domestic production forecast raised for second time to 50.0 - 50.5 MMBOE (previous forecast: 48.5 - 50.0 MMBOE); 2015 consolidated net production raised to 55.3 - 55.8 (previous forecast: 53.5 - 55.0 MMBOE)

- 3Q15 Anadarko Basin average net production was approximately 68,000 BOEPD; 4Q15 average estimated Anadarko Basin net production increased to 74,000 BOEPD (previous forecast: 71,000 BOEPD)

- Milestone: Anadarko Basin daily net production levels surpassed remainder of Company's combined domestic businesses

- Company reported continued improvements in average production rates from recent STACK wells

- Newfield sold approximately $77 million in non-strategic assets year-to-date

- Company reiterated 2015 capital investment budget of approximately $1.4 billion

03 Nov, 2015, 16:01 ET from Newfield Exploration Company

THE WOODLANDS, Texas, Nov. 3, 2015 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited third quarter 2015 financial results. In addition, the Company provided an updated @NFX publication on its website and plans to host a conference call at 10:00 a.m. CST on November 4, 2015. To listen to the call and to view the slide deck, please visit Newfield's website at http://www.newfield.com. To participate in the call, dial (785) 424-1666 and enter conference code 7962303.

"Despite a challenging macro environment, Newfield is delivering on the key elements of its business plan in 2015, and we expect to enter 2016 with momentum and an improving cost structure," said Lee K. Boothby, Newfield Chairman, President and CEO. "We took decisive steps in early 2015 to improve our balance sheet, reduce expenses and improve margins, and shifted both people and capital resources to our highest return asset – the Anadarko Basin. Our near-term priorities remain unchanged: maintaining liquidity and a strong capital structure, holding our economically resilient STACK acreage by production, capturing remaining acreage opportunities in the Anadarko Basin and improving our margins across the Company. We are focused on delivering long-term value creation for our stockholders."

Third Quarter 2015 Results

For the third quarter, the Company recorded a net loss of $1.2 billion, or $7.52 per diluted share (all per share amounts are on a diluted basis). The loss was primarily related to a full-cost ceiling test impairment of $1.9 billion ($1.2 billion after-tax, or $7.49 per share). After adjusting for the effect of impairments, unrealized derivative losses and restructuring related costs, net income would have been $34 million, or $0.21 per share.

Revenues for the third quarter were $377 million. Net cash provided by operating activities before changes in operating assets and liabilities was $280 million.

Newfield's total net production in the third quarter of 2015 was 14.3 MMBOE, comprised of 47% oil, 16% natural gas liquids and 37% natural gas. Domestic production in the third quarter was 12.9 MMBOE.

2015 Production Guidance and Capital Investments

Newfield increased its 2015 domestic net production guidance to 50.0 – 50.5 MMBOE (previous forecast: 48.5 – 50.0 MMBOE). With recent strong performance from its wells in the Anadarko Basin's SCOOP and STACK,  Newfield again increased its expectations for fourth quarter 2015 average net production in the Anadarko Basin to approximately 74,000 BOEPD (previous forecast: 71,000 BOEPD).

Total Company net production guidance was raised to 55.3 – 55.8 (previous forecast: 53.5 – 55.0 MMBOE). The Company's 2015 capital budget was reiterated at approximately $1.4 billion.

Additional operational highlights for the third quarter of 2015 can be found in @NFX.

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 focus on U.S. resource plays and our principal areas of operation include the Mid-Continent, the Rocky Mountains and onshore Texas. We also have offshore oil developments in China.

See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.

**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 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 2014 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: info@newfield.com

3Q15 Actual

3Q15 Actual Results

Domestic

China

Total

Production/Liftings1

Crude oil and condensate (MMBbls)

5.3

1.4

6.7

Natural gas (Bcf)

32.1

32.1

NGLs (MMBbls)

2.3

2.3

      Total (MMBOE)

12.9

1.4

14.3

Average Realized Prices2, 3

Crude oil and condensate (per Bbl)

$

57.45

$

42.78

$

54.31

Natural gas (per Mcf)

3.54

3.54

NGLs (per Bbl)

16.79

16.79

      Crude oil equivalent (per BOE)

$

35.51

$

42.78

$

36.25

Operating Expenses:3

Lease operating (in millions)

Recurring

$

51.5

$

13.6

$

65.1

Major (workovers, etc.)

$

5.8

$

0.4

$

6.2

Lease operating (per BOE)

Recurring

$

4.09

$

9.52

$

4.64

Major (workovers, etc.)

$

0.46

$

0.25

$

0.44

Transportation and processing (in millions)

$

52.4

$

$

52.4

per BOE

$

4.20

$

$

3.77

Production and other taxes (in millions)

$

12.7

$

0.2

$

12.9

per BOE

$

1.01

$

0.15

$

0.92

General and administrative (G&A), net (in millions)

$

64.1

$

1.5

$

65.6

per BOE

$

5.09

$

1.03

$

4.68

   Capitalized direct internal costs (in millions)

$

(14.1)

per BOE

$

(0.99)

Other operating expenses, net (in millions)

$

0.9

per BOE

$

0.06

Interest expense (in millions)

$

37.2

per BOE

$

2.66

Capitalized interest (in millions)

$

(8.4)

per BOE

$

(0.60)

Other non-operating (income) expense (in millions)

$

(1.2)

per BOE

$

(0.09)

____

Note 1: Represents volumes lifted and sold regardless of when produced. Includes natural gas produced and consumed in operations of 1.9 Bcf during the three months ended September 30, 2015.

Note 2: Average realized prices include the effects of derivative contracts. Excluding these effects, the average realized price for domestic and total natural gas would have been $2.51 per Mcf and the average realized price for our domestic and total crude oil and condensate would have been $38.41 per barrel and $39.34 per barrel, respectively. We did not have any derivative contracts associated with our NGL or China production as of September 30, 2015.

 

Note 3: All per unit pricing and expenses exclude natural gas produced and consumed in operations.

 

2015e Production, Cost and Expense Guidance

  Domestic

  China

  Total

Production:

  Oil (Mmbls)

21.3

5.3

26.6

  NGLs (Mmbls)

8.5

8.5

  Natural gas (Bcf)

123

123

Total (MMboe)

50.0 – 50.5

5.3

55.3 – 55.8

Expenses ($ mm)1

  LOE2

$250

$58

$308

  Transportation

$209

$209

  Production & other taxes

$57

$1

$58

  General & administrative (G&A), net3

$202

$7

$209

  Interest expense

$164

$164

Capitalized interest and direct internal costs

($111)

($111)

Tax rate4

37%

60%

40%

Note:  Based on actual commodity prices through 9/30/15 and 4Q15e commodity prices of $47.90 NYMEX WTI and $2.62 per Mcf Henry Hub 1Cost and expenses are expected to be within 5% of the estimates above 2Total LOE includes recurring, major expense and non E&P operating expenses 3Net G&A excludes one-time expenses of an estimated $38mm associated with 1Q15 reduction in force and the announced reorganization 4Estimated China tax rate reflects a 25% taxation in-country, as well as an additional non-cash U.S. income tax of 35%, due to Newfield's current tax position and its inability to utilize foreign tax credits.

 

4Q15e Production, Cost and Expense Guidance

  Domestic

  China

  Total

Production:

  Oil (Mmbls)

5.5

1.3

6.8

  NGLs (Mmbls)

2.3

2.3

  Natural gas (Bcf)

32

32

Total (Mmboe)

  13.0 – 13.4

1.3

14.3 – 14.7

Expenses ($ mm)1

  LOE2

$65

$16

$81

  Transportation

$55

$55

  Production & other taxes

$14

$14

  General & administrative (G&A), net3

$63

$2

$65

  Interest expense

$36

$36

Capitalized interest and direct internal costs

($31)

($31)

Tax rate

37%

60%4

43%

Note:  Based on 4Q15e commodity prices of $47.90 NYMEX WTI and $2.62 per Mcf Henry Hub 1Cost and expenses are expected to be within 5% of the estimates above 2Total LOE includes recurring, major expense and non E&P operating expenses 34Q15e net G&A excludes an estimated $4mm associated with announced reorganization 4Estimated China tax rate reflects a 25% taxation in-country, as well as an additional non-cash U.S. income tax of 35%, due to Newfield's current tax position and its inability to utilize foreign tax credits.

 

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited, in millions, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2015

2014

2015

2014

Oil, gas and NGL revenues

$

377

$

610

$

1,195

$

1,793

Operating expenses:

   Lease operating

71

74

219

228

   Transportation and processing

52

51

153

125

   Production and other taxes

13

32

43

90

   Depreciation, depletion and amortization

236

228

721

633

   General and administrative

66

48

180

172

   Ceiling test and other impairments

1,889

4,202

   Other

1

10

8

15

      Total operating expenses

2,328

443

5,526

1,263

Income (loss) from operations

(1,951)

167

(4,331)

530

Other income (expense):

   Interest expense

(37)

(51)

(127)

(153)

   Capitalized interest

8

13

23

39

   Commodity derivative income (expense)

87

303

230

33

   Other, net

1

1

(13)

4

      Total other income (expense)

59

266

113

(77)

Income (loss) from continuing operations before income taxes

(1,892)

433

(4,218)

453

Income tax provision (benefit)

(665)

155

(1,519)

170

Income (loss) from continuing operations

(1,227)

278

(2,699)

283

Income (loss) from discontinued operations, net of tax

257

      Net income (loss)

$

(1,227)

$

278

$

(2,699)

$

540

Earnings (loss) per share:

    Basic:

     Income (loss) from continuing operations

$

(7.52)

$

2.04

$

(17.17)

$

2.07

     Income (loss) from discontinued operations

1.89

       Basic earnings (loss) per share

$

(7.52)

$

2.04

$

(17.17)

$

3.96

    Diluted:

     Income (loss) from continuing operations

$

(7.52)

$

2.02

$

(17.17)

$

2.05

     Income (loss) from discontinued operations

1.87

       Diluted earnings (loss) per share

$

(7.52)

$

2.02

$

(17.17)

$

3.92

Weighted-average number of shares outstanding for basic earnings (loss) per share

163

137

157

137

Weighted-average number of shares outstanding for diluted earnings (loss) per share

163

138

157

138

 

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, in millions)

September 30,

December 31,

2015

2014

ASSETS

Current assets:

   Cash and cash equivalents

$

7

$

14

   Derivative assets

334

431

   Other current assets

322

495

      Total current assets

663

940

Oil and gas properties, net (full cost method)

4,418

8,232

Derivative assets

148

190

Deferred taxes

49

Other assets

235

236

      Total assets

$

5,513

$

9,598

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

   Derivative liabilities

$

8

$

8

   Other current liabilities

710

1,093

      Total current liabilities

718

1,101

Other liabilities

47

45

Derivative liabilities

6

Long-term debt

2,498

2,892

Asset retirement obligations

192

183

Deferred taxes

21

1,484

      Total long-term liabilities

2,764

4,604

Stockholders' Equity:

Common stock, treasury stock and additional paid-in capital

2,405

1,567

Accumulated other comprehensive gain (loss)

(2)

(1)

Retained earnings (deficit)

(372)

2,327

   Total stockholders' equity

2,031

3,893

   Total liabilities and stockholders' equity

$

5,513

$

9,598

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, in millions)

Nine Months Ended

September 30,

2015

2014

Cash flows from operating activities:

  Net income (loss)

$

(2,699)

$

540

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

  Depreciation, depletion and amortization

721

665

  Deferred tax provision (benefit)

(1,544)

308

  Stock-based compensation

19

15

  Unrealized (gain) loss on derivative contracts

145

(139)

  Ceiling test and other impairments

4,202

  Gain on sale of Malaysia business

(388)

  Other, net

38

1

882

1,002

Changes in operating assets and liabilities

7

68

    Net cash provided by (used in) operating activities

889

1,070

Cash flows from investing activities:

  Additions to oil and gas properties and other

(1,428)

(1,578)

  Proceeds from sales of oil and gas properties

86

616

  Proceeds received from sale of Malaysia business, net

809

  Redemptions of investments

39

  Proceeds from insurance settlement, net

57

    Net cash provided by (used in) investing activities

(1,285)

(114)

Cash flows from financing activities:

  Net proceeds (repayments) under credit arrangements

(398)

(649)

  Proceeds from issuance of senior notes

691

  Repayment of senior subordinated notes

(700)

  Proceeds from issuances of common stock, net

817

4

  Other, net

(21)

(10)

    Net cash provided by (used in) financing activities

389

(655)

Increase (decrease) in cash and cash equivalents

(7)

301

Cash and cash equivalents, beginning of period

14

95

Cash and cash equivalents, end of period

$

7

$

396

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 2015 for our continuing operations stated without the effect of certain items to net income (loss) is shown below:

3Q15

(in millions)

Net Income (loss)

$

(1,227)

Ceiling test

1,889

Unrealized (gain) loss on derivative contracts(1)

44

Restructuring related costs

18

Income tax adjustment for above items 

(690)

Earnings stated without the effect of the above items 

$

34

(1)  The calculation of "Unrealized (gain) loss on derivative contracts" for the third quarter of 2015 is as follows:

3Q15

(in millions)

Commodity derivative income (expense)

$

87

Less: Realized gain (loss) on derivative contracts

131

Unrealized loss on derivative contracts

$

(44)

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 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 to net cash provided by operating activities before changes in operating assets and liabilities is shown below:

3Q15

(in millions)

Net cash provided by operating activities

$

312

   Net changes in operating assets and liabilities

(32)

Net cash provided by operating activities before changes

in operating assets and liabilities

$

280

 

SOURCE Newfield Exploration Company



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