Newfield Exploration Reports First Quarter 2015 Results

1Q15 Actual

1Q15 Actual Results

Domestic

China

Total

Production/Liftings^{Note 1}

Crude oil and condensate - MMBbls

5.0

0.9

5.9

Natural gas - Bcf

29.5

—

29.5

NGLs - MMBbls

1.8

—

1.8

Total MMBOE

11.7

0.9

12.6

Average Realized Prices^{Note 2}

Crude oil and condensate - $/Bbl

$

57.51

$

50.78

$

56.47

Natural gas - $/Mcf

$

3.62

$

—

$

3.62

NGLs - $/Bbl

$

19.96

$

—

$

19.96

Bbl equivalent - $/BOE

$

37.27

$

50.78

$

38.27

Operating Expenses:

Lease operating ($MM)

Recurring

$

56.9

$

9.5

$

66.4

Major (workovers, etc.)

$

8.2

$

—

$

8.2

Lease operating (per BOE)

Recurring

$

5.04

$

10.37

$

5.42

Major (workovers, etc.)

$

0.72

$

—

$

0.67

Transportation and processing ($MM)

$

49.2

$

—

$

49.2

    per BOE

$

4.33

$

—

$

4.01

Production and other taxes ($MM)

$

13.4

$

—

$

13.4

per BOE

$

1.18

$

—

$

1.10

General and administrative (G&A), net ($MM)

$

60.5

$

2.2

$

62.7

per BOE

$

5.31

$

2.64

$

5.11

    Capitalized direct internal costs ($MM)

$

(24.9)

per BOE

$

(2.03)

Other operating expenses, net ($MM)

$

3.8

per BOE

$

0.31

Interest expense ($MM)

$

43.7

per BOE

$

3.57

Capitalized interest ($MM)

$

(6.9)

per BOE

$

(0.57)

Other non-operating (income) expense ($MM)

$

(8.0)

per BOE

$

(0.65)

_____

Note 1: Represents volumes lifted and sold regardless of when produced. Includes natural gas produced and consumed in our operations of 2.2 Bcf during the three months ended March 31, 2015.

Note 2: Average realized prices include the effects of derivative contracts. If the effects of these contracts were excluded, the average realized price for natural gas for our domestic and total natural gas would have been $2.70 per Mcf and our domestic and total crude oil and condensate average realized prices would have been $38.21 per barrel and $40.15 per barrel, respectively. We did not have any derivative contracts associated with our NGL or China production as of March 31, 2015.

2015e Production, Cost and Expense Guidance

Domestic

China

Total

Production:

  Oil (Mmbls)

20.1 – 21.4

5.0

25.1 – 26.4

  NGLs (Mmbls)

7.7 – 8.2

–

7.7 – 8.2

  Natural gas (Bcf)

115 – 122

–

115 – 122

Total (Mmboe)

47.0 – 50.0

5.0

52.0 – 55.0

Expenses ($ mm)¹

  LOE²

$270

$72

$342

  Transportation

$200

–

$200

  Production & other taxes

$71

$1

$72

  General & administrative (G&A), net³

$200

$7

$207

  Interest expense

$160

–

$160

Capitalized interest and direct internal costs

($117)

–

($117)

Tax rate

37%

60%⁴

44%

Note:

Based on $55 / $3 commodity prices in 2015 for oil and gas, respectively

¹

Cost and expenses are expected to be within 5% of the estimates above

²

Total LOE includes recurring, major expense and non E&P operating expenses

³

Net G&A excludes one-time expenses of an estimated $35mm associated with 1Q15 reduction in force and the announced reorganization

⁴

Estimated 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.

2Q15e Production, Cost and Expense Guidance

Domestic

China

Total

Production:

  Oil (Mmbls)

5.3 – 5.5

1.2

    6.5 – 6.7

  NGLs (Mmbls)

1.9 – 2.0

–

     1.9 – 20

  Natural gas (Bcf)

29 – 30

–

      29 – 30

Total (Mmboe)

12.1 – 12.5

1.2

13.3 – 13.7

Expenses ($ mm)¹

  LOE²

$69

$14

$83

  Transportation

$50

–

$50

  Production & other taxes

$19

–

$19

  General & administrative (G&A), net³

$52

$2

$54

  Interest expense

$46

–

$46

Capitalized interest and direct internal costs

($36)

–

($36)

Tax rate

37%

60%⁴

44%

Note:

Based on $55 / $3 commodity prices in 2015 for oil and gas, respectively

¹

Cost and expenses are expected to be within 5% of the estimates above

²

Total LOE includes recurring, major expense and non E&P operating expenses

³

2Q15e net G&A excludes an estimated $5mm associated with the announced reorganization

⁴

Estimated 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)

2015

2014

Oil, gas and NGL revenues

$

349

$

571

Operating expenses:

   Lease operating

75

74

   Transportation and processing

49

37

   Production and other taxes

13

28

   Depreciation, depletion and amortization

237

192

   General and administrative

63

56

   Ceiling test and other impairments

792

—

   Other

4

2

      Total operating expenses

1,233

389

Income (loss) from operations

(884)

182

Other income (expense):

   Interest expense

(44)

(51)

   Capitalized interest

7

13

   Commodity derivative income (expense)

153

(96)

   Other, net

8

2

      Total other income (expense)

124

(132)

Income (loss) from continuing operations before income taxes

(760)

50

Income tax provision (benefit)

(280)

23

Income (loss) from continuing operations

(480)

27

Income (loss) from discontinued operations, net of tax

—

257

      Net income (loss)

$

(480)

$

284

Earnings (loss) per share:

    Basic

     Income (loss) from continuing operations

$

(3.30)

$

0.19

     Income (loss) from discontinued operations

—

1.89

       Basic earnings (loss) per share

$

(3.30)

$

2.08

    Diluted

     Income (loss) from continuing operations

$

(3.30)

$

0.19

     Income (loss) from discontinued operations

—

1.88

       Diluted earnings (loss) per share

$

(3.30)

$

2.07

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

145

136

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

145

137

CONDENSED CONSOLIDATED BALANCE SHEET

 (Unaudited, in millions)

March 31,

December 31,

2015

2014

ASSETS

Current assets:

     Cash and cash equivalents

$

783

$

14

     Derivative assets

425

431

     Other current assets

402

495

         Total current assets

1,610

940

     Oil and gas properties, net (full cost method)

7,603

8,232

     Derivative assets

224

190

     Other assets

241

236

         Total assets

$

9,678

$

9,598

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Derivative liabilities

$

1

$

8

     Other current liabilities

861

1,093

         Total current liabilities

862

1,101

     Other liabilities

45

45

     Derivative liabilities

2

—

     Long-term debt

3,146

2,892

     Asset retirement obligations

183

183

     Deferred taxes

1,202

1,484

         Total long-term liabilities

4,578

4,604

STOCKHOLDERS' EQUITY

Common stock, treasury stock and additional paid-in capital

2,392

1,567

Accumulated other comprehensive gain (loss)

(1)

(1)

Retained earnings

1,847

2,327

      Total stockholders' equity

4,238

3,893

      Total liabilities and stockholders' equity

$

9,678

$

9,598

CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS

(Unaudited, in millions)

2015

2014

Cash flows from operating activities:

  Net income (loss)

$

(480)

$

284

Adjustments to reconcile net income (loss) to net cash

  provided by (used in) operating activities:

  Depreciation, depletion and amortization

237

224

  Deferred tax provision (benefit)

(283)

161

  Stock-based compensation

15

11

  Unrealized (gain) loss on derivative contracts

(32)

57

  Ceiling test and other impairments

792

—

  Gain on sale of Malaysia business

—

(388)

  Other, net

6

(4)

255

345

Changes in operating assets and liabilities

(50)

20

      Net cash provided by (used in) operating activities

205

365

Cash flows from investing activities:

   Additions to oil and gas properties and other

(515)

(561)

   Proceeds from sales of oil and gas properties

29

10

   Proceeds received from sale of Malaysia business, net

—

809

   Redemptions of investments

—

39

      Net cash provided by (used in) investing activities

(486)

297

Cash flows from financing activities:

   Net proceeds (repayments) under credit arrangements

(446)

(649)

   Net proceeds from issuance of senior notes

690

—

   Net proceeds from issuances of common stock

815

—

   Other, net

(9)

(1)

      Net cash provided by (used in) financing activities

1,050

(650)

Increase (decrease) in cash and cash equivalents

769

12

Cash and cash equivalents, beginning of period

14

95

Cash and cash equivalents, end of period

$

783

$

107

Income (loss) from continuing operations

(480)

Ceiling test and other impairments

792

Unrealized (gain) loss on commodity derivatives⁽¹⁾

(32)

Reduction in force

9

Income tax adjustment for above items 

(286)

Earnings stated without the effect of the above items 

$

3

The determination of "Unrealized (gain) loss on commodity derivatives" for the first quarter of 2015 is as follows:

1Q15

(in millions)

Net cash provided by operating activities

$

205

   Net change in operating assets and liabilities

50

Discretionary cash flow

$

255