Newfield Reports Fourth Quarter and Full-Year 2010 Financial Results

For information, contact:

Investor Relations:

Steve Campbell (281) 847-6081

Danny Aguirre (281) 668-2657

Media Relations:

Keith Schmidt (281) 674-2650

Email:

[email protected]

4Q10 Actual Results

4Q10 Actual

Domestic

Int'l

Total

Production/Liftings ^{Note 1}

     Natural gas – Bcf

51.5

–

51.5

     Oil and condensate – MMBbls

2.4

1.9

4.3

     Total Bcfe

66.0

11.3

77.3

Average Realized Prices ^{Note 1,2}

     Natural gas – $/Mcf

$

5.37

$

–

$

5.37

     Oil and condensate – $/Bbl

$

85.17

$

82.87

$

84.16

     Mcf equivalent – $/Mcfe

$

7.41

$

13.81

$

8.37

Operating Expenses:

   Lease operating ($MM)

     Recurring

$

43.0

$

17.5

$

60.5

     Major (workovers, etc.)

$

6.7

$

3.4

$

10.1

     Transportation

$

18.9

$

–

$

18.9

   Lease operating (per Mcfe)

     Recurring

$

0.67

$

1.55

$

0.80

     Major (workovers, etc.)

$

0.10

$

0.30

$

0.13

     Transportation

$

0.29

$

–

$

0.25

  Production and other taxes ($MM)

$

11.5

$

37.3

$

48.8

      per/Mcfe

$

0.18

$

3.30

$

0.65

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

$

37.0

$

1.7

$

38.7

      per/Mcfe

$

0.58

$

0.15

$

0.51

           Capitalized internal costs ($MM)

$

(26.3)

              per/Mcfe

$

(0.35)

Interest expense ($MM)

$

39.5

       per/Mcfe

$

0.52

Capitalized interest ($MM)

$

(15.4)

       per/Mcfe

$

(0.20)

Note 1:   Beginning in 2011, Newfield will report NGLs with its reported oil production. For comparative purposes, the following table depicts 4Q2010 production and realized prices pro-forma this change:

Domestic

Int'l

Total

Production/Liftings

     Natural gas – Bcf

49.9

–

49.9

     Oil, condensate & NGLs – MMBbls

2.7

1.9

4.6

     Total Bcfe

66.0

11.3

77.3

Average Realized Prices

     Natural gas – $/Mcf

$

5.19

$

–

$

5.19

     Oil, condensate & NGLs – $/Bbl

$

82.89

$

82.86

$

82.88

     Mcf equivalent – $/Mcfe

$

7.41

$

13.81

$

8.37

Note 2:  Average realized prices include the effects of hedging contracts. If the effects of these contracts were excluded, the average realized price for total gas would have been $3.88 per Mcf and the domestic and total oil and condensate average realized prices would have been $73.08 and $77.38 per barrel, respectively.

1Q11 & FY11 Estimates

1Q11 & FY11 Estimates

Domestic

Int'l

Total

Production/Liftings

1QE

FY11

1QE

FY11

1QE

FY11

  Natural gas – Bcf

46 – 48

191 – 194

–

–

46 – 48

191 – 194

  Oil, condensate and NGLs – MMBbls

2.3 – 2.9

14.0 – 15.0

1.4 – 1.6

6.1  – 6.5

3.7  – 4.5

20.1 – 21.5

  Total Bcfe

60 – 65

275 – 284

8 – 10

37 – 39

68 – 75

312 – 323

Average Realized Prices

  Natural gas – $/Mcf

Note 1

Note 1

  Oil, condensate and NGLs – $/Bbl

Note 2

Note 2

Note 3

Note 3

  Mcf equivalent – $/Mcfe

Operating Expenses (per Mcfe):  

   Lease Operating

     Recurring

$0.66 - $0.73

$0.63 - $0.70

$1.73 - $2.02

$1.66 - $1.93

$0.80 - $0.89

$0.76 - $0.85

     Major (workovers, etc.)

$0.11 - $0.15

$0.14 - $0.19

$0.15 - $0.21

$0.22 - $0.31

$0.11 - $0.15

$0.15 - $0.20

     Transportation  

$0.36 - $0.40

$0.35 - $0.39

-

-

$0.31 - $0.35

$0.31 - $0.34

   Production/Taxes ^{Note 4}

$0.27 - $0.32

$0.31 - $0.37

$5.56 - $7.11

$4.43 - $5.25

$0.93 - $1.17

$0.80 - $0.95

  G&A, net

$0.67 - $0.71

$0.62 - $0.67

$0.19 - $0.21

$0.18 - $0.20

$0.61 - $0.65

$0.57 - $0.61

     Capitalized internal costs  

($0.35 - $0.40)

($0.32 - $0.36)

  Interest Expense

$0.52 - $0.57

$0.48 - $0.53

  Capitalized Interest

($0.23 - $0.26)

($0.18 - $0.22)

Tax rate (%)^{Note 5}

36% - 38%

36% - 38%

Income taxes (%)

 Current

14% - 16%

14% - 16%

 Deferred

84% - 86%

84% - 86%

Note 1:

The price that the Company receives for natural gas production from the Gulf of Mexico and onshore Gulf Coast, after basis differentials, transportation and handling charges, typically averages $0.25 - $0.50 per MMBtu less than the Henry Hub Index.  Realized natural gas prices for our Mid-Continent properties, after basis differentials, transportation and handling charges, typically average 85-90% of the Henry Hub Index.

Note 2:

The price the Company receives for its Gulf Coast oil production, excluding NGLs, typically averages about 93-97% of the NYMEX West Texas Intermediate (WTI) price. The price the Company receives for its oil production in the Rocky Mountains, excluding NGLs, is currently averaging about $15-$17 per barrel below the WTI price. Oil production from the Company's Mid-Continent properties, excluding NGLs, typically averages 90-95% of the WTI price.

Note 3:

Oil sales from the Company's operations in Malaysia typically sell at a slight discount to Tapis, or today about 105-110% of WTI. Oil sales from the Company's operations in China typically sell at $4-$6 per barrel less than the WTI price.

Note 4:

Guidance for production taxes determined using the average of the strip at 01/24/11 ($91.67/bbl, $4.69/mcf).

Note 5:

Tax rate applied to earnings excluding unrealized gains or losses on commodity derivatives.

CONSOLIDATED STATEMENT OF INCOME

(Unaudited, in millions, except per share data)

For the

Three Months Ended

December 31,

For the

Twelve Months Ended

December 31,

2010

2009

2010

2009

Oil and gas revenues

$  528

$  414

$  1,883

$  1,338

Operating expenses:

   Lease operating

89

67

326

259

   Production and other taxes

49

25

126

63

   Depreciation, depletion and amortization

181

147

644

587

   General and administrative

39

38

156

144

   Ceiling test and other impairments

7

—

7

1,344

   Other

—

—

10

8

        Total operating expenses

365

277

1,269

2,405

Income (loss) from operations

163

137

614

(1,067)

Other income (expenses):

   Interest expense

(40)

(31)

(156)

(126)

   Capitalized interest

15

12

58

51

   Commodity derivative income (expense)

(98)

63

316

252

   Other

(5)

1

(3)

5

       Total other income (expenses)

(128)

45

215

182

Income (loss) before income taxes

35

182

829

(885)

Income tax provision (benefit)

13

69

306

(343)

Net income (loss)

$  22

$  113

$  523

$  (542)

Income (loss) per share:

Basic --

$  0.17

$  0.87

$  3.97

$  (4.18)

Diluted --

$  0.17

$  0.86

$  3.91

$  (4.18)

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

133

130

132

130

Weighted average number of shares outstanding for diluted income (loss) per share *

134

133

134

130

* Had the Company recognized net income for the twelve months ended December 31, 2009, the weighted average number of shares outstanding for the computation of diluted earnings per share would have increased by 2 million shares.

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited, in millions)

December 31,

2010

December 31,

2009

ASSETS

Current assets:

   Cash and cash equivalents

$  39

$  78

   Derivative assets

197

269

   Other current assets

495

546

       Total current assets

731

893

Property and equipment, net (full cost method)

6,608

5,247

Derivative assets

39

19

Other assets

116

95

       Total assets

$  7,494

$  6,254

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

   Derivative liabilities

$  53

$  2

   Other current liabilities

875

871

       Total current liabilities

928

873

Other liabilities

199

142

Long-term debt

2,304

2,037

Deferred taxes

720

434

       Total long-term liabilities

3,223

2,613

Commitments and contingencies

—

—

STOCKHOLDERS' EQUITY

Common stock

1

1

Additional paid-in capital

1,450

1,389

Treasury stock

(41)

(33)

Accumulated other comprehensive loss

(12)

(11)

Retained earnings

1,945

1,422

       Total stockholders' equity

3,343

2,768

       Total liabilities and stockholders' equity

$  7,494

$  6,254

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, in millions)

For the

Twelve Months Ended

December 31,

2010

2009

Cash flows from operating activities:

   Net income (loss)

$  523

$  (542)

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

   Depreciation, depletion and amortization

644

587

   Deferred tax provision (benefit)

247

(391)

   Stock-based compensation

22

28

   Commodity derivative income

(316)

(252)

   Cash receipts on derivative settlements, net

456

883

   Ceiling test and other impairments

7

1,344

   Other

7

3

1,590

1,660

   Changes in operating assets and liabilities

40

(82)

       Net cash provided by operating activities

1,630

1,578

Cash flows from investing activities:

   Additions to oil and gas properties and other, net

(1,658)

(1,400)

   Acquisitions of oil and gas properties

(313)

(9)

   Proceeds from sales of oil and gas properties

12

33

   Redemption of investments

8

20

       Net cash used in investing activities

(1,951)

(1,356)

Cash flows from financing activities:

   Net repayments under credit arrangements

(249)

(176)

   Net proceeds from issuance of senior subordinated notes

686

—

   Repayment of senior notes

(175)

—

   Other

20

8

       Net cash provided by (used in) financing activities

282

(168)

Increase (decrease) in cash and cash equivalents

(39)

54

Cash and cash equivalents, beginning of period

78

24

Cash and cash equivalents, end of period

$  39

$  78

4Q10

(in millions)

Net income

$  22

   Net unrealized loss on commodity derivatives ⁽¹⁾

202

   Other impairments

7

   Income tax adjustment for above items

(75)

Earnings stated without the effect of the above items

$  156

4Q10

(in millions)

   Commodity derivative expense

$  (98)

   Cash receipts on derivative settlements, net

(111)

   Option premiums associated with derivatives settled during the period

7

       Net unrealized loss on commodity derivatives

$  (202)

4Q10

2010

(in millions)

Net cash provided by operating activities

$  323

$  1,630

   Net change in operating assets and liabilities

97

(40)

Net cash provided by operating activities before changes in operating assets and liabilities

$  420

$  1,590