Newfield Reports Third Quarter 2010 Results

For information, contact:

Investor Relations: Steve Campbell (281) 847-6081

Media Relations: Keith Schmidt (281) 674-2650

Email: [email protected]

3Q10 Actual Results

3Q10 Actual

Domestic

Int'l

Total

Production/Liftings

   Natural gas – Bcf

50.4

–

50.4

   Oil and condensate – MMBbls ^{Note 1}

2.2

1.3

3.5

   Total Bcfe

63.7

7.7

71.4

Average Realized Prices ^{Note 2}

   Natural gas – $/Mcf

$

5.66

$

–

$

5.66

   Oil and condensate – $/Bbl

$

84.63

$

72.04

$

80.02

   Mcf equivalent – $/Mcfe

$

7.48

$

12.01

$

7.98

Operating Expenses:

 Lease operating

   Recurring ($MM)

$

38.9

$

15.7

$

54.6

     per/Mcfe

$

0.62

$

2.05

$

0.78

   Transportation ($MM)

$

19.0

$

–

$

19.0

     per/Mcfe

$

0.31

$

–

$

0.27

   Recurring w/ trans ($MM)

$

57.9

$

15.7

$

73.6

     per/Mcfe

$

0.93

$

2.05

$

1.05

   Major (workovers, etc.) ($MM)

$

10.3

$

1.8

$

12.1

     per/Mcfe

$

0.16

$

0.23

$

0.17

Production and other taxes ($MM)

$

2.2

$

19.0

$

21.2

    per/Mcfe

$

0.04

$

2.48

$

0.30

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

$

38.5

$

1.1

$

39.6

    per/Mcfe

$

0.62

$

0.14

$

0.56

         Capitalized internal costs ($MM)

$

(17.3)

            per/Mcfe

$

(0.25)

Interest expense ($MM)

$

39.2

     per/Mcfe

$

0.56

Capitalized interest ($MM)

$

(15.3)

     per/Mcfe

$

(0.22)

Note 1:  International oil production excludes approximately 0.3 MMBbls of deferred Malaysian oil production related to a damaged export pipeline.

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 $4.25 per Mcf and the domestic and total oil and condensate average realized prices would have been $65.92 and $68.16 per barrel, respectively.

4Q10 & FY10 Estimates

4Q10 & FY10 Estimates

Domestic

Int'l

Total

Production/Liftings

4QE

FY10

4QE

FY10

4QE

FY10

  Natural gas – Bcf

49 – 51

198 – 200

–

–

49 – 51

198 – 200

  Oil and condensate – MMBbls

2.5 – 2.7

8.6 – 8.8

1.8 – 1.9

6.0 – 6.1

4.3  – 4.6

14.6 – 14.9

  Total Bcfe

64 – 67

250 – 251

11 – 12

36 – 37

75 – 79

286 – 288

Average Realized Prices

  Natural gas – $/Mcf

Note 1

Note 1

  Oil and condensate – $/Bbl

Note 2

Note 2

Note 3

Note 3

  Mcf equivalent – $/Mcfe

Operating Expenses (per Mcfe):  

 Lease Operating

   Recurring

$0.61 - $0.63

$0.58 - $0.60

$1.44 - $1.47

$1.48 - $1.51

$0.73 - $0.75

$0.69 - $0.71

   Transportation  

$0.28 - $0.30

$0.28 - $0.30

-

-

$0.24 - $0.26

$0.24 - $0.26

     Recurring with transportation

$0.89 - $0.93

$0.86 - $0.90

$1.44 - $1.47

$1.48 - $1.51

$0.97 - $1.01

$0.93 - $0.97

   Major (workovers, etc.)

$0.13 - $0.15

$0.15 - $0.17

$0.52 - $0.54

$0.27 - $0.29

$0.19 - $0.21

$0.17 - $0.19

Production/Taxes ^{Note 4}

$0.29 - $0.31

$0.20 - $0.22

$1.94 - $1.98

$1.81- $1.85

$0.52 - $0.55

$0.36 - $0.43

G&A, net

$0.55 - $0.57

$0.58 - $0.60

$0.11 - $0.12

$0.15 - $0.16

$0.48 - $0.50

$0.53 - $0.55

     Capitalized internal costs  

($0.23 - $0.24)

($0.24 - $0.25)

Interest Expense

$0.47 - $0.51

$0.52 - $0.55

Capitalized Interest

($0.19 - $0.20)

($0.20 - $0.21)

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 we receive 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 we receive for our Gulf Coast oil production typically averages about 90-95% of the NYMEX West Texas Intermediate (WTI) price. The price we receive for our oil production in the Rocky Mountains is currently averaging about $12-$14 per barrel below the WTI price. Oil production from our Mid-Continent properties typically averages 88-92% of the WTI price.

Note 3:

Oil sales from our operations in Malaysia typically sell at a slight discount to Tapis, or about 90-95% of WTI. Oil sales from our operations in China typically sell at $4-$6 per barrel less than the WTI price.

Note 4:

Guidance for production taxes determined using $78/Bbl oil and $4/MMBtu gas.

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

September 30,

For the

Nine Months Ended

September 30,

2010

2009

2010

2009

Oil and gas revenues

$  449

$  375

$  1,355

$  924

Operating expenses:

 Lease operating

86

64

237

192

 Production and other taxes

21

14

77

38

 Depreciation, depletion and amortization

156

144

463

440

 General and administrative

40

40

117

106

  Ceiling test writedown

—

—

—

1,344

 Other

—

1

10

8

   Total operating expenses

303

263

904

2,128

Income (loss) from operations

146

112

451

(1,204)

Other income (expenses):

 Interest expense

(39)

(31)

(116)

(95)

 Capitalized interest

15

13

43

39

 Commodity derivative income (expense)

131

(8)

414

189

 Other

1

(1)

2

4

   Total other income (expenses)

108

(27)

343

137

Income (loss) before income taxes

254

85

794

(1,067)

Income tax provision (benefit)

93

7

293

(412)

Net income (loss)

$  161

$  78

$  501

$  (655)

Income (loss) per share:

Basic --

$  1.22

$  0.59

$  3.80

$  (5.06)

Diluted --

$  1.20

$  0.58

$  3.75

$  (5.06)

Weighted average number of shares outstanding

  for basic income (loss) per share

132

130

132

129

Weighted average number of shares outstanding

  for diluted income (loss) per share *

134

132

134

129

* Had we recognized net income for the nine month period ended September 30, 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)

September 30,

2010

December 31,

2009

ASSETS

Current assets:

 Cash and cash equivalents

$  128

$  78

 Derivative assets

296

269

 Other current assets

436

546

   Total current assets

860

893

Property and equipment, net (full cost method)

6,184

5,247

Derivative assets

73

19

Other assets

109

95

   Total assets

$  7,226

$  6,254

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

$  876

$  873

Other liabilities

201

142

Long-term debt

2,169

2,037

Deferred taxes

680

434

   Total long-term liabilities

3,050

2,613

Commitments and contingencies

—

—

STOCKHOLDERS' EQUITY

Common stock

1

1

Additional paid-in capital

1,430

1,389

Treasury stock

(41)

(33)

Accumulated other comprehensive loss

(13)

(11)

Retained earnings

1,923

1,422

   Total stockholders' equity

3,300

2,768

   Total liabilities and stockholders' equity

$  7,226

$  6,254

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited, in millions)

For the

Nine Months Ended

September 30,

2010

2009

Cash flows from operating activities:

 Net income (loss)

$  501

$  (655)

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

  Depreciation, depletion and amortization

463

440

 Deferred tax provision (benefit)

259

(448)

 Stock-based compensation

16

22

 Ceiling test writedown

—

1,344

 Commodity derivative income

(414)

(189)

 Cash receipts on derivative settlements

345

701

1,170

1,215

 Changes in operating assets and liabilities

137

2

     Net cash provided by operating activities

1,307

1,217

Cash flows from investing activities:

 Additions to oil and gas properties and other, net

(1,202)

(1,052)

 Acquisitions of oil and gas properties

(209)

(9)

 Proceeds from sales of oil and gas properties

14

—

 Redemptions of investments

5

18

     Net cash used in investing activities

(1,392)

(1,043)

Cash flows from financing activities:

 Net repayments under credit arrangements

(384)

(107)

 Net proceeds from issuance of senior subordinated notes

686

—

 Repayment of senior notes

(175)

—

 Other

8

5

   Net cash provided by (used in) financing activities

135

(102)

Increase in cash and cash equivalents

50

72

Cash and cash equivalents, beginning of period

78

24

Cash and cash equivalents, end of period

$  128

$  96

3Q10

(in millions)

Net income

$  161

  Net unrealized gain on commodity derivatives ⁽¹⁾

(20)

  Income tax adjustment for above item

7

Earnings stated without the effect of the above item

$  148

(1) The determination of "Net unrealized gain on commodity derivatives" for the third quarter of 2010 is as follows:

3Q10

(in millions)

   Commodity derivative income

$  131

   Cash receipts on derivative settlements

(118)

   Option premiums associated with derivatives settled

     during the period

7

         Net unrealized gain on commodity derivatives

$  20

3Q10

(in millions)

Net cash provided by operating activities

$  419

  Net change in operating assets and liabilities

(25)

Net cash provided by operating activities before changes

  in operating assets and liabilities

$  394