EXHIBIT 99.1
NEWFIELD ANNOUNCES SECOND QUARTER RESULTS**
YEAR-TO-DATE NATURAL GAS PRODUCTION CLIMBS 26%
FOR IMMEDIATE RELEASE
HOUSTON - (JULY 23, 2003) - NEWFIELD EXPLORATION COMPANY (NYSE:NFX)
today announced its financial and operating results for the second quarter and
year-to-date 2003. The Company also issued estimates of certain significant
operating and financial data for the third quarter of 2003. A conference call to
discuss the results is planned for 8:30 a.m. (CDT), Thursday, July 24. To
participate in the call, dial 719-457-2625 (conference code: 316634). A
listen-only broadcast will also be provided over the Internet. Simply go to the
Investor Relations section at www.newfld.com. An audio replay, as well as a
transcript of the call, will be posted to the Company's website as soon as it
becomes available following the call.
SECOND QUARTER 2003
For the second quarter of 2003, Newfield reported net income of $45.8
million, or $0.82 per share (all per share amounts are on a diluted basis). Two
items negatively impacted results by approximately $0.21 per share for the
quarter:
o redemption of all of the outstanding 6 1/2% convertible trust
preferred securities (QUIPS), in the second quarter, resulted in a
$10.5 million charge ($6.8 million after-tax), approximately $6.5
million of which was redemption premium paid to the holders and the
remainder was the write-off of unamortized issuance costs paid at
the time of the initial offering of the securities in 1999; and
o a ceiling test write-down of $7.3 million ($5.1 million after-tax)
of producing assets offshore Australia. Based on crude oil prices
in effect on June 30, 2003, the unamortized cost of the Australian
properties exceeded the cost center ceiling under full cost
accounting rules, requiring the ceiling test write-down at the end
of the quarter.
Revenues in the second quarter of 2003 were $255.6 million. Net cash
provided by operating activities before changes in operating assets and
liabilities* was $176.3 million in the second quarter of 2003.
This compares to net income in the second quarter of 2002 of $16.3
million, or $0.36 per share. Revenues in the second quarter of 2002 were $161.6
million. Net cash provided by operating activities before changes in operating
assets and liabilities* was $99.7 million in the second quarter of 2002.
The Company's production in the second quarter of 2003, when stated on
a natural gas equivalent basis, increased nearly 20% over the second quarter of
2002 and was up 2% over the first quarter of this year. Newfield produced 56.2
billion cubic feet equivalent (Bcfe), or an
average of 618 million cubic feet equivalent per day, during the second quarter
of 2003. The following tables detail quarterly production and average realized
prices.
PRODUCTION
2Q03 2Q02 % CHANGE
-------------------------------------------
United States
Natural gas (Bcf) 46.8 37.9 23%
Oil and condensate production (MMBbls) 1.58 1.33 19%
Australia
Oil and condensate liftings (MMBbls) -- 0.278 (100%)
Total Production (Bcfe) 56.2 47.5 18%
AVERAGE REALIZED PRICES
2Q03 2Q02 % CHANGE
-------------------------------------------
United States
Natural gas (per Mcf) $4.50 $3.21 40%
Oil and condensate (per Bbl) $27.54 $23.84 16%
Australia
Oil and condensate liftings (per Bbl) -- $25.72 --
Total (per Mcfe) $4.51 $3.37 34%
- -------------------------------------------------------------------------------
Prices shown are net of transportation expense and after hedging. The Company
has not entered into hedging transactions specifically relating to Australian
production.
Stated on a unit of production basis, Newfield's lease operating
expense (LOE) in the second quarter of 2003 was $0.47 per Mcfe. This compares to
LOE of $0.54 per Mcfe in the same period of 2002. Several non-routine repairs in
the Gulf of Mexico increased second quarter 2002 LOE by approximately $4
million. LOE in the second quarter of 2003 was slightly lower than expected due
to the timing of expenditures on well workovers in the Gulf of Mexico, which
were deferred into the third quarter of 2003. Production taxes in the second
quarter of 2003 (including resource rent tax in Australia) were $0.12 per Mcfe
compared to $0.08 per Mcfe in the same period of 2002. Higher production taxes
primarily relate to significantly higher natural gas prices. DD&A expense,
stated on a unit of production basis, in the second quarter of 2003 was $1.77
per Mcfe compared to $1.64 per Mcfe in the second quarter of 2002. The increase
in DD&A expense relates primarily to higher cost reserve additions and the
impact of the adoption of SFAS 143. G&A expenses in the second quarter of 2003
were $0.28 per Mcfe compared to $0.27 per Mcfe in the same period of 2002. G&A
expense in the second quarter of 2003 was negatively impacted by $1.4 million in
payments made to employees of EEX Corporation located in San Antonio, Texas,
upon the closing of that office. G&A expense in the second quarter of 2003 is
net of capitalized direct internal costs of $7.4 million compared to $1.9
million in the second quarter of 2002.
Capital expenditures in the second quarter of 2003 were $106.6 million.
YEAR-TO-DATE 2003
For the first six months of 2003, Newfield posted net income of $110.0
million, or $1.98 per share. Revenues for the first half of 2003 were $534.8
million. This compares to net income of $32.6 million, or $0.73 per share, on
revenues of $309.7 million for the first half of 2002. Net cash provided by
operating activities before changes in operating assets and liabilities* was
$352.2 million in the first half of 2003 compared to $196.4 million in the same
period of 2002.
Production volumes for the first half of 2003 were more than 20% above
the same period last year. The Company produced 111.5 Bcfe in the first six
months of 2003 compared to 91.3 Bcfe in the first six months of the prior year.
The following tables detail production and average realized prices for the first
half of 2003:
YEAR-TO-DATE PRODUCTION
1H03 1H02 % CHANGE
-------------------------------------------
United States
Natural gas (Bcf) 90.8 71.8 26%
Oil and condensate production (MMBbls) 3.10 2.68 16%
Australia
Oil and condensate liftings (MMBbls) 0.358 0.576 (38%)
Total Production (Bcfe) 111.5 91.3 22%
AVERAGE REALIZED PRICES
1H03 1H02 % CHANGE
-------------------------------------------
United States
Natural gas (per Mcf) $4.77 $3.23 48%
Oil and condensate (per Bbl) $28.27 $22.93 23%
Australia
Oil and condensate liftings (per Bbl) $31.86 $23.80 34%
Total (per Mcfe) $4.77 $3.36 42%
- -------------------------------------------------------------------------------
Prices shown are net of transportation expense and after hedging. The Company
has not entered into hedging transactions specifically relating to Australian
production.
In the first half of 2003, LOE, stated on a unit of production basis,
averaged $0.53 per Mcfe, equal to LOE in the same period of 2002. DD&A expense
in the first half of 2003 was $1.76 per Mcfe compared to $1.63 per Mcfe in the
same period of the prior year. The increase in DD&A expense relates primarily to
higher cost reserve additions and the impact of the adoption of SFAS 143. G&A
expense in the first half of 2003 was $0.30 per Mcfe, up 7% when compared to the
prior year expense of $0.28 per Mcfe. G&A expense in the first half of 2003 is
net of capitalized direct internal costs of $14.2 million compared to $4.2
million in the first half of 2002.
Capital spending in the first half of 2003 totaled $230.7 million.
*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:
2Q03 2Q02
-------------------------------
Net cash provided by operating activities $ 211.9 $ 97.8
LESS: (Increase) Decrease in operating assets
and liabilities 35.6 (1.9)
Net cash provided by operating activities
before changes in operating assets and
liabilities $ 176.3 $ 99.7
1H03 1H02
-------------------------------
Net cash provided by operating activities $ 277.5 $ 196.4
LESS: (Increase) Decrease in operating assets
and liabilities (74.7) --
Net cash provided by operating activities
before changes in operating assets and
liabilities $ 352.2 $ 196.4
THIRD QUARTER 2003 ESTIMATES
Below are estimates of production and significant operating and
financial data for the third quarter of 2003. Although the Company believes the
expectations reflected in this forward-looking information are reasonable, such
expectations are based upon assumptions and anticipated results that are subject
to numerous uncertainties. Please see the discussion regarding forward-looking
information at the end of this release.
NATURAL GAS PRODUCTION AND PRICING Newfield's natural gas production in
the third quarter of 2003 is expected to be 44 - 48 Bcf (475 - 525 MMcf/d). The
price received by the Company for its natural gas production from the Gulf of
Mexico and onshore Gulf Coast has typically tracked the Henry Hub Index. Gas
from the Company's Mid-Continent properties has typically sold at a discount of
$0.12 - $0.15 per Mcfe to Henry Hub. Hedging gains or losses will affect price
realizations.
CRUDE OIL PRODUCTION AND PRICING Consolidated oil production in the
third quarter of 2003 is expected to be 1.8 - 2.0 million barrels (19,800 -
22,000 BOPD). Australian oil liftings during the third quarter are expected to
be 342 - 378 thousand barrels (3,700 - 4,100 BOPD). The timing of liftings in
Australia will impact reported production and revenues. The price the Company
receives for its Gulf Coast production has typically averaged about $2 below the
NYMEX West Texas Intermediate (WTI) price. Oil production from the Mid-Continent
has typically sold at a $1.00 - $1.50 per barrel discount to WTI. Australian
crude oil sales are based on the Tapis Benchmark, which has historically been
comparable to WTI. Hedging gains or losses will affect price realizations.
LEASE OPERATING AND OTHER EXPENSES Newfield's LOE is expected to be $40
- - $44 million ($0.69 - $0.76 per Mcfe) in the third quarter of 2003. The
Company's domestic LOE is expected to be $33 - $37 million ($0.62 - $0.69 per
Mcfe). Production and other taxes in the third quarter of 2003 (including
resource rent tax in Australia) are expected to be $12 - $13 million ($0.20 -
$0.22 per Mcfe). These expenses vary and are subject to impact from, among other
things, production volumes and commodity pricing, tax rates, service costs, the
costs of goods and materials and workover activities.
GENERAL AND ADMINISTRATIVE EXPENSE Newfield's G&A expense for the third
quarter of 2003 is expected to be $13 - $15 million ($0.23 - $0.26 per Mcfe),
net of capitalized direct internal costs. Capitalized G&A expense is expected to
be $6 - $8 million. G&A expense includes stock and incentive compensation
expense. Incentive compensation expense depends largely on Newfield's net
income.
INTEREST EXPENSE The non-capitalized portion of the Company's interest
expense for the third quarter of 2003 is expected to be $8 - $10 million ($0.15
- - $0.17 per Mcfe). Current borrowings under the Company's bank facilities are
$140 million. The remainder of long-term
debt consists of three separate issuances of notes that in the aggregate total
$550 million principal amount. Capitalized interest for the third quarter of
2003 is expected to be about $2 - $3 million.
INCOME TAXES Including both current and deferred taxes, the Company
expects its consolidated income tax rate in the third quarter of 2003 to be
about 35 - 38%. About 35% of the tax provision is expected to be deferred.
The Company provides information regarding its outstanding hedging
positions in its annual report and quarterly reports filed with the SEC and in
its electronic publication -- @NFX. This publication can be found on the
Company's web page at http://www.newfld.com. Through the web page, interested
persons may elect to receive @NFX through e-mail distribution.
Newfield Exploration is an independent crude oil and natural gas
exploration and production company. The Company relies on a proven growth
strategy that includes balancing acquisitions with drill bit opportunities.
Newfield's areas of operation include the Gulf of Mexico, the onshore U.S. Gulf
Coast, the Anadarko Basin and offshore northwest Australia.
**Certain of the statements set forth in this release regarding
estimated or anticipated third quarter results and production volumes are
forward looking and are based upon assumptions and anticipated results that are
subject to numerous uncertainties. 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 and the availability of capital
resources, labor conditions and other factors set forth in our Annual Report on
Form 10-K for the year ended December 31, 2002. In addition, the drilling of oil
and gas wells and the production of hydrocarbons are subject to governmental
regulations and operating risks.
Newfield Exploration Company For information, contact:
363 N. Sam Houston Parkway East, Ste. 2020 Steve Campbell
Houston, TX 77060 (281) 847-6081
www.newfld.com info@newfld.com
- -------------- ---------------
###
FOR THE FOR THE
CONSOLIDATED STATEMENT OF INCOME THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA) JUNE 30, JUNE 30,
-------------------------- --------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
OIL AND GAS REVENUES $ 255,552 $ 161,611 $ 534,836 $ 309,650
--------- --------- --------- ---------
OPERATING EXPENSES:
Lease operating 26,582 25,706 58,838 48,759
Production and other taxes 6,532 3,861 19,106 7,271
Transportation 1,859 1,316 3,422 2,647
Depreciation, depletion and amortization 99,660 78,027 196,360 149,234
Ceiling test writedown 7,300 -- 7,300 --
General and administrative 14,865 12,206 31,768 23,973
Gas sales obligation and debt settlements 10,477 -- 20,475 --
Stock compensation 807 757 1,486 1,335
--------- --------- --------- ---------
TOTAL OPERATING EXPENSES 168,082 121,873 338,755 233,219
--------- --------- --------- ---------
INCOME FROM OPERATIONS 87,470 39,738 196,081 76,431
OTHER INCOME (EXPENSES):
Interest expense (14,982) (7,134) (31,668) (14,348)
Capitalized interest 3,899 2,130 7,718 4,273
Dividends on preferred securities of
Newfield Financial Trust I (2,245) (2,336) (4,581) (4,672)
Unrealized commodity derivative expense* (1,629) (5,880) (2,846) (11,525)
Other (3,091) (1,247) (4,320) 569
--------- --------- --------- ---------
(18,048) (14,467) (35,697) (25,703)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 69,422 25,271 160,384 50,728
--------- --------- --------- ---------
Income tax provision 23,607 9,001 56,003 18,132
--------- --------- --------- ---------
Income before cumulative effect of change in
accounting principle 45,815 16,270 104,381 32,596
Cumulative effect of change in accounting
principle** -- -- 5,575 --
--------- --------- --------- ---------
NET INCOME $ 45,815 $ 16,270 $ 109,956 $ 32,596
========= ========= ========= =========
EARNINGS PER SHARE:
BASIC
Income before cumulative effect of change
in accounting principle $ 0.86 $ 0.37 $ 1.98 $ 0.74
Cumulative effect of change in accounting
principle** -- -- 0.11 --
--------- --------- --------- ---------
Net income $ 0.86 $ 0.37 $ 2.09 $ 0.74
========= ========= ========= =========
DILUTED
Income before cumulative effect of change
in accounting principle $ 0.82 $ 0.36 $ 1.88 $ 0.73
Cumulative effect of change in accounting
principle** -- -- 0.10 --
--------- --------- --------- ---------
Net income $ 0.82 $ 0.36 $ 1.98 $ 0.73
========= ========= ========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR BASIC EARNINGS PER SHARE 53,468 44,376 52,679 44,295
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR DILUTED EARNINGS PER SHARE 57,701 48,928 56,956 48,838
- -------------------------------
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.
FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
PRODUCTION DATA JUNE 30, JUNE 30,
-------------------------- --------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Average daily production:
Oil and condensate (Bbls) 17,356 17,651 19,079 17,978
Gas (Mcf) 513.8 416.0 501.4 396.5
Average realized price:
Oil and condensate (Bbls) $ 27.54 $ 24.17 $ 28.64 $ 23.08
Gas (Mcf) $ 4.50 $ 3.21 $ 4.77 $ 3.23
</Table>
<Table>
<Caption>
CONSOLIDATED BALANCE SHEET JUNE 30, DECEMBER 31,
(UNAUDITED, IN THOUSANDS OF DOLLARS) 2003 2002
----------- -----------
ASSETS
Current assets:
Cash & cash equivalents $ 44,423 $ 48,898
Accounts receivable, oil and gas 168,246 130,489
Inventories 14,474 7,910
Commodity derivatives* 11,039 2,655
Deferred taxes 15,031 12,801
Other current assets 28,301 36,074
----------- -----------
Total current assets 281,514 238,827
----------- -----------
Oil and gas properties, net (full cost method) 2,216,820 2,010,005
Assets held for sale 35,000 35,000
Furniture, fixtures and equipment, net 7,877 8,030
Commodity derivatives* 4,057 4,439
Other assets 17,223 19,452
----------- -----------
Total assets $ 2,562,491 $ 2,315,753
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 206,781 $ 246,197
Commodity derivatives* 58,562 49,610
----------- -----------
Total current liabilities 265,343 295,807
----------- -----------
Other liabilities 14,229 16,976
Commodity derivatives* 13,513 10,610
Long-term debt 692,943 709,615
Asset retirement obligation** 161,691 --
Deferred taxes 151,455 129,309
----------- -----------
Total long-term liabilities 1,033,831 866,510
----------- -----------
Company-obligated, mandatorily redeemable,
convertible preferred securities of Newfield
Financial Trust I -- 143,750
----------- -----------
Minority interest -- 455
----------- -----------
STOCKHOLDERS' EQUITY
Common stock 567 526
Additional paid-in capital 781,243 636,317
Treasury stock (26,575) (26,213)
Unearned compensation (12,482) (6,479)
Accumulated other comprehensive income (loss)
Foreign currency translation adjustment 6,722 (3,888)
Commodity derivatives* (32,377) (27,295)
Retained earnings 546,219 436,263
----------- -----------
Total stockholders' equity 1,263,317 1,009,231
----------- -----------
Total liabilities and stockholders' equity $ 2,562,491 $ 2,315,753
=========== ===========
</Table>
- ---------------
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.
<Table>
<Caption>
FOR THE FOR THE
CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED, IN THOUSANDS OF DOLLARS) JUNE 30, JUNE 30,
----------------------------- -----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 45,815 $ 16,270 $ 109,956 $ 32,596
Depreciation, depletion and amortization 99,660 78,027 196,360 149,234
Ceiling test writedown 7,300 -- 7,300 --
Gas sales obligation and debt settlements 10,477 -- 20,475 --
Stock compensation 807 757 1,486 1,335
Unrealized commodity derivative* 1,629 5,880 2,846 11,525
Deferred taxes 10,576 (1,194) 19,333 1,710
Cumulative effect of change in
accounting principle** -- -- (5,575) --
----------- ----------- ----------- -----------
176,264 99,740 352,181 196,400
Changes in operating assets and liabilities 35,591 (1,961) (74,671) 28
----------- ----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 211,855 97,779 277,510 196,428
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties (107,580) (80,494) (231,572) (164,983)
Additions to furniture, fixtures and equipment (513) (731) (2,404) (1,557)
----------- ----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (108,093) (81,225) (233,976) (166,540)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under
credit arrangements 275,000 133,000 1,019,000 261,000
Repayments of borrowings under
credit arrangements (340,000) (168,000) (915,000) (314,000)
Proceeds from issuances of common stock 136,957 1,433 137,683 4,829
Purchases of treasury stock (23) (118) (362) (336)
Re-purchase of secured notes (25,726) -- (59,595) --
Repayments of secured notes -- -- (11,215) --
Deliveries under the gas sales obligation -- -- (8,442) --
Gas sales obligation settlement -- -- (62,017) --
Repayment of QUIPS (148,448) -- (148,448) --
----------- ----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (102,240) (33,685) (48,396) (48,507)
----------- ----------- ----------- -----------
Effect of exchange rate changes on cash
and cash equivalents 315 (340) 387 (334)
----------- ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents 1,837 (17,471) (4,475) (18,953)
Cash and cash equivalents, beginning of period 42,586 25,128 48,898 26,610
----------- ----------- ----------- -----------
Cash and cash equivalents, end of period $ 44,423 $ 7,657 $ 44,423 $ 7,657
=========== =========== =========== ===========
</Table>
- ---------------
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.