EXHIBIT 99.1
NEWFIELD REPORTS FOURTH QUARTER AND FULL-YEAR 2003 RESULTS**
FOR IMMEDIATE RELEASE
HOUSTON - (FEBRUARY 11, 2004) -- NEWFIELD EXPLORATION COMPANY (NYSE:NFX)
today announced financial and operating results for the fourth quarter and
full-year 2003. A 2004 capital budget of $600 million (excluding acquisitions)
also was announced, as well as financial and operational guidance for the first
quarter of 2004. The Company will hold a conference call at 8:30 a.m. CST on
Thursday, February 12, 2004. To participate in the call, please visit the
Company's web site at www.newfld.com.
HIGHLIGHTS INCLUDE:
o Increased 2003 production volumes 21%. Production growth due to a
combination of acquisitions and drilling success.
o Replaced 163% of 2003 production with the addition of 359 Bcfe of
new reserves. Approximately 108% of 2003 production was replaced
through discoveries and extensions. Reserves increased to 1.32
trillion cubic feet equivalent (Tcfe). Asset diversification
continued, with about 59% of the Company's total reserves now
located onshore and 41% in the Gulf of Mexico.
o Drilled 200 total wells within a risk/reward-balanced portfolio.
Drilled a record 69 wells in the Onshore Gulf Coast region and 95
wells in the Mid-Continent.
o Announced the Company's first deepwater discovery in the Gulf of
Mexico with the Rigel Field and signed a joint venture agreement to
develop the deepwater Glider Field.
o Gained momentum in international program. Acquired first assets in
UK North Sea and was awarded license area in Southern Gas Basin. In
China's Bohai Bay, successful appraisal drilling was conducted in
two oil fields. Newfield believes the fields are commercial and is
working on the required development plan filings with the Chinese
government.
o Announced 2004 capital budget of $600 million. The program includes
a record $230 million for exploration. Drilling plans include 25-35
wells in the Gulf of Mexico (including 6-8 deep shelf wells and 3-4
in deepwater), 45-70 wells onshore Gulf Coast, a record 160 wells in
the Mid-Continent and 4-6 wells internationally.
Newfield President and CEO David A. Trice said, "We made great strides in
2003 as we continued to diversify our asset base and execute our strategy. We
once again replaced our production with the addition of new reserves.
Importantly, our prospecting and drilling efforts in 2003 set up a solid
inventory of prospects for 2004. Our 2004 drilling inventory offers more
reserve exposure than we have ever had at Newfield. Our exploration efforts have
grown and we will invest a record amount to test impact prospects along the Gulf
Coast, in deepwater, in the deep shelf and internationally. We enter 2004 with
financial strength underpinned by an attractive hedging position and a portfolio
that is expected to provide another year of growth in reserves and production."
FOURTH QUARTER 2003 FINANCIAL RESULTS
For the fourth quarter of 2003, Newfield reported net income from
continuing operations of $40.2 million, or $0.71 per share (all per share
amounts are on a diluted basis). Stated without the effect of a $6.8 million
($4.4 million after-tax), or $0.08 per share, charge related to unrealized
commodity derivative transactions (SFAS 133), net income for the fourth quarter
of 2003 was $44.6 million, or $0.79 per share. Earnings in the quarter were
negatively impacted by an adjustment to the Company's accrual for estimated
deferred income tax expense. As a result, the effective tax rate for the fourth
quarter was 44%. Revenues in the fourth quarter of 2003 were $245 million. Net
cash provided by continuing operating activities before changes in operating
assets and liabilities was $195.4 million in the fourth quarter of 2003. See
Explanation and Reconciliation of Non-GAAP Financial Measures.
This compares to net income from continuing operations in the fourth
quarter of 2002 of $28.8 million, or $0.59 per share. Stated without the effect
of a $3.7 million ($2.4 million after-tax), or $0.04 per share, charge related
to unrealized commodity derivative transactions (SFAS 133), net income from
continuing operations for the fourth quarter of 2002 was $31.2 million, or $0.63
per share. Including income from discontinued operations, net income in the
fourth quarter of 2002 was $31.9 million, or $0.65 per share. Revenues for the
fourth quarter of 2002 were $189 million. Net cash provided by continuing
operating activities before changes in operating assets and liabilities was
$125.2 million in the fourth quarter of 2002. See Explanation and Reconciliation
of Non-GAAP Financial Measures.
FOURTH QUARTER 2003 PRODUCTION
Newfield's production in the fourth quarter of 2003 was 55.1 Bcfe, a 13%
increase over fourth quarter 2002 production of 48.6 Bcfe, which includes
production from discontinued operations of 2.3 Bcfe. The following tables detail
production and average realized prices from continuing operations for the fourth
quarters of 2003 and 2002.
4Q03 4Q02 % CHANGE
---- ---- --------
Natural gas (Bcf) 46.1 38.2 21%
Oil and condensate production (MMBbls) 1.49 1.37 9%
Total Production (Bcfe) 55.1 46.3 19%
FOURTH QUARTER AVERAGE REALIZED PRICES+
4Q03 4Q02 % CHANGE
------ ------ --------
Natural gas (per Mcf) $ 4.39 $ 3.98 10%
Oil and condensate (per Bbl) $27.47 $26.21 5%
Natural gas equivalent (per Mcfe) $ 4.42 $ 4.05 9%
- --------------------------------------------------------------------------------
+Prices shown are net of all applicable transportation expenses, which reduced
the realized price of natural gas by $0.02 per Mcf for the fourth quarters of
2003 and 2002. The realized price of oil and condensate was reduced by $0.27 and
$0.32 per barrel for the fourth quarters of 2003 and 2002, respectively. Average
realized prices include the effects of hedging.
Stated on a unit of production basis, Newfield's lease operating expense
(LOE) in the fourth quarter of 2003 was $0.61 per Mcfe, slightly higher than LOE
from continuing operations of $0.59 in the same period of 2002. Production taxes
in the fourth quarter of 2003 increased to $0.12 per Mcfe compared to production
taxes from continuing operations of $0.05 per Mcfe in the same period of 2002.
DD&A expense, stated on a unit of production basis, in the fourth quarter of
2003 was $1.84 per Mcfe compared to DD&A expense from continuing operations of
$1.71 per Mcfe in the fourth quarter of 2002. G&A expense (including stock
compensation) in the fourth quarter of 2003 was $0.28 per Mcfe compared to G&A
expense from continuing operations of $0.36 per Mcfe in the same period of 2002.
G&A expense in the fourth quarter of 2003 is net of capitalized direct internal
costs of $6.3 million compared to $1.9 million in the fourth quarter of 2002.
Capital expenditures in the fourth quarter of 2003 were $165.6 million.
FULL-YEAR 2003 FINANCIAL RESULTS
For 2003, Newfield reported net income from continuing operations of
$210.9 million, or $3.77 per share, on revenues of $1.0 billion. The following
items negatively impacted earnings from continuing operations during 2003:
o a $10.0 million one-time charge was recorded in the first quarter of
2003 ($6.5 million after-tax), in connection with the unwind of the
gas forward sales obligation inherited through the acquisition of
EEX in late 2002; and
o the redemption of all outstanding 6 1/2% convertible trust preferred
securities (QUIPS), in the second quarter of 2003 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.
Including the loss from discontinued operations (see Discontinued
Operations discussion below) and the gain from the cumulative effect of the
adoption of SFAS 143, net income was $199.5 million, or $3.57 per share for
2003. Net cash provided by continuing operating activities before changes in
operating assets and liabilities in 2003 was $734.3 million. See Explanation and
Reconciliation of Non-GAAP Financial Measures.
For 2002, Newfield reported net income from continuing operations of $68.7
million, or $1.51 per share, on revenues of $626.8 million. Including income
from discontinued operations, net income was $73.8 million, or $1.61 per share,
for 2002. Net cash provided by continuing operating activities before changes in
operating assets and liabilities in 2002 was $397.5 million. See Explanation and
Reconciliation of Non-GAAP Financial Measures.
2003 PRODUCTION
Newfield's production for 2003, including production from discontinued
operations, was 21% above 2002 levels. Including production from discontinued
operations the Company produced 223.5 Bcfe in 2003 compared to 184.1 Bcfe in
2002. The following tables detail production and average realized prices from
continuing operations for 2003 and 2002:
2003 2002 % CHANGE
------ ------ --------
Natural gas (Bcf) 184.2 144.7 27%
Oil and condensate production (MMBbls) 6.05 5.23 16%
Total Production (Bcfe) 220.6 176.1 25%
2003 AVERAGE REALIZED PRICES+
2003 2002 % CHANGE
------ ------ --------
Natural gas (per Mcf) $ 4.58 $ 3.42 34%
Oil and condensate (per Bbl) $27.65 $24.21 14%
Natural gas equivalent (per Mcfe) $ 4.58 $ 3.53 30%
- --------------------------------------------------------------------------------
+Prices shown are net of all applicable transportation expenses, which reduced
the realized price of natural gas by $0.02 per Mcf and $0.03 per Mcf for the
years ended 2003 and 2002, respectively. The realized price of oil and
condensate was reduced by $0.34 and $0.35 per barrel for the years ended 2003
and 2002, respectively. Average realized prices include the effects of hedging.
Stated on a unit of production basis, Newfield's LOE from continuing
operations in 2003 was $0.54 per Mcfe compared to 2002 LOE of $0.52 per Mcfe.
Production taxes from continuing operations in 2003 increased to $0.14 per Mcfe
compared to $0.08 per Mcfe in 2002. DD&A expense from continuing operations in
2003, stated on a unit of production basis, was $1.79 per Mcfe compared to $1.68
per Mcfe in 2002. G&A expense from continuing operations (including stock
compensation) in 2003 was $0.28 per Mcfe compared to $0.31 per Mcfe in 2002. G&A
expense in 2003 is net of capitalized direct internal costs of $26.7 million
compared to $7.0 million in 2002.
DISCONTINUED OPERATIONS
During the third quarter of 2003, the Company sold Newfield Exploration
Australia Ltd., which owned all of Newfield's properties in Australia. As a
result of the sale, Newfield recognized an after-tax loss of $9.9 million, or
about $0.18 per share. In addition to this loss, the loss from discontinued
operations also included a second quarter 2003 ceiling test writedown of
producing assets of $7.3 million ($5.1 million after-tax).
FINDING AND DEVELOPMENT COSTS
United States: Newfield added 356 Bcfe with its core domestic program
(excluding property sales of 3 Bcfe), replacing 161% of 2003 production. Total
domestic investment in 2003 was $631 million, including acquisitions.
Approximately $66 million was spent on seismic data and leasehold acquisition.
International: Newfield invested $16 million in international operations
in 2003. Approximately $9 million was invested in North Sea activities and
approximately $5 million was spent on the appraisal of two oil fields in China's
Bohai Bay.
RESERVE REPLACEMENT AND PROVED RESERVES
During 2003, Newfield's worldwide reserve replacement was 163% of
production from continuing operations of 220.6 Bcfe. The Company's reserve
replacement in 2002 was 255% of total production. 2003 marks the 14th
consecutive year that Newfield has more than replaced annual production with
proved reserves.
At the end of 2003, Newfield had proved reserves of 1.32 Tcfe, which is
net of the impact of property sales of approximately 24 Bcfe (21 Bcfe of which
relates to discontinued operations in Australia). Proved reserves at year-end
2003 increased 9% over 2002 proved reserves of 1.21 Tcfe. At year-end 2003,
Newfield's reserves were 83% natural gas compared to 81% natural gas
at year-end 2002. Only 13% of Newfield's proved reserves are "proved
undeveloped," among the lowest percentage in the industry.
EXPLANATION AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Earnings stated without the effect of unrealized commodity derivative
transactions (SFAS 133), a non-GAAP financial measure, exclude certain items
that affect the comparability of operating results. Earnings without the effect
of these items are presented because the timing and amount of these items cannot
be reasonably estimated and because earnings without the effect of these items
are more comparable to earnings estimates provided by securities analysts.
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 from continuing
operations before changes in operating assets and liabilities to net cash
provided by operating activities from continuing operations is shown below:
4Q03 4Q02
------- -------
Net cash provided by operating activities
from continuing operations $ 200.7 $ 106.4
LESS: (Increase) decrease in operating assets
and liabilities 5.3 (18.8)
Net cash provided by operating activities
from continuing operations before changes in
operating assets and liabilities $ 195.4 $ 125.2
YTD03 YTD02
------- -------
Net cash provided by operating activities
from continuing operations $ 659.2 $ 383.3
LESS: (Increase) decrease in operating assets
and liabilities (75.1) (14.2)
Net cash provided by operating activities
from continuing operations before changes
in operating assets and liabilities $ 734.3 $ 397.5
2004 PLANNED CAPITAL SPENDING
Newfield announced a 2004 capital budget of $600 million, excluding
acquisitions. A record $230 million is being allocated to exploration.
Development spending is expected to be about $315 million.
2004 ESTIMATES
Below are production estimates for the full-year 2004 and estimates for
significant operating and financial data for the first quarter of 2004. 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.
2004 PRODUCTION As previously announced, Newfield expects its 2004
production to be in the range of 225 - 235 Bcfe, an increase of 2 - 5% over 2003
production of 220.6 Bcfe.
About 50% of the Company's production in 2004 is expected to come from the
Gulf of Mexico. About 30-35% of total production in 2004 is expected to come
from the onshore Gulf Coast region. The Mid-Continent region accounts for 15-20%
of expected 2004 production.
FIRST QUARTER 2004 ESTIMATES
NATURAL GAS PRODUCTION AND PRICING The Company's natural gas production in
the first quarter of 2004 is expected to be 44 - 48 Bcf (480 - 530 MMcf/d). The
price the Company receives for natural gas production from the Gulf of Mexico
and onshore Gulf Coast has typically tracked the Henry Hub Index. Gas from
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 Oil production in the first quarter of
2004 is expected to be 1.3 - 1.5 million barrels (14,800 - 16,500 BOPD). The
price the Company receives for 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. Hedging gains or losses will affect price realizations.
LEASE OPERATING AND OTHER EXPENSES LOE is expected to be $31 - $35 million
($0.60 - $0.66 per Mcfe) in the first quarter of 2004. Production taxes in the
first quarter of 2004 are expected to be $10 - $11 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 G&A expense for the first quarter of
2004 is expected to be $15 - $17 million ($0.28 - $0.30 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 net income.
INTEREST EXPENSE The non-capitalized portion of the Company's interest
expense for the first quarter of 2004 is expected to be $5 - $6 million ($0.09 -
$0.10 per Mcfe). Current borrowings under the Company's bank facilities are $85
million. The remainder of long-term debt consists of three separate issuances of
notes that in the aggregate total $550 million in principal amount. Capitalized
interest for the first quarter of 2004 is expected to be about $6 - $7 million.
INCOME TAXES Including both current and deferred taxes, Newfield expects
its consolidated income tax rate in the first quarter of 2004 to be about 35 -
38%. About 45% 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 Newfield's
web page at http://www.newfld.com. Through the web page, you may elect to
receive @NFX through e-mail distribution.
Newfield Exploration Company is an independent crude oil and natural gas
exploration and production company. We rely on a proven growth strategy that
includes balancing acquisitions with drill bit opportunities. Our areas of
operation include the Gulf of Mexico, the onshore U.S. Gulf Coast, the Anadarko
and Arkoma Basins and select international ventures.
**Certain of the statements set forth in this release regarding planned capital
expenditures, drilling plans, the commerciality and development of discoveries
in China and estimated or anticipated full year 2004 production volumes and
first 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, the availability of capital resources, labor
conditions and other factors set forth in the Company's 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
###
CONSOLIDATED STATEMENT OF INCOME FOR THE FOR THE
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
OIL AND GAS REVENUES $ 244,879 $ 188,909 $ 1,016,986 $ 626,835
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Lease operating 33,483 27,471 119,290 90,768
Production and other taxes 6,578 2,276 31,737 13,285
Transportation 1,313 1,331 6,359 5,708
Depreciation, depletion and amortization 101,294 79,116 394,701 295,054
General and administrative (1) 15,628 16,596 61,636 54,363
Gas sales obligation settlement and redemption of securities -- -- 20,475 --
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 158,296 126,790 634,198 459,178
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 86,583 62,119 382,788 167,657
OTHER INCOME (EXPENSES):
Interest expense (12,778) (13,171) (57,803) (34,515)
Capitalized interest 4,215 2,286 15,943 8,839
Dividends on preferred securities of
Newfield Financial Trust I -- (2,336) (4,581) (9,344)
Unrealized commodity derivative expense* (6,825) (3,670) (6,102) (29,147)
Other 418 536 1,374 4,485
----------- ----------- ----------- -----------
(14,970) (16,355) (51,169) (59,682)
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES 71,613 45,764 331,619 107,975
Income tax provision 31,459 16,967 120,713 39,229
----------- ----------- ----------- -----------
INCOME FROM CONTINUING OPERATIONS 40,154 28,797 210,906 68,746
Income (loss) from discontinued operations, net of tax -- 3,083 (16,992) 5,101
----------- ----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 40,154 31,880 193,914 73,847
Cumulative effect of change in accounting principle, net of tax** -- -- 5,575 --
----------- ----------- ----------- -----------
NET INCOME $ 40,154 $ 31,880 $ 199,489 $ 73,847
=========== =========== =========== ===========
EARNINGS PER SHARE:
BASIC
Income from continuing operations $ 0.72 $ 0.61 $ 3.88 $ 1.52
Income (loss) from discontinued operations -- 0.07 (0.31) 0.12
Cumulative effect of change in accounting principle,
net of tax** -- -- 0.10 --
----------- ----------- ----------- -----------
Net income $ 0.72 $ 0.68 $ 3.67 $ 1.64
=========== =========== =========== ===========
DILUTED
Income from continuing operations $ 0.71 $ 0.59 $ 3.77 $ 1.51
Income (loss) from discontinued operations -- 0.06 (0.30) 0.10
Cumulative effect of change in accounting principle,
net of tax** -- -- 0.10 --
----------- ----------- ----------- -----------
Net income $ 0.71 $ 0.65 $ 3.57 $ 1.61
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR BASIC EARNINGS PER SHARE 56,069 47,227 54,347 45,096
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR DILUTED EARNINGS PER SHARE 56,643 51,713 56,744 49,589
- ----------
(1) Includes stock compensation of $944 and $735 for the three months ended
December 31, 2003 and 2002, respectively and $3,059 and $2,801 for the
year ended December 31, 2003 and 2002, respectively.
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.
PRODUCTION DATA FROM CONTINUING OPERATIONS FOR THE FOR THE
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Average daily production:
Oil and condensate (Bbls) 16,230 14,846 16,586 14,325
Gas (Mcf) 501.3 414.7 504.7 396.4
Average realized price:
Oil and condensate (Bbls) $ 27.47 $ 26.21 $ 27.65 $ 24.21
Gas (Mcf) $ 4.39 $ 3.98 $ 4.58 $ 3.42
</Table>
<Table>
<Caption>
CONSOLIDATED BALANCE SHEET DECEMBER 31, DECEMBER 31,
(UNAUDITED, IN THOUSANDS OF DOLLARS) 2003 2002
------------ ------------
ASSETS
Current assets:
Cash & cash equivalents $ 15,347 $ 33,798
Accounts receivable, oil and gas 134,774 125,670
Inventories 553 1,260
Derivative assets * 13,786 2,655
Deferred taxes 12,893 13,023
Other current assets 61,563 30,788
Assets of discontinued operations -- 31,633
----------- -----------
Total current assets 238,916 238,827
----------- -----------
Oil and gas properties, net (full cost method) 2,418,500 1,986,912
Floating production system and pipelines 35,000 35,000
Furniture, fixtures and equipment, net 5,875 7,317
Derivative assets * 2,223 4,439
Other assets 16,197 19,387
Goodwill 16,378 --
Assets of discontinued operations -- 23,871
----------- -----------
Total assets $ 2,733,089 $ 2,315,753
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 255,522 $ 246,197
Derivative liabilities* 44,696 49,610
----------- -----------
Total current liabilities 300,218 295,807
----------- -----------
Other liabilities 13,203 15,949
Derivative liabilities * 13,244 10,610
Long-term debt 643,459 709,615
Asset retirement obligation ** 151,548 --
Deferred taxes 242,839 124,777
Liabilities of discontinued operations -- 5,559
----------- -----------
Total long-term liabilities 1,064,293 866,510
----------- -----------
Company-obligated, mandatorily redeemable,
convertible preferred securities of Newfield
Financial Trust I -- 143,750
Minority interest -- 455
STOCKHOLDERS' EQUITY
Common stock 571 526
Additional paid-in capital 796,256 636,317
Treasury stock (26,679) (26,213)
Unearned compensation (10,912) (6,479)
Accumulated other comprehensive income (loss)
Foreign currency translation adjustment 851 (3,888)
Commodity derivatives * (26,428) (27,295)
Minimum pension liability (833) --
Retained earnings 635,752 436,263
----------- -----------
Total stockholders' equity 1,368,578 1,009,231
----------- -----------
Total liabilities and stockholders' equity $ 2,733,089 $ 2,315,753
=========== ===========
</Table>
- ----------
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.
<Table>
<Caption>
CONSOLIDATED STATEMENT OF FOR THE FOR THE
CASH FLOWS THREE MONTHS ENDED TWELVE MONTHS ENDED
(UNAUDITED, IN THOUSANDS OF DOLLARS) DECEMBER 31, DECEMBER 31,
------------------------------ ------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 40,154 $ 31,880 $ 199,489 $ 73,847
(Income) loss from discontinued operations,
net of tax -- (3,083) 16,992 (5,101)
Depreciation, depletion and amortization 101,294 79,116 394,701 295,054
Gas sales obligation settlement and redemption
of securities -- -- 20,475 --
Stock compensation 944 735 3,059 2,801
Unrealized derivative expense * 6,825 3,670 6,102 29,147
Deferred taxes 46,153 12,906 99,066 1,727
Cumulative effect of change in
accounting principle ** -- -- (5,575) --
----------- ----------- ----------- -----------
195,370 125,224 734,309 397,475
Changes in operating assets and liabilities 5,282 (18,825) (75,142) (14,218)
----------- ----------- ----------- -----------
Net cash provided by continuing activities 200,652 106,399 659,167 383,257
Net cash provided by discontinued activities -- 1,695 10,339 20,202
----------- ----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 200,652 108,094 669,506 403,459
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of business, net of cash acquired 1,585 (204,411) (90,157) (204,411)
Proceeds from sale of business -- -- 9,678 --
Additions to oil and gas properties (172,256) (77,428) (530,898) (295,004)
Additions to furniture, fixtures and equipment (593) (374) (3,331) (2,401)
----------- ----------- ----------- -----------
Net cash used in continuing activities (171,264) (282,213) (614,708) (501,816)
Net cash used in discontinued activities -- (65) (3,085) (16,297)
----------- ----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (171,264) (282,278) (617,793) (518,113)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under
credit arrangements 283,500 164,700 1,569,000 654,700
Repayments of borrowings under
credit arrangements (329,500) (189,700) (1,510,000) (747,700)
Proceeds from issuances of common stock 7,157 1,957 149,304 7,787
Purchases of treasury stock (63) (53) (465) (419)
Proceeds from issuance of senior subordinated
notes -- 247,920 -- 247,920
Repurchase of secured notes -- -- (63,068) --
Repayments of secured notes -- (23,586) (11,215) (23,586)
Deliveries under the gas sales obligation -- (1,672) (8,442) (1,672)
Gas sales obligation settlement -- -- (62,017) --
Redemption of trust preferred securities -- -- (148,449) --
----------- ----------- ----------- -----------
Net cash provided by (used in) continuing
activities (38,906) 199,566 (85,352) 137,030
Net cash provided by (used in) discontinued
activities -- -- -- --
----------- ----------- ----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (38,906) 199,566 (85,352) 137,030
----------- ----------- ----------- -----------
Effect of exchange rate changes on cash
and cash equivalents (105) (178) 88 (88)
----------- ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents (9,623) 25,204 (33,551) 22,288
Cash and cash equivalents from continuing
operations, beginning of period 24,970 9,761 33,798 8,668
Cash and cash equivalents from discontinued
operations, beginning of period -- 13,933 15,100 17,942
----------- ----------- ----------- -----------
Cash and cash equivalents, end of period $ 15,347 $ 48,898 $ 15,347 $ 48,898
=========== =========== =========== ===========
</Table>
- ----------
* Associated with SFAS 133.
** Associated with the adoption of SFAS 143.