Newfield Exploration Reports Second Quarter 2015 Results

2Q15 Actual  

2Q15 Actual Results

Domestic

China

Total

Production/Liftings¹

Crude oil and condensate (MMBbls)

5.5

1.7

7.2

Natural gas (Bcf)

29.8

—

29.8

NGLs (MMBbls)

2.0

—

2.0

Total (MMBOE)

12.4

1.7

14.1

Average Realized Prices^{2, 3}

Crude oil and condensate (per Bbl)

$

64.18

$

60.24

$

63.28

Natural gas (per Mcf)

3.50

—

3.50

NGLs (per Bbl)

19.17

—

19.17

Crude oil equivalent (per BOE)

$

40.34

$

60.24

$

42.71

Operating Expenses:³

Lease operating (in millions)

Recurring

$

50.5

$

17.0

$

67.5

Major (workovers, etc.)

$

5.3

$

0.1

$

5.4

Lease operating (per BOE)

Recurring

$

4.15

$

10.38

$

4.89

Major (workovers, etc.)

$

0.43

$

0.07

$

0.39

Transportation and processing (in millions)

$

51.5

$

—

$

51.5

per BOE

$

4.22

$

—

$

3.72

Production and other taxes (in millions)

$

16.5

$

0.3

$

16.8

per BOE

$

1.35

$

0.19

$

1.21

General and administrative (G&A), net (in millions)

$

49.4

$

1.6

$

51.0

per BOE

$

4.09

$

0.96

$

3.72

Capitalized direct internal costs (in millions)

$

(18.7)

per BOE

$

(1.35)

Other operating expenses, net (in millions)

$

2.9

per BOE

$

0.21

Interest expense (in millions)

$

46.1

per BOE

$

3.34

Capitalized interest (in millions)

$

(7.7)

per BOE

$

(0.56)

Other non-operating (income) expense (in millions)

$

22.4

per BOE

$

1.62

____

Note 1: Represents volumes lifted and sold regardless of when produced. Includes natural gas produced and consumed in operations of 1.9 Bcf during the three months ended June 30, 2015.

Note 2: Average realized prices include the effects of derivative contracts. Excluding these effects, the average realized price for domestic and total natural gas would have been $2.36 per Mcf and the average realized price for our domestic and total crude oil and condensate would have been $47.59 per barrel and $50.49 per barrel, respectively. We did not have any derivative contracts associated with our NGL or China production as of June 30, 2015.

Note 3: All per unit pricing and expenses exclude natural gas produced and consumed in operations.

2015e Production, Cost and Expense Guidance

  Domestic

  China

  Total

Production:

  Oil (Mmbls)

20.9 – 21.5

5.0

25.9 – 26.5

  NGLs (Mmbls)

         7.8 – 8.1

–

      7.8 – 8.1

  Natural gas (Bcf)

       119 – 123

–

    119 – 123

Total (MMboe)

48.5 – 50.0

5.0

53.5 – 55.0

Expenses ($ MM)¹

  LOE²

$258

$61

$319

  Transportation

$200

–

$200

  Production & other taxes

$65

$1

$66

  General & administrative (G&A), net³

$196

$7

$203

  Interest expense

$163

–

$163

Capitalized interest and direct internal costs

($109)

($1)

($110)

Tax rate

37%

60%⁴

42%

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

¹Cost and expenses are expected to be within 5% of the estimates above

²Total LOE includes recurring, major expense and non E&P operating expenses

³Net G&A excludes one-time expenses of an estimated $41mm associated with 1Q15 reduction in force and the announced reorganization

⁴Estimated 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.

3Q15e Production, Cost and Expense Guidance

  Domestic

  China

  Total

Production:

  Oil (Mmbls)

5.3

1.3

6.6

  NGLs (Mmbls)

2.1

–

2.1

  Natural gas (Bcf)

31

–

31

Total (Mmboe)

  12.4 – 12.6

1.3

13.7 – 13.9

Expenses ($ mm)¹

  LOE²

$66

$17

$83

  Transportation

$51

–

$51

  Production & other taxes

$18

–

$18

  General & administrative (G&A), net³

$49

$2

$51

  Interest expense

$36

–

$36

Capitalized interest and direct internal costs

($26)

–

($26)

Tax rate

37%

60%⁴

44%

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

¹Cost and expenses are expected to be within 5% of the estimates above

²Total LOE includes recurring, major expense and non E&P operating expenses

³3Q15e net G&A excludes an estimated $17mm associated with announced reorganization

⁴Estimated 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.

(Unaudited, in millions, except per share data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2015

2014

2015

2014

Oil, gas and NGL revenues

$

469

$

612

$

818

$

1,183

Operating expenses:

   Lease operating

73

80

148

154

   Transportation and processing

52

37

101

74

   Production and other taxes

17

30

30

58

   Depreciation, depletion and amortization

248

213

485

405

   General and administrative

51

68

114

124

   Ceiling test and other impairments

1,521

—

2,313

—

   Other

3

3

7

5

      Total operating expenses

1,965

431

3,198

820

Income (loss) from operations

(1,496)

181

(2,380)

363

Other income (expense):

   Interest expense

(46)

(51)

(90)

(102)

   Capitalized interest

8

13

15

26

   Commodity derivative income (expense)

(10)

(174)

143

(270)

   Other, net

(22)

1

(14)

3

      Total other income (expense)

(70)

(211)

54

(343)

Income (loss) from continuing operations before income taxes

(1,566)

(30)

(2,326)

20

Income tax provision (benefit)

(574)

(8)

(854)

15

Income (loss) from continuing operations

(992)

(22)

(1,472)

5

Income (loss) from discontinued operations, net of tax

—

—

—

257

      Net income (loss)

$

(992)

$

(22)

$

(1,472)

$

262

Earnings (loss) per share:

    Basic:

     Income (loss) from continuing operations

$

(6.09)

$

(0.16)

$

(9.55)

$

0.03

     Income (loss) from discontinued operations

—

—

—

1.89

       Basic earnings (loss) per share

$

(6.09)

$

0.16

$

(9.55)

$

1.92

    Diluted:

     Income (loss) from continuing operations

$

(6.09)

$

(0.16)

$

(9.55)

$

0.03

     Income (loss) from discontinued operations

—

—

—

1.87

       Diluted earnings (loss) per share

$

(6.09)

$

0.16

$

(9.55)

$

1.90

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

163

136

154

136

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

163

136

154

138

CONDENSED CONSOLIDATED BALANCE SHEET

 (Unaudited, in millions)

June 30,

December 31,

2015

2014

ASSETS

Current assets:

     Cash and cash equivalents

$

42

$

14

     Derivative assets

353

431

     Other current assets

490

495

         Total current assets

885

940

Oil and gas properties, net (full cost method)

6,134

8,232

Derivative assets

168

190

Other assets

271

236

         Total assets

$

7,458

$

9,598

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Derivative liabilities

$

5

$

8

     Other current liabilities

840

1,093

         Total current liabilities

845

1,101

Other liabilities

46

45

Derivative liabilities

4

—

Long-term debt

2,450

2,892

Asset retirement obligations

187

183

Deferred taxes

669

1,484

         Total long-term liabilities

3,356

4,604

Stockholders' Equity:

Common stock, treasury stock and additional paid-in capital

2,403

1,567

Accumulated other comprehensive gain (loss)

(1)

(1)

Retained earnings

855

2,327

      Total stockholders' equity

3,257

3,893

      Total liabilities and stockholders' equity

$

7,458

$

9,598

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions)

Six Months Ended

June 30,

2015

2014

Cash flows from operating activities:

  Net income (loss)

$

(1,472)

$

262

Adjustments to reconcile net income (loss) to net cash

  provided by (used in) operating activities:

  Depreciation, depletion and amortization

485

437

  Deferred tax provision (benefit)

(872)

153

  Stock-based compensation

25

35

  Unrealized (gain) loss on derivative contracts

101

184

  Ceiling test and other impairments

2,313

—

  Gain on sale of Malaysia business

—

(388)

  Other, net

22

(2)

602

681

Changes in operating assets and liabilities

(25)

52

      Net cash provided by (used in) operating activities

577

733

Cash flows from investing activities:

   Additions to oil and gas properties and other

(927)

(1,036)

   Proceeds from sales of oil and gas properties

29

12

   Proceeds received from sale of Malaysia business, net

—

809

   Redemptions of investments

—

39

      Net cash provided by (used in) investing activities

(898)

(176)

Cash flows from financing activities:

   Net proceeds (repayments) under credit arrangements

(446)

(618)

   Proceeds from issuance of senior notes

691

—

   Repayment of senior subordinated notes

(700)

—

   Proceeds from issuances of common stock, net

817

2

   Other, net

(13)

—

      Net cash provided by (used in) financing activities

349

(616)

Increase (decrease) in cash and cash equivalents

28

(59)

Cash and cash equivalents, beginning of period

14

95

Cash and cash equivalents, end of period

$

42

$

36

2Q15

(in millions)

Net Income (loss)

$

(992)

Ceiling test and other impairments

1,521

Unrealized (gain) loss on derivative contracts⁽¹⁾

133

Restructuring related costs and reduction in force

5

Premium on debt redemption

24

Unamortized debt issuance costs and discount from redemption

8

Income tax adjustment for above items 

(624)

Earnings stated without the effect of the above items 

$

75

      (in millions)

Net cash provided by operating activities

$

372

   Net change in operating assets and liabilities

(25)

Net cash provided by operating activities before changes

in operating assets and liabilities

$

347