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Newfield Exploration Announces Intent to Pursue Strategic Alternatives for its International Assets; Provides 2012 Year-End Business Update
- Fourth Quarter 2012 Production Exceeds Guidance, Company Produces 50 million BOE in 2012
By: PR Newswire
Feb. 13, 2013 06:27 PM
THE WOODLANDS, Texas, Feb. 13, 2013 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced that its Board of Directors has authorized the evaluation of strategic alternatives for the Company's international assets, which consist of offshore oil and natural gas developments in Malaysia and China, and has provided significant updates on year-end results.
"The decision to pursue alternatives for Newfield's international assets follows a comprehensive review of the Company's strategy, asset base and future direction with our Board of Directors," said Lee K. Boothby, Newfield Chairman, President and CEO. "This action reflects the confidence we have in our domestic portfolio and the substantial opportunities we see across our liquids-rich domestic resource areas, which include the Uinta basin, the Cana Woodford, the Williston basin and the Eagle Ford. Our Company has evolved and adapted through the successful execution of a number of important transitions and we believe that now is the right time to become a North American-focused operator.
"During 2012, we completed our transformation to an oil-focused company by growing our liquids volumes and as a result, about 55% of our 2013 volumes are expected to come from liquids production. We are allocating substantially all of our capital to liquids-related projects, while we focus on improving our future returns and profitability. Over the last four years, we have delivered a CAGR of more than 20% in domestic liquids production. We are confident in Newfield's ability to execute at every level of the Company and to continue delivering exceptional domestic liquids growth into the future."
Newfield has engaged Goldman, Sachs & Co. as its advisor to lead the process related to exploring strategic opportunities for its international assets.
Fourth Quarter and Full-Year 2012:
Newfield produced 50 million BOE in 2012, including 11.9 million BOE in the fourth quarter of 2012. Full-year production exceeded the Company's most recent guidance by approximately 0.5 million BOE.
Newfield incurred a $1.5 billion non-cash full cost ceiling test writedown associated with the carrying value of Newfield's domestic proved reserves. The non-cash writedown relates primarily to low natural gas prices and the sale of non-strategic assets.
During the fourth quarter of 2012, Newfield also incurred a non-cash charge for deferred income taxes of approximately $550 million. The charge was primarily related to the Company's focus on U.S. operations and its repatriation of accumulated profits from its international subsidiaries. In December 2012, the Company used repatriated cash to reduce borrowings under its revolving credit facility.
Newfield's actions related to its international assets and year-end proved reserves will impact financial results for the fourth quarter of 2012. The Company expects to report a net loss of approximately $1.2 billion or $8.80 per share.
Year-End 2012 Proved and Probable Reserves:
Proved reserves at year-end 2012 were 566 million BOE, down 13% from 652 million BOE at year-end 2011. The decrease relates primarily to low natural gas prices, the sale of non-strategic assets in 2012 and produced volumes. This decrease was partially offset by the addition of 86 million BOE of reserves through the Company's active drilling programs. Reserves were determined using SEC pricing of $2.76 per MMBtu of natural gas and $94.84 per Bbl of oil.
Approximately 90% of Newfield's proved reserves are now located in domestic resource plays and 48% of proved reserves are oil and liquids. Proved developed producing reserves now represent 45% of total proved reserves. Price-related revisions totaled 616 Bcfe and were due to low natural gas prices. The present value of the Company's proved reserves at year-end (discounted at 10%) was $5.9 billion ($4.4 billion after-tax).
Probable reserves at year-end 2012 were 283 million BOE, or 34% lower than year-end 2011. Liquids increased to 66% of probable reserves. Price-related revisions to natural gas probable reserves totaled approximately 1,200 Bcfe.
Detailed tables on year-end proved reserves and capital investments are below.
2012 Capital Expenditures:
Fourth Quarter / Full Year 2012 Conference Call:
As previously announced, Newfield will report its fourth quarter and full year 2012 financial and operating results after market close on February 19 and will host a conference call with analysts and investors at 8:30 a.m., February 20, 2013.
Newfield Exploration Company is an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. We are focused on North American resource plays of scale. Our principal domestic areas of operation include the Mid-Continent, the Rocky Mountains and onshore Texas. Internationally, we have oil and natural gas developments offshore Malaysia and China.
**This release contains forward-looking information. All information other than historical facts included in this release, such as information regarding international strategic plans,estimated or anticipated production growth and planned capital expenditures, is forward-looking information. Although Newfield believes that these expectations are reasonable, this information is based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. 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 refining capacity for the crude oil Newfield produces in the Uinta basin, the availability and cost of capital resources, new regulations or changes in tax legislation, labor conditions and severe weather conditions (such as hurricanes). In addition, the drilling of oil and natural gas wells and the production of hydrocarbons are subject to numerous governmental regulations and operating risks. Other factors that could impact forward-looking statements are described in "Risk Factors" in Newfield's 2011 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other subsequent public filings with the Securities and Exchange Commission, which can be found at www.sec.gov. Unpredictable or unknown factors not discussed in this press release could also have material adverse effects on forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Unless legally required, Newfield undertakes no obligation to publicly update or revise any forward-looking statements.
For additional information, please contact Newfield's Investor Relations department.
SOURCE Newfield Exploration Company
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