Newfield Exploration Reports Fourth Quarter and Full-year 2017 Results
THE WOODLANDS, Texas, Feb. 20, 2018 /PRNewswire/ -- Newfield Exploration Company (NYSE: NFX) today announced full-year and fourth quarter 2017 unaudited financial and operating results. Additional details can be found in the Company's @NFX publication, located on its website http://www.newfield.com.
Newfield plans to host a conference call at 10 a.m. CST on February 21, 2018. To listen to the call, please visit Newfield's website at http://www.newfield.com. To participate in the call, dial 323-794-2094 and provide conference code 7828350 at least 10 minutes prior to the scheduled start time.
Highlights
-- Fourth quarter 2017 net production exceeded guidance expectations.
-- Domestic net production was 169,800 BOEPD (40% oil and 61% liquids),
exceeding mid-point guidance by approximately 1,750 BOEPD. The
better than expected results during the quarter were primarily
related to higher volumes from the Anadarko Basin, which reached
more than 117,000 BOEPD (12% increase from the prior quarter).
-- There were no liftings during the fourth quarter of 2017 from China.
Following recent repairs to the Pearl Field's third-party storage
vessel, production in China resumed in early 2018 with a lifting
planned for the first quarter.
-- Full-year 2017 domestic net production significantly exceeded original
guidance expectations.
-- Domestic net production grew approximately 10% over the prior year
(excluding 9,400 BOEPD of production associated with the 2016 sale
of the Company's Texas assets) and averaged 152,000 BOEPD (40% oil
and 61% liquids). Original 2017 guidance was for 3-5% growth.
-- For the full year, Anadarko Basin production grew 16% over the prior
year and averaged nearly 100,000 BOEPD (34% oil and 62% liquids).
Lease operating expenses (LOE) in the Anadarko Basin averaged $1.76
per BOE for the year, the lowest LOE within the Company's portfolio.
-- At the end of the fourth quarter, the Company had $326 million of cash
on hand.
-- Recent operational highlights include:
-- The Company turned to sales its most "technically comprehensive"
spacing pilot to-date -- the Velta June -- which has 12 wells
(drilled on four separate pads) located in the Meramec formation.
This 5,000' lateral development reached combined peak production
from the pads in excess of 10,000 BOEPD gross. Newfield operates the
Velta June with a 48% working interest.
-- The information obtained from the Velta June development will be
applied to the entirety of the STACK development with key learnings
on completion cluster efficiencies, intra-well communication, well
design cost/benefit analysis, fracture geometry and flowback
practices.
-- Newfield has now completed nearly 80 infill wells in STACK and has
tested from four to 12 wells per section in the Meramec horizon. The
results have shown the ability to generate strong returns across the
acreage from the Stark 10-well development located in the west, to
the Jackson/Florene spacing test located to the east. Additional
information regarding performance to date and the recent
Jackson/Florene test is available in @NFX presentation.
-- In 2017, Newfield allocated capital to test additional prospective
horizons on its acreage in the Anadarko Basin. This endeavor was
dubbed "SCORE" -- the Sycamore, Caney, Osage Resource Expansion.
Since early 2017, Newfield has drilled or participated in
approximately 20 SCORE wells. In addition to successful Newfield
operated and industry wells in the Sycamore, Caney and Osage,
Newfield recently extended the prolific STACK Meramec play to the
northwest and the North SCOOP oil play was extended to the east.
-- One distinct highlight was the Larry well, completed in the black
oil window along the eastern edge of Newfield's North SCOOP play.
This SXL well had a gross IP30 of more than 1,900 BOEPD, of which
more than 80% was oil. Newfield remains highly encouraged by its
North SCOOP development and plans significant HBP drilling activity
in its three-year plan (3YR Plan).
-- Newfield continued to grow its daily production in the Williston
Basin with a single operated-rig. In the fourth quarter of 2017, net
production averaged 20,300 BOEPD. In 2018, the Company expects to
continue to run a single rig and grow production approximately 7%
year-over-year.
-- Uinta Basin production continued to grow during 2017 with the
deployment of a single operated-rig. Fourth quarter 2017 net
production averaged 18,200 BOEPD. Recent efforts have focused
exclusively on unlocking the value of the Central Basin through
lower well costs and improved well productivity.
-- Newfield has recently drilled more than 20 wells in the Central
Basin, largely under a joint venture drilling agreement. This
program successfully reduced completed well costs and enhanced well
productivity. Newfield plans to continue to run a single rig in the
Central Basin in 2018 related primarily to HBP operations. The
Company holds interests in approximately 225,000 net acres in the
basin.
Fourth Quarter and Full-Year 2017 Financial and Production Summary
For the fourth quarter, the Company recorded net income of $95 million, or $0.47 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by one time tax benefits of 47 million or $0.24 per share, due to the Tax Reform Act repeal of AMT and refundable AMT tax credits, and an unrealized derivative loss of $95 million, or $0.48 per share. After adjusting for the effect of the tax benefit and unrealized derivative loss during the period, net income would have been $143 million, or $0.71 per share.
Revenues for the fourth quarter were $509 million. Net cash provided by operating activities was $311 million. Discretionary cash flow from operations was $342 million. Newfield's total net production in the fourth quarter of 2017 was 15.6 MMBOE, comprised of 40% oil, 21% natural gas liquids and 39% natural gas.
For the full year, the Company recorded net income of $427 million, or $2.13 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by one time tax benefits of $61 million, or $0.30 per share, due to the Tax Reform Act repeal of AMT and refundable AMT tax credits, $17 million, or $0.09 per share due to the carryback of net operating losses, and an unrealized derivative loss of $83 million, or $0.41 per share. After adjusting for the effect of the tax benefit and unrealized derivative losses during the period, net income would have been $432 million, or $2.15 per share.
Revenues for the full year were $1,767 million. Net cash provided by operating activities was $952 million. Discretionary cash flow from operations was $1,062 million. For the full-year 2017, Newfield's net production was 57.3 MMBOE, of which 1.7 MMBOE was from offshore China.
Proved Reserves and Costs Incurred
Newfield's year-end 2017 proved reserves were up 33% year-over-year to 680 MMBOE (over 99% domestic). Crude oil and natural gas prices used to calculate reserves were $51.34 per barrel (up 20%) and $2.98 per MMbtu (up 20%), respectively. As a result, our standardized measure of discounted future net cash flows is $4.4 billion and our pre-tax present value of reserves (discounted at 10%) at year-end 2017 was approximately $4.9 billion, up 84% over the prior year-end.
During 2017, proved reserves increased 167 MMBOE primarily as a result of positive performance revisions of 139 MMBOE and revisions of 14 MMBOE resulting from commodity price increases. During 2017, Newfield added proved reserves of 76 MMBOE, which included 2 MMBOE of reserves purchased and 74 MMBOE added through extensions, discoveries and other additions. We also sold non-strategic assets of 4 MMBOE and produced 58 MMBOE.
Approximately 58% of proved reserves are liquids and 59% are proved developed. The largest source of reserve additions during 2017 came from the Anadarko Basin, which now total 477 MMBOE and comprise more than over two-thirds of Newfield's total proved reserves. The proved reserve life index for the Company is approximately 12 years. Newfield engaged the consulting firms DeGolyer and MacNaughton and Ryder Scott Company to perform an audit of the internally prepared reserve estimates on certain fields covering 97% of year-end 2017 proved reserve quantities on a barrel of oil equivalent basis. The purpose of these audits was to provide additional assurance on the reasonableness of internally prepared reserve estimates. Newfield's proved reserves are, in aggregate, reasonable and within the established audit tolerance guidelines of 10 percent.
Newfield invested approximately $1.3 billion in 2017, which includes approximately $202 million in acquisitions, land and leasehold expenditures and approximately $120 million of capitalized interest and internal costs. The tables below provide additional information on reserves and costs incurred during 2017.
Crude Oil Natural Gas Natural Gas Total
and (Bcf) Liquids (MMBOE)
Condensate (MMBbls)
(MMBbls)
-------
Total
Company
Reserves
---------
December 31,
2016 190 1,366 95 513
Revisions of
previous
estimates 52 318 49 153
Extensions,
discoveries
and other
additions 35 151 14 74
Purchases of
properties 1 2 - 2
Sales of
properties (4) (3) - (4)
Production (24) (130) (12) (58)
--- ---- --- ---
December 31,
2017 250 1,704 146 680
=== ===== === ===
The following table presents costs incurred for oil and gas property acquisition, exploration and development for 2017:
Domestic China Total
-------- ----- -----
Property acquisitions:
----------------------
Unproved $98 $ - $98
Proved 104 - 104
Exploration 704 - 704
Development(1) 430 5 435
--- ---
Total costs incurred(2) $1,336 $5 $1,341
====== === ======
(1)Includes net change in asset
retirement costs of $(20) million
(2)Total costs incurred includes
approximately $124 million of
capitalized interest and internal
costs
Newfield Exploration Company is an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Our U.S. operations are onshore and focus primarily on large scale, liquids-rich resource plays in the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. In addition, we have producing oil assets offshore China.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "may," "forecast," "outlook," "could," "budget," "objectives," "strategy," "believe," "expect," "anticipate," "intend," "estimate," "project," "target," "goal," "plan," "should," "will," "predict," "guidance," "potential" or other similar expressions are intended to identify forward-looking statements. Other than historical facts included in this release, all information and statements, including but not limited to information regarding planned capital expenditures, estimated reserves, estimated production targets, estimated wellhead rates of return, estimated future operating costs and other expenses and other financial measures, estimated pre-tax future tax rates, drilling and development plans, the timing of production, and other plans and objectives for future operations, are forward-looking statements. Although, as of the date of this release, Newfield believes that these expectations are reasonable, this information is based upon assumptions and anticipated results that are subject to numerous uncertainties and risks and no assurance can be given that such expectations will prove to have been correct.
Actual results may vary significantly from those anticipated due to many factors, including but not limited to commodity prices and our ability to hedge commodity prices, drilling results, accessibility to economic transportation modes and processing facilities, our liquidity and the availability of capital resources, operating risks, failures and hazards, industry conditions, governmental regulations, including water regulations, in the areas we operate in financial counterparty risks, the prices of goods and services, the availability of drilling rigs and other support services, our ability to monetize assets and repay or refinance our existing indebtedness, labor conditions, severe weather conditions, new regulations or changes in tax or environmental legislation, environmental liabilities not covered by indemnity or insurance, legislation or regulatory initiatives intended to address seismic activity or induced seismicity, and other operating risks.
Please see Newfield's 2017 Annual Report on Form 10-K, and other subsequent public filings, all filed with the U.S. Securities and Exchange Commission (SEC), for a discussion of other factors that may cause actual results to vary. Unpredictable or unknown factors not discussed in this press release or in Newfield's SEC filings could also have material adverse effects on Newfield's actual results as compared to its anticipated results. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this release. Unless legally required, Newfield undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For additional information, please contact Newfield's Investor Relations department.
Phone: 281-210-5321
Email: IR@newfield.com
4Q17 Actual
4Q17 Actual Results Domestic China Total
------------------- -------- ----- -----
Production/Liftings(1)
Crude oil and condensate (MBbls) 6,175 - 6,175
Natural gas (Bcf) 36.6 - 36.6
NGLs (MBbls) 3,338 - 3,338
Total (MBOE) 15,622 - 15,622
Average Realized Prices(2)(3)
Crude oil and condensate (per
Bbl) $49.60 $ - $49.60
Natural gas (per Mcf) 2.58 - 2.58
NGLs (per Bbl) 30.15 - 30.15
Crude oil equivalent (per BOE) $32.29 $ - $32.29
Operating Expenses:(3)
Lease operating (in millions)
Recurring $43 $2 $45
Major (workovers, etc.) $3 $ - $3
Lease operating (per BOE)
Recurring $2.78 $ - $2.90
Major (workovers, etc.) $0.23 $ - $0.23
Transportation and processing (in
millions) $77 $ - $77
per BOE $4.98 $ - $4.98
Production and other taxes (in
millions) $21 $ - $21
per BOE $1.35 $ - $1.35
General and administrative (G&A),
net (in millions) $47 $2 $49
per BOE $3.01 $ - $3.14
Capitalized direct internal costs
(in millions) $(13)
per BOE $(0.85)
Other operating expenses
(income), net (in millions) $4
per BOE $0.23
Interest expense (in millions) $38
per BOE $2.44
Capitalized interest (in
millions) $(15)
per BOE $(0.94)
Other non-operating (income)
expense (in millions) $(2)
per BOE $(0.05)
_______
(1) Represents volumes lifted and
sold regardless of when
produced. Includes natural
gas produced and consumed in
operations of 1.1 Bcf during
the three months ended
December 31, 2017.
(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 $2.57 per
Mcf and the average realized
price for our total crude oil
and condensate would have
been $51.13 per barrel.
(3) All per unit pricing and
expenses exclude natural gas
produced and consumed in
operations.
CONDENSED
CONSOLIDATED
BALANCE SHEET
(Unaudited, in
millions)
December 31,
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $326 $555
Short-term
investments - 25
Derivative assets 15 75
Other current assets 405 294
Total current assets 746 949
--- ---
Oil and gas
properties, net
(full cost method) 3,931 3,140
Derivative assets 1 -
Other assets 283 223
Total assets $4,961 $4,312
====== ======
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current liabilities:
Derivative
liabilities 98 97
Other current
liabilities 720 587
---
Total current
liabilities 818 684
--- ---
Other liabilities 69 63
Derivative
liabilities 26 3
Long-term debt 2,434 2,431
Asset retirement
obligations 130 154
Deferred taxes 76 39
--- ---
Total long-term
liabilities 2,735 2,690
----- -----
Stockholders'
equity:
Common stock,
treasury stock and
additional paid-in
capital 3,246 3,205
Accumulated other
comprehensive
income (loss) - (2)
Retained earnings
(deficit) (1,838) (2,265)
------ ------
Total stockholders'
equity 1,408 938
----- ---
Total liabilities
and stockholders'
equity $4,961 $4,312
====== ======
CONSOLIDATED STATEMENT OF
OPERATIONS
(Unaudited, in millions,
except per share data)
Three Months Ended Year Ended
December 31, December 31,
2017 2016 2017 2016
---- ---- ---- ----
Oil, gas and NGL revenues $509 $415 $1,767 $1,472
---- ---- ------ ------
Operating expenses:
Lease operating 48 61 215 244
Transportation and
processing 77 72 300 272
Production and other taxes 21 8 64 42
Depreciation, depletion and
amortization 127 115 467 572
General and administrative 49 46 200 213
Ceiling test and other
impairments - - - 1,028
Other 4 1 6 20
---
Total operating expenses 326 303 1,252 2,391
--- --- ----- -----
Income (loss) from
operations 183 112 515 (919)
--- --- --- ----
Other income (expense):
Interest expense (38) (38) (150) (154)
Capitalized interest 15 16 61 51
Commodity derivative income
(expense) (105) (69) (47) (191)
Other, net 2 3 7 5
--- --- ---
Total other income (expense) (126) (88) (129) (289)
---- --- ---- ----
Income (loss) before income
taxes 57 24 386 (1,208)
Income tax provision
(benefit) (38) 11 (41) 22
--- ---
Net income (loss) $95 $13 $427 $(1,230)
=== === ==== =======
Earnings (loss) per share:
Basic $0.47 $0.07 $2.14 $(6.36)
===== ===== ===== ======
Diluted $0.47 $0.07 $2.13 $(6.36)
===== ===== ===== ======
Weighted-average number of
shares outstanding for
basic earnings (loss) per
share 200 199 199 193
=== === === ===
Weighted-average number of
shares outstanding for
diluted earnings (loss) per
share 201 200 200 193
=== === === ===
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
(Unaudited, in millions)
Year Ended
December 31,
2017 2016
---- ----
Cash flows from operating
activities:
Net income (loss) $427 $(1,230)
Adjustments to reconcile
net income (loss) to net
cash provided by (used
in) operating activities:
Depreciation, depletion
and amortization 467 572
Deferred tax provision
(benefit) 37 13
Stock-based compensation 34 22
Unrealized (gain) loss on
derivative contracts 83 392
Ceiling test and other
impairments - 1,028
Other, net 14 13
--- ---
1,062 810
Changes in operating
assets and liabilities (110) 16
Net cash provided by (used
in) operating activities 952 826
--- ---
Cash flows from investing
activities:
Additions to and
acquisitions of oil and
gas properties and other (1,289) (1,371)
Proceeds from sales of oil
and gas properties 96 405
Redemptions of investments 50 -
Purchases of investments (25) (25)
--- ---
Net cash provided by (used
in) investing activities (1,168) (991)
------ ----
Cash flows from financing
activities:
Net proceeds (repayments)
of borrowings under
credit arrangements - (39)
Proceeds from issuances of
common stock, net 3 779
Other, net (16) (25)
Net cash provided by (used
in) financing activities (13) 715
--- ---
Increase (decrease) in
cash and cash equivalents (229) 550
Cash and cash equivalents,
beginning of period 555 5
--- ---
Cash and cash equivalents,
end of period $326 $555
==== ====
Explanation and Reconciliation of Non-GAAP Financial Measures
Adjusted Net Income (Earnings Stated Without the Effect of Certain Items)
Earnings stated without the effect of certain items is a non-GAAP financial measure. Earnings without the effect of these items are presented because they affect the comparability of operating results from period to period. In addition, earnings without the effect of these items are more comparable to earnings estimates provided by securities analysts. This measure should not be considered an alternative to net income (loss) as defined by generally accepted accounting principles.
A reconciliation of earnings for the fourth quarter and full year of 2017 stated without the effect of certain items to net income (loss) is shown below:
4Q17 2017
----
In millions Per diluted In millions Per diluted
share share
----- -----
Net Income (loss) $95 $0.47 $427 $2.13
Carryback of net
operating losses - - (17) (0.09)
Tax Reform Act repeal of
AMT and refundable AMT
tax credits (47) (0.24) (61) (0.30)
Unrealized (gain) loss on
derivative contracts 95 0.48 83 0.41
Earnings stated without
the effect of the above
items 143 0.71 432 2.15
=== ==== === ====
Weighted-average number
of shares outstanding
for per diluted share 201 200
Discretionary Cash Flow from Operations
Discretionary cash flow from operations represents net cash provided by operating activities before changes in operating assets and liabilities and 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 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 to discretionary cash flow from operations is shown below:
4Q17 2017
---- ----
(In millions)
Net cash provided by operating
activities $311 $952
Net changes in operating assets and
liabilities 31 110
Discretionary cash flow from
operations $342 $1,062
==== ======
PV-10
PV-10 is a non-GAAP financial measure and generally differs from the standardized measure of discounted future net cash flows (the most directly comparable measure calculated and presented under U.S. generally accepted accounting principles) because it does not include the effects of income taxes on future net revenues. Neither PV-10 nor the standardized measure represents an estimate of the fair market value of our crude oil and natural gas properties. PV-10 is used in the oil and natural gas industry as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific income tax characteristics of such entities.
The following table shows a reconciliation of the standardized measure to PV-10:
Domestic China Total
-------- ----- -----
(In millions)
December 31,
2017:
Standardized
measure of
discounted
future net
cash flows $4,354 $47 $4,401
Present value
of future
income tax
expense 545 - 545
--- --- ---
Proved reserve
PV-10 value
(before tax) $4,899 $47 $4,946
====== === ======
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SOURCE Newfield Exploration Company
