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Newfield Reports Financial and Operating Results for Third Quarter 2009

HOUSTON, Oct. 21 /PRNewswire-FirstCall/ -- Newfield Exploration Company (NYSE: NFX) today reported its unaudited third quarter 2009 financial and operating results. Newfield will be hosting a conference call at 8:30 a.m. (CDT) on October 22. To participate in the call, dial 719-325-2138 or listen through the website at http://www.newfield.com.

Third Quarter 2009

For the third quarter of 2009, Newfield recorded net income of $78 million, or $0.58 per diluted share (all per share amounts are on a diluted basis). Net income includes the effect of the following items:

    --  a net unrealized loss on commodity derivatives of $243 million ($155
        million after-tax); and

    --  the recognition of a $24 million tax benefit, or $0.18 per share,
        associated with deferred tax assets in Malaysia.

Without the effect of these items, net income for the third quarter of 2009 would have been $209 million, or $1.58 per share.

Revenues in the third quarter of 2009 were $375 million. Net cash provided by operating activities before changes in operating assets and liabilities was $451 million. See "Explanation and Reconciliation of Non-GAAP Financial Measures" found after the financial statements in this release.

Newfield's production in the third quarter of 2009 was 65.5 Bcfe, an increase of 7% over the third quarter of 2008. Newfield's oil liftings in the third quarter were 3.8 MMBbls, or an average of approximately 41,300 BOPD. This represents a 40% increase over the same period in 2008 and is primarily attributable to the timing of international oil liftings. Natural gas production in the third quarter was 42.5 Bcfe, an average of 462 MMcf/d, and excludes approximately 2.6 Bcfe of voluntary natural gas curtailments due to low natural gas prices. Capital expenditures in the third quarter of 2009 were $285 million.

Highlights

    --  Improving Cost Structure - Domestic recurring lease operating expense
        for the third quarter of 2009, stated on a unit of production basis, was
        $0.81 per Mcfe and reflects lower service costs, reduced water handling
        costs due to deferred completions and the ongoing efforts to lower
        expenses throughout the Company's core operating regions.
    --  Mid-Continent Production Reaches New Highs, Woodford Production up
        Nearly 30% - Gross operated production from the Mid-Continent recently
        set a new high and is currently 460 MMcfe/d gross, or 323 MMcfe/d net.
        Woodford Shale production is 308 MMcfe/d compared to about 240 MMcfe/d
        at the end of the second quarter of 2009. Newfield began returning
        previously curtailed wells to production during October 2009. Newfield
        has a 30 well inventory of uncompleted wells that are expected to be
        completed by early 2010.
        --  Woodford Shale - The Company has 10 operated rigs running under term
            contracts, with three of the remaining rigs rolling off of term
            before the end of 2009. Newfield continues to improve upon
            efficiency gains in its Woodford development. Some recent examples
            are listed below:
            --  Increasing Lateral Lengths - Newfield expects that its average
                lateral length in 2009 will exceed 5,000 feet. By year-end 2009,
                the Company expects to have drilled eight "super extended
                lateral" wells with horizontal lengths in excess of 8,000 feet.
                Two of the wells drilled to date have lateral lengths greater
                than 10,000 feet. Initial production results from the first
                super extended laterals are expected in December 2009.
            --  Optimizing Fracture Stimulation Operations - The Company is
                fracture stimulating its wells with greater efficiency in 2009.
                The average number of fracs per day has increased to more than
                five on recent pad completions, compared to three fracs per day
                in 2008.
        --  Company Adds Fourth Operated Rig in Granite Wash Play - Based on the
            success of the initial horizontal drilling program in the Granite
            Wash, Newfield added a fourth operated rig in October in its Stiles
            Ranch field, located in Wheeler County, Texas. In July 2009,
            Newfield announced that its first seven horizontal wells in Stiles
            Ranch had an average gross initial production rate of 22 MMcfe/d.
            Recent well completions have been deferred and the Company expects
            to have production results from 6 - 8 additional completions in
            early 2010. Newfield has an approximate 80% working interest in
            Stiles Ranch.
    --  Newfield Enters the Marcellus Shale - On October 14, 2009, Newfield
        announced the signing of a joint exploration agreement with Hess
        Corporation in the Marcellus Shale play. The agreement covers up to
        140,000 gross acres primarily in Susquehanna and Wayne Counties,
        Pennsylvania. Newfield will operate the new venture with each company
        having a 50 percent interest. The 2009 portion of Newfield's Marcellus
        Shale activities will be funded within the Company's existing $1.45
        billion capital budget. Drilling operations are not expected to commence
        until 2010.
    --  Additional Exploration Test Planned Offshore China - In the third
        quarter of 2009, the Company announced an oil discovery with its LF 7-1
        Pearl prospect, located in the Pearl River Mouth Basin, offshore China.
        Prior to year-end 2009, the Company expects to spud its Jade prospect to
        test a fault-separated target to the northeast. The Newfield operated
        Pearl development is underway with first production expected in late
        2012.
    --  Deepwater Gulf of Mexico Update - Newfield has seven deepwater
        developments underway in the deepwater Gulf of Mexico which are expected
        to provide significant future production growth.
        --  Fastball - The Fastball development, located at Viosca Knoll 1003,
            commenced production on October 19, 2009. Gross production is
            expected to ramp up to 40 MMcf/d and 3,200 BOPD. Newfield operates
            Fastball with a 66% working interest.
        --  Pyrenees - In the second quarter of 2009, Newfield announced a
            significant operated discovery on its Pyrenees prospect, located at
            Garden Banks 293 in approximately 2,100 feet of water. A recent
            sidetrack delineated the downdip limits in the three proven pay
            sands seen in the discovery well and provided encouragement for the
            exploration potential of both the shallow and deep sand sections on
            the feature. Additional drilling is planned for 2010. Newfield
            operates the development with a 40% working interest.
    --  Company Increasing Monument Butte Operated Rig Count to Five - Based on
        increased demand, narrowing price differentials and a shift to oil
        investments, Newfield recently added a fourth operated rig in its
        Monument Butte oil field, located in the Uinta Basin of Utah. The
        Company is planning to add a fifth operated rig in the field in the near
        future. Gross oil production from Monument Butte is about 16,000 BOPD. A
        five-rig program in the field is expected to grow annual field
        production by at least 10%. The Monument Butte field area covers
        approximately 180,000 gross acres, substantially all held-by-production.

    --  Company to Add Additional Rigs in Williston Basin - Newfield expects to
        add up to two additional operated rigs in its Williston Basin
        development areas. The Company has been running a one-rig program since
        early 2009. Newfield has approximately 200,000 net acres in prospective
        development areas, located primarily on the Nesson Anticline and west of
        the Nesson. An additional 200,000 net acres are located in northern
        Montana where several exploration plays are underway. Newfield has
        drilled 12 successful oil wells in the North Dakota portion of the
        Williston Basin since entering the region in late 2007. Two wells were
        drilled since the second quarter 2009. The first was an exploratory well
        in the Big Valley area, covering more than 50,000 net acres in northern
        North Dakota. The well recently commenced production and continues to
        clean-up following fracture stimulation. Results warrant additional
        exploratory drilling to assess this large area. The second well was
        drilled in the Catwalk area, which covers 25,300 net acres. Completion
        operations on the well are expected to commence next week.

Newfield Exploration Company is an independent crude oil and natural gas exploration and production company. The Company relies on a proven growth strategy of growing reserves through an active drilling program and select acquisitions. Newfield's domestic areas of operation include the Mid-Continent, the Rocky Mountains, onshore Texas and the Gulf of Mexico. The Company has international operations in Malaysia and China.

**This release contains forward-looking information. All information other than historical facts included in this release, such as information regarding estimated or anticipated fourth quarter 2009 results, estimated capital expenditures, cash flow, production and cost reductions, drilling and development plans and the timing of activities, 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 from its Monument Butte field in Utah, the availability and cost of capital resources, labor conditions and severe weather conditions (such as hurricanes). In addition, the drilling of oil and gas wells and the production of hydrocarbons are subject to governmental regulations and operating risks.


    For information, contact:
    Investor Relations: Steve Campbell (281) 847-6081
    Media Relations: Keith Schmidt (281) 674-2650
    Email: info@newfield.com


    3Q09 Actual Results

                                                   3Q09 Actual
                                      Domestic        Int'l         Total
    Production/Liftings(Note 1)
        Natural gas - Bcf                42.5             -          42.5
        Oil and condensate - MMBbls       1.7           2.1           3.8
        Total Bcfe                       52.6          12.9          65.5

    Average Realized Prices (Note 2)
        Natural gas - $/Mcf             $6.88            $-         $6.88
        Oil and condensate - $/Bbl    $102.95        $66.76        $82.61
        Mcf equivalent - $/Mcfe         $8.87        $11.13         $9.31

    Operating Expenses:( Note 3)
      Lease operating
        Recurring ($MM)                 $42.5         $15.2         $57.7
          per/Mcfe                      $0.81         $1.18         $0.88
        Major (workovers, repairs,
         etc.) ($MM)                     $5.7          $0.7          $6.4
          per/Mcfe                      $0.11         $0.05         $0.10

    Production and other taxes ($MM)     $4.7          $9.3         $14.0
        per/Mcfe                        $0.09         $0.72         $0.21

    General and administrative
     (G&A), net ($MM)                   $38.4          $1.4         $39.8
        per/Mcfe                        $0.73         $0.11         $0.61

            Capitalized internal costs
             ($MM)                                                 $(19.3)
               per/Mcfe                                            $(0.30)

    Interest expense ($MM)                                          $31.7
        per/Mcfe                                                    $0.48

    Capitalized interest ($MM)                                     $(12.5)
        per/Mcfe                                                   $(0.19)

    Note 1: Domestic natural gas production includes voluntary curtailments of
            approximately 2.6 Bcfe related to low natural gas prices.

    Note 2: Average realized prices include the effects of hedging contracts.
            If the effects of these contracts were excluded, the average
            realized price for total gas would have been $3.14 per Mcf and the
            total oil and condensate average realized price would have been
            $62.72 per barrel.

    Note 3: Recurring lease operating expense includes transportation expense.



    4Q09 Estimates
                                              4Q09 Estimates
                                  Domestic         Int'l           Total
    Production/Liftings
        Natural gas - Bcf        44.7 - 45.5              -      44.7 - 45.5
        Oil and condensate
         - MMBbls                  1.7 - 1.8      1.4 - 1.5        3.1 - 3.3
        Total Bcfe               54.9 - 56.3      8.4 - 9.0      63.3 - 65.3

    Average Realized Prices
        Natural gas - $/Mcf           Note 1
        Oil and condensate
         - $/Bbl                      Note 2         Note 3
        Mcf equivalent - $/Mcfe

    Operating Expenses:
      Lease operating
        Recurring ($MM)        $34.2 - $37.8  $18.4 - $20.3    $52.6 - $58.1
          per/Mcfe             $0.62 - $0.67  $2.19 - $2.25    $0.83 - $0.89
        Major (workover,
         repairs, etc.)
         ($MM)( Note 4)        $13.1 - $14.5              -    $13.1 - $14.5
          per/Mcfe             $0.24 - $0.26              -    $0.21 - $0.22

    Production and other taxes
     ($MM)(Note 5)             $14.0 - $15.4  $13.3 - $14.7    $27.3 - $30.1
          per/Mcfe             $0.26 - $0.27  $1.58 - $1.63    $0.43 - $0.46

    General and administrative
     (G&A), net ($MM)          $29.8 - $33.0    $1.4 - $1.5    $31.2 - $34.5
          per/Mcfe             $0.54 - $0.59  $0.16 - $0.17    $0.49 - $0.53

            Capitalized
             internal costs
             ($MM)                                            ($18.5 - $20.4)
              per/Mcfe                                        ($0.29 - $0.31)

    Interest expense ($MM)                                     $29.0 - $32.0
          per/Mcfe                                             $0.46 - $0.49

    Capitalized interest
     ($MM)                                                     ($11.0 - $12.1)
          per/Mcfe                                             ($0.17 - $0.19)

    Tax rate (%)(Note 6)                                             36 - 38%

    Income taxes (%)
      Current                                                       14% - 16%
      Deferred                                                      84% - 86%

    Note 1: Gas prices in the Mid-Continent, after basis differentials,
            transportation and handling charges, typically average 75-85% of
            the Henry Hub Index. Gas prices in the Gulf of Mexico and onshore
            Gulf Coast, after basis differentials, transportation and handling
            charges, typically averages $0.25-$0.50 per MMBtu less than the
            Henry Hub Index.
    Note 2: Oil prices in the Gulf Coast typically average 90-95% of NYMEX WTI
            price. Rockies oil prices are currently averaging about $12-$14
            per barrel below WTI. Oil production from the Mid-Continent
            typically averages 85-90% of WTI.
    Note 3: Oil in Malaysia typically sells at a slight discount to Tapis, or
            about 90-95% of WTI. Oil production from China typically sells at
            $6-$8 per barrel less than WTI.
    Note 4: Domestic major expense includes approximately $6 million for well
            workover expense and other projects initiated in response to
            higher commodity prices and lower service costs.
    Note 5: Guidance for production taxes determined using $75/Bbl oil and
            $4.50/MMBtu gas.
    Note 6: Tax rate applied to earnings excluding unrealized gains or losses
            on commodity derivatives.



    CONSOLIDATED STATEMENT OF INCOME      For the             For the
                                     Three Months Ended   Nine Months Ended
    (Unaudited, in millions,            September 30,       September 30,
     except per share data)          ------------------   -----------------
                                        2009     2008       2009     2008
                                        -----    -----     ------    -----

    Oil and gas revenues                $375     $680       $924   $1,887
                                       -----    -----     ------    -----

    Operating expenses:
      Lease operating                     64       67        192      184
      Production and other taxes          14       51         38      154
      Depreciation, depletion and
       amortization                      144      181        440      504
      General and administrative          40       36        106      105
      Ceiling test writedown               -        -      1,344        -
      Other                                1        -          8        -
                                       -----    -----     ------    -----
        Total operating expenses         263      335      2,128      947
                                       -----    -----     ------    -----

    Income (loss) from operations        112      345     (1,204)     940

    Other income (expenses):
      Interest expense                   (31)     (36)       (95)     (83)
      Capitalized interest                13       16         39       43
      Commodity derivative income
       (expense)                          (8)     726        189     (247)
      Other                               (1)       8          4       10
                                       -----    -----     ------    -----
        Total other income (expenses)    (27)     714        137     (277)
                                       -----    -----     ------    -----

    Income (loss) before income taxes     85    1,059     (1,067)     663

    Income tax provision (benefit)         7      335       (412)     247
                                       -----    -----     ------    -----

    Net income (loss)                    $78     $724      $(655)    $416
                                       =====    =====     ======    =====

    Income (loss) per share:
    Basic --                           $0.59    $5.59     $(5.06)   $3.22
                                       =====    =====     ======    =====

    Diluted --                         $0.58    $5.48     $(5.06)   $3.15
                                       =====    =====     ======    =====

    Weighted average number of shares
     outstanding for basic income
     (loss) per share                    130      129        129      129
    Weighted average number of shares
     outstanding for diluted income
     (loss) per share *                  132      132        129      132

    * Had we recognized net income for the nine months ended September 30,
      2009, the weighted average number of shares outstanding for the
      computation of diluted earnings per share would have increased by
      2 million shares.



    CONDENSED CONSOLIDATED BALANCE SHEET         September 30,  December 31,
    (Unaudited, in millions)                          2009          2008
                                                 -------------  ------------

    ASSETS
    Current assets:
      Cash and cash equivalents                         $96         $24
      Derivative assets                                 377         663
      Other current assets                              469         519
                                                     ------      ------
        Total current assets                            942       1,206

    Property and equipment, net (full cost method)    4,940       5,758
    Derivative assets                                    48         247
    Other assets                                        107          94
                                                     ------      ------
      Total assets                                   $6,037      $7,305
                                                     ======      ======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities                                $805      $1,085
                                                     ------      ------

    Other liabilities                                   143          92
    Long-term debt                                    2,106       2,213
    Deferred taxes                                      345         658
                                                     ------      ------
        Total long-term liabilities                   2,594       2,963
                                                     ------      ------

    Commitments and contingencies                         -           -

    STOCKHOLDERS' EQUITY
    Common stock                                          1           1
    Additional paid-in capital                        1,375       1,335
    Treasury stock                                      (33)        (32)
    Accumulated other comprehensive loss                (14)        (11)
    Retained earnings                                 1,309       1,964
                                                     ------      ------
      Total stockholders' equity                      2,638       3,257
                                                     ------      ------
      Total liabilities and stockholders' equity     $6,037      $7,305
                                                     ======      ======



    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
    (Unaudited, in millions)                                     For the
                                                            Nine Months Ended
                                                              September 30,
                                                            -----------------
                                                              2009    2008
                                                             ------  ------
    Cash flows from operating activities:
      Net income (loss)                                       $(655)   $416
    Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:

      Depreciation, depletion and amortization                  440     504
      Deferred tax provision (benefit)                         (448)    213
      Stock-based compensation                                   22      17
      Ceiling test writedown                                  1,344       -
      Commodity derivative (income) expense                    (189)    247
      Cash receipts (payments) on derivative settlements        701    (783)
                                                             ------  ------
                                                              1,215     614
      Changes in operating assets and liabilities                 2       8
                                                             ------  ------
        Net cash provided by operating activities             1,217     622
                                                             ------  ------

    Cash flows from investing activities:
      Additions to oil and gas properties and other, net     (1,061) (1,780)
      Net redemptions of investments                             18      48
                                                             ------  ------
        Net cash used in investing activities                (1,043) (1,732)
                                                             ------  ------

    Cash flows from financing activities:
      Net proceeds (repayments) under credit arrangements      (107)    285
      Net proceeds from issuance of senior subordinated notes     -     592
      Other                                                       5      18
                                                             ------  ------
        Net cash provided by (used in) financing activities    (102)    895
                                                             ------  ------


    Increase (decrease) in cash and cash equivalents             72    (215)
    Cash and cash equivalents, beginning of period               24     250
                                                             ------  ------

    Cash and cash equivalents, end of period                    $96     $35
                                                             ======  ======

Explanation and Reconciliation of Non-GAAP Financial Measures

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.

A reconciliation of earnings for the third quarter of 2009 stated without the effect of certain items to net income is shown below:


                                                                   3Q09
                                                              -------------
                                                              (in millions)
    Net income                                                     $78
      Net unrealized loss on commodity derivatives(1)              243
      Income tax adjustment for above item                         (88)
      Tax benefit associated with deferred tax assets in
       Malaysia                                                    (24)
                                                                  ----
    Earnings stated without the effect of the above items         $209
                                                                  ====

    -------------
    (1) The determination of "Net unrealized loss on commodity derivatives"
        for the third quarter of 2009 is as follows:
                                                                   3Q09
                                                               -------------
                                                               (in millions)
      Commodity derivative expense                                 $(8)
      Cash receipts on derivative settlements                     (242)
      Option premiums associated with derivatives settled
       during the period                                             7
                                                                 -----
      Net unrealized loss on commodity derivatives               $(243)
                                                                 =====

Net Cash Provided by Operating Activities Before Changes in Operating Assets and Liabilities

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:


                                                                   3Q09
                                                              -------------
                                                              (in millions)
    Net cash provided by operating activities                     $505
      Net change in operating assets and liabilities               (54)
                                                                  ----
    Net cash provided by operating activities before
     changes in operating assets and liabilities                  $451
                                                                  ====

SOURCE Newfield Exploration Company

Investor Relations, Steve Campbell, +1-281-847-6081, Media Relations, Keith Schmidt, +1-281-674-2650, both of Newfield Exploration Company, info@newfield.com

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