THE WOODLANDS, Texas, — Newfield Exploration Company (NYSE: NFX) announced last week its second-quarter 2018 unaudited financial and operating results. Additional details can be found in the Company’s @NFX publication, located on its website https://www.newfield.com.
Second Quarter 2018 Highlights
- Domestic and Anadarko Basin net production exceeded the high-end of the Company’s guidance ranges. Second quarter 2018 domestic net production was 186,700 BOEPD (39% oil and 62% liquids). Stronger than expected production results were driven primarily by the Anadarko Basin which averaged 131,100 BOEPD (mid-point of guidance was 123,000 BOEPD), an increase of 13% relative to the prior quarter and approximately 48% year-over-year. Second quarter average net liquids production in the Anadarko Basin grew approximately 15% relative to the prior quarter to over 80,000 BOEPD. The Company’s net crude oil production from the AnadarkoBasin averaged over 42,000 BOPD (up more than 40% year-over-year), in line with guidance.
- Consolidated production for the second quarter of 2018 was approximately 195,300 BOEPD (42% oil, and 64% liquids). The Company lifted 782,000 net barrels from its offshore oil field in China.
- Second quarter 2018 capital investments were $365 million, or approximately $5 million above original guidance. For the full-year 2018, the Company increased its capital budget by approximately 4% to $1.35 billion, excluding capitalized interest and overhead costs of approximately $114 million.
- Realized prices for crude oil and NGLs remained stable relative to the prior quarter. Specifically, STACK realized crude oil prices during the quarter averaged 100% of NYMEX WTI. Domestic natural gas prices in the quarter averaged approximately 79% of Henry Hub pricing.
- During the second quarter, discretionary cash flow exceeded capital investments by $11 million. As a result, available liquidity expanded to $2.4 billion ($2 billion in undrawn credit facility, $125 millionmoney market lines of credit and nearly $300 million of available cash on hand). Additionally, the Company’s ratio of Net Debt to adjusted EBITDA decreased to 1.7x as of June 30, 2018. This is ahead of the prior guidance of decreasing the ratio below 1.8x by year-end 2018. The Company remains focused on further improving its credit profile and reaching sustainable positive free cash flow generation.
- The Company continues to advance its Sycamore, Caney, Osage, Resource Expansion (SCORE) initiative. Recent positive drilling results were released in Northwest STACK, located in northeast Dewey County, Oklahoma, where the Company holds approximately 24,000 net acres (>70% operated). Results on several recent wells can be found in @NFX. By year-end, over 80% of this position is expected to be HBP.
- In the Williston Basin, Newfield’s net production in the quarter averaged 21,000 BOEPD. Importantly, the Williston Basin program is expected to deliver discretionary cash flow that exceeds capital expenditures by more than $130 million at today’s strip oil prices. Uinta Basin net production averaged approximately 21,000 BOEPD during the quarter.
Second Quarter 2018 Financial and Production Summary
For the second quarter, the Company recorded net income of $119 million, or $0.59 per diluted share (all per share amounts are on a diluted basis). Earnings were impacted by an unrealized derivative loss of $78 million, or $0.39 per share, and a gain from a favorable legal settlement of $8 million, or $0.04 per share. After adjusting for the effects of the unrealized derivative loss and legal settlement during the period, net income would have been $189 million, or $0.94 per share. See the “Explanation and Reconciliation of Non-GAAP Financial Measures” at the end of this press release for additional disclosures.
Revenues for the second quarter were $679 million. Net cash provided by operating activities was $488 million. Discretionary cash flow from operations was $376 million. See the “Explanation and Reconciliation of Non-GAAP Financial Measures” at the end of this press release for additional disclosures.
Newfield’s consolidated net production in the second quarter of 2018 was approximately 195,300 BOEPD, comprised of 42% oil, 22% natural gas liquids and 36% natural gas. Domestic net production in the same quarter was approximately 186,700 BOEPD, comprised of 39% oil, 23% natural gas liquids and 38% natural gas.
2018 Production and Capital Investment Outlook
Newfield today increased it’s expectations for annual production volumes and capital investments in 2018. The table below updates guidance for production by commodity and planned capital investments for the Company’s Domestic and Anadarko Basin assets. Newfield now expects to invest approximately $1.35 billion in 2018 (previous guidance was $1.3 billion), excluding capitalized interest overhead costs of about $114 million. The increase in estimated capital investments for 2018 is primarily related to greater participation in projects operated by others as well as increased working interest levels in its operated developments year-to-date.
Newfield Exploration Company is an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Its 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, the company has a producing oil field offshore China.