Newfield Exploration Posts $98 Million in Net Income for Second Quarter of 2017

Houston-based Newfield Exploration Company reported a net income of $98 million or $0.49 per diluted share for the second quarter of 2017. Last year, the company reported a net loss of $667 million or $3.36 per diluted share, according to company financials.

“We are on target to deliver the key objectives within our 2017 business plan and we expect to enter 2018 with strong momentum across the company,” said Lee K. Boothby, President and CEO. “We have streamlined our operations to improve our cost structure and margins and we are fortunate to have high-return plays to actively develop in today’s commodity price environment. The advancements we are demonstrating in more mature development plays like SCOOP and the Bakken, are great examples of where we are headed in STACK. We have a deep drilling inventory of quality development opportunities to pursue over the next several decades and we continue to be encouraged by the prospectivity of other horizons on our acreage in the Anadarko Basin. With the exception of our contractor’s recent mechanical issue in China, where we are hopeful that repairs will be completed by year-end, the year 2017 is shaping up to be another strong year of performance for Newfield.”

Newfield reported revenues for the second quarter were $402 million. Net cash provided by operating activities was $300 million. Discretionary cash flow from operations was $215 million.

Newfield’s domestic net production was 141,000 Boe per day during the second quarter, exceeding the mid-point of guidance by nearly 4,000 Boe per day. This attributed to 40% oil and 59% liquids.

Consolidated net production was nearly 150,000 Boe per day (44% oil and 62% liquids), compared to a mid-point guidance of approximately 145,850 Boe per day.

Based on Newfield’s strong performance, the company announced Tuesday that it is increasing the mid-point of its domestic production outlook for 2017.

The mid-point for 2017 domestic guidance was raised to 149,600 Boe per day from 148,600 Boe per day. Newfield now estimates that its year-over-year domestic production growth, adjusted for prior-year asset sales, will be approximately 8%.

The mid-point estimate for 2017 total company production was reduced to nearly 153,600 Boe per day from 155,100 Boe per day. Production from the Newfield operated Pearl Field in the South China Sea was recently suspended due to a mechanical issue associated with a third-party floating, storage and offloading vessel located approximately 10 miles from the field. Due to the uncertainties surrounding the timing of repairs, Newfield has removed from its guidance approximately 5,000 Boe per day net from expected future liftings in the second half of 2017.

At the end of the second quarter, Newfield had approximately $550 million of cash and short-term investments on hand. The cash balance includes the recent closing on the sale of the Company’s asset in Bohai Bay, China.

In the STACK, Newfield has completed the Company’s fourth operated pilot on increased density spacing. The Stark pilot initiated production from nine infill SXL wells in the Meramec with each well testing “GEN17” completions of 2,100 pounds of proppant per foot and 2,100 gallons of liquid per foot. After 60 days, cumulative average production from the nine infill wells is outperforming the Company’s 1.1 MM Boe estimated gross type curve. In addition, average per well cumulative 60-day production from the Stark infill wells is in-line with recent held-by-production (HBP) wells with comparable completions, adjusted for lateral length. The Stark infill wells, which averaged 1,211 Boe per day over the 30-day period (65% oil, 82% liquids), are being produced with controlled flowback operations to minimize draw-down and maximize oil recovery.

Newfield is advancing its learnings in the STACK by collecting data on multiple infill well spacing scenarios. In addition to the Stark, the Freeman and Velta June pilots will test 10 and 12-well spacing, respectively. Production results from these pads are expected late this year and early next year.

In the SCOOP, continued improvements in completions have allowed tighter density spacing in the Woodford (5-6 wells/per spacing unit compared to 8-10 wells/per spacing unit). The Company recently turned to sales seven Tina infill wells with 17% higher 30-day average production (1,708 Boe per day) when compared to previous developments with four to five infill wells/section (1,462 Boe per day). When compared against offset wells drilled over the last several years, the Tina infill wells have nearly twice the proppant and fluid loads with 25% less costs per completed well.

In the Williston Basin, recent improvements to completion designs have allowed the company to raise its estimated type curve to 1 MM Boe gross. Wells completed year-to-date are projecting more than 80% higher 30-day average production rates of 1,883 Boe per day when compared to 30-day average rates (1,036 Boe per day) from previous wells drilled in close proximity.