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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 22, 2002
NEWFIELD EXPLORATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-12534 72-1133047
(STATE OR OTHER JURISDICTION (COMMISSION FILE (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) NUMBER) IDENTIFICATION NUMBER)
363 N. SAM HOUSTON PARKWAY E.
SUITE 2020
HOUSTON, TEXAS 77060
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 847-6000
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ITEM 5. OTHER EVENTS
On July 22, 2002, Newfield Exploration Company ("Newfield" or the
"Company") announced its financial and operating results for the second quarter
and year-to-date 2002. Set forth below is a portion of the press release.
SECOND QUARTER 2002
-------------------
For the second quarter of 2002, Newfield reported net income of $20.1
million, or $0.44 per share (all per share amounts are on a diluted basis),
stated before the effect of a non-cash charge related to FAS 133. Stated after
the effect of the non-cash charge, net income for the second quarter of 2002 was
$16.3 million, or $0.36 per share. Revenues in the second quarter of 2002 were
$161.6 million. This compares to net income in the second quarter of 2001 of
$53.0 million, or $1.11 per share, stated before the effect of a non-cash gain
related to FAS 133. Stated after the effect of the non-cash gain, earnings for
the second quarter of 2001 were $56.7 million, or $1.18 per share. Revenues in
the second quarter of 2001 were $200.7 million. For the second quarter of 2002,
operating cash flow before changes in working capital was $99.7 million, or
$2.07 per share, compared to $144.7 million, or $2.97 per share, in the same
period of 2001.
Newfield's second quarter 2002 production, when stated on an energy
equivalent basis, increased 4% over the same period of 2001 and 8.5% over the
first quarter of 2002. Newfield's second quarter 2002 production was 47.5
billion cubic feet equivalent (Bcfe), or an average of 522 million cubic feet
equivalent per day. The following tables detail quarterly production and average
realized prices:
SECOND QUARTER PRODUCTION
2Q02 2Q01 % CHANGE
------ ------ --------
United States
Natural gas (Bcf)* 37.9 35.5 7%
Natural gas (MMcf/d) 416 390 7%
Oil and condensate production (MMBbls) 1.33 1.37 (3)%
Oil and condensate production (BOPD) 14,602 15,101 (3)%
Australia
Oil and condensate liftings (MMBbls) .278 .342 (19)%
Oil and condensate liftings (BOPD) 3,049 3,757 (19)%
Total
Natural gas (Bcf) 37.9 35.5 7%
Oil and condensate (MMBbls) 1.61 1.72 (6)%
Total Production (Bcfe) 47.5 45.8 4%
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* During the second quarter of 2002, the Company resolved several open
accounting matters relating to prior periods. The matters included such things
as the calculation of royalties due to the Minerals Management Service and
accounting for production from a recent acquisition. As a result of the
resolution of these matters, the Company recorded an additional 1.9 Bcf of gas
production and related revenue, DD&A and income tax in the second quarter of
2002.
AVERAGE REALIZED PRICES
2Q02 2Q01 % CHANGE
---------- ---------- --------
United States
Natural gas (per Mcf) $ 3.21 $ 4.39 (27)%
Oil and condensate (per Bbl) $ 23.84 $ 24.45 (2)%
Australia
Oil and condensate (per Bbl) $ 25.72 $ 28.02 (8)%
Total
Natural gas (per Mcf) $ 3.21 $ 4.39 (27)%
Oil and condensate (per Bbl) $ 24.17 $ 25.16 (4)%
Total per Mcfe $ 3.37 $ 4.35 (23)%
Newfield's lease operating expense (LOE) in the second quarter of 2002,
stated on a unit of production basis, was $0.54 per thousand cubic feet
equivalent (Mcfe) compared to $0.50 per Mcfe in the same period last year.
Newfield's DD&A expense in the second quarter of 2002 was $1.64 per Mcfe
compared to $1.56 per Mcfe in the second quarter of 2001. The Company's general
and administrative (G&A) expense for the second quarter of 2002 was $0.27 per
Mcfe compared to $0.26 per Mcfe in the same period of 2001. Net interest expense
and dividends were $0.15 per Mcfe in the second quarter of 2002 compared to
$0.12 per Mcfe in the second quarter of 2001. Capitalized interest in the second
quarter of 2002 was $2.1 million compared to $2.8 million in the same period
last year.
Capital expenditures in the second quarter of 2002 were about $80
million.
YEAR-TO-DATE 2002
-----------------
Stated without the effect of a non-cash charge related to FAS 133,
Newfield posted net income of $40.1 million, or $0.88 per share in the first
half of 2002. Stated with the impact of the non-cash charge, net income for the
first half of 2002 was $32.6 million, or $0.73 per share. Revenues for the first
half of 2002 were $309.7 million. Stated without the impact of a non-cash gain
related to FAS 133, net income for the first half of 2001 was $117.2 million, or
$2.45 per share. Stated with the impact of the non-cash gain, income in the
first half of 2001 was $115.1 million, or $2.41 per share. Revenues for the
first six months of 2001 were $410.1 million. Operating cash flow before changes
in working capital was $196.4 million, or $4.08 per share, in the first half of
2002 compared to $285.7 million, or $5.88 per share, in the first half of 2001.
Production volumes for the first half of 2002 were 7% above the same
period last year. The Company produced 91.3 Bcfe in the first six months of 2002
compared to 85.4 Bcfe in the first six months of the prior year. The following
tables detail production and average realized prices for the first half of 2002:
YEAR-TO-DATE PRODUCTION
1H02 1H01 % CHANGE
------ ------ --------
United States
Natural gas (Bcf)* 71.8 66.3 8%
Natural gas (MMcf/d) 397 366 8%
Oil and condensate production (MMBbls) 2.68 2.62 2%
Oil and condensate production (BOPD) 14,797 14,450 2%
Australia
Oil and condensate liftings (MMBbls) .576 .581 (1)%
Oil and condensate liftings (BOPD) 3,181 3,212 (1)%
Total
Natural gas (Bcf) 71.8 66.3 8%
Oil and condensate (MMBbls) 3.25 3.20 2%
Total Production (Bcfe) 91.3 85.4 7%
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*During the second quarter of 2002, the Company resolved several open
accounting matters relating to prior periods. The matters included such things
as the calculation of royalties due to the Minerals Management Service and
accounting for production from a recent acquisition. As a result of the
resolution of these matters, the Company recorded an additional 1.9 Bcf of gas
production and related revenue, DD&A and income tax in the second quarter of
2002.
AVERAGE REALIZED PRICES
1H02 1H01 % CHANGE
-------- -------- --------
United States
Natural gas (per Mcf) $ 3.23 $ 4.94 (35)%
Oil and condensate (per Bbl) $22.93 $24.56 (7)%
Australia
Oil and condensate liftings (per Bbl) $23.80 $27.30 (13)%
Total
Natural gas (per Mcf) $ 3.23 $ 4.94 (35)%
Oil and condensate (per Bbl) $23.08 $25.06 (8)%
Total per Mcfe $ 3.36 $ 4.77 (30)%
In the first half of 2002, LOE, stated on a unit of production basis,
averaged $0.53 per Mcfe compared $0.51 per Mcfe in the first half of 2001. DD&A
expense in the first half of 2002 was $1.63 per Mcfe compared to $1.55 per Mcfe
in the same period of the prior year. G&A expense in the first half of 2002 was
$0.28 per Mcfe, up slightly when compared to the prior year expense of $0.27 per
Mcfe.
Capital spending in the first half of 2002 totaled $161 million.
CONSOLIDATED STATEMENT OF INCOME FOR THE FOR THE
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
OIL AND GAS REVENUES $ 161,611 $ 200,747 $ 309,650 $ 410,073
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Lease operating 25,706 22,750 48,759 43,574
Transportation 1,316 1,563 2,647 2,825
Production and other taxes 3,861 5,463 7,271 12,581
Depreciation, depletion and amortization 78,027 71,577 149,234 132,723
General and administrative 12,206 11,236 23,973 21,926
Stock compensation 757 703 1,335 1,298
---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 121,873 113,292 233,219 214,927
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 39,738 87,455 76,431 195,146
OTHER INCOME (EXPENSE):
Interest income and other, net (1,247) 529 569 1,142
Interest expense (7,134) (6,641) (14,348) (13,623)
Capitalized interest 2,130 2,824 4,273 4,154
Dividends on preferred securities of
Newfield Financial Trust I (2,336) (2,336) (4,672) (4,672)
Unrealized commodity derivative expense * (5,880) 5,719 (11,525) 4,161
---------- ---------- ---------- ----------
(14,467) 95 (25,703) (8,838)
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 25,271 87,550 50,728 186,308
---------- ---------- ---------- ----------
Income tax provision 9,001 30,813 18,132 66,426
---------- ---------- ---------- ----------
Income before cumulative effect of change in
accounting principle 16,270 56,737 32,596 119,882
Cumulative effect of change in accounting principle* -- -- -- 4,794
---------- ---------- ---------- ----------
NET INCOME $ 16,270 $ 56,737 $ 32,596 $ 115,088
========== ========== ========== ==========
EARNINGS PER SHARE:
BASIC
Income before cumulative effect of change
in accounting principle $ 0.37 $ 1.27 $ 0.74 $ 2.70
Cumulative effect of change in accounting
principle* -- -- -- (0.11)
---------- ---------- ---------- ----------
Net income $ 0.37 $ 1.27 $ 0.74 $ 2.59
========== ========== ========== ==========
DILUTED
Income before cumulative effect of change
in accounting principle $ 0.36 $ 1.18 $ 0.73 $ 2.50
Cumulative effect of change in accounting
principle* -- -- -- (0.09)
---------- ---------- ---------- ----------
Net income $ 0.36 $ 1.18 $ 0.73 $ 2.41
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR BASIC EARNINGS PER SHARE 44,376 44,651 44,295 44,387
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR DILUTED EARNINGS PER SHARE 48,928 49,314 48,838 49,098
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*ASSOCIATED WITH SFAS 133.
PRODUCTION DATA FOR THE FOR THE
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ --------------------------------
2002 2001 2002 2001
------------ ------------ ------------- ------------
Average daily production:
Oil and condensate (Bbls) 17,651 18,858 17,978 17,662
Gas (Mcf) 416.0 390.2 396.5 366.1
Average realized price:
Oil and condensate (Bbls) $ 24.17 $ 25.16 $ 23.08 $ 25.06
Gas (Mcf) $ 3.21 $ 4.39 $ 3.23 $ 4.94
CONSOLIDATED BALANCE SHEET JUNE 30, DECEMBER 31,
(UNAUDITED, IN THOUSANDS OF DOLLARS) 2002 2001
------------ ------------
ASSETS
Current assets:
Cash & cash equivalents $ 7,657 $ 26,610
Accounts receivable, oil and gas 120,918 92,644
Inventories 9,446 7,332
Commodity derivatives * 9,318 79,012
Other current assets 22,827 25,006
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Total current assets 170,166 230,604
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Oil and gas properties, net (full cost method) 1,419,746 1,408,579
Furniture, fixtures and equipment, net 6,868 6,807
Commodity derivatives * 743 7,409
Other assets 9,396 9,972
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$ 1,606,919 $ 1,663,371
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 148,538 $ 160,814
Commodity derivatives * 8,133 4,217
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Total current liabilities 156,671 165,031
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Other liabilities 8,959 6,288
Commodity derivatives * 3,119 1,813
Long-term debt 375,653 428,631
Deferred taxes 205,472 207,880
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Total long-term liabilities 593,203 644,612
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Company-obligated, mandatorily redeemable,
convertible preferred securities of Newfield
Financial Trust I 143,750 143,750
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STOCKHOLDERS' EQUITY
Common stock 453 449
Additional paid-in capital 372,242 364,734
Treasury stock (26,130) (25,794)
Unearned compensation (7,659) (7,845)
Accumulated other comprehensive income (loss)
Foreign currency translation adjustment (4,056) (8,918)
Commodity derivatives * (16,567) 24,936
Retained earnings 395,012 362,416
------------ ------------
Total stockholders' equity 713,295 709,978
------------ ------------
Total liabilities and stockholders' equity $ 1,606,919 $ 1,663,371
============ ============
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* Associated with SFAS 133.
CONSOLIDATED STATEMENT OF FOR THE FOR THE
CASH FLOWS THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED, IN THOUSANDS OF DOLLARS) JUNE 30, JUNE 30,
------------------------ ------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,270 $ 56,737 $ 32,596 $ 115,088
Depreciation, depletion and amortization 78,027 71,577 149,234 132,723
Deferred taxes (1,194) 21,414 1,710 35,938
Stock compensation 757 703 1,335 1,298
Commodity derivatives * 5,880 (5,719) 11,525 (4,161)
Cumulative effect of change in
accounting principle* -- -- -- 4,794
---------- ---------- ---------- ----------
99,740 144,712 196,400 285,680
Changes in operating assets and liabilities (1,961) 6,299 28 66,862
---------- ---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 97,779 151,011 196,428 352,542
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition, net of cash acquired -- -- -- (264,089)
Additions to oil and gas properties (80,494) (147,992) (164,983) (255,838)
Additions to furniture, fixtures and equipment (731) (924) (1,557) (2,036)
---------- ---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (81,225) (148,916) (166,540) (521,963)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 133,000 189,000 261,000 852,000
Repayments of borrowings (168,000) (187,000) (314,000) (809,000)
Proceeds from issuance of senior notes -- -- -- 174,879
Proceeds from issuances of common stock 1,433 823 4,829 1,353
Purchases of treasury stock (118) (16,461) (336) (17,036)
---------- ---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (33,685) (13,638) (48,507) 202,196
---------- ---------- ---------- ----------
Effect of exchange rate changes on cash
and cash equivalents (340) (274) (334) 563
---------- ---------- ---------- ----------
Increase (decrease) in cash and cash equivalents (17,471) (11,817) (18,953) 33,338
Cash and cash equivalents, beginning of period 25,128 63,606 26,610 18,451
---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 7,657 $ 51,789 $ 7,657 $ 51,789
========== ========== ========== ==========
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* Associated with SFAS 133.
ITEM 9. REGULATION FD DISCLOSURE
On July 22, 2002, Newfield issued a press release that contained the
following estimates of certain significant operating and financial data for the
third quarter of 2002.
THIRD QUARTER 2002 ESTIMATES
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Below are estimates of certain significant operating and financial data
for the third quarter of 2002. Although the Company believes the expectations
reflected in this forward-looking information are reasonable, such expectations
are based upon assumptions and anticipated results that are subject to numerous
uncertainties. Please see the discussion regarding forward-looking information
set forth below.
NATURAL GAS PRODUCTION AND PRICING
Newfield's natural gas production in the third quarter of 2002 is
expected to be 34 - 37 Bcf (370 - 410 MMcf/d). The price received by the Company
for its natural gas production from the Gulf of Mexico and onshore Gulf Coast
has typically tracked the Henry Hub Index. Gas from the Company's Mid-Continent
properties has typically sold at a discount of $0.12 - $0.15 per Mcfe to Henry
Hub. Hedging gains or losses will affect price realizations.
CRUDE OIL PRODUCTION AND PRICING
Consolidated oil production in the third quarter of 2002 is expected to
be 1.4 - 1.6 million barrels (16,000 - 18,000 BOPD). Australian oil production
during the third quarter is expected to be 260 - 285 thousand barrels (2,800 -
3,100 BOPD). The oil volume estimates for the Company's Australian production in
the third quarter reflect production downtime associated with annual maintenance
on the production facilities. The timing of liftings in Australia will impact
reported production and revenues. The price the Company receives from its Gulf
Coast production has typically averaged about $2 below the NYMEX WTI price. Oil
production from the Mid-Continent has typically sold for a $1.00 - $1.50 per
barrel discount to WTI. Australian crude oil sales are based on the Tapis
Benchmark, which has historically been comparable to WTI. Hedging gains or
losses will affect price realizations.
For the full-year 2002, the Company expects to produce 180-185 Bcfe, an
increase of 3-6% over 2001 production volumes. This production estimate excludes
the impact of the previously announced agreement to acquire EEX Corporation,
which is expected to close in late September 2002. The Company may, however,
elect to voluntarily curtail production in response to low oil and gas prices.
Any curtailments could adversely impact the Company's growth projections.
LEASE OPERATING EXPENSE
Newfield's LOE, including domestic production and severance taxes and
resource rent tax in Australia, is expected to be $31 - $35 million in the third
quarter of 2002 ($0.70 - $0.78 per Mcfe). The Company's domestic LOE, including
taxes, is expected to be $0.60 - $0.66 per Mcfe in the third quarter of 2002.
This estimate includes severance taxes of $0.08 - $0.10 per Mcfe. LOE varies and
is subject to impact from, among other things, production volumes and commodity
pricing, tax rates, service costs, the costs of goods and materials and workover
activities.
GENERAL AND ADMINISTRATIVE EXPENSE
Newfield's G&A expense for the third quarter of 2002 is expected to be
$12 - $13 million ($0.26 - $0.29 per Mcfe). This estimate includes accrual of
performance-based pay.
INTEREST EXPENSE
The non-capitalized portion of the Company's interest expense for the
third quarter of 2002 is expected to be $6 - $7 million ($0.14 - $0.16 per
Mcfe), including a $2.3 million payment on its convertible trust preferred
securities. Current borrowings under the Company's bank
facilities are $56 million. The remainder of long-term debt consists of two
separate issuances of senior notes that in the aggregate total $300 million.
Capitalized interest for the third quarter of 2002 is expected to be about $2.2
million.
INCOME TAXES
Including both current and deferred taxes, the Company expects its
consolidated income tax rate in the third quarter of 2002 to be about 35%.
The Company provides information regarding its outstanding hedging
positions in its annual report and quarterly reports filed with the SEC and in
its electronic publication -- @NFX. This publication can be found on the
Company's web page at http://www.newfld.com. Through the web page, stockholders
can elect to receive @NFX through e-mail distribution.
FORWARD-LOOKING INFORMATION
Certain of the statements set forth above regarding estimated or
anticipated third quarter 2002 results, capital spending and yearly production
volumes are forward-looking and based upon assumptions and anticipated results
that are subject to numerous uncertainties. 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 and the
availability of capital resources, labor conditions and other factors set forth
in our Annual Report on Form 10-K for the year ended December 31, 2001. In
addition, the drilling of oil and gas wells and the production of hydrocarbons
are subject to governmental regulations and operating risks.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 8-K to be signed on its behalf by the
undersigned thereunto duly authorized.
NEWFIELD EXPLORATION COMPANY
Date: July 24, 2002 By: /s/ TERRY W. RATHERT
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Terry W. Rathert
Vice President and Chief Financial
Officer (Authorized Officer and
Principal Financial Officer)