NEWFIELD EXPLORATION CO /DE/ - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - July 20, 2011

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EX-99.1 - EXHIBIT 99.1 - NEWFIELD EXPLORATION CO /DE/ex991.htm
EX-99.2 - EXHIBIT 99.2 - NEWFIELD EXPLORATION CO /DE/ex992.htm

Exhibit 99.3
@NFX is periodically published to keep shareholders aware of current operating activities at Newfield. It may include estimates of expected production volumes, costs and expenses, recent changes to hedging positions and commodity pricing.

July 20, 2011

Newfield today released financial and operational results for the second quarter of 2011. The earnings and operational release can be found on our website.

In conjunction with the release of its second quarter earnings and operating results, the Company today provided a comprehensive update on its Uinta Basin drilling programs, including the disclosure of new oil plays available for development. Recent acquisitions have increased the Company’s acreage position to approximately 250,000 net acres. Over the coming months, the Company expects to increase its operated rig count from a historic five-rig program to at least eight rigs in 2012. As a result, oil production growth from the region is expected to increase more than 25% in 2012. A copy of the recent release and other detailed information on the Uinta Basin can be obtained through Newfield’s website.

This edition of @NFX includes:
·  
Third quarter and full-year 2011 estimates
·  
Updated tables detailing complete hedge positions. Items highlighted reflect new and/or changed data since our last publication on April 20, 2011

THIRD QUARTER AND FULL YEAR 2011 ESTIMATES
   
3Q11 & FY11 Estimates
  
   
Domestic
    
Int’l
    
Total
  
Production/Liftings
  
3QE
    
FY11
    
3QE
    
FY11
    
3QE
    
FY11
  
   Natural gas – Bcf
     45 – 49       188 – 190       –       0.2 – 0.2       45 – 49       189 – 190  
   Oil, condensate and NGLs – MMBbls
     3.4 – 4.0       14.1 – 14.4       1.4 – 2.0       6.5 – 6.6       4.8 – 5.9       20.6 – 21.0  
   Total Bcfe
     65 – 73       273 – 276       8 – 12       39 – 40       74 – 84       312 – 316  
                                                 
Average Realized Prices
                                                
   Natural gas – $/Mcf
  
Note 1
    
Note 1
                                  
   Oil, condensate and NGLs – $/Bbl
  
Note 2
    
Note 2
    
Note 3
    
Note 3
                  
   Mcf equivalent – $/Mcfe
                                                
                                                 
Operating Expenses (per Mcfe):
                                                
    Lease Operating
                                                
      Recurring
   $ 0.74 - $0.86     $ 0.72 - $0.87     $ 1.75 - $2.22     $ 1.55 - $1.93     $ 0.87 - $1.04     $ 0.82 - $1.00  
      Major (workovers, etc.)
   $ 0.21 - $0.29     $ 0.14 - $0.18     $ 0.36 - $0.48     $ 0.64 - $0.83     $ 0.23 - $0.31     $ 0.20 - $0.26  
      Transportation
   $ 0.30 - $0.39     $ 0.31 - $0.40       -       -     $ 0.26 - $0.34     $ 0.27 - $0.35  
                                                 
    Production/Taxes Note 4
   $ 0.33 - $0.42     $ 0.29 - $0.39     $ 4.74 - $5.77     $ 4.96 - $6.23     $ 0.90 - $1.10     $ 0.86 - $1.11  
                                                 
   G&A, net
   $ 0.62 - $0.75     $ 0.55 - $0.72     $ 0.16 - $0.21     $ 0.15 - $0.19     $ 0.56 - $0.68     $ 0.50 - $0.65  
                                                 
      Capitalized internal costs
                                   $ (0.33 - $0.40 )   $ (0.30 - $0.38 )
                                                 


 
 
 

   Interest Expense
        
$0.51 - $0.60
$0.51 - $0.55
             
   Capitalized Interest
        
($0.23 - $0.30)
($0.22 - $0.27)
             
Tax rate (%)Note 5
        
36% - 38%
36% - 38%
             
Income taxes (%)
            
  Current
        
18% - 22%
18% - 22%
  Deferred
        
78% - 82%
78% - 82%

Note 1:
The price that the Company receives for natural gas production from 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.  Realized natural gas prices for our Mid-Continent properties, after basis differentials, transportation and handling charges, typically average 90-95% of the Henry Hub Index.
Note 2:
The price the Company receives for its Gulf Coast oil production, excluding NGLs, typically averages about 98-102% of the NYMEX West Texas Intermediate (WTI) price. The price the Company receives for its oil production in the Rocky Mountains, excluding NGLs, is currently averaging about $15-$17 per barrel below the WTI price. Oil production from the Company’s Mid-Continent properties, excluding NGLs, typically averages 90-95% of the WTI price.
Note 3:
Oil sales from the Company’s operations in Malaysia typically sell at a slight discount to Tapis, or today about 110-115% of WTI. Oil sales from the Company’s operations in China typically sell at a premium of up to $10 per barrel greater than the WTI price.
Note 4:
Guidance for production taxes determined using the average of the strip at 06/21/11 ($94.54/bbl, $4.50/mcf).
Note 5:
Tax rate applied to earnings excluding unrealized gains or losses on commodity derivatives.
 
NATURAL GAS HEDGE POSITIONS
Please see the tables below for our complete hedging positions.

The following hedge positions for the third quarter of 2011 and beyond are as of July 19, 2011:

Third Quarter 2011
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
24,840 MMMBtus
$6.30
  
—
  
—
  
—
10,120 MMMBtus*
—
  
$6.00 — $7.91
  
$6.00
  
$7.75 — $8.03
               
Fourth Quarter 2011
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
12,030 MMMBtus
$6.03
  
—
  
—
  
—
17,440 MMMBtus*
—
  
$5.86 — $7.37
  
$5.50 — $6.00
  
$6.60 — $8.03
               
First Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   5,460 MMMBtus
$5.42
  
—
  
—
  
—
 22,750 MMMBtus*
—
  
$5.59 — $6.55
  
$5.00 — $6.00
  
$5.20 — $7.10

Second Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   5,460 MMMBtus
$5.42
  
—
  
—
  
—
 22,750 MMMBtus*
—
  
$5.44 — $6.26
  
$5.00 — $5.75
  
$5.20 — $7.00
               
Third Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   5,520 MMMBtus
$5.42
  
—
  
—
  
—
 23,000 MMMBtus*
—
  
$5.44 — $6.26
  
$5.00 — $5.75
  
$5.20 — $7.00
               
 
 
 
2
 
 
Fourth Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
    1,860 MMMBtus
$5.42
  
—
  
—
  
—
  15,070 MMMBtus*
—
  
$5.51 — $6.41
  
$5.00 — $6.00
  
$5.20 — $7.55
               
First Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
    4,500 MMMBtus
$5.33
  
—
  
—
  
—
  10,800 MMMBtus*
—
  
$5.58 — $6.89
  
$5.00 — $6.00
  
$6.00 — $7.55
               
Second Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
    4,550 MMMBtus
$5.33
  
—
  
—
  
—
  10,920 MMMBtus*
—
  
$5.44 — $6.36
  
$5.00 — $5.75
  
$6.00 — $6.65
               
Third Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
    4,600 MMMBtus
$5.33
  
—
  
—
  
—
  11,040 MMMBtus*
—
  
$5.44 — $6.36
  
$5.00 — $5.75
  
$6.00 — $6.65
               
Fourth Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
    4,600 MMMBtus
$5.33
  
—
  
—
  
—
    6,770 MMMBtus*
—
  
$5.24 — $6.20
  
$5.00 — $5.75
  
$6.00 — $6.65

*These 3-way collar contracts are standard natural gas collar contracts with respect to the periods, volumes and prices stated above. The contracts have floor and ceiling prices per MMMBtu as per the table above until the price drops below a weighted average price of $4.26 per MMMBtu. Below $4.26 per MMMBtu, these contracts effectively result in realized prices that are on average $1.30 per MMMBtu higher than the cash price that otherwise would have been realized.

The following table details the expected impact to pre-tax income from the settlement of our derivative contracts, outlined above, at various NYMEX gas prices.

       
Gas Prices
    
   
$4
$5
$6
$7
$8
$9
 
2011 (in millions)
          
 3rd  Quarter
  
$72
$42
$8
($17)
($43)
($78)
 4th  Quarter
  
$48
$27
$ -
($14)
($35)
($64)
Total 2011
  
$120
$69
$8
($31)
($78)
($142)
               
2012 (in millions)
          
 1st  Quarter
  
$35
$16
($7)
($19)
($47)
($75)
 2nd Quarter
  
$31
$12
($7)
($26)
($54)
($82)
 3rd  Quarter
  
$32
$12
($7)
($26)
($54)
($83)
 4th  Quarter
  
$20
$9
($4)
($14)
($29)
($46)
Total 2012
  
$118
$49
($25)
($85)
($184)
($286)
 
 
 
3
 
 
               
2013 (in millions)
          
 1st  Quarter
  
$20
$8
($3)
    ($12)
($24)
($39)
 2nd Quarter
  
$19
$6
($3)
($14)
($30)
($46)
 3rd  Quarter
  
$19
$6
($3)
($15)
($30)
($46)
 4th  Quarter
  
$13
$3
($3)
($13)
($25)
($36)
Total 2013
  
$71
$23
($12)
($54)
($109)
($167)


 
In the Rocky Mountains, we hedged basis associated with approximately 7 Bcf of our natural gas production from July 2011 through December 2012 to lock in the differential at a weighted average of $0.92 per MMBtu less than the Henry Hub Index.  In total, this hedge and the 8,000 MMBtu per day we have sold on a fixed physical basis for the same period results in an average basis hedge of $0.92 per MMBtu less than the Henry Hub Index.

In the Mid-Continent, we hedged basis associated with approximately 1 Bcf of our anticipated Stiles/Britt Ranch natural gas production from July 2011 through August 2011.  In total, this hedge and the 30,000 MMBtu per day we have sold on a fixed physical basis for the same period results in an average basis hedge of $0.52 per MMBtu less than the Henry Hub Index.  We have also hedged basis associated with approximately 23 Bcf of our natural gas production from this area for the period September 2011 through December 2012 at an average of $0.55 per MMBtu less than the Henry Hub Index.

Approximately 14% of our natural gas production correlates to Houston Ship Channel, 16% to Columbia Gulf, 16% to Texas Gas Zone 1, 3% to Southern Natural Gas, 4% to Tetco ELA, 1% to Tenn 100, 6% to CenterPoint/East, 20% to Panhandle Eastern Pipeline, 2% to Waha, 6% to Colorado Interstate, and 12% to others.

CRUDE OIL HEDGE POSITIONS
 
The following hedge positions for the third quarter of 2011 and beyond are as of July 19, 2011:
               
Third Quarter 2011
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   920,000 Bbls
$81.51
  
—
  
—
  
—
1,748,000 Bbls*
—
  
$  82.37 — $112.28
  
$75.00 — $100.00
  
$102.25 — $129.75
               
Fourth Quarter 2011
              
   
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   920,000 Bbls
$81.51
  
—
  
—
  
—
1,932,000 Bbls*
—
  
$  81.67 — $111.68
  
$75.00 — $100.00
  
$102.25 — $129.75
               
First Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   546,000 Bbls
$82.27
  
—
  
—
  
—
2,639,000 Bbls*
—
  
$  83.10 — $115.50
  
$75.00 — $100.00
  
$106.30 — $137.80
               
Second Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   546,000 Bbls
$82.27
  
—
  
—
  
—
2,639,000 Bbls*
—
  
$  83.10 — $115.50
  
$75.00 — $100.00
  
$106.30 — $137.80
               
 
 
 
4
 
 
Third Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   552,000 Bbls
$82.27
  
—
  
—
  
—
2,668,000 Bbls*
—
  
$  83.10 — $115.50
  
$75.00 — $100.00
  
$106.30 — $137.80
               
Fourth Quarter 2012
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
   552,000 Bbls
$82.27
  
—
  
—
  
—
2,668,000 Bbls*
—
  
$  83.10 — $115.50
  
$75.00 — $100.00
  
$106.30 — $137.80
               
First Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
1,170,000 Bbls*
—
  
$  80.00 — $110.54
  
$80.00
  
$109.50 — $111.40
               
Second Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
1,183,000 Bbls*
—
  
$  80.00 — $110.54
  
$80.00
  
$109.50 — $111.40
               
Third Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
1,196,000 Bbls*
—
  
$  80.00 — $110.54
  
$80.00
  
$109.50 — $111.40
               
Fourth Quarter 2013
              
 
Weighted Average
  
Range
Volume
Fixed
  
Collars
  
Floor
  
Ceiling
1,196,000 Bbls*
—
  
$  80.00 — $110.54
  
$80.00
  
$109.50 — $111.40

*These 3-way collar contracts are standard crude oil collar contracts with respect to the periods, volumes and prices stated above. The contracts have floor and ceiling prices per Bbl as per the table above until the price drops below a weighted average price of $82.12 per Bbl. Below $82.12 per Bbl, these contracts effectively result in realized prices that are on average $18.50 per Bbl higher than the cash price that otherwise would have been realized.

The following table details the expected impact to pre-tax income from the settlement of our derivative contracts, outlined above, at various NYMEX oil prices. 

   
Oil Prices
  
   
$50
$60
$70
$80
$90
$100
$110
  
                   
2011 (in millions)
              
 3rd  Quarter
  
$55
$46
$25
$6
($4)
($17)
($33)
  
 4th  Quarter
  
$57
$48
$26
$7
($4)
($17)
($33)
  
Total 2011
  
$112
$94
$51
$13
($8)
($34)
($66)
  
                   

 
5
 


 
2012 (in millions)
              
 1st  Quarter
  
$62
$54
$30
$8
$1
($9)
($18)
  
 2nd Quarter
  
$62
$53
$30
$8
$1
($10)
($18)
  
 3rd  Quarter
  
$63
$54
$31
$8
$1
($10)
($18)
  
 4th  Quarter
  
$63
$54
$31
$8
$2
($10)
($18)
  
Total 2012
  
$250
$215
$122
$32
$5
($39)
($72)
  
                   
2013 (in millions)
              
 1st  Quarter
  
$29
$23
$12
$ -
$ -
$ -
$ -
  
 2nd Quarter
  
$30
$24
$12
$ -
$ -
$ -
$ -
  
 3rd  Quarter
  
$30
$24
$12
$ -
$ -
$ -
$ -
  
 4th  Quarter
  
$30
$24
$12
$ -
$ -
$ -
$ -
  
Total 2013
  
$119
$95
$48
$ -
$ -
$ -
$ -
  


We provide information regarding our outstanding hedging positions in our annual and quarterly reports filed with the SEC and in our electronic publication -- @NFX.  This publication can be found on Newfield’s web page at http://www.newfield.com. Through the web page, you may elect to receive @NFX through e-mail distribution.

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, Appalachia and the Gulf of Mexico. The Company has international operations in Malaysia and China.
 
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