Newfield Exploration Co. said it made progress on a three-year development plan unveiled last February, as it broke two production records in the first quarter and was able to expand its unsecured credit facility by $200 million.
On Tuesday, Newfield reported record production of 173,600 boe/d in 1Q2018, which included 41% oil, 20% natural gas liquids (NGLs) and 39% natural gas. The production figure just eclipsed guidance for the quarter of 167,000-173,000 boe/d. The Woodlands, TX-based company attributed the results to record production in the Anadarko Basin, which averaged 117,500 boe/d and was also above guidance of 112,000-116,000 boe/d.
Domestic net production was 25% higher year/year (y/y), up from 138,833 boe/d. Meanwhile, Anadarko net production increased 33.7% y/y, up from 87,879 boe/d. Consolidated 1Q2018 production was 176,500 boe/d (42% oil, 20% NGLs, 38% natural gas). Newfield also reported 261,000 bbl of net production from its offshore oil field in China.
"Our plan estimates net production of as much as 200,000 boe/d in 2020," CEO Lee Boothby said during an earnings call to discuss 1Q2018 on Wednesday. "The Anadarko Basin is the asset that will fuel our growth and transition us to living within cash flow from operations."
Based on the strong production results from the first quarter, Newfield raised its full-year domestic production guidance to 175,000-185,000 boe/d, and its full-year Anadarko production guidance to 120,000-130,000 boe/d. The company said it was "on track" to deliver on two goals from the three-year development plan -- specifically, to grow Anadarko and domestic production by 20% and 15% per year, respectively.
Although the company spent $345 million on capital expenditures (capex) during the first quarter, which was in-line with expectations, Boothby said spending in the Anadarko was slightly higher than expected, due in part to increased activity from outside operators and higher working interest through some of the company's held-by-production (HBP) drilling efforts. Capex for the full-year 2018 remained unchanged at $1.3 billion.
"Activity levels in the Anadarko are very high today, but we are laser-focused on our investment levels and generating our 2018 growth outlook for $1.3 billion," Boothby said.
Newfield is focused on the SCOOP (aka the South Central Oklahoma Oil Province) and the STACK (aka the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) plays.
The company ran an 11-rig drilling program in the first quarter, with nine rigs deployed in the Anadarko, one in the Williston Basin and one in the Uinta Basin. Newfield placed 43 wells targeting the Anadarko, with a 52% working interest (WI), into production in 1Q2018. It also placed four Williston wells (40% WI) and seven Uinta wells (76% WI) into production.
The company said it had expanded its unsecured credit facility by $200 million, to a new total of $2 billion, with an extended term to May 2023. Newfield had no borrowings at the end of the quarter.
"We brought in a few new banks," CFO Larry Massaro said during Wednesday's call. "It creates a little bit more optionality and flexibility for us in the future. You have to plan five years out and [determine] what the company is going to look like. Looking at our growth rate in both production and cash flow, we expect to have greater needs possibly.
"It was a really smart thing to do. We took advantage of a great market, getting an unsecured facility, renewing what we had and enlarging it. We're very happy with it."
Newfield reported net earnings of $86 million (43 cents/share), compared to net income of $147 million (73 cents) in the year-ago quarter. The company said the latest earnings were impacted by an unrealized derivative loss of $79 million (minus 39 cents). Revenues totaled $580 million in 1Q2018, compared to $417 million in 1Q2017.