Newfield Exploration Co.'s Gulf of Mexico operations were hammered by hurricanes last fall, but at the end of the year, the Houston-based producer still managed to add 467 Bcfe to its proved reserves, upping the total 12% to 2 Tcfe, which was nearly two times 2005's production, the company said Thursday. With no significant acquisitions completed last year, about 96% of the new reserves came through the drillbit.
However, Newfield, with extensive domestic natural gas operations on- and offshore, reported 4Q2005 production dropped dramatically, to 50.3 Bcfe from 69.5 Bcfe for the same period of 2004, reflecting an estimated 16 Bcfe of deferred production related to last fall's hurricanes. For its U.S. operations, natural gas output fell 27% to 39.5 Bcf from 53.8 Bcf in 4Q2004. Total 2005 gas output last year in the United States fell 3%, to 190.9 Bcf from 197.6 Bcf in 2004. In 2005, Newfield oil and gas production reached 241.6 Bcfe worldwide, reflecting a total deferral of about 22 Bcfe related to hurricanes, compared with 2004's 243.6 Bcfe.
"The damage to infrastructure, pipelines and processing facilities continues to impact Newfield's Gulf of Mexico production in early 2006," the company reported. Currently, the company is producing about 215 MMcfe/d, with 80 MMcfe/d of deliverability off-line. Production is expected to ramp up to 250 MMcfe/d by the end of 1Q2006, moving up to 275 MMcfe/d by mid-year. The company also expects 2006 Gulf production will be negatively impacted by the "inability to execute drilling and recompletion programs" in the final half of 2005. Deferrals associated with the hurricanes are forecast to be about 15 Bcfe this year. Gas production is expected to range between 42-47 Bcf (465-520 MMcf/d).
In 4Q2005, Newfield reported net income of $184 million ($1.43/share), compared with $90 million (72 cents) in 4Q2004. The quarter's earnings were impacted by a $147 million gain (74 cents/share) associated with unrealized changes in open derivative contracts, and a $10 million ceiling test writedown (7 cents) associated with a decreased emphasis in Brazil and other international exploration efforts. Without special items, Newfield's net income would have been $99 million (77 cents/share). Because of rising service costs, especially for offshore rigs, Newfield's lease operating expense (LOE) was $1.09/Mcfe, compared with LOE of 69 cents in 4Q2004.
For 2005, Newfield posted net income of $348 million ($2.73/share) on revenues of $1.8 billion. Discounting special items, net income was $482 million ($3.77). Net income in 2004 was $312 million ($2.63) on revenues of $1.4 billion.
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