With a $5.5 billion merger with Encana Corp. in the offing, Newfield Exploration Co. on Thursday reported a more than one-third increase in Midcontinent production and said it would spend more to reach higher production targets by year's end.
The Woodlands, TX-based company reported domestic net production of 199,000 boe/d (37% oil) in 3Q2018, a 25.2% increase from the year-ago quarter (159,000 boe/d) and above guidance. Newfield's domestic production of crude oil (74,300 b/d) fell within guidance for the quarter, while natural gas (462 MMcf/d) and natural gas liquids (NGL) (48,000 b/d) beat their respective guidance ranges.
In the Anadarko Basin, where Newfield had 11 operated rigs deployed, production averaged 143,700 boe/d in 3Q2018, up 36.9% from the year-ago quarter (105,000 boe/d) and 9.6% sequentially (131,100 boe/d). As with the overall figures, crude oil production (43,000 b/d) in the Anadarko fell within guidance for the quarter, but natural gas (341 MMcf/d) and NGL (44,000 b/d) production beat their estimates.
Newfield also produced 21,400 boe/d (68% oil) in the Williston Basin in the third quarter, while production in the Uinta (83%) and Arkoma basins averaged 19,700 and 13,800 boe/d, respectively. The company had one rig deployed in the Williston and one in the Uinta during the quarter.
The company made several tweaks to its 4Q2018 and full-year 2018 production guidance, both in terms of total production and in the Anadarko.
For the fourth quarter, total production is now estimated to range from 185,000-200,000 boe/d, compared to 185,000-195,000 previously. Full-year production is now estimated at 185,000-190,000 boe/d, instead of 180,000-190,000 boe/d. In the Anadarko, 4Q2018 production is now estimated to fall within 130,000-145,000 boe/d, up from 130,000-140,000 boe/d. Full-year Anadarko production is expected to be between 130,000-135,000 boe/d -- it was 125,000-135,000 boe/d previously.
Newfield also raised its capital spend guidance to $1.4 billion for 2018, up from $1.35 billion. The company attributed the increase to accelerated completions in the Anadarko and the continuation of its operated rig in the Uinta through the end of 2018.
During an earnings call Thursday, CEO Lee Boothby said the company was continuing to see "great results" in the South Central Oklahoma Oil Province (SCOOP) and the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties (STACK).
Newfield holds about 24,000 net acres in the northwest part of the STACK, which the company has focused on under its SCORE (Sycamore, Caney, Osage, Resource Expansion) initiative.
"We continue to see solid well results in the STACK, and we are rapidly migrated to cube development commencing row drilling operations across multiple drilling units," Boothby said. "This effort will allow the team to optimize completions, test simultaneous cube development of the Meramec, Osage and Woodford formations, and reduce downtime associated with the outside operated activities."
Boothby added that the company expects to generate more than $140 million of excess cash in the Williston in 2018.
Newfield reported net income of $224 million ($1.11/share) in 3Q2018, compared to net income of $87 million (44 cents) in the year-ago quarter. The company said earnings were affected by an unrealized derivative gain of $20 million (10 cents), so without the adjustment net income would have been $204 million ($1.01).