This year Newfield Exploration Co. plans to continue its focus on oil and liquids-rich natural gas activities, which executives said Thursday served the company well. By targeting the more lucrative commodities last year, the company grew oil's share of its reserves portfolio to one-third.
Nearly 60% of Newfield's spending last year was focused on oil and liquids-rich gas assets. Domestic oil production increased 20% over 2009, the company said. Because of the increased oil profile, Newfield's present value minus 10% of proved reserves at year-end was $6.8 billion, an increase of more than 80% over the previous year.
"In short, we've moved low-cost, low-margin gas reserves to probable and replaced them with higher-cost, high-margin oil reserves..." CEO Lee Boothby told financial analysts during a conference call Thursday. "We've delivered on our promise to invest in oil over gas and the results are evident...oil will likely account for two-thirds of our revenues this year."
Newfield said it plans to invest about $1.7 billion in 2011, which is about what 2011 cash flow from operations is expected to be. About two-thirds of the budget is to be allocated to oil projects and substantially all of the remainder is planned for liquids-rich gas plays.
For 2011 Newfield said it expects its production will be 312-323 Bcfe, up 8-12% over 2010. Domestic oil production is expected to increase about 50% in 2011. Natural gas production is expected to remain flat, despite a significant reduction in gas investments.
Newfield is growing its profile in the Eagle Ford Shale of South Texas. Last year's assessment program in the play included 11 wells, all of which encountered light oil. Lateral lengths on the wells were approximately 5,000 feet. Newfield said it believes that substantially all of its Eagle Ford acreage in the Maverick Basin is within the oil window. This year Newfield plans to run two to three operated rigs in the Eagle Ford and has a service agreement in place for fracture stimulation services in 2011-2012. Newfield said it may elect to increase its activity in the second half of 2011.
Newfield said it continues to have success with its Granite Wash development program, located mainly in Wheeler County, TX. For 2011 the company plans to drill about 24 wells with a four-rig operated program. This level of activity is expected to grow production more than 20% over 2010. The planned 2011 program will focus almost exclusively on the condensate and liquids-rich Marmaton formation in Stiles/Britt Ranch and initial assessment of new acreage.
With substantially all of its Woodford Shale acreage in the gas portion of the play held by production, Newfield said it has shifted its primary focus to a new play in the area: the "oily" Woodford, which is located along the western edge of the company's acreage in Coal and Hughes counties, OK.
For 2011 Newfield plans to run a two to three operated rig program in the Arkoma Basin, primarily focusing on the oil and liquids-rich portion of the play. Newfield said it expects that its gas production in the region will decline moderately in 2011.
In 2011 Newfield plans to maintain a five-rig program in the Greater Monument Butte field area and expects to grow its Uinta Basin production more than 15% over 2010. A significant portion of the 2011 drilling program will be dedicated to development and delineation wells on the acreage north and adjacent to the Monument Butte Unit. The remainder of the drilling program will focus on development drilling in the Greater Monument Butte Unit.
Newfield more than doubled its Williston Basin production in 2010 and today the area is producing about 7,000 boe/d net. Nearly all of the Company's 2011 drilling campaign is focused on development areas, both on the Nesson Anticline and west of the Nesson.
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