Newfield Exploration Announces Significant Discovery Offshore Malaysia,
Provides Update on Process to Explore "Strategic Alternatives" for
THE WOODLANDS, Texas, April 2, 2013
THE WOODLANDS, Texas, April 2, 2013 /PRNewswire/ -- Newfield Exploration
Company (NYSE: NFX) today announced a significant natural gas discovery on the
Block SK 310 Production Sharing Contract (PSC) area, located 50 miles offshore
Sarawak in approximately 250 feet of water. This is the Company's second
pinnacle reef natural gas discovery in the region.
The B-14 well encountered 1,800 feet of gross column and 1,585 feet of net
natural gas pay in the main carbonate objective. A drill stem test was
recently conducted, which confirmed commerciality of the reservoir. Newfield
estimates that Gas Initially In Place (GIIP) ranges from 1.5 – 3.0 Tcf.
Newfield operates Block SK 310 with a 30% interest. Partners Diamond Energy
Sarawak, a wholly-owned subsidiary of Mitsubishi Corporation and PETRONAS
Carigali, has 30% and 40% interests, respectively.
The B-14 discovery is located less than three miles from Newfield's first
pinnacle reef gas discovery, B-15, also located on Block SK 310 in
approximately 250 feet of water. Recoverable reserves on this discovery are
estimated at approximately 265 Bcf and will be developed in conjunction with
the B-14 discovery.
"This is the largest conventional exploratory success that Newfield has made
in its 25-year history," said Lee K. Boothby, Newfield Chairman, President and
CEO. "Recent amendments to gas terms in Malaysia make natural gas developments
economically competitive with oil developments. We have multiple 'reef'
prospects to test along trend, and additional drilling is expected to resume
in the third quarter with the drilling of our B-17 prospect."
Block SK 310 covers approximately 1.1 million acres. Newfield has identified
additional prospects on the contract area with multi-Tcf of remaining gas
resource potential. Newfield has committed to drill one remaining exploration
well (B-17 prospect) on Block SK 310.
Boothby said, "In December 2012,we signed a new PSC for Block SK 408 and
completed farming into Block SK 319. Both PSCs are in offshore Sarawak. These
areas provide a combined 1.7 million acres and nearly double our acreage
position offshore Malaysia. These blocks extend our successful pinnacle reef
trend providing dozens of high-potential exploration targets, located in and
around producing fields with existing infrastructure and pipelines in place."
Block SK 408 covers 1.1 million acres in water depths ranging from 200 – 400
feet. There have been 16 discoveries in the block so far with existing
infrastructure and production hubs located less than 10 miles from dozens of
potential prospects identified to date by Newfield. The Company has a 10-well
commitment on the block over a three-year initial exploration period. Newfield
will operate the block with a 40% interest. Other partners include Shell (30%)
and PETRONAS Carigali (30%).
Block SK 319 covers approximately 580,000 acres and is located adjacent to
Block SK 408. Water depths are 300 feet or less. Newfield has identified
several exploration prospects in the block and the Company has a five-well
commitment over an initial three-year exploration period. Block SK 319 is
operated by Shell (50%), and Newfield and PETRONAS Carigali each hold a 25%
Company Provides Update on Process to Explore "Strategic Alternatives" for its
In February, Newfield announced that its Board of Directors authorized the
evaluation of strategic alternatives for the Company's international
businesses, which consist of offshore developments and related projects in
Malaysia and China. Goldman, Sachs & Co. has been retained by the Company and
is leading the process. A data room for the international businesses is
expected to open in the second quarter of 2013.
Newfield's actions related to its international businesses at year-end 2012
now allow the Company to move cash from its international businesses to the
U.S. without significant U.S. cash tax implications. Newfield's 2013 domestic
federal taxes remain substantially all deferred. However, because of the
Company's domestic net operating loss carry-forward position, Newfield is not
able to recognize tax benefits from foreign tax credits.
As a result, the Company expects an effective book tax rate in 2013 of 55 –
65%. At current oil prices, Newfield's full-year 2013 international cash
income taxes are expected to be $55 – $65 million.
Newfield Exploration Company is an independent energy company engaged in the
exploration, development and production of crude oil, natural gas and natural
gas liquids. Newfield is focused on North American resource plays of scale.
The Company's principal domestic areas of operation include the Mid-Continent,
the Rocky Mountains and onshore Texas. Internationally, Newfield has oil
developments offshore Malaysia and China.
**This release contains forward-looking information. All information other
than historical facts included in this release, such as information regarding
estimated or anticipated drilling plans, planned capital expenditures, and
estimated production, is forward-looking information. Although Newfield
believes that these expectations are reasonable, this information is based
upon assumptions and anticipated results that are subject to numerous
uncertainties and risks. Actual results may vary significantly from those
anticipated due to many factors, including drilling results, oil and gas
prices, industry conditions, the prices of goods and services, the
availability of drilling rigs and other support services, the availability of
refining capacity for the crude oil Newfield produces in the Uinta Basin, the
availability and cost of capital resources, new regulations or changes in tax
legislation, labor conditions and severe weather conditions (such as
hurricanes). In addition, the drilling of oil and natural gas wells and the
production of hydrocarbons are subject to numerous governmental regulations
and operating risks. Other factors that could impact forward-looking
statements are described in "Risk Factors" in Newfield's 2012 Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q and other subsequent public filings
with the Securities and Exchange Commission, which can be found at
www.sec.gov. Unpredictable or unknown factors not discussed in this press
release could also have material adverse effects on forward-looking
statements. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof. Unless
legally required, Newfield undertakes no obligation to publicly update or
revise any forward-looking statements.
For additional information, please contact Newfield's Investor Relations
SOURCE Newfield Exploration Company
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