• Newfield’s production from the Uinta Basin continues to grow with current gross production recently setting a new record of approximately 36,000 BOEPD, or 25,000 BOEPD net.
• Newfield has approximately 230,000 net acres in the Maverick Basin of Texas and has been active in Maverick, Zavala and Dimmit counties since 2010.
• Newfield’s net production in the Williston Basin recently achieved a new high of more than 10,000 BOEPD.
Newfield Exploration Company (NYSE: NFX) today issued its mid-year operational update, highlighting recent positive results from key assessment plays in the Company’s portfolio of assets. In addition, Newfield placed an updated slide deck on its website. The updates were provided in advance of second quarter earnings, planned for release after market close on July 24, 2012. A conference call will be held at 7:30 a.m. CDT on July 25, 2012.
“We have seen solid assessment results year-to-date in our key domestic operating areas,” said Lee K. Boothby, Newfield Chairman, President and CEO. “Our 2012 plan called for the early and rapid assessment of new plays in the Uinta’s Central Basin, the Cana Woodford in the Anadarko Basin of Oklahoma and super extended laterals (SXLs) in the Maverick Basin Eagle Ford. We are seeing very encouraging results in each area today and feel confident that the economics of these plays will allow us to move them into aggressive development in 2013 and beyond.”
“Our shift to oil, which began in 2009, continues as more than half of our expected production in the second half of 2012 will be oil/liquids. For 2012, we expect our oil/liquids production will increase nearly 30% over 2011 levels. Our liquids production today is largely ‘black oil’. With the strength of our performance year-to-date, we are again revising our full-year 2012 production expectations higher. Our focus today is clear: grow oil production, grow cash flow and position our Company for strong performance in 2013.”
Newfield’s oil and liquids liftings in the second quarter of 2012 were 6.1 MMBbls (67,000 BOPD) and comprised 49% of total Company production. Approximately 4% of Newfield’s second quarter production was NGLs. Second quarter 2012 oil/liquids volumes were 40% higher than in the comparable period of 2011. Natural gas production in the second quarter of 2012 was approximately 40 Bcf, or an average of approximately 440 MMcf/d. On an equivalent basis, Newfield’s production in the second quarter of 2012 was 76.4 Bcfe.
For the second time this year, Newfield raised its 2012 expectations for total Company production to 296 – 304 Bcfe (previous guidance was 292 – 302 Bcfe). With increasing activities planned in key oil regions in late 2012 and ongoing leasing in the Cana Woodford, Newfield expects that its capital investments in 2012 will approximate $1.7 billion, or the “upper end” of its original guidance range of $1.5 – $1.7 billion.
Assessment Plays Benefitting from “Controlled Flowback”
In all of Newfield’s wet gas condensate and oil assessment plays, the Company is employing “controlled flowback” in its completion practices. This includes recent horizontal well results disclosed in this news release from the Cana Woodford, Uinta Basin, Eagle Ford Shale and Williston Basin. Through this practice, initial production rates are being intentionally held back to minimize pressure drawdown, maintain higher reservoir pressure and maximize oil recovery over time.
In late 2010, Newfield began to aggressively lease acreage in the Cana Woodford play in the Anadarko Basin of Oklahoma. At the time, these leases were south and east of the majority of industry activity. Today, more than 45 industry rigs are running in this play. Newfield now has more than 135,000 net acres in the play, up from 125,000 net acres in early 2012. The Company ran an average of five operated rigs in the first half of 2012 and, with continued strong results, plans to further increase activity levels in 2013.
Newfield is very encouraged with its results in the play to date. Today’s drilling campaign is focused on the “South Cana” – an area prone to high oil and liquids yields that encompasses about 80,000 net acres. Recent notable wells from the Company’s South Cana drilling program include:
Wright 1H-9 – Based on available public data, Newfield’s Wright well (74% working interest) had the highest initial flow rate (all rates are 24-hour) achieved to date in the South Cana Woodford. The well had an initial gross production rate of more than 1,900 BOEPD (27% oil). The well averaged approximately 1,450 BOEPD over its first 7 days of production. The well has a 4,730’ lateral length.
Branch 1H-16 – The Branch well (100% working interest) had an initial gross production rate of more than 1,850 BOEPD (27% oil). The well averaged approximately 1,550 BOEPD over its first 7 days of production. The well has a 4,950’ lateral length.
Whitt 1H-25 – The Whitt well (93% working interest) had an initial gross production rate of approximately 1,050 BOEPD (50% oil). The well averaged nearly 900 BOEPD over its first 7 days of production. The well has a lateral length of 4,900’.
Faith 1H-12 – The Faith well (52% working interest) had an initial gross production rate of nearly 1,000 BOEPD (22% oil). The well averaged approximately 900 BOEPD over its first 30 days of production. The well has a lateral length of 4,200’.
Greenwood 1H-4 – The Greenwood well (63% working interest) had an initial gross production rate of 1,000 BOEPD (16% oil). The well averaged 930 BOEPD over its first 7 days of production. The well has a lateral length of 4,900’.
Williams 1H-19 – The Williams well (94% working interest) had an initial gross production rate of approximately 650 BOEPD (69% oil). The well averaged 430 BOEPD over its first 30 days of production. The well has a lateral length of 4,900’.
The Company also has approximately 55,000 net acres located in the “North Cana.” This region is in very early stages of assessment, with drilling planned in the second half of 2012.
Newfield is a proven operator in the Woodford formation of Oklahoma where it has drilled approximately 380 horizontal wells in the Arkoma Woodford since 2005. In the second half of 2012 and into 2013, Newfield plans to drill SXL wells (up to 10,000’ laterals) in the Cana Woodford, a practice that led to improved production rates, higher recoveries of hydrocarbons, lower finding and development costs and improved returns in the Arkoma Woodford.
Net production from Newfield’s Mid-Continent region is approximately 57,000 BOEPD.
Newfield’s net production in the Williston Basin recently achieved a new high of more than 10,000 BOEPD. The increase reflects strong production rates from six second-quarter 2012 well completions. The recent wells had average initial gross production rates of approximately 2,650 BOEPD. Average lateral lengths were more than 11,000’.
Moberg Federal 29-32-2H – A recent notable completion was the Moberg well (72% working interest), which had initial gross production of approximately 3,500 BOEPD and averaged 1,380 BOEPD over its first 30 days of production. The well was drilled on a two-well pad and had a lateral length of approximately 11,000’. The well was drilled and completed for approximately $10 million gross.
As drilling has transitioned into development from common pad locations, efficiency gains continue to be realized. Newfield recently drilled a SXL well with a lateral length of 11,500’ in 20 days. This compares to a 2010 and 2011 average days-to-depth of 45 days and 35 days, respectively. Over the last two years, increased lateral lengths have helped to lower finding and development costs, increase recoveries of oil in place, improve returns and minimize the surface impact of operations.
“In the fourth quarter of 2011, we purposely slowed our activities in the Williston Basin to get a handle on well costs and improve upon our overall execution in the field,” said Boothby. “Our team’s execution in 2012 has been superb and we now have a high rate-of-return development inventory that will drive profitable oil growth over the next several years.”
The Company is on pace to grow its oil production from the Williston Basin approximately 35% over 2011 levels. Newfield is running three operated rigs in the Williston Basin today where it has approximately 100,000 net acres and an inventory of more than 300 ready-to-drill locations in the Bakken and Three Forks formations. Additional resource potential exists in deeper benches within the basin and infill drilling and field studies are currently underway.