Houston Mariners SeminarHouston Mariners SeminarSeptember 21, 2004September 21, 2004David A. TriceDavid A. Trice
The Traditional Shelf (10,000-15,000’) is MatureThe Traditional Shelf (10,000-15,000’) is Mature
Independents are Entering DeepwaterIndependents are Entering Deepwater- Enhanced Economics- Enhanced Economics- Infrastructure Creates Opportunities- Infrastructure Creates Opportunities
The Ever-Changing Gulf of MexicoThe Ever-Changing Gulf of Mexico
1.1.
2.2.
Today’s PresentationToday’s Presentation
3.3. Ultra-Deep ShelfUltra-Deep Shelf- An Emerging Shallow Water Play- An Emerging Shallow Water Play- Newfield’s Unique Exposure- Newfield’s Unique Exposure
8
9
10
11
12
13
14
15
16
1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04
SWGOM DWGOM
GOM Production StrugglesGOM Production Struggles
BCF/D
80
100
120
140
160
180
200
220
240
1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04
DWGOM Rig CountSWGOM Rig Count
GOM Rig Count, Shelf and DeepwaterGOM Rig Count, Shelf and Deepwater
Limited Production Response to High Rig Count
Low Drilling/High Prices = Diminishing Opportunities
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Gas
Pri
ce ($
/MM
BT
U)
0
25
50
75
100
125
150
175
200
225
250
275
300
GO
M J
ack-
up R
ig C
ount
12 Month Strip
GOM Jack-up Rig Count
Rig Count v. Gas PriceRig Count v. Gas Price
GOM ReservesGOM Reserves
0
5,000
10,000
15,000
20,000
25,000
30,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Rese
rves
- Bc
f
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
% D
eepw
ater
Shelf Deepwater % Deep
The Growth of NFXThe Growth of NFX
0
50
100
150
200
250
1993 1995 1997 1999 2001 2003
Gulf of Mexico
Net Production (BCFE)
Mid-Continent
Onshore GC
International
Rockies
LOUISIANATEXAS
Small Targets in Deep WatersSmall Targets in Deep Waters POST-1995 DEEPWATER INFRASTRUCTUREPOST-1995 DEEPWATER INFRASTRUCTURE
Deepwater Processing PlatformNewfield Deepwater 3D Seismic
• Higher Commodity Prices• Extensive Infrastructure• Longer Tie Backs, Sub-sea Completions, Better Flow Assurance
Models• Improved Completion, Development Technologies
•Standardized Sub-sea Trees• Better Synthetic Drilling Muds
•Higher Rate Completions•Frac Packs•Larger Tublars
Gulf of Mexico
M I S S I S S I P P I
Deepwater MilestonesDeepwater Milestones
Toledo Prospect CHVWater Depth: 10,062’ TD: 22,695’
TobagoUCLWater Depth: 9,627’ TD: 18,500’Drilling
Trident UCLWater Depth: 9,687’ TD: 19,539’
Great White ShellWater Depth: 8,070’ TD: 19,705’
Spiderman APCWater Depth: 8,055’ TD: 17,743’
JackCHVWater Depth: 7,000’ TD: 31,000’
St. MaloUCLWater Depth:
6,853’ TD: 29,066’450’ Oil1,400’ Section
ChinookBHPWater Depth: 8,831’ TD: 27,652’620’ Gross Column260’ Net Oil
TahitiCHVWater Depth: 4,292’ TD: 29,000’1,000’ Net Pay400-500 MMBbls
Atlas Prospect APCWater Depth: 8,807’ TD: 16,769’
JubileeAPCWater Depth: 8,730’ TD: 17,850’
VortexKMGWater Depth: 8,344’ TD: 19,330’
Coulomb ShellWater Depth:
7,570’ TD: 18,237’Thunderhorse
BPWater Depth: 6,037’ TD: 29,100’
Lease Expiration - > 2,999’ WaterLease Expiration - > 2,999’ Water
0100200300400500600700800900
1000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Und
rille
d G
OM
Lea
ses
31%
69%
16%
84%
72%
39%
61%
Undrilled Leases > 2,999’ - MajorsUndrilled Leases > 2,999’ - Independents
28% 72%
28%
57%
43%
56%
44%
64%
36%
57%
43%
Source: James K Dodson Company, CSFB Equity Research
Gulf of Mexico
M I S S I S S I P P I
-
DEEPWATER PROJECTS
WORKING INTEREST
NET RESERVE POTENTIAL, BCFE 2003 2004 2005
Llano ORRI - - -Glider 25% 60 40 22 -
Wrigley 50% 50 - 9 15
Sleeper 100% 40 8 10 27Dalmatian 37.50% 60 - 25 23
388 47 79 97
SUCCESS CASE CAPITAL (in MM$)
DVP.
EXPL.
~3
Anduin 50% 70 - 17 25
Rigel 25% 25 7 8 4
2006
50
La Femme 50% 50 7 8 Jacobs 100% 30 8 10 23
23 --
40
186
--
---
Deepwater GOM Deepwater GOM
LLANO On-line ORRI ~3 Bcfe Net Exposure
GLIDER On-line Joint Venture Development NFX WI: 25%
WILDEBEEST NFX WI: 100%
SLEEPER 2003 Lease Sale NFX WI: 100%
ANDUIN Est. Spud: Late 2004 NFX WI: 50%
WRIGLEY Est. Spud: Late 2004 NFX WI: 50%
JACOBS NFX WI: 100%
La Femme NFX WI:
50%
DALMATIAN NFX WI: 37.5%
RIGEL Under Development First Prod: 2H05 NFX WI: 25%
Development
Exploration
Ultra Deep Drilling on the GOM ShelfUltra Deep Drilling on the GOM Shelf - What is Treasure Project? - What is Treasure Project?
Ultra-deep drilling concept (24,000 – 35,000’)Ultra-deep drilling concept (24,000 – 35,000’) Carry deepwater tertiary reservoirs found productive in Carry deepwater tertiary reservoirs found productive in
deepwater fields back under the Shelfdeepwater fields back under the Shelf Trap reservoirs on 4-way closures beneath salt weldTrap reservoirs on 4-way closures beneath salt weld Paleogene and Cretaceous (?) reservoirs could also Paleogene and Cretaceous (?) reservoirs could also
occur at great depth on same 4-way closures occur at great depth on same 4-way closures (productive elsewhere in GOM basin)(productive elsewhere in GOM basin)
Multi-Tcfe targetsMulti-Tcfe targets Major drilling challengesMajor drilling challenges
Ultra-Deep ExplorationUltra-Deep Exploration
Gulf of Mexico
M I S S I S S I P P I
Newfield Exposure:59 Blocks: 45% WI21 Blocks: 100% WI6 Blocks: 25 – 100 % WI
Sale 192 – Industry Leasing Sale 190 – Industry Leasing
Blackbeard *XOM Operated Est. Spud: Late ‘04 / early ‘05NFX WI: 23%
Treasure Island
Tahiti GC 640/641
JB Mountain SMI 223
FerganaShark
Thunder Horse MC 776/777
* All, or substantially all, of NFX’s WI is carried
BP BHP BHP
BHP KMG
BHP XOM
BHP BHP BP / Shell
Petrobras
Treasure Bay *
BHP Operated
NFX WI: 26%
JosephShell
DrillingPTD: ~ 25,000
TARZAN Class Jack-up Rig:TARZAN Class Jack-up Rig:“Scooter Yeargain”“Scooter Yeargain”
Combined Drilling Load: 2.5 million pounds
Liquid Mud Volume: 2,800 BBLS
Mud Pump Input HP: 9,000 ( 3 @ 3,000)
Mud Pump Volume: 1,800 GPM @7500 PSI
Horsepower: 10,750 Rowan’s “Scooter Yeargain”
Blackbeard Prospect –
Operator XOM signs firm well commitment with Rowan to spud between Dec. 1, 2004 and Jan. 31, 2005
Ultra-Deep Challenges (other than the obvious)Ultra-Deep Challenges (other than the obvious)
5-year lease terms are insufficient to allow for 5-year lease terms are insufficient to allow for evaluation & testing of frontier playevaluation & testing of frontier play
Long lead times required for:Long lead times required for:– Geotechnical evaluationsGeotechnical evaluations– Land/partnering negotiationsLand/partnering negotiations– Drilling design / procurementDrilling design / procurement– Well evaluationWell evaluation– Completion design / procurement / testingCompletion design / procurement / testing
SOO’s for Ultra-Deep DrillingSOO’s for Ultra-Deep Drilling
Notice to Lessees:Notice to Lessees:““Ultra deep frontier offers the potential for Ultra deep frontier offers the potential for significant resources…”significant resources…”““Importance of expediting domestic exploration to Importance of expediting domestic exploration to address initial national need.”address initial national need.”““Expedite exploration for new sources of hydo-Expedite exploration for new sources of hydo-carbons at ultra-deep depths.”carbons at ultra-deep depths.”
MMS May Grant an SOO if the Following Applies:MMS May Grant an SOO if the Following Applies:1) Lease in primary term on Aug. 1, 20021) Lease in primary term on Aug. 1, 20022) Targets below 25,000’2) Targets below 25,000’3) Reasonable schedule of work leading to drilling3) Reasonable schedule of work leading to drilling
Treasure Island, Comparison to Deepwater GOMTreasure Island, Comparison to Deepwater GOM
Deepwater * Treasure IslandDepth 20,000' - 30,000'+ 24,000' - 35,000'+
DHC $20 - $100 MM+ $35 - $75 MM+
Reserves .1Bn BBL - 2Bn BBL Roughly equivalent
Prospect Areas Single to several blocks Same
Wells Drilled (thru 2002) 2284 1
Initial Drilling Technology Adequate InadequateInitial Prod./Dev. Technology Inadequate ?
Time to 1st Production 3 - 8 years <1 - 2 years
Lease Term 10 year 5 year
Royalty Relief 5 - 87.5 MMBO 25 BCF(4.16 MMBOE)
*Larger, deepwater prospects
EH&S: A PriorityEH&S: A Priority
• Newfield’s operating practices are often commended by the MMS.
– Nominated for 2003 National SAFE Award in High Activity Category
– Top 3 Finalist, 2002 SAFE Award, High Activity Category
– Lake Jackson District 2001 Award,Production Operations
– Lafayette District 2000 SAFE Award– Top 5 Finalist, 2000 SAFE Award,
High Activity Category– Top 5 Finalist, 1998 SAFE Award,
High Activity Category– National SAFE Award 1997,
Small Producer Category– Houma District 1997 SAFE Award,
Operations at Eugene Island 182A– Lafayette District 1996 SAFE Award
May 15, 2003
Socially Responsible Fund Excels
Neuberger Berman Offering Tops Market With Returns as It Eschews Some Stocks
Within the energy sector, the manager [Ms. Dyott] is bullish on Newfield Exploration Co., partly because the company has consistently increased its reserves and production capacity on a per-share basis.
Another plus, she said, is that Newfield ties executive compensation partly to the company's environmental, safety and health performance. That means that if a significant number of accidents occur within a division, the executive in charge of that group may see his or her compensation reduced.
"There's no better way to ensure good performance than to factor this into management's paychecks," said Ms. Dyott.
* NFX remains one of Neuberger’s two core E&P holdings in this fund.
This presentation by Newfield Exploration Company includes forward-looking information. All This presentation by Newfield Exploration Company includes forward-looking information. All information other than historical facts included in this presentation, including information information other than historical facts included in this presentation, including information regarding estimated proved reserves, production targets, anticipated production rates, planned regarding estimated proved reserves, production targets, anticipated production rates, planned capital expenditures, the number of wells planned to be drilled in the future, the relative risks capital expenditures, the number of wells planned to be drilled in the future, the relative risks and potential of planned exploratory wells, the availability of capital resources to fund capital and potential of planned exploratory wells, the availability of capital resources to fund capital expenditures and business strategy and other plans and objectives for future operations, is expenditures and business strategy and other plans and objectives for future operations, is forward-looking information. Although the Company believes that the expectations reflected in forward-looking information. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such expectations are based upon such forward-looking information are reasonable, such expectations are based upon assumptions and anticipated results that are subject to numerous uncertainties. Actual results assumptions and anticipated results that are subject to numerous uncertainties. Actual results may vary significantly from those anticipated due to many factors, including drilling results, oil 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 and gas prices, industry conditions, the prices of goods and services, the availability of drilling rigs and other support services and the availability of capital resources. In addition, the drilling rigs and other support services and the availability of capital resources. In addition, the drilling of oil and gas wells and the production of hydrocarbons are subject to governmental of oil and gas wells and the production of hydrocarbons are subject to governmental regulations and operating risks.regulations and operating risks.
There are numerous additional uncertainties inherent in estimating quantities of proved oil and There are numerous additional uncertainties inherent in estimating quantities of proved oil and natural gas reserves, including many factors beyond the control of the Company. Reserve natural gas reserves, including many factors beyond the control of the Company. Reserve engineering is a subjective process of estimating underground accumulations of oil and natural engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and function of the quality of available data and of engineering and geological interpretation and judgment. As a result, estimates made by different engineers often vary from one another. In judgment. As a result, estimates made by different engineers often vary from one another. In addition, results of drilling, testing and production subsequent to the date of an estimate may addition, results of drilling, testing and production subsequent to the date of an estimate may necessitate revisions of such estimates. Accordingly, reserve estimates are generally different necessitate revisions of such estimates. Accordingly, reserve estimates are generally different from quantities of oil and natural gas that are recovered.from quantities of oil and natural gas that are recovered.
Forward-Looking StatementsForward-Looking Statements