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Newfield Exploration Management Discusses Q2 2012 Results - Earnings Call Transcript

What I see today is a very positive inflection point. Our transition to an oil company is real and more than half of our production will now be derived from high-value oil and liquids production. This is great news and we're excited about what this means for our future.

As you know, Newfield has certainly changed and evolved over time. We've transitioned from a Gulf of Mexico start up nearly 25 years ago to a company today with core, onshore North American resource plays, lucrative assets in Southeast Asia, and a deep inventory in both oil and natural gas drilling opportunities. We've more than doubled our oil production over the last 4 years, we've transitioned from a company driving growth from natural gas to a company that is driving growth from oil, and we've done it largely organically. We have thousands of low-risk oil development locations that are ready to drill today in our core development areas and a recent assessment results show very exciting early returns in the Cana Woodford, Eagle Ford Shale and in 2 in new plays in the Central Basin region of the Uinta Basin.

More on our assessments later in the call. Our Chief Operating Officer, Gary Packer, will give you a good project level overview.

I'm excited about our results here today and I'm confident we will ultimately achieve our main goal, readying a development inventory of opportunities that will again propel us to double-digit production growth, driven by oil and financed through our internal resources.

I can assure you that our management team is united in delivering strong results for our shareholders and focusing on maximizing our primary product, cash. I'll turn it over to our CFO, Terry Rathert, to quickly cover our financial results from the quarter. Terry?

Terry W. Rathert

Thanks Lee. Our net income in the second quarter, excluding FAS 133 income, was $80 million or $0.61 per share. Revenues for the second quarter were $627 million. Value creation or transition oil is evident. 86% of our revenues in the quarter came from our oil and liquids production. Cash flow for the period was $330 million. Our oil and liquids liftings in the second quarter of 2012 were up 40% over the comparable period in 2011 to 6.1 million barrels, or on average, more than 67,000 barrels of oil per day. Our NGL volumes in the quarter were about 530,000 barrels, only 4% of our total production had its realized price of $28 per barrel. Our oil and liquids production comprised 49% of our total production in the second quarter and we expect that more than half of our production will come from liquids in the back half of the year. I look forward to soon reporting our results in BOEs as compared to Bcfs.

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