Joe B. Foster, former Chairman of Tenneco Oil Company, founded Newfield in 1988. The Company was capitalized with $9 million by an investment group led by Charles Duncan, the University of Texas endowment funds and the founding employees.
In May 1990, Newfield purchased its first property - Eugene Island 172. Following an active workover program, production increased from 0.2 MMcf/d to over 20 MMcf/d by the end of 1990. Eugene Island 172 continues to produce today. In April 1990, a second private placement added $37 million to Newfield's capital. New investors included Yale and Duke Universities, Dartmouth College and Warburg, Pincus Investors, L.P.
The company made its first operated exploratory discovery at Ship Shoal 157 in late 1990. A six well drilling program increased production to 4,500 barrels of oil equivalent per day.
Newfield has a history of adding value behind acquisitions. The acquisition of Eugene Island 181/182 resulted in a successful seven well drilling program and production increased to over 65 MMcfe/d.
In November 1993, Newfield completed its initial public offering of common stock and began trading on the New York Stock Exchange under the ticker symbol "NFX." The Company went public at a split-adjusted price of $4.38 per share.
In late 1993, Newfield acquired the Eugene Island 251/262 Field. Newfield drilled five successful wells and installed a new platform and pipeline. Eugene Island 251/262 remains one of Newfield's most significant fields today.
In late 1994, Newfield acquired a farm-in position in the South Timbalier 148 Field and began a drilling program. During 1995, four successful exploratory wells and two development wells were drilled. Three platforms were later installed and production peaked at 100 MMcfe/d.
In 1996, Newfield began drilling activities offshore Louisiana at West Delta 152 and Ewing Bank 947 Fields. The drilling programs were successful and added significant new reserves. Production in these fields increased to over 100 MMcfe/d.
In 1997, Newfield made an acquisition in the Western Gulf of Mexico for $43 million. A key prospect was East Cameron 286, where Newfield had identified drilling prospects. A successful wildcat and four delineation wells were drilled. Production began from these wells in the fourth quarter of 1998 at more than 45 MMcfe/d.
Newfield began to diversify its asset base in 1995. A logical expansion was into similar geologic plays onshore in South Louisiana. In early 1998, Newfield drilled a significant discovery in the Broussard area near Lafayette. The field is now producing more than 30 MMcf/d.
During 1999, Newfield continued to expand its focus areas. New joint ventures along the Texas and Louisiana coasts increased the Company's prospect inventory. At the same time, Gulf of Mexico production reached record levels. Two significant acquisitions were completed in the Gulf of Mexico during the year, adding more than 170,000 acres and new drilling prospects. Newfield also acquired two producing oil fields offshore Australia. This was Newfield's first international production.
In early 2000, Newfield closed on the acquisition of three producing gas fields in South Texas for $139 million. This acquisition established the Company as a serious onshore player. Newfield's move to establish onshore operations did not dilute the Company's Gulf of Mexico focus. gulf production increased 10% in 2000. Newfield recorded record earnings revenue and cash flow in 2000.
In early 2001, Newfield completed its largest ever acquisition - Lariat Petroleum and established a new focus area in the Anadarko Basin of Oklahoma. More than just properties, Newfield acquired a going concern. Lariat had a skilled team of employees with a track record of adding value.
In the Gulf of Mexico, the Company made exciting discoveries at West Cameron 294 and Eugene Island 251. West Cameron 294 was Newfield's first deep shelf discovery and two wells were placed online at 35 MMcf/d and 300 BCPD. A third well at West Cameron 294 was drilled in late 2001 and tested 23 MMcf/d. At Eugene Island 251, a significant new field was found adjacent to Newfield's largest producing offshore asset.
2001 was a year of extreme volatility in the energy sector. Newfield managed the volatility through hedging its oil and gas production, shifting spending levels throughout its broader asset base and by curtailing production in periods of weak pricing. A share buy back program was also utilized in 2001. Newfield entered 2002 with a broader asset base, a deeper inventory of prospects and a strong balance sheet.
Newfield acquired EEX Corporation in 2002. The acquisition was announced in May and closed in November. This acquisition provided the Company with a significant asset base in South Texas. In addition, the acquisition provided overlapping acreage in South Louisiana and about 60 blocks in the deepwater Gulf of Mexico. Following this transaction, nearly half of Newfield's production is attributable to onshore fields - a marked difference from the Company's asset portfolio in the mid-1990s.
The Company had a good year with the drillbit in 2002. Excluding the EEX acquisition, Newfield added 181 Bcfe domestically at an average cost to find and develop of $1.70 per Mcfe, replacing 105% of domestic production. Including the acquisition, Newfield replaced 255% of 2002 production with the addition of new reserves.
Newfield enjoyed exploration success in the deep shelf play in the Gulf of Mexico. The Company drilled four successful wells out of seven attempts and posted finding costs of less than $1.50 per Mcfe in the Gulf of Mexico in 2002.
Newfield conducted an aggressive drilling program along the Gulf Coast in 2003. Following the late 2002 acquisition of EEX Corporation, Newfield had an inventory of ready-to-drill ideas. In 2003, the Company drilled more than 69 wells in South Texas and Louisiana compared to only eight wells in all of 2002. About 50 of the wells were drilled on properties acquired from EEX.
Newfield announced a record exploration budget in early 2003 -- $200 million. In the deep shelf play of the Gulf of Mexico, the Company drilled a significant discovery in early May at West Cameron 73. Newfield owns a 70% working interest in the field.
We established operations in Malaysia in early 2004. Our Malaysian portfolio includes current production of about 10,200 BOPD (gross), exploration and development opportunities in shallow water and high potential exploration prospects in deepwater. In August 2004, Newfield acquired Inland Resources in a $575 million transaction. The acquisition established a new focus area in the Rocky Mountains. Inland had proved reserves of 326 BCFE. We replaced nearly 300% of 2004 production with new reserves.
Proved reserves increased 12% to 2 Tcfe. Diversification is evident with reserves more evenly distributed among our focus areas: 29% in the Mid-Continent, 23% onshore Gulf Coast, 20% Rocky Mountains, 20% Gulf of Mexico and 8% International.
Added 467 Bcfe of proved reserves, nearly two times 2005 production. Almost all (96%) of the reserve additions came through the drillbit. No significant acquisitions were completed in 2005.
Made several significant exploration discoveries, including Grove in the U.K. North Sea and Wrigley in the deepwater Gulf of Mexico.
Gained access to 52,000 acres in three South Texas counties through a multi-year joint venture with a major oil company. Initial wells drilled under the joint venture were successful and up to 10 additional wells are expected to be drilled in the remainder of 2006. We plan to drill about 100 wells onshore Texas in 2006.
Newfield assimilated the Inland acquisition from 2004 and drilled nearly 200 wells in the Monument Butte Field in Utah. Production grew about 25%, exiting 2005 at more than 10,000 BOPD.
The Company began development of four fields offshore Malaysia. Malaysian production is expected to increase from a year-end 2005 rate of 10,000 BOPD gross to more than 45,000 BOPD gross in 2008. In 2006, we plan to drill 10-12 shallow water wells (PM 318, 323) and the first deepwater well (Block 2C).
We also began development of two fields in China's Bohai Bay. First production is expected in the second half of 2006.
Newfield invested approximately $2 billion in 2006 reflecting the large development projects underway and the high level of activity in its focus areas.
In 2006, Newfield's diversification became apparent and more than 50% of total Company reserves were located in longer-lived resource plays.
These include: Monument Butte in Utah, the Woodford Shale play in southeastern Oklahoma and the Mountain Front Wash play of the Stiles/Britt Ranch in western Oklahoma and the Texas Panhandle.
With more than 100,000 acres, Monument Butte of the Rocky Mountain Region provides the Company with thousands of drilling location in shallow oil sands. During 2006, the region conducted a successful 20-acre infill drilling pilot program in Monument Butte. The region drilled approximately 200 wells and operates 100% of our reserves in Monument Butte.
We drilled more than 350 wells in the Mid-Continent in 2006 and have a multi-year inventory of lower risk drilling opportunities. Our two most active plays in 2006 were the Woodford Shale and Mountain Front Wash play of the Stiles/Britt Ranch, both characterized by multiple producing horizons and large acreage positions. In regards to the Woodford Shale, we signed a gathering agreement with MarkWest and the number of operated drilling rigs climbed to 13. At the end of 2006, the company has acquired more than 130,000 net acres in the Woodford Shale. The Company has more than 50,000 net acres in the Mountain Front Wash play and four operated drilling rigs at the end of 2006. The Mid-Continent region exited the year with record production levels in excess of 180 MMcfe/d.
In the Gulf of Mexico, we owned interests in about 290 leases on the shelf and 70 leases in deepwater (approximately 1.8 million acres gross) with more than 600 gross producing wells at the end of 2006. At year end, Newfield had virtually returned to pre-storm production levels. We operate about 75% or our Gulf of Mexico reserves. At the end of 2006, we were producing from four deepwater fields, and our first operated development - the Wrigley Field - is preparing for production.
Internationally, 2006 was a year of project development. At the end of 2006, we commenced production from two oil fields in China's Bohai Bay. We also were positioned for significant production additions in 2007 as we prepare to bring the Grove Field in the U.K. North Sea on-line. The Abu oil field in Malaysia also will come on-line in mid-2007.
During May, Newfield announced a $578 million acquisition of assets in the Rocky Mountains. These assets provide an entry into many of the Rockies' most attractive exploration and development areas.
The Company exited 2008 with total proved reserves of 2.95 Tcfe. Nearly 90% of these reserves were located onshore U.S. These reserves were 72% natural gas and approximately 62% proved developed. Our 24% growth in 2008 production over 2007 levels (when adjusted for properties sold and acquired) was led by stronger than forecast volumes from the Woodford Shale, new oil fields commencing production in Malaysia and higher than forecast volumes in the Rockies and the Gulf of Mexico.
Newfield entered a new operating area of the Marcellus Shale of Pennsylvania. The Company commenced oil development in the Pearl River Mouth Basin in China. Flexible and financially sound, the Company entered its third decade of operation.
The 2010 budget is $1.6 billion with more than 70% of this budget is allocated to resource plays, primarily in the Rocky Mountains and the Mid-Continent. Newfield continued to focus on its oil assets with year-end oil production more than 20% over 2009. The Company acquired 335,000 acres in the Maverick Basin of southwest Texas and kicked off an assessment of the Eagle Ford Shale. In late 2010, Newfield was added to the prestigious list of companies comprising the Standard & Poor's (S&P) 500.
A substantial portion of Newfield's $1.9 billion budget is oil-focused. The Company is growing its oil production and taking advantage of the price disparity between oil and natural gas. In mid-2011, Newfield acquired an additional 70,000 net acres in the Uinta Basin and currently has 280,000 net acres prospective for oil developments. Additional plays are being assessed.
Newfield's Corporate headquarters moved to 4 Waterway Square Place, The Woodlands, Texas, in September.
Newfield further transitions to an oil company with its investments almost entirely "oil-focused." This oil focus includes the Uinta Basin oil plays of Utah, the Williston Basin of North Dakota, the Eagle Ford of Texas and assessment of our new position in the "liquids-rich" Cana Woodford in Oklahoma’s Anadarko Basin. More than 50% of our production is derived by liquids by the end of this year.
In 2013, Newfield issued its first "three-year plan." Year one of the plan was achieved and it was extended to cover 2014-16. The plan provides 20% CAGR in production and cash flow and provides an improving cost structure. During 2013, Newfield reached an agreement to sell its Malaysian business for $898 million and the transaction closed in early 2014. In addition, the STACK play was unveiled and the Anadarko Basin was again the Company’s fastest growing region.