Newfield further shifts focus to Oklahoma STACK play

Newfield Exploration Co., Houston, has agreed to divest all of its assets in Texas in separate deals with Protege LLC, Tulsa, and an undisclosed buyer for combined net aftertax proceeds of $390 million. The two deals are expected to close in the third quarter.

Protege is acquiring Newfield’s Eagle Ford shale assets, while the undisclosed buyer is acquiring Newfield’s conventional natural gas assets in South Texas. Current net production from the combined assets is 12,700 boe/d, of which 35% is oil.

“Proceeds from the sale of our Texas assets will replenish our cash balance and position us for the timely acceleration of our STACK development in the future,” said Lee K. Boothby, Newfield chairman and chief executive officer.

In its second-quarter earnings report, the firm said it has increased its 2016 capital budget to $700-750 million, reflecting $40 million for two STACK pilots, and $50 million for additional drilling on existing assets and assets associated with the recently closed acquisition of STACK properties from Chesapeake Energy Corp. (OGJ Online, May 6, 2016). The deal expanded Newfield’s STACK footprint to 265,000 net acres.

Boothby noted that the firm has lifted its average type curve in STACK by 15% to 1.1 million boe after drilling more than 100 wells to date. “Our well results continue to improve as we optimize our completions and look for innovative ways to enhance returns in our upcoming full-field development campaign,” Boothby said. “We recently closed on our previously announced STACK acquisition and have allocated additional capital to these assets in the second half of this year.”

For the second quarter, Newfield recorded a net loss of $667 million primarily attributable to a full-cost ceiling test impairment of $522 million.

Backed financially by EnCap Investments LP, Protege has assets in South Texas, the Permian basin, the Midcontinent region, and the Appalachian basin.

Contact Matt Zborowski at matthewz@ogjonline.com.

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