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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 13, 2005

NEWFIELD EXPLORATION COMPANY

(Exact name of registrant as specified in its charter)
         
Delaware
(State or other jurisdiction
of incorporation)
  1-12534
(Commission File Number)
  72-1133047
(I.R.S. Employer
Identification No.)
     
363 N. Sam Houston Parkway E., Suite 2020
Houston, Texas

(Address of principal executive offices)
  77060
(Zip Code)

Registrant’s telephone number, including area code: (281) 847-6000

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 


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Item 9.01  Financial Statements and Exhibits
SIGNATURES
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENT


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Item 9.01  Financial Statements and Exhibits

(b)    Pro forma financial information.

     The unaudited pro forma combined condensed income statement for the calendar year ended December 31, 2004 giving effect to the acquisition by Newfield Exploration Company of Inland Resources Inc. and the issuance by Newfield Exploration Company of the common stock and notes described therein begin on page F-1 of this report.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
  NEWFIELD EXPLORATION COMPANY
 
 
Date: April 13, 2005  By:   /s/ TERRY W. RATHERT    
    Terry W. Rathert   
    Senior Vice President and Chief Financial Officer   

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NEWFIELD EXPLORATION COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

     On August 27, 2004, Newfield Exploration Company acquired Inland Resources Inc. for $575 million. The purchase was funded through concurrent offerings of Newfield common stock and debt. Newfield issued 5.4 million shares of its common stock at a price to the public of $52.85 per share and $325 million of its 6 5/8% senior subordinated notes due 2014.

     The following summary unaudited pro forma combined condensed income statement combines the historical consolidated income statements of Newfield and Inland and gives effect to the issuance of the common stock and the notes and to the acquisition using the purchase method of accounting.

     The unaudited pro forma combined condensed income statement is based on the following assumptions and adjustments:

  •   the income statement data assume that the issuance of the common stock and the notes and the acquisition were effected on January 1, 2004; and
 
  •   the historical financial statement of Inland has been adjusted to conform to the accounting policies of Newfield.

     The Newfield historical income statement information for the year ended December 31, 2004 is derived from the audited financial statements of Newfield and includes Inland’s results for the period from August 28, 2004 (the day following the acquisition) through December 31, 2004. The Inland historical income statement information is derived from the unaudited financial statements of Inland for the period from January 1, 2004 through August 27, 2004 (the date of the acquisition). The unaudited pro forma combined condensed income statement should be read together with the historical financial statements and related notes of Newfield and Inland.

     The unaudited pro forma combined condensed income statement is presented for illustrative purposes only. The financial results may have been different if the companies had always been combined or if the transactions had occurred as of the dates indicated above. They do not purport to indicate the future results that Newfield will experience. Further, the unaudited pro forma combined condensed income statement does not reflect the effect of restructuring charges to fully integrate and operate the combined organization.

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NEWFIELD EXPLORATION COMPANY

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(In thousands, except per share data)

                                 
    Year Ended December 31, 2004  
    Historical     Historical              
    Newfield     Inland     Pro forma     Pro forma  
    Exploration     Resources(1)     Adjustments     Combined  
Oil and gas revenues
  $ 1,352,728     $ 46,341     $     $ 1,399,069  
 
                       
Operating expenses:
                               
Lease operating
    151,995       8,525             160,520  
Production and other taxes
    42,300       854             43,154  
Exploration
          214       (214)   (a)      
Loss on lease sales
          1,097       (1,097)   (b)      
Depreciation, depletion and amortization
    471,361       12,047       (11,885 ) (c)     492,752  
 
                    21,229   (d)        
Ceiling test writedown
    17,034                   17,034  
Impairment of floating production system and pipelines
    35,000                   35,000  
General and administrative
    84,033       17,892             101,925  
 
                       
Total operating expenses
    801,723       40,629       8,033       850,385  
 
                       
Income (loss) from operations
    551,005       5,712       (8,033 )     548,684  
 
Other income (expenses):
                               
Interest and other expense
    (55,693 )     (8,888 )     (89)   (e)     (54,049 )
 
                    16,412   (f)        
 
                    8,778   (g)        
 
                    (14,569 ) (h)        
Other income
    3,616       296             3,912  
 
                       
Total other income (expenses)
    (52,077 )     (8,592 )     10,532       (50,137 )
 
                       
Income (loss) before income taxes
    498,928       (2,880 )     2,499       498,547  
Income tax provision (benefit)
    186,833             (133)  (i)     186,700  
 
                       
Net income (loss)
  $ 312,095     $ (2,880 )   $ 2,632     $ 311,847  
 
                       
Basic earnings per common share
  $ 5.35                     $ 5.06  
 
                           
Diluted earnings per common share
  $ 5.26                     $ 4.98  
 
                           
Weighted average number of shares outstanding for basic earnings per share
    58,325               5,405   (j)     61,633  
 
                           
 
                    (2,097)  (k)        
Weighted average number of shares outstanding for diluted earnings per share
    59,289               5,405   (j)     62,597  
 
                           
 
                    (2,097)  (k)        


(1)   Historical Inland Resources results are for the period from January 1, 2004 through August 27, 2004 (the date of the acquisition).

See accompanying Notes to the Unaudited Pro forma Combined Condensed Financial Statement.

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NEWFIELD EXPLORATION COMPANY

NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENT

(a)   To record the reversal of historical Inland exploration expense recorded in accordance with the successful efforts method of accounting for oil and gas activities. No such expense is recorded under the full cost method of accounting for oil and gas activities, which method is utilized by Newfield.
 
(b)   To record the reversal of the historical Inland loss on lease sales recorded in accordance with the successful efforts method of accounting for oil and gas activities. No such loss is recorded under the full cost method of accounting for oil and gas activities, which method is utilized by Newfield.
 
(c)   To record the reversal of historical Inland depreciation, depletion and amortization expense recorded in accordance with the successful efforts method of accounting for oil and gas activities.
 
(d)   To record pro forma depreciation, depletion and amortization expense in accordance with the full cost method of accounting for oil and gas activities based on the purchase price allocation to depreciable and depletable assets.
 
(e)   To reverse historical Inland capitalized interest.
 
(f)   To record the capitalization of interest based on the allocation of the purchase price to unproved oil and gas properties.
 
(g)   To eliminate the historical Inland interest expense (including amortization of debt issuance costs) of $8.8 million for the period from January 1, 2004 through August 27, 2004 related to Inland’s debt.
 
(h)   To record pro forma interest expense resulting from the issuance of $325 million of notes with a stated interest rate of 6 5/8%. The notes were issued at par. Pro forma interest expense, which includes amortization of debt issuance costs, is calculated as follows:
         
    For the Year Ended  
    December 31, 2004  
    (In thousands)  
 
Interest expense — $325 million senior subordinated notes due 2014.
  $ 14,393  
Amortization of debt issuance costs — senior subordinated notes due 2014
    176  
 
     
 
  $ 14,569  
 
     

(i)   To record pro forma income tax expense adjustments based on the applicable statutory tax rate of 35%.
 
(j)   To record the issuance of 5.4 million shares of Newfield common stock in connection with the acquisition.
 
(k)   To reverse the weighted average impact of the 5.4 million shares issued in connection with the acquisition that are included in the historical Newfield amounts.

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