NFX Initiating Coverage

EQUITY RESEARCH

INITIATION OF COVERAGE

Oppenheimer & Co Inc. 85 Broad Street, New York, NY 10004 Tel: 800-221-5588 Fax: 212-667-8229

Robert Du Boff, CFA212 [email protected]

Oppenheimer & Co. Inc. does and seeks to do business with companies coveredin its research reports. As a result, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investorsshould consider this report as only a single factor in making their investmentdecision. See "Important Disclosures and Certifications" section at the end ofthis report for important disclosures, including potential conflicts of interest. See"Price Target Calculation" and "Key Risks to Price Target" sections at the end ofthis report, where applicable.

Stock Price Performance Company DescriptionNewfield Exploration (NFX) is anindependent E&P with a focuson domestic, oil and liquids-richunconventional resource plays. Its focusareas include the US Mid-Continent,Rockies, and onshore Gulf Coast.Proved reserves from continuing ops. asof December 31, 2013 were 576 mmboe,52% liquids. It is headquartered in TheWoodlands, TX.

December 15, 2014 ENERGY/OIL & GAS

Stock Rating:

OUTPERFORM12-18 mo. Price Target $35.00NFX - NYSE $24.13

3-5 Yr. EPS Gr. Rate 21%52-Wk Range $45.43-$22.79Shares Outstanding 137.2MFloat 135.5MMarket Capitalization $3,311.4MAvg. Daily Trading Volume 3,584,637Dividend/Div Yield NA/NMBook Value $25.73Fiscal Year Ends Dec2014E ROE 5.2 %LT Debt $3,046.0MPreferred $0.0MCommon Equity $3,525MConvertible Available No

EPSDiluted Q1 Q2 Q3 Q4 Year Mult.

2013A 0.33 0.33 0.47 0.48 1.61 15.0x2014E 0.44A 0.43A 0.52A 0.47 1.86 13.0x2015E 0.37 0.46 0.48 0.49 1.80 13.4x2016E 0.52 0.50 0.54 0.61 2.17 11.1x

Newfield ExplorationLiving on the Hedge: Initiating at Outperform, $35 PTSUMMARY

We are initiating coverage of Newfield Exploration (NFX) with an Outperform ratingand a 12- to 18-month price target of $35, based on 3.7x P/CF using our 2015estimate of $9.40/share. We believe NFX’s historical valuation gap to the exploration& production group will narrow as it completes its transition from a diversified, globalE&P to a more focused strategy based on North American liquids growth. AlthoughNFX has fairly limited exposure to the more heralded US basins, we think liquidsgrowth and exploration upside will drive sentiment amid a bearish commodity priceenvironment. More important, it has a significant hedge position for 2015-16, whichwill support cash flows as the Street takes an ax to estimates in the energy space.

KEY POINTS

■ Production Growth. Our Outperform rating is based on production andexploration upside from the core Anadarko and Uinta basins. We expect USproduction growth of ~10% in 2015 and ~8.5% in 2016, driven by higher-valueliquids (+18.5% and +14%).

■ Strong Hedge Book. NFX has 70% of 2015-16 production locked in at ~$90/bvs. the current strip price of $65-70/b. Although we are bearish on the E&P groupoverall, expecting consensus numbers to drop considerably, hedging gains shouldenable CFPS growth in each of the next two years.

■ Compelling Valuation. NFX is trading at 11.3x P/E, 2.6x P/CF, and 3.9xEV/EBITDA, based on 2015E consensus, discounts of 45%, 47%, and 30%,respectively, to the Oppenheimer E&P universe. Our $35 price target represents46% upside potential at just a mean historical P/CF, as the current valuation gapnarrows following a liquids-driven transformation.

■ Exploration Upside. We believe a focus on less mature plays—Anadarko andUinta—provides excellent exploration upside as NFX further delineates thesepositions. The operations update in February should provide a positive catalystfor investor sentiment.

■ Financial Flexibility. Although the net debt ratio of 43% exceeds the groupaverage, debt has declined significantly due to the sale of non-core assets. Thisshould continue with the sale of its China unit, which we estimate will generate ~$500M in net proceeds. NFX also has $1.4B undrawn on its revolver.

2

Table of Contents

Page

Investment Thesis 3

Company Overview 7

Valuation 9

Outlook 11

Operational Overview 14

Proved Reserves 25

Financial Condition 27

Management 29

Financial Models 31

Newfield Exploration

3

Investment Thesis

We are initiating coverage of Newfield Exploration (NFX) with an Outperform rating and a 12- to 18-month price target of $35, representing potential upside of 46% from the current level. Our price target is based on a target 3.7x P/CF multiple using our 2015 cash flow estimate of $9.40 per share, in line with the stock’s five-year average, and well below the mean for the Oppenheimer E&P Universe of 5.7x. The price target also represents 5.3x P/CF on a debt-adjusted basis, 23% below the group.

We believe NFX’s historical valuation gap to its peers will narrow as it completes its transition from a diversified, global exploration and production company to a more focused strategy based on sustainable North American unconventional liquids growth. Newfield’s strong hedge position for the next two years also gives us more confidence in its ability to grow earnings and cash flow in the near term despite the recent drop in oil prices. This provides the company a solid cushion to continue to invest while awaiting service costs to reset to this new world order.

We expect EPS to fall just 3% next year and rebound 21% in 2016, and cash flow per share to grow 3% and 12%. Our estimates are based on the current futures strip price, which reflects crude oil prices of $65-70/b for WTI for the next two years. Although in our scenario NFX will outspend cash flow over that time, the expected sale of its China assets will help bridge much of the gap.

Key Investment Positives:

Strong Liquids-Driven Growth Near Term

Exploration Upside Not Fully Reflected in the Stock, We Believe

Leading Hedge Position Protects Three-Year Outlook

Compelling Valuation

Flexible Financial Position

Key Investment Risks:

Commodity Price Risk

Cash Flow Deficits

Operating/Exploration Risks

See also our initiations of AR, WLL, and XEC, as we expand coverage of exploration and production companies within our oil & gas sector.


4

Income Statement ($millions) FY13A FY14E FY15E FY16E

Revenues

Oil & Gas $1,788.5 $2,255.0 $1,898.8 $2,316.9

Realized Gain/(Loss) on Derivatives $60.0 ($37.9) $395.1 $252.7

Total Revenue $1,848.5 $2,217.1 $2,293.9 $2,569.5

YoY growth -32% 20% 3% 12%

Net Income $218.5 $254.9 $253.1 $311.5

Adjusted EPS $1.61 $1.86 $1.80 $2.17

YoY Growth -29.3% 15.5% -2.8% 20.6%

Diluted shares 136.0 137.4 140.4 143.3

Cash Flow/Operations $952.5 $1,249.2 $1,320.2 $1,508.6

CF/Share $7.00 $9.09 $9.40 $10.53

EBITDA $1,163.5 $1,394.1 $1,431.9 $1,625.2

Cash Flows

Capital Spending

Total CAPEX $2,095.0 $2,057.0 $1,825.0 $1,900.0

Free Cash Flow ($1,126) $617 ($5) ($391)

Operating Summary - US Only

Oil Production (mbd) 38.9 50.4 59.8 70.7

NGL Production (mbd) 14.1 21.9 25.8 27.1

Natural Gas Production (mmcfd) 341 345 342 343

Total Production (mboed) 109.8 129.9 142.7 155.0

YoY Growth 1% 18% 10% 9%

Liquids Mix 48% 56% 60% 63%

Oil Growth YoY 19% 30% 19% 18%

NGL Growth YoY 99% 55% 18% 5%

Gas Growth YoY -18% 1% -1% 0%

Net Realized Prices - US Only

Oil ($/b) $85.77 $80.98 $74.07 $72.79

NGLs ($/b) $30.74 $32.60 $24.08 $26.47

Natural Gas ($/mcf) $3.97 $3.83 $3.77 $3.60

Total Realized Price ($/boe) $47.47 $47.84 $45.01 $46.36

Hedging Gain ($/boe) $1.36 ($0.74) $7.49 $4.56

Unit Cost/Profit ($/boe) - US Only

LOE $7.13 $6.70 $6.45 $6.35

Transportation $3.54 $3.80 $4.00 $3.95

Production Taxes $1.73 $2.50 $2.29 $2.50

DD&A $17.25 $18.36 $18.25 $18.49

G&A $5.67 $4.82 $4.30 $4.31

Total Unit Cost $35.32 $36.17 $35.30 $35.60

YoY Chg 0.0% 2.4% -2.4% 0.9%

Unit Profit $7.75 $8.39 $6.74 $6.90

YoY Chg 140.3% 8.2% -19.6% 2.3%

Balance Sheet

Debt $3,694.0 $2,908.0 $2,895.9 $3,091.6

Equity $2,956.0 $3,589.7 $3,842.8 $4,154.3

Capitalization $6,650.0 $6,497.7 $6,738.7 $7,245.9

Debt Ratio 56% 45% 43% 43%

Cash & Equivalents $95.0 $96.0 $78.6 ($72.3)

Net Debt $3,599.0 $2,812.0 $2,817.3 $3,163.9

Net Debt Ratio 55% 44% 42% 43%

Valuation

Current 1 Year 3 Year 5 Year

P/E 11.4x 15.0x 12.2x 12.1x

P/CF 2.6x 3.4x 3.0x 3.7x

EV/EBITDA 4.0x 5.0x 4.6x 4.9x

Price Target P/E ('15) 19.4x NA NA NA

Price Target P/CF ('15) 3.7x NA NA NA

Price Target EV/EBITDA ('15) 5.3x NA NA NA

Reserve Profile 2010 2011 2012 2013

Reserve @ YE (mmboe) 618.6 652.1 565.8 611.9

% Liquids 33% 40% 48% 55%

Reserve Replacement 134% 203% -9% 199%

F&D $/boe $30.97 $24.96 NM $24.09

Newfield Exploration (NFX)Rating: OutperformMarket Cap: $3.3 billion

Newfield Exploration (NFX) is an independent oil & gas E&P with a focus ondomestic, oil and liquids-rich unconventional resource plays. Its operational focusareas include the Mid-Continent, Rocky Mountains, and onshore Gulf Coast areas of the United States. The company also has operations in China, which are currently held for sale and reported as discontinued operations. The company is headquartered in The Woodlands, TX.

NFX expects 2014 total production from continuing operations of 47.4 mmboe, or

~130 mboed, an 18% increase from 2013 (US only). BY commodity, guidance is 39% oil, 17% NGLs, and 44% natural gas. The four focus areas of the company (Anadarko Basin, Uinta Basin, Williston Basin, and Eagle Ford) are now expected to produce a

combined 34.9 mmboe for the full year, 53% year-over-year growth, and accounting for 74% of total US operations (from 57% a year ago).

Investment Highlights:• Liquids-Driven Growth Near Term. Based on Newfield’s three-year plan, we expect production growth from continuing operations (excluding international assets

sold or held for sale) of ~10% in 2015 and ~8.5% in 2016, despite reduced capital spending due to the recent drop in oil prices. This includes growth from higher-value liquids of 18.5% and 14%, respectively. Oil & NGLs will account for a combined 63%

by the end of 2016, up from 55% currently.

• Leading Hedge Position. Newfield has one of the largest hedged oil positions in

the E&P group. It has about 83% and 63% of 2015 and 2016 estimated production locked in at around $90/b, and a material amount of 2017 production hedged in the high $80s. At $70/b WTI, the company would realize estimated hedging gains of

$670M over the next three years. While we think consensus earnings estimates for the entire E&P group must come down based on current oil & gas futures, NFX numbers have much less to fall due to this hedge cushion.

• Compelling Valuation. NFX is currently trading at 11.3x P/E, 2.6x P/CF, and 4.0x EV/EBITDA, based on 2015 consensus estimates. These multiples are discounted at

45%, 47%, and 30%, respectively, to the Oppenheimer E&P universe. Based on our own estimates for 2015, which are modeled using oil & gas price futures, the stock is trading at 13.3x P/E, 2.6 P/CF, and 4.2x EV/EBITDA, even steeper discounts of 65%,

55%, and 37% to the group.

-4.0%

0.0%

4.0%

8.0%

12.0%

120

130

140

150

160

2011 2012 2013 2014E 2015E 2016E

Y-o

-Y G

row

th

mb

oe

d

Production Summary

Production Year-on-Year Growth

$820

$400

$360

$170

Total 2014 Drilling ($M)

Anadarko Uinta Williston Eagle Ford

Source: Company reports; Oppenheimer & Co. Inc. estimates.


5

Investment Positives

Liquids-Driven Growth Near Term

Based on Newfield’s three-year plan, we expect production growth from continuing operations (excluding international assets sold or held for sale) of ~10% in 2015 and ~8.5% in 2016, despite reduced capital spending due to the recent drop in oil prices. This forecast includes growth from higher-value liquids of 18.5% and 14%, respectively. Oil & NGLs will account for a combined 63% by the end of ‘16, up from 55% currently.

Exploration Upside Not Fully Reflected in the Stock

We believe Newfield’s focus on plays less followed and less understood by the Street—the Anadarko and Uinta basins—provides excellent exploration upside as the company further delineates these positions. As the STACK, Springer, Uteland Butte, and Wasatch plays progress to development mode, we expect the resource potential to be better reflected in the share price. We expect NFX to provide updated type curves on these plays as early as February, which will be a positive catalyst for the name.

Leading Hedge Position Protects Three-Year Outlook

Newfield has one of the largest hedged oil positions in the E&P group. It has about 83% and 63% of 2015 and 2016 estimated production from continuing operations locked in at around $90/b, and a material amount of 2017 production hedged in the high $80s. At $70/b WTI, the company would realize estimated hedging gains of $670M over the next three years (see Exhibit 27, p. 28). While we think consensus earnings estimates for the

entire E&P group must come down based on current oil & gas futures, NFX numbers have much less to fall due to this hedge cushion.

Compelling Valuation

NFX is currently trading at 11.3x P/E, 2.6x P/CF, and 4.0x EV/EBITDA, based on 2015 Factset consensus estimates. These multiples are discounted at 45%, 47%, and 30%, respectively, to the Oppenheimer E&P universe. Based on our own estimates for 2015, which are modeled using oil & gas price futures, the stock is trading at 13.3x P/E, 2.6 P/CF, and 4.2x EV/EBITDA multiples, even steeper discounts of 65%, 55%, and 37% to the group based on our numbers.

Flexible Financial Position

Although Newfield’s net-debt-to-capital ratio of 43% exceeds the E&P group average following the ramp-up in US unconventional spending, debt has declined significantly due to the sale of international and non-core US assets. Asset sales will continue next year with the sale of NFX’s China business, which we estimate will generate $500M in net proceeds. Moreover, the company has an undrawn $1.4B credit facility, supported by proved reserves from legacy, high-value assets in the Williston Basin and Eagle Ford Shale. Although Newfield is targeting a cash-neutral position by 2016, we think this will be challenging in the current price environment. However, with much of its core acreage held by production, we believe the company has flexibility to slow down or ramp up drilling plans based on changes in commodity prices.


6

Investment Risks

Commodity Price Risk

Despite a strong hedge position, Newfield, like all oil & gas companies, is highly dependent on the market price of its oil & gas sales. Absent any hedging gains, the core Anadarko Basin may fail to generate acceptable returns on investment at prices closer to $65/b levels if service costs do not reset to lower levels over the longer term. The Uinta Basin could be even less economic at those prices.

Moreover, the company’s realized prices may decline relative to market benchmarks if Newfield is unable to source appropriate takeaway capacity for its oil & gas. Of note, Uinta Basin production consists of waxy crude, which is more difficult to transport to end markets. However, we believe growing industry investment and existing customer contracts may help mitigate these risks.

Cash Flow Deficits

Based on our CAPEX assumptions, we believe Newfield will have a cash flow deficit of $505M next year and $391M in 2016. We expect NFX to bridge this gap with asset sales, particularly the sale of its China operations next year, and borrowings on its revolving credit facility. However, if the company is unable to sell China at an acceptable value, or cannot utilize its revolver due to debt covenant violations or reduced lender commitments, it may have to reduce spending levels further. This would compromise its production growth outlook.

Operating/Exploration Risks

The company is currently delineating much of its core acreage, which is in plays relatively undeveloped by industry. Much of our resource outlook is based on the company’s ability to increase the number of drilling locations through downspacing wells or co-development of overlapping pay zones. If NFX is unable to develop these additional drilling locations due to uneconomic well performance or technical barriers, or if it cannot procure necessary personnel and equipment, long-term production growth and investment returns will be limited.


7

Company Overview

Newfield Exploration (NFX) is an independent oil & gas E&P with a focus on domestic, oil and liquids-rich unconventional resource plays. Its operational focus areas include the Mid-Continent, Rocky Mountains, and onshore Gulf Coast areas of the United States. The company also has operations in China, which are currently held for sale and reported as discontinued operations.

Exhibit 1. Production History

0

20

40

60

80

100

120

140

160

180

2010 2011 2012 2013 2014E 2015E 2016E

mb

oe

d

Oil NGLs Gas

30% Liquids

63% Liquids

Source: Company filings, Oppenheimer & Co. Inc. estimates.

During 3Q14, total production from continuing operations was 12.7 mmboe, or an average of 138.2 mboed. Volumes were 55% liquids (38% oil and 17% NGLs) and 45% natural gas. Proved reserves from continuing operations as of December 31, 2013 were 576 mmboe, 40% oil, 12% NGLs, and 48% gas, with 56% of reserves classified as proved developed. Reserves from China operations classified as discontinued were 25 mmboe at year-end 2013, 100% oil and 16% proved developed.

Business Strategy

Focus on US Liquids Opportunities. Starting in 2011, largely due to capital

constraints and a weak natural gas environment, NFX transitioned from a global diversified E&P to one focused on US onshore opportunities, with a bent toward oil and liquids-rich unconventional plays. By focusing on plays with similar characteristics, management is more flexible in shifting capital, equipment, and personnel as dictated by current economics. For 2014, we expect production (including discontinued operations) will be 97% US and 57% liquids, up from 87% and 39%, respectively, in 2011. We estimate US liquids production this year of 72.3 mboed, a 27% CAGR for 2011-2014. Investment in dry gas has been limited to preserving future opportunities in assets that are largely held by production (HBP).

Capital Discipline. Under the current three-year plan, NFX intends to keep capital

spending in a range of $1.6 billion to $1.8 billion, with the goal of balancing operating cash flows with spending by 2016. NFX has a significant hedge book, 80% of estimated 2015 oil production and 60% of 2016 at roughly $90/b. This hedge position should enable the company to weather the recent downturn in oil prices as it continues to execute this three-year plan. Proceeds from the sale of its Malaysia assets earlier this year for around $900 million and expected proceeds from the sale of China will also help bridge the funding gap in the near term.


8

Growth Through Drilling and Select Acquisitions. NFX seeks to grow reserves

through a combination of exploration drilling and select acquisitions. The company replaced 213% of reserves over the trailing three years and 273% over the last five, excluding revisions, with roughly 97% of additions from the drill bit. F&D costs averaged $21.29/boe and $15.56/boe, respectively, excluding reserve revisions. The largest area of focus in the last two years has been the Anadarko Basin in Oklahoma (~47% of CAPEX), where it holds 275,000 net acres in the SCOOP and STACK plays, and is testing other horizons such as the Springer Shale. Much of this positioned was leased in 2011-12, and further expanded through bolt-on acquisitions, with NFX buying up 65,000 acres in 2013 and an additional 50,000acres this year. The company also acquired 65,000 net acres in the Uinta Basin of the Rockies in 2011, north of its established Greater Monument Butte Unit waterflood play. It continues to drill this acreage, dubbed the Central Basin, as it progresses the play toward commercial development.

Improving Operating Efficiency. The company has scaled back its scope, divesting

international assets, offshore Gulf of Mexico, and marginal US onshore plays such as the Granite Wash, in order to improve operational focus. NFX utilizes super extended length (SXL) laterals in most plays, drilling approximately 10,000 feet horizontally in order to efficiently capture resources. The SXL program also enables the company to more efficiently capture leases by covering multiple lease units with one well. Management has been disciplined in proving up a play’s economics before accelerating capital spending. Once in development, management continues to push cost savings and efficiencies in order to further improve economics.

Stock Performance Exhibit 2. 5-Year Stock Performance

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

NFX XOI S&P 500

Transformation to US onshore, liquids focus

Source: FactSet. Note: These results cannot and should not be viewed as an indicator of future performance.

NFX shares are down only 2% YTD, one of the best-performing stocks in the energy space, well ahead of the AMEX Oil Index (XOI), down 16%, but underperforming the S&P 500, up 10% so far this year. The company continues to benefit from its strong liquids growth; positive recent well results, particularly in the Anadarko and Uinta basins; and an advantaged hedge position relative to peers. With the recent pullback in oil prices driving the stock down 40% in the last 90 days, NFX is now trading 47% off its 52-week high, and 5% above its low.

The stock has lost 43% and 42% in the trailing three- and five-year periods, compared to the S&P up 61% and 84%, and the XOI up 3% and 21%, respectively. The historical underperformance can largely be attributed to a high leverage to natural gas production amid a weak gas price environment, although the company has come a long way in reversing its fortunes in recent quarters.


9

Valuation

Relative Valuation

NFX is currently trading at 11.3x P/E, 2.6x P/CF, and 4.0x EV/EBITDA multiples, based on 2015 Factset consensus estimates. These multiples are discounted at 45%, 47%, and 30%, respectively, to the Oppenheimer E&P universe at large. The stock is also trading below its five-year average P/E multiple of 12.1x, P/CF of 3.7x, and EV/EBITDA multiple of 4.9x.

Based on our own estimates for 2015, which are modeled using oil & gas price futures, the stock is trading at 13.3x P/E, 2.6 P/CF, and 4.2x EV/EBITDA, even steeper discounts of 65%, 55%, and 37% to the group. Even on a debt-adjusted basis (assuming equity is issued to repay all debt), NFX is trading at 4.2x P/CF using our estimates, a 38% discount to the E&P group.

Commodity Sensitivities

Based on our sensitivity analysis, even at commodity prices of approximately $40/b oil and $3.50/mcf gas, the company would generate EBITDA that would put it in line with its five-year average EV/EBITDA multiple at the current share price and operating cash flow that would put the stock below its average P/CF multiple. We attribute at least some of this resilience to the company’s strong hedge book. It is our belief that, even as the Street takes numbers down to reflect the current oil & gas price outlook, NFX’s upside far outweighs the downside risk.

Implied Reserve Value

NFX has an adjusted IRV (enterprise value, less non-oil & gas assets, divided by proved reserves assuming a 15:1 oil-to-gas ratio) of ~$18.20/boe. This is a discount of 26% to the Oppenheimer E&P average of just under $24.50/boe. On an unadjusted basis, IRV is approximately $13.25/boe, a 22% discount to the group.

Price Target

Our price target of $35/share is based on 3.7x our 2015 CFPS estimate of $9.40, in line with its five-year average. The target P/CF is 23% below the peer group on an unadjusted basis, and also 23% below the group on a debt-adjusted basis. Our price target also represents 5.2x EV/EBITDA based on our ‘15 estimate of $1.43B, slightly above the five-year mean, but a significant discount to the group at 6.6x. We think the stock should trade at or above its five-year mean valuation multiples based on continued North American liquids growth, exploration success, and a strong hedge position.


10

Exhibit 3. Relative Valuation

5

7

9

11

13

15

17

19

Consensus P/E (Next 12 Months)

3-Year 5-Year

Mean 12.2 12.1

Low 7.7 6.6High 19.3 19.3

1

2

3

4

5

6

7

8

9

Consensus P/CF (Next 12 Months)

3-Year 5-Year

Mean 3.0 3.7

Low 2.1 2.1High 4.3 6.2

2

3

4

5

6

7

8

9

Consensus EV/EBITDA (Next 12 Months)

3-Year 5-Year

Mean 4.6 4.9

Low 3.6 3.6High 5.7 6.8

Source: Factset.


11

Outlook

Production

In early October, NFX increased production guidance for 2014. It expects total production from continuing operations of 47.4 mmboe for the full year, or ~130 mboed, an 18% increase from 2013 (US only). By commodity, guidance is 39% oil, 17% NGLs, and 44% natural gas. The four focus areas of the company (Anadarko Basin, Uinta Basin, Williston Basin, and Eagle Ford) are now expected to produce a combined 34.9 mmboe for the full year, 53% year-over-year growth, and accounting for 74% of total US operations (from 57% a year ago).

Under the three-year plan announced late last year, adjusted for the sale of Granite Wash assets in September, Newfield expects 2015 production from continuing operations of 44.9-51.9 mmboe (123-142 mboed), or 2% growth at the midpoint (9% excluding the Granite Wash), including approximately 62% liquids. For 2016, production was forecasted at 48.3-58.3 mmboe (132-159 mboed), a 10% growth rate at the midpoint, and approximately 63% liquids. The company plans to issue an updated three-year outlook in early 2015.

Exhibit 4. Company Production Forecast – Focus Areas

Source: Newfield Exploration.

Capital Investment

Newfield’s three-year plan is based on capital spending of $1.6 billion to $1.8 billion annually, excluding capitalized costs (around $200 million annually) and discontinued operations. For 2014, the company has budgeted $1.75 billion, excluding capitalized costs, up from its initial plan of $1.6 billion due largely to accelerated spending in the Anadarko Basin, and to a lesser extent the Williston Basin.

Given the sharp drop in the oil futures curve in the last several months, we expect CAPEX will fall close to the low end of guidance in the next two years. Spending will likely increase in the Anadarko Basin, Newfield’s highest return focus area, but fall off in other areas as the company is able to meet or approximate prior production goals at lower spending levels due to capital efficiency gains.


12

Exhibit 5. 2014 Capital Budget

47%

23%

21%

10%

Total 2014 Budget: $1.75B

Anadarko Uinta Williston Eagle Ford

Note: Excludes capitalized internal costs (~$200M). Source: Newfield Exploration.

In our model, we expect the company to hit or slightly exceed its prior production guidance at the lower end of its CAPEX plan. We believe efficiency gains realized in the last several quarters will largely offset the moderation in spending levels.

Operating Costs

For the full year 2014, NFX guided to total lease operating expenses (recurring, workovers, and transportation) from continuing operations of $483M. On a per-unit basis of production, excluding natural gas consumed internally (~8 Bcf), LOE cost guidance is roughly $10.50/boe, down 2% from the prior year. Taxes other than income were guided to $115M, or $2.50/boe (up 44% due largely to higher revenues), while G&A costs were guided to $222M, or roughly $4.80/boe (down 15%). DD&A expense is forecasted at $845M, about $18.35/boe (up 6% from 2013).

Unit costs jumped significantly in 2011, up 34% from 2010’s due to the shift to more expensive liquids production and industrywide cost inflation. Unit cost growth has moderated in recent years, though, as higher costs have been leveraged over higher production levels. However, unit profit (after taxes, but excluding interest expense and capitalized cost) has also trended up in recent years due to the growth in higher priced liquids production. Going forward, we expect unit cash costs (LOE, G&A) to moderate slightly as expenses such as water handling and overhead are leveraged over even higher volumes.

Exhibit 6. Unit Profit Trends

$14.19

$12.17

$3.22 $7.75

$8.39 $6.74 $6.90

$0

$10

$20

$30

$40

$50

$60

$70

2010 2011 2012 2013 2014E 2015E 2016E

$/b

oe

Production Costs Transportation Taxes Other Than Income G&A DD&A Income Taxes AT Unit Profit

Source: Company filings, Oppenheimer & Co. Inc. estimates.


13

Earnings & Cash Flows

For our earnings and cash flow estimates, we use the NYMEX futures prices for our oil & gas forecasts. Based on the recent curve, we see 2015 prices of $66.75/b for WTI crude oil and $3.60/mcf for HH gas, and 2016 prices of $69.69/b and $3.81/mcf, respectively.

Based on these assumptions, we estimate earnings of $253M ($1.80/share) in ’15 and $311M ($2.17/share) in ’16. Our cash flow estimates are $1.32B ($9.40/sh) and $1.51B ($10.53/sh), respectively. Assuming cash CAPEX (including capitalized internal items) of $1.825B and $1.9B, respectively, we see a cash flow deficit of $505M next year before asset sales, falling to $391M in 2016. NFX likely will bridge some of the gap with asset sales, including our estimate for $500M of proceeds from China next year. Newfield’s stated goal is to balance capital spending with cash flows as early as 2016, but we see this as a challenge in the current oil price environment.

Sensitivities

Under our sensitivity analysis, we see a $10/b price drop for WTI crude oil reducing 2015 earnings by $34M ($0.24/sh) and cash flows by $53M ($0.38/sh), slightly below the company forecast of $65M. A $0.50/mcf change in HH natural gas impacts our estimates by $7M ($0.05/sh) of earnings and $11M ($0.08/sh) of cash flows. See Sensitivity Analysis, p. 32.


14

Operational Overview Newfield now operates four focus areas, which presently account for 74% of domestic production. These areas include the Anadarko Basin (31% of expected 2014 production), the Uinta Basin (20%), the Williston Basin (14%), and the Eagle Ford (9%). In aggregate, these four areas are expected to grow 53% in 2014. The portfolio also includes non-core gas-dominated assets, including the Arkoma Woodford and onshore Gulf Coast, where capital spending has been immaterial for the last three years. At year-end 2013, Newfield held 1.6M net acres in the US, inclusive of 42,000 in the Granite Wash and 30,000 in the Powder River Basin, divested earlier this year, largely offset by 50,000 acquired in the Anadarko Basin. It also has operations offshore China, which it intends to sell and has classified as discontinued.

Exhibit 7. Areas of Operation

Rockies: ~300K Net Acres

Mid-Continent: ~400K Net Acres

Onshore Gulf Coast: ~270K Net Acres


Anadarko Basin

Newfield’s primary growth engine in recent years has been the Anadarko Basin in Oklahoma, where it is active in the SCOOP and STACK plays. It holds 275,000 net acres prospective for the SCOOP and STACK, including the emerging Springer Shale play. Much of this positioned was leased in 2011-12, and further expanded through bolt-on acquisitions, with NFX buying up 65,000 acres in 2013 and an additional 50,000 acres this year. Spending continues to ramp up to hold leases, delineate the acreage, and optimize well spacing and drilling and completion techniques.


15

Exhibit 8. Anadarko Basin

STACK190,000 net acres

SCOOP85,000 net acres


Production in the Anadarko Basin averaged 45 mboed in 3Q14, 58% liquids, up 129% from the prior-year period’s. Production was averaging 50 mboed in late October, ahead of prior company forecasts due to a better than expected midstream buildout. The company now expects full-year production of 14.8 mmboe from the region, or 40.6 mboed, up 106% year over year based on capital spending of approximately $920M. Realized crude pricing is roughly $5/bbl below WTI.

Based on its position last March (~225,000 net acres), the company estimates a drilling inventory for the SCOOP and STACK combined of 2,000 total wells based on 1,320’ well spacing (4 wells per 640-acre drilling spacing unit) and 4,000 wells based on 660’ spacing (8 wells per DSU). This equates to total resource (proved reserves and net unrisked resource) of 800 mmboe and over 1,400 mmboe, respectively, under the two scenarios under on the current type curve. This estimate is based on one to three defined stacked pay intervals in the primary target zones, depending on location. It does not include other potential zones such as the emerging Springer Shale. We expect the company to update its resource and type curve estimates in February.

Exhibit 9. SCOOP & STACK Resource Estimates – As of March 2014

Play

Net

Acres

YE 2013

Proved

Reserves

(MMBOE)

Total Resource -

Proved Reserves

+ Net Unrisked

Resource

Total Remaining

Gross SXL

Locations

Total Resource -

Proved Reserves

+ Net Unrisked

Resource

Total Remaining

Gross SXL

Locations

STACK 150,000 10 500 1,165 960 2,650

SCOOP 75,000 106 300 885 520 1,600

Total 225,000 116 800 2,050 1,480 4,250

1,320' Well Spacing 660' Well Spacing

Note: The company currently holds 225K net acres: 190K net acres in STACK and 85K net acres in SCOOP. Source: Newfield Exploration.


16

Management has indicated that service costs have been relatively consistent in recent quarters. Only about half of its rigs are under contract and pressure pumping services remain in good supply in the region, so the company is well positioned to benefit from a drop in service costs if lower crude prices persist.

SCOOP

Newfield holds 85,000 net acres in the SCOOP (South Central Oklahoma Oil Province) play, where the Woodford Shale is the primary target. Its acreage can be divided into 43,000 acres in the south, which is currently in development, and 42,000 acres in the north, where the Woodford is thinner and has not been delineated.

South SCOOP. With the southern SCOOP acreage largely locked up (more than 80%

held by production), the company is now developing the acreage utilizing six rigs for pad drilling. It estimates the shift to pad drilling will save approximately $500,000 per well. Newfield is currently spacing wells at 880’, or 6 wells per DSU, using pad drilling. However, Continental Resources is currently testing up to 10 wells per section in the play.

Exhibit 10. SCOOP Well Spacing


NFX identified two windows on its SCOOP acreage, an oil window in the east, transitioning to a wet gas window moving west. Under type curve assumptions disclosed last February, SCOOP wet gas SXL wells (~10,000’ laterals) have an estimated ultimate recovery (EUR) of 2.0 to 2.6 mmboe—6% oil, 44% NGLs, and 50% gas—with an average well cost of $9M to $11M. SCOOP oil SXL wells have an EUR of 1.1 to 1.4 mmboe—6% oil, 34% NGLs, and 30% gas—with an average well cost of $10M to $13M.

Throughout the South SCOOP, NFX expects to generate a rate of return in excess of 70% at $90/bbl oil and $4/mmbtu natural gas. Although a prolonged $80/bbl oil price could reduce the rate of return by 10% based on current capital costs, management expects a 10% to 15% drop in service costs over time under that scenario, with an even more pronounced drop at $70/bbl oil, which would largely offset the price drop.

Exhibit 11. SCOOP Type Curves

SCOOP Wet Gas SXL

14,000' - 16,000' Depth

$9-11M Gross Well Cost

2,000-2,600 MBOE EUR (6% oil, 44% NGLs, 50% gas)

2014 Average WI 71%, 57% NRI

>50% ROR ($90/b WTI oil, $4/mmbtu HH gas)

SCOOP Oil SXL

12,000' - 14,000' Depth


1,100-1,400 MBOE EUR (36% oil, 34% NGLs, 30% gas)


>50% ROR ($90/b WTI oil, $4/mmbtu HH gas) Source: Newfield Exploration, March 2014.


17

NFX currently has 280 mmcfd of gas gathering through DCP Midstream in the southern SCOOP, with NGL prices linked to the Mont Belvieu hub. It expects processing capacity to exceed 300 mmcfd by next year.

North SCOOP. The Woodford Shale is somewhat thinner in the northern half of the

SCOOP, and NFX currently estimates a rate of return closer to 40%. Accordingly, the area is a lower spending priority relative to the southern SCOOP and STACK plays. Only about 40% of the northern SCOOP acreage is held by production, and the company expects to run one or two rigs next year to lock up these leases. It is also participating in six non-operated rigs, which are delineating this area as well. Most of the leases operated by Newfield have three years remaining, and could be extended at reasonable cost.

Springer Shale. Last quarter, Newfield disclosed the Springer Shale play within its

southern SCOOP acreage. The Springer is a Mississippian aged formation above the Woodford at a vertical depth of 11,000’ to 14,000’ and is up to 150’ thick with high permeability and porosity. Although not as prolific as the Woodford, returns are competitive based on early results. The first operated Springer well, the Jarred, began production with a 24-hour IP rate of 1,950 boe/d (85% oil), and an average 30-day rate of 1,220 boe/d (81% oil) on a 4,850’ lateral. Newfield estimates well costs for that length of $9M to $10M, but ultimately expects to drill SXL wells.

Exhibit 12. Anadarko Basin Cross Section


NFX also participated in nine wells operated by others, with plans to drill or participate in 12 more this year. The most active and vocal industry player in the Springer has been CLR, which will dedicate 10 rigs to the play in 2015. NFX has in interest in about two-thirds of Continental’s Springer wells with an average 15% working interest, which will help ramp up its understanding of the play. CLR has announced 15 total producing wells in the Springer with an average 24-hour IP of 1,230 boe/d and 30-day average of 830 boe/d. It recently disclosed its EUR model for a 4,500’ lateral of 940 mboe (67% oil, 17% NGLs, and 16% gas) at a $9.7M well cost, and plans to drill its first 7,500’ extended lateral with a modeled EUR of 1.6 mmboe at a $12.1M well cost.

Other Horizons. Both Newfield and industry have hinted at other prospective intervals in

the SCOOP besides the Springer. We expect more details in the coming quarters, but any additional stacked pay would benefit from co-development with the Woodford owing to shared above-ground infrastructure.


18

STACK

Newfield discovered the STACK play, to the north of SCOOP and northeast of the traditional Cana Woodford gas play and south of the Mississippi Lime. The play is prospective for the Meramec Shale in the Southern Mississippi Trend, and on much of the acreage is also prospective for the oil window of the Woodford. The play derives its name from the stacked nature of its pay zones, which account for a combined 700’ of thickness in some areas, 400’ in the Meramec alone. NFX believes it can target up to three vertical intervals in the STACK. Although industry has also identified the Osage Shale below the Meramec, NFX believes it may be able to drain this interval just from targeting the Meramec and Woodford.

Exhibit 13. STACK Well Spacing


Newfield now holds 190,000 net acres in the STACK, after adding roughly 40,000 acres year to date. It is currently running 4 operated rigs, and has so far has production delineated two-thirds of its acreage. The recent emphasis has been on HBP drilling, although it is also running downspacing tests—spacing wells across lease lines and drilling SXL wells to maximize the number of leases it produces from. We note that production from one interval will hold all depths. NFX needs to drill roughly 100 more wells to hold leases, which should run through 2016. We also expect Newfield to announce a large midstream deal covering the play in the near future.

Management believes that both the Meramec and the Woodford have similar production profiles in the STACK. Under the most recently disclosed type curve, STACK SXL wells have an estimated ultimate recovery of 800 to 1,000 mboe—40% oil, 30% NGLs, and 30% gas—with an average well cost of $9M to $12M, with the lower end representing a target for full-scale development. Recent wells have been completed for under $10M. Under the development type curve assumption, rate of return in the STACK should exceed 40%. However, the 18 wells drilled to date have outperformed the type curve, with recent 30-day production tracking around 85% oil. Recent industry activity to the west (DVN, XEC) has yielded even higher production rates, but with a lower oil cut. NFX is looking at well spacing between four and eight wells per DSU, but current plans call for six wells per section, or 880’ spacing.

The company has added roughly 40,000 net acres in the STACK this year, and will continue to look at bolt-on deals. However, there are not a lot of contiguous blocks available, a prerequisite for Newfield’s SXL drilling plans. The company also prefers operated acreage, which allows for greater flexibility once the play is in full development.


19

Exhibit 14. STACK Type Curve

STACK SXL

8,000' - 11,000' Depth


800-1,000 MBOE EUR (40% oil, 30% NGLs, 30% gas)



Source: Newfield Exploration, March 2014.

On the 3Q14 call, Newfield highlighted four recent wells in the STACK. The John well was completed in the northwest area of its acreage, its furthest step-out to date, with a 30-day average IP rate of 821 boe/d, 84% oil. It also completed the Slash C well in the southeast, its lowest cost well to date at $9.8M, with a 30-day average rate of 620 boe/d, 84% oil. It also drilled its first stacked wells, the Connie and Freeman wells spaced 275’ vertically and 880’ apart on the surface. Connie flowed from the Upper Meramec with an average 30-day rate of 935 boe/d, 87% oil, and Freeman flowed from the Lower Meramec with a 30-day average of 680 boe/d, 85% oil. The company is currently testing other stacked configurations, including one Meramec and one Woodford well, as well as two stacked Woodford wells, with results expected next year.

Exhibit 15. Recent STACK Wells



20

Uinta Basin

NFX is the largest producer in Utah, comprising the Greater Monument Butte Unit (GMBU), a waterflood field geared toward maintaining current production while generating free cash flow, and the Central Basin, where it is currently exploring deeper horizons such as the Uteland Butte and Wasatch formations. The company holds 225,000 net acres in the Uinta Basin, including roughly 100,000 in the GMBU and 65,000 acres in the Central Basin.

Exhibit 16. Uinta Basin


Production in the Uinta Basin averaged 25.8 mboed in 3Q14, 81% liquids, and up 15% from a year ago. For the full year, NFX expects Uinta total production of 9.4 mmboe, or 25.8 mboed, up 15% based on capital spending of approximately $400M.

Crude out of the Uinta basin is a low-sulfur, waxy crude. It has excellent properties for the production of lubricants, and increasingly bunker fuel. However, this crude must be kept heated for transportation to prevent it from solidifying. Due to this constraint, it has traditionally been consumed in nearby refineries in the Salt Lake City area. These volumes are currently trucked to Salt Lake City on heated trucks, although TSO is currently evaluating a 65 mbd Uinta Express Pipeline, which would help reduce this truck traffic while providing access to rail loading facilities. Newfield consumes much of its Uinta gas production internally as fuel to keep oil tanks warm, particularly in the winter.

In order to protect economics in the play and support refinery expansion, NFX committed a significant amount of volumes, 38 mbd gross, to Salt Lake City area refiners, including 20 mbd of incremental refining capacity. It signed a 7-year, 18 mbd contract with TSO in late 2011 and a 10-year, 20 mbd contract with HFC in early 2012. HFC is also in talks with Uinta waxy crude producers around the refiner’s Woods Cross expansion Phase 2, which includes a lubes plant and would require another ~25 mbd of waxy crude starting in 2018 at the earliest.

Under these contracts, the waxy crude is priced at roughly 80% of WTI (inclusive of transportation), with reopeners for extreme moves in crude in either direction. However, we see the realized differential to WTI narrowing over time as more crude is sold outside the region. New entrants in the area, including Crescent Point Energy and Ultra Petroleum have led to growth in heated railcar capacity out of the Basin. The industry is now railing 20-30 mbd of waxy crude to refineries on the East, West, and Gulf Coasts, including 2 mbd for NFX, compared to minimal volumes a few years ago.

As it grows into its refinery commitments, Newfield expects Uinta production growth of 10% in 2015 and 20% in 2016 to over 50 mbd, gross (NFX average working interest is 71%). Capital investment will likely trend down from the $400M 2014 level, as more capital is allocated to the Anadarko Basin and as efficiency gains enable the company to spend less to meet its commitments.


21

Central Basin

In 2011, the company acquired 65,000 net acres in an overpressured area of the Uinta Basin north of GMBU, which it dubbed the Central Basin. The play is prospective for four unconventional horizontal targets, one in the Uteland Butte formation and three in the Wasatch, both of which sit below the traditional Green River formation targeted by GMBU. Production in the Central Basin is roughly 10 mbd currently.

Exhibit 17. Central Basin


Until recently, local regulations limited horizontal drilling to 3,500’ laterals. After working with the state, Newfield began drilling 10,000’ SXL wells beginning in early 2013. Production from both the Uteland Butte and Wasatch wells has been very strong, with 24-hour IP rates above 2,000 boe/d and 90-day rates still above 1,000 boe/d. However, the real hurdle for progressing this play into full development has been high capital costs. Currently, the company is running only three rigs in the Central Basin. It expects to release more detailed development plans for the Uteland Butte early next year, while plans for the Wasatch could take a little longer as NFX works to lower costs.

Uteland Butte. The Uteland Butte is a roughly 150’ thick target in the Central Basin,

below the Green River formation at an average depth of 8,750’. The current Uteland Butte type curve for SXL wells assumes an EUR of 600 to 800 mboe—75% oil and 25% gas—at an average well cost of $10M to $12M, with the lower end of the range representing potential development mode. The estimated rate of return is 20% to 50% at $90 oil. Newfield announced results from three Uteland Butte wells earlier this year, with an average 24-hour IP rate of 2,157 boe/d and 30-, 60-, and 90-day average rates of 1,449 boe/d, 1,251 boe/d. and 1,067 boe/d, respectively. It recently drilled its lowest cost Uteland Butte well for around $10.8M.

Exhibit 18. Uteland Butte Type Curve

Central Basin Uteland Butte SXL

8,750' Avg. Depth

$10-12M Gross Development Well Cost

600-800 MBOE EUR (75% oil, 0% NGLs, 25% gas)

Average WI 78%, 61% NRI

20% - >50% ROR ($90/b WTI oil, $4/mmbtu HH gas)



22

Wasatch. The Wasatch lies below the Uteland Butte, at an average depth of 10,000’, but

is significantly thicker, up to 1,000’, with potential for up to three stacked intervals. The current type curve for Wasatch SXL wells assumes an EUR of 800 to 1,200 mboe—75% oil and 25% gas—at an average well cost of $13M to $15M. The estimated rate of return is 20% to 50% at $90 oil. Newfield announced results from two Uteland Butte wells earlier this year, with an average 24-hour IP rate of 2,068 boe/d and 30-, 60-, and 90-day average rates of 1,428 boe/d, 1,479 boe/d. and 1,241 boe/d, respectively.

Exhibit 19. Wasatch Type Curve

Central Basin Wasatch SXL

10,000' Avg. Depth

$13-15M Gross Development Well Cost

800-1,200 MBOE EUR (75% oil, 0% NGLs, 25% gas)




Greater Monument Butte Unit

NFX acquired the GMBU waterflood field (~100,000 net acres) in 2004. Since then, it has drilled nearly 1,700 wells, and has approximately 1,300 producing oil wells and 1,100 water injection wells today, primarily targeting the Green River formation. Current production is around 16 mboed. The project is run like a manufacturing operation, with three rigs drilling 180-200 producing wells a year to maintain production. GMBU is now very close to cash flow neutral, and is expected to throw off free cash flow in 2015.

Exhibit 20. GMBU Type Curve

20-Acre Infill Green River Waterflood

5,000' Avg. Depth

$1.13M Gross Well Cost

140 MBOE EUR (90% oil, 2% NGLs, 8% gas)




The GMBU was initially developed with 40-acre vertical well spacing, and Newfield later moved to 20-acre infill drilling. The type curve for 20-acre spacing is 140 mboe EU—90% oil, 2% NGLs, and 8% gas—with a gross well cost of $1.13M ($714,000 for drilling & completion and $415,000 for two well conversions, pattern infrastructure, and facilities), with an implied rate of return of more than 50%. The company is now testing downspacing to 10 acres. It also expects to test the potential for the Uteland Butte formation on its GMBU acreage, below the Green River.


23

Exhibit 21. GMBU Well Spacing


Williston Basin

Newfield holds 41,000 net acres in full development of the Middle Bakken and First Three Forks formations around the Nesson Anticline in North Dakota. Although the Williston Basin development holds a limited inventory of undrilled locations—200 to 250 wells remaining based on four Bakken and four Three Forks wells per unit, or roughly a three- to five-year drilling program—the play generates strong economics with proved developed producing (PDP) reserves to support Newfield’s borrowing base.

Production in the Williston Basin was 19.4 mboed in 3Q14, 83% liquids, and up 59% from a year ago. Full-year production is now expected to total 6.5 mmboe, or 17.8 mboed, a 48% increase from 2013. NFX is investing $360M (21% of CAPEX) in the Williston this year, but will likely shift some of those dollars to the Anadarko Basin in 2015.

The type curve for a 10,000’ Bakken SXL well assumes a 450 to 950 mboe EUR—66% oil, 12% NGLs, and 22% gas—with an $8.4M well cost for a 30% to >50% rate of return at $90 oil. The Three Forks wells have an EUR of 400 to 800 mboe—65% oil, 13% NGLs, and 22% gas—also for $8.4M with an estimated rate of return of 20% to >50%.

Exhibit 22. Williston Basin Type Curves

Bakken SXL

11,000' Avg. Depth





Three Forks SXL

11,000' Avg. Depth






NFX continues to focus on drilling efficiency in the Bakken. Although recent industry trends are moving back toward higher cost, higher intensity completions utilizing cemented liners and plug-and-perf completions, the company continues to utilize lower cost, sliding sleeve completions. Management believes that higher cost completions may indeed increase ultimate recoveries, but do not enhance net present value, especially in development mode once an operator starts drilling infill wells. Accordingly, NFX is focused on drilling cheaper wells, preferring to redeploy the savings to other plays, notably the Anadarko Basin. NFX is now drilling three-well pads in under 50 days, with average costs trending toward $7.5M and a recent best-in-class well drilled for $6.8M. However, it is also participating in higher cost (>$10M), enhanced completions in its non-operated wells, and will evaluate the results.


24

Eagle Ford

Newfield holds 160,000 net acres in the Maverick Basin in Texas, although only 17,000 net acres in the West Asherton and Fashing developments targeting the Eagle Ford Shale can be considered core. Similar to the Williston, Newfield’s Eagle Ford position provides strong economics and PDP reserves, but with a limited undrilled inventory—roughly 50 wells which should last around two years based on a single rig program. We expect the company to drop a significant amount of non-core acreage in the Maverick Basin next year.

Eagle Ford production in 3Q14 was approximately 12 mboed, 85% oil. Full-year production is estimated at 4.2 mmboe, or 11.5 mboed, up 40% from the prior year. Capital spending was budgeted at $170 million this year, or 10% of the total.

The estimated type curve for the Eagle Ford is 550 mboe EUR—87% oil—with 8,500’ laterals at a cost of $7M for a 40% rate of return. NFX believes the Upper Eagle Ford/Austin Chalk intervals on its acreage are non-commercial.

Exhibit 23. 2014 YTD Well Results (as of 9/30/14)

Play

Avg. Gross

24-Hour IP

(boe/d)

#

Wells

Avg. Gross

30-Day Rate

(boe/d)

#

Wells

Avg. Gross

60-Day Rate

(boe/d)

#

Wells

Avg. Gross

90-Day Rate

(boe/d)

#

Wells

SCOOP Wet Gas SXL 2,006 5 1,615 5 1,646 5 1,550 5

SCOOP Wet Gas XL 1,377 13 1,054 13 1,042 13 1,022 13

SCOOP Oil 1,511 17 1,194 16 1,166 13 977 7

STACK 931 10 651 10 580 6 581 3

Uteland Butte SXL 2,157 3 1,449 3 1,251 3 1,067 3

Wasatch SXL 2,068 2 1,428 2 1,479 2 1,241 2

Williston Basin 2,369 39 821 36 671 34 599 28

Eagle Ford SXL 874 9 783 9 735 9 734 5 Note: Williston Basin includes 31 Middle Bakken and 8 Three Forks wells. Source: Newfield Exploration.

Dry Gas Assets

NFX is in several dry gas plays, including the Arkoma Basin in the Mid-Continent and conventional onshore gas fields in the Gulf Coast. However, it is not investing in any of these plays currently. Its focus in these plays is to manage the natural field decline while preserving future opportunities under a more conducive gas price. These assets are largely held by production.

Arkoma Basin

Newfield holds 150,000 net acres in the Arkoma Basin of Oklahoma. Current production is approximately 140 mmcfe/d, virtually all natural gas. NFX has not drilled a new Arkoma well in almost four years, and would likely need to see the oil-gas ratio closer to 10:1 before reallocating capital to the play. Although recent industry drilling has generated significantly improved well results, which could enhance returns, NFX would rather sit on the acreage, which is largely held by production, and let other operators prove up these concepts for the time being.

Onshore Gulf Coast

Newfield holds roughly 109,000 net acres in conventional onshore gas plays in south Texas. Production at the end of 2013 was around 41 mmcfe/d, over 90% gas. Production in these fields should continue to decline going forward due to limited investment.


25

International

China

Newfield held proved reserves of 25 mmboe (84% proved undeveloped) in China at year-end 2013, which the company intends to sell and has classified as a discontinued operation. The primary asset is the offshore Pearl (LF-7) oil development in the Pearl River Mouth basin, which NFX operates with a 49% working interest. The project commenced first oil in November, 2014, a year behind schedule due to a malfunction of a hydraulic jacking system in 2013. The project is expected to ramp up to peak production of 40 mbd gross over the next few months, and should generate over $185M of annual cash flow at $70 oil. Newfield’s total spending in China this year will be around $100M.

Now that production has started, we expect the company to solicit bids for the asset in the next several weeks, with a sale likely in early 2015. Chinese producer Brightoil Petroleum announced in early November that it planned to bid on the asset, and we believe several other suitors could make an offer. NFX will structure the transaction as a sale of shares in the venture, which would incur a 10% tax rate on proceeds.

We conservatively model $500M in after-tax cash proceeds from the sale of China next year, based on 3x estimated the cash flows of $185M, or just $28,000/flowing barrel. By comparison, APC sold its China operations earlier this year to Brightoil for $1.075B, or almost $100,000/flowing barrel.

Malaysia

Newfield held 11 mmboe of proved reserves (all developed) offshore Malaysia as of year-end 2013. It closed on the sale of this business to SapuraKencana Petroleum in February 2014 for $898M in cash ($809M net). Proceeds were used to pay down the company’s credit facility and for general corporate purposes.

Proved Reserves

Proved reserves from continuing operations as of December 31, 2013 were 576 mmboe, 40% oil, 12% NGLs, and 48% gas, with 56% of reserves classified as proved developed. Reserves from China operations classified as discontinued were 25 mmboe at yearend 2013, 100% oil and 16% proved developed. Reserve life is roughly 12.5 years.

The company replaced 213% of reserves over the trailing three years and 273% over the last five, excluding reserve revisions, with roughly 97% of additions from the drill bit. Finding and development costs averaged $34.96/boe over the trailing three years ($34.44/boe for continuing operations), but only $21.29/boe excluding reserve revisions.


26

Exhibit 24. Proved Reserves

Source: Company data and Oppenheimer & Co. Inc. estimates. Source: Company data and Oppenheimer & Co. Inc. estimates.



-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

2009 2010 2011 2012 2013

Reserve Replacement

5 Yr 174%

3 Yr 130%

0

10

20

30

40

50

60

2009 2010 2011 2012 2013

Oil & Gas Production (mmboe)

Oil Gas

5 Yr Avg 48.0 3 Yr Avg 49.8

-100

-50

0

50

100

150

200

2009 2010 2011 2012 2013

Oil & Gas Additions (mmboe)

Oil Gas

3 Yr Avg 64.7

5 Yr Avg 83.8

-150

-100

-50

0

50

100

150

200

250

2009 2010 2011 2012 2013

Reserve Additions (mmboe)

Drillbit Purchase Revisions

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2009 2010 2011 2012 2013

Cost Incurred ($million)

3 Yr Avg 2,2635 Yr Avg 2,042

-$10

-$5

$0

$5

$10

$15

$20

$25

$30

$35

2009 2010 2011 2012 2013

F&D Costs ($/boe)

3 Yr $34.96

5 Yr $24.37


27

Financial Condition

Balance Sheet

At September 30, Newfield had total debt of $3.0B compared to shareholder’s equity of $3.5B, for a 46% debt-to-capital ratio. Including a $396M cash balance, the net-debt-to-capital ratio was 43%, down from 55% at the end of 2013 due largely to debt reduction following the sale of Malaysia earlier this year. NFX also paid down $600M of 2018 Senior Notes this quarter with proceeds from the Granite Wash sale. Debt is currently composed of $700M in senior subordinated notes and $1.75B in senior unsecured debt. The earliest maturity is 2020 ($700M), and the weighted average coupon rate is 5.81%.

The company also has a LIBOR-based $1.4B revolving credit facility maturing June 2018, which was undrawn as of September 30. Restrictive covenants limit total debt to capital to a ratio of 0.6 to 1.0, and requires adjusted EBITDA to interest expenses of at least 3.0 to 1.0. NFX also has $195M available under money market lines of credit, which was also undrawn as of September. While we would expect the company to draw on its credit facility in late 2014 as it continues to outspend cash flow, it will likely use proceeds from the planned China sale to pay down these borrowings and narrow the spending deficit.

Exhibit 25. Debt Maturity Schedule (as of 9/30/14)

0

500

1,000

1,500

2,000

2,500

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

$M

7 1/8%Senior Sub

Notes(Repaid in 4Q14)

LIBOR-Based

Revolver

(Undrawn)

6 1/8%Senior Sub

Notes

5 3/4%Senior

Notes

5 5/8%Senior

Notes

Source: Company filings.

Acquisitions & Divestitures

NFX spent $385M on acquisitions in 2011-2013, largely to add acreage in the Anadarko and Uinta basins. It has also spent $21M on property acquisitions this year, mostly for 50,000 net acres in the Anadarko Basin (40,000 in STACK and 10,000 in SCOOP). While Newfield looks to continue picking up acreage, particularly in its Anadarko plays, we note there is not any sizable contiguous acreage on the market, and expect only small bolt-on deals going forward.

Newfield generated nearly $1.1B in proceeds from asset sales during 2011-2013, and another $1.4B so far this year. Asset sales YTD include net proceeds of $809M for Malaysia and $616M for other properties, mainly 42,000 acres in the Granite Wash as well as 30,000 non-core Rockies acres. It also plans to sell its China assets next year, including the Pearl oil development. Although management has not disclosed a price tag, it expects a reasonable valuation given the level of oil production expected from the field. We have conservatively estimated net proceeds of $500M.


28

Although the sale of China concludes most of the heavy lifting, we believe the company may continue to monetize non-core assets going forward to accelerate drilling in the STACK and SCOOP. Candidates up for divestment include fields in the twilight of their useful lives for Newfield, including some onshore Gulf Coast conventional fields.

The Williston Basin and Eagle Ford could command high valuations given their strong economics and are considered less strategic due to their limited drilling inventories. However, we note both hold considerable PDP reserves that help underpin the company’s borrowing base. Accordingly, a large share of potential proceeds would have to fund debt reduction rather than additional drilling capital, and so may not create considerable value.

Hedges

Newfield has one of the largest hedged oil positions in the E&P group. It has 49.4 mbd on average hedged for 2015 and 44.5 mbd for 2016, or about 83% and 63% of our US production forecast respectively, at around $90/b. It also has ~18 mbd hedged for 2017 in the high $80s (with some short puts at $70-$75/b). In general, the company prefers to hedge around two-thirds of its production for the next two years and one-third of expected volumes three years out, but has been more aggressive in recent years due to the sizable expected cash flow deficit involved in the transformation to a US onshore, liquids-focused portfolio.

Exhibit 26. Hedge Position

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017

Oil Hedge Position

$86.19

/bbl$85.19

/bbl

$88.89

/bbl

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017

Gas Hedge Position

$4.06

/mmbtu

$4.13

/mmbtu

$93.07

/bbl

Note: 2017 assumes 5% production growth. Hedging realizations based on strip pricing. Source: Company filings.

At an $80/b WTI oil price, the company estimates its hedging program will generate pre-tax income of $181M in 2015, $163M in 2016, and $57M in 2017. At $70/b WTI, hedging gains would equal $320M, $252M, and $98M, respectively.

The company has also hedged 240 mmcfd of natural gas for 2015, or 70% of expected production, at a price of around $4.15/mcf. It is just starting to look at putting on hedges for 2016. Gas hedges are not a major priority, as gas represents a smaller component of total revenue (~20% of our 2015 estimate) given its continued de-emphasis. The company does not hedge any of its NGL components.

Exhibit 27. Expected Pre-Tax Hedging Gains/(Losses) ($M)

$70 $80 $90 $100 $110

2015 320 181 1 (171) (350)

2016 252 163 0 (125) (287)

2017 98 57 (8) (61) (126)

$3.00 $4.00 $5.00 $6.00

2015 99 12 (47) (134)

Oil Prices

Gas Prices



29

Management Exhibit 28. Senior Management

Name Age Position

Total Years of Service

with Newfield

Lee K. Boothby 52 President, Chief Executive Officer and Chairman of the Board 14

Lawrence S. Massaro 50 Executive Vice President and Chief Financial Officer 3

Gary D. Packer 51 Executive Vice President and Chief Operating Officer 18

George T. Dunn 56 Senior Vice President — Development 21

William D. Schneider 62 Senior Vice President — Exploration 25

Stephen C. Campbell 45 Vice President — Investor Relations 14

George W. Fairchild, Jr. 46 Chief Accounting Officer and Assistant Corporate Secretary 2

Clay M. Gaspar 41 Vice President — Mid-Continent 2

Daryll T. Howard 51 Vice President — Rocky Mountains 17

John H. Jasek 44 Vice President — Onshore Gulf Coast 14

John D. Marziotti 50 General Counsel and Corporate Secretary 10 Source: Newfield Exploration 10-K.

Lee K. Boothby: President, CEO & Chairman. Mr. Boothby was named chairman of the

board in May 2010, CEO in May 2009, and president in February 2009. He previously served as SVP – Acquisitions and Business Development from 2007-2009, VP – Mid-Continent from 2002-2007, and VP and Managing Director – Newfield Exploration Australia Ltd. 1999-2001. He holds a degree in petroleum engineering from Louisiana State University and an MBA from Rice University.

Lawrence S. Massaro: EVP & CFO. Mr. Massaro was promoted to EVP and chief

financial officer in November 2013. He joined the company in 2011 as VP – Corporate Development, leading the company's business development, strategic planning, and product marketing efforts. Prior to joining Newfield, Mr. Massaro was a managing director at JP Morgan in its oil and gas investment banking group since 2005. Mr. Massaro holds a degree in petroleum engineering from Texas A&M University and an MBA from Southern Methodist University.

Gary D. Packer: EVP & COO. Gary Packer was promoted to EVP and chief operating

officer in May, 2009. He was promoted to VP – Rocky Mountains in 2004, and was previously Gulf of Mexico general manager. Mr. Packer joined the company in 1995 from Amerada Hess Corporation. He holds a degree in petroleum and natural gas engineering from Penn State University.

George T. Dunn: SVP – Development. Mr. Dunn was promoted to SVP – Development

in September, 2012. He previously served as VP – Mid-Continent since 2007, and managed onshore Gulf Coast operations from 2001-2007. He holds a degree in petroleum engineering from the Colorado School of Mines.

William D. Schneider: SVP – Exploration. Mr. Schneider was promoted to Senior Vice

President – Exploration in September, 2012. He was previously VP – Gulf of Mexico and International beginning in 2011 and VP – Onshore Gulf Coast and International 2008-2011. He holds bachelor of arts and master of arts degrees in geology from Boston University.


30

Stock prices of other companies mentioned in this report (as of 12/11/2014):

Continental Resources (CLR-NYSE, $33.24, Not Covered) Crescent Point Energy (CPG-TSX, C$22.30, Not Covered) Ultra Petroleum (UPL-NYSE, $14.58, Not Covered)


31

2012 2013 1Q14 2Q14 3Q14 4Q14E 2014E 1Q15E 2Q15E 3Q15E 4Q15E 2015E 1Q16E 2Q16E 3Q16E 4Q16E 2016E

Oil & Gas Revenues ($mm) 2,567 1,789 553 608 610 485 2,255 431 467 493 507 1,899 544 561 590 622 2,317

Expenses ($mm):

Lease operating 407 276 74 81 76 77 308 79 81 83 85 328 86 87 89 90 352

Transportation 107 137 37 38 51 50 175 49 50 52 52 203 53 54 56 56 219

Production and Other Taxes 344 67 25 29 31 30 115 29 28 30 30 116 33 34 35 37 139

DD&A 955 668 188 212 228 217 845 217 228 238 245 927 245 253 261 266 1,025

G&A 218 211 56 68 48 50 222 52 54 55 58 218 58 59 60 61 239

Other 15 3 0 0 8 0 8 0 0 0 0 0 0 0 0 0 0

Total Costs and Expenses 2,046 1,362 380 428 441 424 1,673 425 440 458 470 1,793 474 487 501 511 1,973

Operating Income (Loss) 521 427 173 180 169 61 582 6 27 35 37 106 70 74 88 111 343

Commodity Derivatives Loss (Income) (135) (60) 39 47 20 (68) 38 (104) (97) (96) (98) (395) (73) (64) (61) (55) (253)

Net Interest Expenses & Other 121 143 36 37 37 28 138 30 24 25 27 106 27 27 28 28 110

Pretax Income 535 343 98 96 112 101 406 80 100 106 108 395 116 111 121 138 486

Income Taxes 228 124 38 37 40 36 151 29 36 38 39 142 42 40 44 49 174

Net Income (Loss) 307 219 60 59 72 65 255 51 64 68 69 253 74 71 78 88 311

Basic $2.27 $1.62 $0.44 $0.43 $0.52 $0.47 $1.87 $0.37 $0.46 $0.49 $0.49 $1.82 $0.53 $0.50 $0.55 $0.62 $2.19

Diluted $2.27 $1.61 $0.44 $0.43 $0.52 $0.47 $1.86 $0.37 $0.46 $0.48 $0.49 $1.80 $0.52 $0.50 $0.54 $0.61 $2.17

Common shares out (diluted): 135 136 137 136 138 139 137 139 140 141 141 140 142 143 144 144 143

EBITDA 1,627 1,164 324 346 378 347 1,394 328 353 371 380 1,432 389 392 411 433 1,625

Cash Flow 1,262 953 286 308 339 317 1,249 297 327 344 352 1,320 360 363 382 403 1,509

Cash Flow per share $9.35 $7.00 $2.08 $2.27 $2.45 $2.29 $9.09 $2.13 $2.34 $2.44 $2.49 $9.40 $2.53 $2.54 $2.66 $2.79 $10.53

(CAPEX) (1,789) (2,095) (561) (475) (542) (479) (2,057) (450) (450) (450) (475) (1,825) (450) (475) (475) (500) (1,900)

(Dividends) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Sales/(Acquistions) 630 36 819 2 604 0 1,425 0 500 0 0 500 0 0 0 0 0

(Share Repurchase)/Issuance 0 (20) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Free Cash Flow 136 (1,126) 544 (165) 401 (162) 617 (153) 377 (106) (123) (5) (90) (112) (93) (97) (391)

Production

Oil (mbd) 32.8 38.9 45.6 49.5 52.2 54.3 50.4 57.5 58.9 60.3 62.7 59.8 66.3 69.2 71.9 75.2 70.7

Natural Gas (mmcfd) 413 341 331 364 366 320 345 333 343 349 344 342 342 349 349 333 343

NGLs (mbd) 7.1 14.1 18.9 22.0 23.9 22.8 21.9 24.4 25.2 26.0 27.7 25.8 27.6 27.2 26.5 27.2 27.1

Continuing Operations (mboed) 108.8 109.8 118.5 133.2 138.2 130.4 129.9 137.4 141.2 144.5 147.7 142.7 152.6 154.6 156.5 158.0 155.0

Disc. International Operations (mboed) 27.6 22.4 11.1 0.4 0.0 5.0 4.1 17.5 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 0.0

Total Production (mboed) 136.4 132.3 129.6 132.5 138.2 135.4 134.0 154.9 141.2 144.5 147.7 147.0 150.9 154.6 156.5 158.0 155.0

Benchmark Prices

WTI ($/b) $94.16 $97.98 $98.65 $103.14 $97.68 $75.55 $93.70 $66.49 $66.94 $67.60 $66.75 $66.75 $68.29 $69.34 $70.14 $70.98 $69.69

Henry Hub ($/mcf) $2.76 $3.67 $4.90 $4.56 $4.07 $3.94 $4.37 $3.48 $3.53 $3.67 $3.60 $3.60 $3.93 $3.70 $3.73 $3.87 $3.81

Realization

Crude Oil, before hedges ($/bbl) $95.62 $94.44 $90.91 $90.33 $85.07 $65.79 $82.48 $58.24 $58.97 $59.89 $59.47 $59.10 $61.18 $62.46 $63.54 $64.66 $63.03

Natural Gas, before hedges ($/mcf) $2.65 $3.39 $4.65 $4.32 $3.85 $3.73 $4.14 $3.30 $3.34 $3.47 $3.41 $3.38 $3.71 $3.50 $3.53 $3.66 $3.60

NGLs, before hedges ($/bbl) $31.26 $30.75 $38.11 $31.11 $34.16 $27.93 $32.60 $24.58 $23.41 $23.64 $24.68 $24.08 $26.61 $25.63 $25.93 $27.66 $26.47

Realized Price, before hedges ($/boe) $51.92 $56.70 $57.94 $51.97 $48.90 $42.84 $50.27 $39.59 $37.31 $38.06 $38.24 $38.33 $40.59 $40.85 $41.92 $43.75 $41.80

Hedging Impact ($/boe) $3.48 $1.36 ($3.82) ($4.03) ($1.00) $5.60 ($0.74) $7.55 $7.71 $7.38 $7.31 $7.49 $5.42 $4.67 $4.32 $3.87 $4.56

Realized Price ($/boe) $55.40 $58.06 $54.12 $47.94 $47.90 $48.45 $49.53 $47.14 $45.02 $45.44 $45.55 $45.81 $46.01 $45.52 $46.24 $47.62 $46.36

Total unit cost ($/boe) $35.32 $35.32 $36.31 $36.77 $35.15 $36.09 $36.17 $35.24 $35.17 $35.33 $35.46 $35.30 $35.36 $35.46 $35.63 $35.95 $35.60

After-tax unit profit ($boe) $3.22 $7.75 $7.70 $6.74 $8.17 $7.92 $8.39 $7.64 $6.32 $6.49 $6.47 $6.74 $6.83 $6.45 $6.80 $7.48 $6.90

Balance Sheet Items 2012 2013 1Q14 2Q14 3Q14 4Q14E 2014E 1Q15E 2Q15E 3Q15E 4Q15E 2015E 1Q16E 2Q16E 3Q16E 4Q16E 2016E

Cash and equivalents 88 95 107 36 396 96 96 96 79 79 79 79 79 23 (24) (72) (72)

Debt 3,045 3,694 3,046 3,077 3,046 2,908 2,908 3,061 2,667 2,773 2,896 2,896 2,941 2,997 3,043 3,092 3,092

Equity 2,780 2,956 3,250 3,242 3,525 3,590 3,590 3,641 3,705 3,774 3,843 3,843 3,917 3,988 4,066 4,154 4,154

Key Items & Ratios

Debt Ratio 52.3% 55.5% 48.4% 48.7% 46.4% 44.8% 44.8% 45.7% 41.9% 42.4% 43.0% 43.0% 42.9% 42.9% 42.8% 42.7% 42.7%

Net Debt Ratio 51.5% 54.9% 47.5% 48.4% 42.9% 43.9% 43.9% 44.9% 41.1% 41.7% 42.3% 42.3% 42.2% 42.7% 43.0% 43.2% 43.2%

BV per share $20.59 $21.90 $23.90 $23.84 $25.73 $26.07 $26.27 $26.31 $26.64 $27.00 $27.36 $27.56 $27.75 $28.11 $28.52 $28.99 $29.21

ROACE 6.0% 5.1% 5.2% 4.9% 5.5%

Source: Company data and Oppenheimer & Co. Inc. estimates. Financials exclude international operations beginning in 2013.

Newfield ExplorationFinancial and Operating Model


32

NFX Stock Price $24.12 /sh Dividends $0 mm Liquids Gas Total

Shares Outstanding 139 mm Yield 0.0% Region mbd mmcfd mboe Mix

Market Capitalization $3.3 bn Cash $444 mm US 86 342 143 97%

2015E CAPEX $1,825 mm Net Debt $2,602 mm Other 4 0 4 3%

Income Tax Rate 36% Net Debt Ratio 42% Total 90 342 147 100%

Mix 61% 39% * North America

Hedges 77% 70% 61%

Oil Gas

$/b $/mcf $mm $/sh $mm $/sh $mm $/sh $mm $/sh P/E P/CF EV/EBITDA

100 5.00 409 $2.93 1,562 $11.20 1,675 $12.01 (263) ($1.89) 8.2 2.2 3.5

4.50 391 $2.81 1,534 $11.01 1,647 $11.81 (291) ($2.08) 8.6 2.2 3.6

4.00 373 $2.68 1,507 $10.81 1,619 $11.62 (318) ($2.28) 9.0 2.2 3.7

3.50 366 $2.63 1,496 $10.73 1,608 $11.54 (329) ($2.36) 9.2 2.2 3.7

3.00 361 $2.59 1,488 $10.67 1,600 $11.48 (337) ($2.42) 9.3 2.3 3.7

90 5.00 385 $2.76 1,524 $10.93 1,637 $11.74 (301) ($2.16) 8.7 2.2 3.6

4.50 367 $2.63 1,497 $10.74 1,609 $11.54 (328) ($2.35) 9.2 2.2 3.7

4.00 349 $2.51 1,470 $10.54 1,582 $11.35 (355) ($2.55) 9.6 2.3 3.7

3.50 342 $2.45 1,459 $10.46 1,571 $11.27 (366) ($2.63) 9.8 2.3 3.8

3.00 337 $2.42 1,450 $10.40 1,562 $11.21 (375) ($2.69) 10.0 2.3 3.8

80 5.00 365 $2.62 1,494 $10.72 1,607 $11.52 (331) ($2.37) 9.2 2.3 3.7

4.50 348 $2.49 1,467 $10.52 1,579 $11.33 (358) ($2.57) 9.7 2.3 3.7

4.00 330 $2.37 1,439 $10.32 1,552 $11.13 (386) ($2.77) 10.2 2.3 3.8

3.50 323 $2.32 1,428 $10.25 1,541 $11.05 (397) ($2.84) 10.4 2.4 3.8

3.00 317 $2.28 1,420 $10.19 1,532 $10.99 (405) ($2.90) 10.6 2.4 3.9

70 5.00 331 $2.38 1,442 $10.34 1,554 $11.15 (383) ($2.75) 10.1 2.3 3.8

4.50 314 $2.25 1,414 $10.14 1,526 $10.95 (411) ($2.95) 10.7 2.4 3.9

4.00 296 $2.12 1,387 $9.95 1,499 $10.75 (438) ($3.14) 11.4 2.4 3.9

3.50 289 $2.07 1,376 $9.87 1,488 $10.67 (449) ($3.22) 11.6 2.4 4.0

3.00 284 $2.03 1,367 $9.81 1,479 $10.61 (458) ($3.28) 11.9 2.5 4.0

60 5.00 211 $1.51 1,255 $9.00 1,366 $9.80 (570) ($4.09) 15.9 2.7 4.3

4.50 193 $1.39 1,227 $8.80 1,339 $9.60 (598) ($4.29) 17.4 2.7 4.4

4.00 176 $1.26 1,200 $8.61 1,311 $9.40 (625) ($4.48) 19.1 2.8 4.5

3.50 169 $1.21 1,189 $8.53 1,300 $9.32 (636) ($4.56) 20.0 2.8 4.5

3.00 163 $1.17 1,181 $8.47 1,292 $9.26 (644) ($4.62) 20.6 2.8 4.6

Sensitivity

Oil ($70-$80/b) 34 $0.24 53 $0.38 53 $0.38 3-Year 11.4 2.9 5.0

Gas ($3.5-$4/mcf) 7 $0.05 11 $0.08 11 $0.08 5-Year 14.5 3.4 6.5

Source: Company information and Oppenheimer & Co. estimates. Oil price is NYMEX WTI. Brent-WTI differential based on NYMEX futures.


Production Profile

Oil and Gas Price Sensitivity Analysis - 2015

MultiplesEarnings Cash Flow EBITDA Free Cash

*


33

Source: Oppenheimer & Co. Inc. and company data. Source: Oppenheimer & Co. Inc. and company data.




5-Year Operating Summary


$0

$1

$1

$2

$2

$3

$3

$4

$4

$5

$0

$100

$200

$300

$400

$500

$600

2011 2012 2013 2014E 2015E

5-Year Earnings Summary

Income EPS

Incom

e (

$m

m)

EP

S ($

/sh)

$0

$2,000

$4,000

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2011 2012 2013 2014E 2015E

5-Year CAPEX

Cash Flow CAPEX

Cash flo

w (

$m

m) C

AP

EX

($m

m)

$0

$3

$6

$9

$12

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2011 2012 2013 2014E 2015E

5-Year Cash Flow Summary

Cash Flow CFPS

CF

PS

($/s

h) C

ash F

low

($m

m)

0%

2%

4%

6%

8%

10%

2011 2012 2013 2014E 2015E

5-Year Return on Average Capital Employed

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014E 2015E

(mboed)

5-Year Production Profile

Oil NGLs Natural Gas

$0

$2

$4

$6

$8

$10

$12

$14

2011 2012 2013 2014E 2015E

5-Year Unit Profit

0.000

0.100

0.200

0.300

0.400

0.500

2011 2012 2013 2014E 2015E

(boe

d /

sh

are

)

5-Year Annualized Production per Share

$0

$10

$20

$30

$40

-50%

0%

50%

100%

150%

200%

250%

300%

350%

400%

2009 2010 2011 2012 2013

5-Year Reserve Summary

Replacement F&D ($/boe)

Reserv

e R

epla

cem

ent (%

)

F&

D ($

/boe)


34

Investment ThesisWe believe NFX’s historical valuation gap to the group will narrow as the company completes its transition from a diversified, globalexploration and production company to a more focused strategy based on sustainable North American unconventional liquids growth.Newfield’s strong hedge position for the next two years also gives us more confidence in its ability to grow earnings and cash flow in thenear term despite the recent drop in oil prices. This provides the company a solid cushion to continue to invest while awaiting service coststo reset to this new world order.

Price Target CalculationOur price target of $35/share is based on 3.7x P/CF using our 2015 estimate of $9.40/share, in line with its five-year average and belowthe E&P group average of 5.7x. Our price target also represents 5.2x EV/EBITDA based on our ‘15 estimate of $1.43B, slightly above thefive-year mean, but a significant discount to the group at 6.6x. We think the stock should trade at or above its five-year mean valuationmultiples based on continued North American liquids growth, exploration success, and a strong hedge position.

Key Risks to Price TargetDespite a strong hedge position, Newfield, like all oil & gas companies, is highly dependent on the market price of its oil& gas sales. Absent any hedging gains, its core investments may fail to generate acceptable returns at lower prices, or ifNewfield is unable to source appropriate takeaway capacity for its oil & gas. The company's growth plans are also at riskif it is unable to sell assets and/or borrow funds to bridge its spending gap over the next few years, or if it is unable to addreserves due to exploration or operational difficulties.

Important Disclosures and CertificationsAnalyst Certification - The author certifies that this research report accurately states his/her personal views about thesubject securities, which are reflected in the ratings as well as in the substance of this report. The author certifies that no partof his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views containedin this research report.Potential Conflicts of Interest:Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firmincluding the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensationbased upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any researchanalyst and any member of his or her household from executing trades in the securities of a company that such researchanalyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an officer,director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in coveredcompanies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long positionof less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options,futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoingarrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered byOppenheimer & Co. Inc:Stock Prices as of December 15, 2014Anadarko Petroleum (APC - NYSE, $73.34, OUTPERFORM)Devon Energy Corporation (DVN - NYSE, $53.01, OUTPERFORM)HollyFrontier Corp. (HFC - NYSE, $37.33, PERFORM)Tesoro Corporation (TSO - NYSE, $74.41, PERFORM)


35


36


37

All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer & Co.Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price histories,please write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department,Business Manager.

Oppenheimer & Co. Inc. Rating System as of January 14th, 2008:

Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.

Perform (P) - Stock expected to perform in line with the S&P 500 within the next 12-18 months.

Underperform (U) - Stock expected to underperform the S&P 500 within the next 12-18 months.

Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential conflictof interest.

Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008:

Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments, and/orthe ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector.

Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to aperceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than higherrated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy, aggressivetrading accounts might decide to liquidate their positions to employ the funds elsewhere.

Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness perceivedin the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group.


38

Distribution of Ratings/IB Services Firmwide

IB Serv/Past 12 Mos.

Rating Count Percent Count Percent

OUTPERFORM [O] 321 54.41 147 45.79

PERFORM [P] 261 44.24 97 37.16

UNDERPERFORM [U] 8 1.36 0 0.00

Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do notcorrelate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assignedbuy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.

Company Specific DisclosuresA member of the household of an Oppenheimer & Co. Inc. research analyst who covers this company has a long positionin DVN.

The Oppenheimer & Co. Inc. analyst/associate(s) who covers this company also has a long position in APC and DVN.

The analyst/associate/member of the analyst's or associate's household owns a long position in DVN.

Additional Information Available

Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: EquityResearch Department, Business Manager.

Other DisclosuresThis report is issued and approved for distribution by Oppenheimer & Co. Inc. Oppenheimer & Co. Inc. transacts business on all principalexchanges and is a member of SIPC. This report is provided, for informational purposes only, to institutional and retail investor clients ofOppenheimer & Co. Inc. and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdictionwhere such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors.This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer& Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solelyon investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits andrisks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalfof any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report,the recipient should consider whether such recommendation is appropriate given the recipient's particular investment needs, objectivesand financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourageinvestors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtueof their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied,is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report andthe income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investmentsin such securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from theuse of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable toOppenheimer & Co. Inc. All information, opinions and statistical data contained in this report were obtained or derived from public sourcesbelieved to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate orcomplete (with the exception of information contained in the Important Disclosures section of this report provided by Oppenheimer & Co.Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressedherein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal,accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation shouldnot be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications,clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web


http://www.opco.com

39

sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contentsthereof. Each such address or hyperlink is provided solely for the recipient's convenience and information, and the content of linked thirdparty web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or followsuch hyperlinks do so at their own risk.This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which isauthorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construedas a solicitation or an offer to purchase or sell investments or related financial instruments. This research is for distribution only to personswho are eligible counterparties or professional clients and is exempt from the general restrictions in section 21 of the Financial Servicesand Markets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is beingdistributed in the UK only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) High Net Worth companies,unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended). It is notintended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to,and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensationscheme may be applied.Distribution in Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by OppenheimerInvestments Asia Limited (OIAL) to persons whose business involves the acquisition, disposal or holding of securities, whether as principalor agent. OIAL, an affiliate of Oppenheimer & Co. Inc., is regulated by the Securities and Futures Commission for the conduct ofdealing in securities, advising on securities, and advising on Corporate Finance. For professional investors in Hong Kong, please [email protected] for all matters and queries relating to this report. This report or any portion hereof may not be reprinted, sold, orredistributed without the written consent of Oppenheimer & Co. Inc.

This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright© Oppenheimer & Co. Inc. 2014.


mailto:[email protected]

Documents

NFX Initiating Coverage