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Newfield holds on to Chinese assets amid weakening oil prices

14th January 2015

Newfield Exploration has concluded its marketing process for its China business and now plans to retain its assets due to weakening oil prices

Newfield Exploration has concluded its marketing process for its China business and now plans to retain its assets due to weakening oil prices
The Pearl facility, located in the South China Sea, is currently producing oil and development drilling is on-going and is expected to reach a peak rate in mid-2015

For financial purposes, the China business will be reclassified as "continuing operations" in the fourth quarter of 2014. 

"The recent and significant pull back in global oil prices created headwinds for our China sales process," said Larry Massaro, Newfield's executive vice president and CFO.

"Our China oilfields are expected to generate significant free cash flows over the next several years. Although our intent was to monetise the asset, it was not a sale at any price. We will remain disciplined in our capital investments and intend to use the cash flows from our China business to manage short-term borrowing levels and ensure that we manage our overall debt and liquidity positions during a period of weak oil prices."

Newfield has monetised more than USD 2.6bn in non-strategic assets over the last three years and has used proceeds to fund its domestic businesses.

The recent sale of the Granite Wash (closed in October 2014) allowed for the repayment of USD 600m in long-term debt.

Newfield's credit facility expires in 2018 and the company has no long-term bond maturities prior to 2020. Newfield currently has more than USD 1bn of liquidity under its credit facility and other money market lines.

Net liftings from China in the fourth quarter of 2014 were approximately 300,000 barrels of oil. Newfield will provide 2015 guidance for its China business along with total company guidance in February 2015.

The Pearl facility, located in the South China Sea, is currently producing oil and development drilling is on-going. Net capital investments in China for 2015 are estimated at less than USD 50m. The Pearl facility is expected to reach a peak rate in mid-2015.

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