Newfield Exploration Co., The Woodlands, Tex., has concluded its marketing process for its China business and now plans to retain the assets. The business will be reclassified for financial purposes as “continuing operations” in fourth-quarter 2014.
“The recent and significant pull back in global oil prices created headwinds for our China sales process,” said Larry Massaro, Newfield executive vice-president and chief financial officer. “Our China oil fields are expected to generate significant free cash flows over the next several years.”
Net liftings from China in the fourth quarter totaled 300,000 bbl of oil. The Pearl facility in the South China Sea is currently producing oil and development drilling is ongoing. Net capital investments in China for this year are estimated at less than $50 million. The Pearl facility is expected to reach a peak rate midyear.
“Although our intent was to monetize the asset, it was not a sale at any price,” Massaro explained. “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 monetized more than $2.6 billion in nonstrategic assets over the last 3 years and has used proceeds to fund its domestic businesses. The recent sale of the Granite Wash allowed for the repayment of $600 million in long-term debt (OGJ Online Sept. 22, 2014). The company in early 2014 closed on the sale of its business offshore Malaysia for $898 million (OGJ Online, Feb. 11, 2014).
