Newfield Exploration Co. (NFX:US), which received about 70 percent of its output from natural gas in 2010, isn’t drilling for dry gas for the first time in its 24- year history, Chief Executive Officer Lee Boothby said.
The company’s last gas drilling operation finished in January in the Woodford Shale and the rig was moved to Oklahoma’s oil-rich Cana Woodford, where Newfield has about 125,000 acres, Boothby said in an interview at the Howard Weil conference in New Orleans.
Gas for April delivery fell 1.8 cents to settle at $2.208 per million British thermal units in New York after falling to $2.176, the lowest intraday price since February 2002. Newfield, based in The Woodlands, Texas, said last month it had deferred about 2 billion cubic feet equivalent of gas and might halt more production if prices fell further.
“Our view is natural-gas prices are likely to be lower longer,” Boothby said today. “I’m not expecting a robust rebound in gas prices in the next three years.”
The company is looking to boost onshore oil output in North America this year through projects in such areas as the Uinta Basin in Utah. Newfield said in February that output of petroleum liquids such as crude is expected to rise by more than 20 percent, while gas output will fall about 15 percent on natural field declines.
The company expects to receive about 48 percent of its production from liquids in 2012 and about 80 percent of its revenue, according to a slide presentation for the Howard Weil conference.
Newfield is preparing to start its process of divesting Gulf of Mexico assets, Boothby said. He declined to specify whether the company would sell or spin off the assets or execute another transaction.
“We would expect by mid-summer we’ll have some resolution for plans in the Gulf of Mexico,” Boothby said.
The company is prepared to keep some or all of the Gulf assets if it doesn’t get the right price, Boothby said. The offshore properties are in both deep and shallow waters, he said.
“The Gulf of Mexico, in the post-Macondo world, with everything else we have going in North America onshore, isn’t a good fit for us,” Boothby said.
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