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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MAY 20, 2003
(DATE OF EARLIEST EVENT REPORTED)
NEWFIELD EXPLORATION COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 1-12534 72-1133047
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
363 N. SAM HOUSTON PARKWAY E., SUITE 2020
HOUSTON, TEXAS 77060
(Address of Registrant's Principal Executive Offices)
(281) 847-6000
(Registrant's Telephone Number, Including Area Code)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information.
The unaudited pro forma combined condensed income statement
for the year ended December 31, 2002 giving effect to the acquisition
by Newfield Exploration Company of EEX Corporation and the issuance by
Newfield Exploration Company of the Notes described therein begin on
page F-1 of this report.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEWFIELD EXPLORATION COMPANY
Date: May 20, 2003 By: /s/ TERRY W. RATHERT
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Terry W. Rathert
Vice President and Chief
Financial Officer
2
NEWFIELD EXPLORATION COMPANY
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
On November 26, 2002, Newfield Exploration Company ("Newfield")
acquired EEX Corporation ("EEX") pursuant to a stock-for-stock merger (the
"Merger") in which Newfield Operating Company, a wholly owned subsidiary of
Newfield, merged with and into EEX, with EEX surviving as a wholly owned
subsidiary of Newfield. A total of approximately 7.1 million shares of Newfield
common stock were issued in connection with the Merger. Newfield financed the
EEX debt that became due at the closing of the Merger and a portion of the
transaction costs associated with the Merger with the issuance in August 2002 of
$250 million aggregate principal amount of its 8 3/8% Senior Subordinated Notes
due 2012 (the "Notes").
The following unaudited pro forma combined condensed income statement
combines the historical consolidated income statements of Newfield and EEX and
gives effect to the issuance of the Notes and to the Merger using the purchase
method of accounting.
The unaudited pro forma combined condensed income statement is based on
the following assumptions and adjustments:
o the income statement data assume that the issuance of the
Notes and the Merger were effected on January 1, 2002; and
o the historical financial statements of EEX have been adjusted
to conform to the accounting policies of Newfield.
The historical income statement information for the year ended December
31, 2002 is derived from the unaudited financial statements of EEX and the
audited consolidated financial statements of Newfield. The unaudited pro forma
combined condensed income statement should be read together with the historical
financial statements and related notes of Newfield.
The unaudited pro forma combined condensed income statement is
presented for illustrative purposes only. The financial results may have been
different if the companies had always been combined or if the transactions had
occurred as of the date indicated above, and the unaudited pro forma combined
condensed income statement does not purport to predict Newfield's future
results. Further, the unaudited pro forma combined condensed income statement
does not reflect the effect of restructuring charges that have been or will be
incurred to fully integrate and operate the combined organization more
efficiently or synergies that have resulted, or are anticipated to result, from
the Merger.
F-1
NEWFIELD EXPLORATION COMPANY
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 2002
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HISTORICAL HISTORICAL PRO FORMA PRO FORMA
NEWFIELD(A) EEX(B) ADJUSTMENTS COMBINED
----------- ---------- ----------- ----------
Revenues ........................................................ $ 661,750 $ 137,499 $ 799,249
Operating expenses:
Lease operating ............................................. 105,860 23,235 129,095
Exploration ................................................. -- 23,060 $ (23,060)(C) --
Production and other taxes .................................. 17,286 10,193 27,479
Transportation .............................................. 5,708 -- 5,708
Depreciation, depletion and amortization .................... 303,274 41,894 (41,894)(D) 385,303
82,029 (E)
General and administrative .................................. 56,117 15,836 71,953
Gain on sales of property, plant and
equipment, net ............................................ -- (858) 577 (F) (281)(F)
---------- ---------- ----------
Total operating expenses ................................ 488,245 113,360 619,257
---------- ---------- ----------
Income from continuing operations ............................... 173,505 24,139 179,992
---------- ---------- ----------
Other income (expenses):
Interest and other income (expense) ......................... (18,721) 1,030 (17,691)
Interest expense ............................................ (34,555) (24,714) 1,873 (G) (61,767)
6,593 (H)
10,737 (I)
(21,701)(I)
Dividends on convertible preferred securities
of Newfield Financial Trust I ............................. (9,344) -- (9,344)
---------- ---------- ----------
Total other income (expenses) ........................... (62,620) (23,684) (88,802)
---------- ---------- ----------
Income before income taxes, discontinued
operations and extraordinary items ........................... 110,885 455 91,190
---------- ---------- ----------
Income tax provision ............................................ 37,038 431 (7,053)(J) 30,416
---------- ---------- ----------
Income before discontinued operations,
extraordinary items and preferred stock
dividends .................................................... $ 73,847 $ 24 $ 60,774
========== ========== ==========
Per share data:
Basic earnings per share (K) ................................ $ 1.64 $ -- $ 1.18
========== ========== ==========
Diluted earnings per share (K) .............................. $ 1.61 $ -- $ 1.17
========== ========== ==========
Weighted average number of shares outstanding
for basic earnings per share ............................. 45,096 41,901 (41,901)(L) 51,485
========== ========== 6,389 (L) ==========
Weighted average number of shares outstanding
for diluted earnings per share ........................... 49,589 41,901 (41,901)(L) 52,055
========== ========== 6,389 (L) ==========
(3,923)(M)
See accompanying Notes to Unaudited Pro forma
Combined Condensed Income Statement.
F-2
NEWFIELD EXPLORATION COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
(A) The Newfield historical amounts are derived from the audited
consolidated statement of income of Newfield and include EEX's
consolidated results for the period from November 27, 2002 (the day
following the Merger) through December 31, 2002.
(B) The EEX historical amounts are derived from the unaudited consolidated
statement of operations of EEX for the period from January 1, 2002
through November 26, 2002 (the date of the Merger).
(C) To record the reversal of historical EEX exploration expense recorded in
accordance with the successful efforts method of accounting for oil and
gas activities. No such expense is recorded under the full cost method of
accounting for oil and gas activities utilized by Newfield.
(D) To record the reversal of historical EEX depreciation, depletion and
amortization expense recorded in accordance with the successful efforts
method of accounting for oil and gas activities.
(E) To record pro forma depreciation, depletion and amortization expense in
accordance with the full cost method of accounting for oil and gas
activities based on the purchase price allocation to depreciable and
depletable assets.
(F) To record the reversal of the historical EEX gain on the sales of oil and
gas properties recorded in accordance with the successful efforts method
of accounting for oil and gas activities. The remaining $0.3 million gain
on sales of property, plant and equipment for the year ended December 31,
2002 relates to the sale of non oil and gas assets.
(G) To adjust EEX historical interest expense to reflect the reversal of
amortization of historical debt issuance costs.
(H) To record the capitalization of interest based on the allocation of the
purchase price to unproved oil and gas properties.
(I) To eliminate historical EEX interest expense of approximately $10.7
million for the year ended December 31, 2002 related to EEX's credit
facility and to reflect the interest expense which results from the
issuance of the Notes with a stated interest rate of 8 3/8%. The Notes
were issued at a discount of 0.832%. Interest expense also includes
amortization of debt issuance costs and the Note discount which is being
amortized over the term of the Notes.
YEAR ENDED
DECEMBER 31,
2002
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(IN THOUSANDS)
Interest expense - $250 million senior subordinated notes .............. $ 20,938
Amortization of note discount - senior subordinated notes .............. 150
Amortization of debt issuance costs - senior subordinated notes ........ 613
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$ 21,701
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(J) To record income tax expense on the pro forma adjustments based on the
applicable statutory tax rate of 35%.
(K) Calculated by dividing income before discontinued operations,
extraordinary items and preferred stock dividends by the weighted average
number of shares outstanding.
(L) To reverse historical EEX common stock and reflect the net effect of
Newfield common stock issued in the Merger as if the shares were issued
on January 1, 2002.
(M) To adjust the weighted average number of shares outstanding for the
calculation of diluted earnings per share to exclude the dilutive effect
of the shares underlying Newfield's 6 1/2% quarterly income convertible
trust preferred securities because to include such shares would have been
antidilutive.
F-3