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Houston Mariners Seminar September 21, 2004 David A. Trice

Houston Mariners Seminar September 21, 2004 David A. Trice. The Ever-Changing Gulf of Mexico. Today’s Presentation. The Traditional Shelf (10,000-15,000’) is Mature. 1. 2. Independents are Entering Deepwater - Enhanced Economics - Infrastructure Creates Opportunities. 3.

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Houston Mariners Seminar September 21, 2004 David A. Trice

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  1. Houston Mariners Seminar September 21, 2004 David A. Trice

  2. The Ever-Changing Gulf of Mexico Today’s Presentation The Traditional Shelf (10,000-15,000’) is Mature 1. 2. Independents are Entering Deepwater - Enhanced Economics - Infrastructure Creates Opportunities 3. Ultra-Deep Shelf - An Emerging Shallow Water Play - Newfield’s Unique Exposure

  3. GOM Production Struggles BCF/D

  4. GOM Rig Count, Shelf and Deepwater Limited Production Response to High Rig Count Low Drilling/High Prices = Diminishing Opportunities

  5. Rig Count v. Gas Price $7.00 300 12 Month Strip $6.50 275 GOM Jack-up Rig Count $6.00 250 $5.50 225 $5.00 200 $4.50 175 Gas Price ($/MMBTU) GOM Jack-up Rig Count $4.00 150 $3.50 125 $3.00 100 $2.50 75 $2.00 50 $1.50 25 $1.00 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

  6. GOM Reserves 30,000 50.0% 25,000 40.0% 20,000 30.0% % Deepwater 15,000 Reserves - Bcf 20.0% 10,000 10.0% 5,000 0 0.0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Shelf Deepwater % Deep

  7. The Growth of NFX Net Production (BCFE) Rockies International Mid-Continent Onshore GC Gulf of Mexico

  8. Small Targets in Deep Waters POST-1995 DEEPWATER INFRASTRUCTURE • Higher Commodity Prices • Extensive Infrastructure • Longer Tie Backs, Sub-sea Completions, Better Flow Assurance Models • Improved Completion, Development Technologies • Standardized Sub-sea Trees • Better Synthetic Drilling Muds • Higher Rate Completions • Frac Packs • Larger Tublars Deepwater Processing Platform Newfield Deepwater 3D Seismic

  9. Deepwater Milestones M I S S I S S I P P I Spiderman APC Water Depth: 8,055’ TD: 17,743’ Coulomb Shell Water Depth: 7,570’ TD: 18,237’ Thunderhorse BP Water Depth: 6,037’ TD: 29,100’ Tahiti CHV Water Depth: 4,292’ TD: 29,000’ 1,000’ Net Pay 400-500 MMBbls Atlas Prospect APC Water Depth: 8,807’ TD: 16,769’ Chinook BHP Water Depth: 8,831’ TD: 27,652’ 620’ Gross Column 260’ Net Oil Tobago UCL Water Depth: 9,627’ TD: 18,500’ Drilling Vortex KMG Water Depth: 8,344’ TD: 19,330’ Great White Shell Water Depth: 8,070’ TD: 19,705’ Jubilee APC Water Depth: 8,730’ TD: 17,850’ Toledo Prospect CHV Water Depth: 10,062’ TD: 22,695’ Trident UCL Water Depth: 9,687’ TD: 19,539’ St. Malo UCL Water Depth: 6,853’ TD: 29,066’ 450’ Oil 1,400’ Section Gulf of Mexico Jack CHV Water Depth: 7,000’ TD: 31,000’

  10. Undrilled Leases > 2,999’ - Independents Undrilled Leases > 2,999’ - Majors Lease Expiration - > 2,999’ Water 1000 72% 900 800 700 600 84% 61% 500 Undrilled GOM Leases 400 36% 43% 300 44% 43% 200 69% 28% 100 39% 16% 28% 72% 57% 56% 64% 57% 31% 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: James K Dodson Company, CSFB Equity Research

  11. Development Exploration Deepwater GOM M I S S I S S I P P I SUCCESS CASE CAPITAL (in MM$) DEEPWATER WORKING NET RESERVE PROJECTS INTEREST POTENTIAL, BCFE 2003 2004 2005 2006 Llano ORRI - - - - ~3 DVP. Glider 25% 60 40 22 - - - Rigel 25% 25 7 8 4 • RIGEL • Under Development • First Prod: 2H05 • NFX WI: 25% EXPL. - Sleeper 100% 40 8 10 27 • JACOBS • NFX WI: 100% - Dalmatian 37.50% 60 - 25 23 - Anduin 50% 70 - 17 25 50 23 Wrigley 50% 50 - 9 15 - 40 La Femme 50% 50 7 8 • WRIGLEY • Est. Spud: Late 2004 • NFX WI: 50% - Jacobs 100% 30 8 10 23 388 47 79 97 186 • ANDUIN • Est. Spud: Late 2004 • NFX WI: 50% • SLEEPER • 2003 Lease Sale • NFX WI: 100% • LLANO • On-line • ORRI • ~3 Bcfe Net Exposure • La Femme • NFX WI: 50% • DALMATIAN • NFX WI: 37.5% • GLIDER • On-line • Joint Venture Development • NFX WI: 25% • WILDEBEEST • NFX WI: 100% Gulf of Mexico

  12. Ultra Deep Drilling on the GOM Shelf - What is Treasure Project? • Ultra-deep drilling concept (24,000 – 35,000’) • Carry deepwater tertiary reservoirs found productive in deepwater fields back under the Shelf • Trap reservoirs on 4-way closures beneath salt weld • Paleogene and Cretaceous (?) reservoirs could also occur at great depth on same 4-way closures (productive elsewhere in GOM basin) • Multi-Tcfe targets • Major drilling challenges

  13. BP / Shell BHP BHP BP BHP BHP XOM BHP KMG BHP Petrobras Ultra-Deep Exploration M I S S I S S I P P I Joseph Shell Drilling PTD: ~ 25,000 JB Mountain SMI 223 Treasure Island Blackbeard *XOM Operated Est. Spud: Late ‘04 / early ‘05NFX WI: 23% Shark Fergana Treasure Bay * BHP Operated NFX WI: 26% Thunder Horse MC 776/777 Tahiti GC 640/641 Gulf of Mexico Newfield Exposure: 59 Blocks: 45% WI 21 Blocks: 100% WI 6 Blocks: 25 – 100 % WI Sale 192 – Industry Leasing Sale 190 – Industry Leasing * All, or substantially all, of NFX’s WI is carried

  14. TARZAN Class Jack-up Rig: “Scooter Yeargain” Blackbeard Prospect – Operator XOM signs firm well commitment with Rowan to spud between Dec. 1, 2004 and Jan. 31, 2005 Combined Drilling Load: 2.5 million pounds Liquid Mud Volume: 2,800 BBLS Mud Pump Input HP: 9,000 ( 3 @ 3,000) Mud Pump Volume: 1,800 GPM @7500 PSI Horsepower: 10,750 Rowan’s “Scooter Yeargain”

  15. Ultra-Deep Challenges (other than the obvious) • 5-year lease terms are insufficient to allow for evaluation & testing of frontier play • Long lead times required for: • Geotechnical evaluations • Land/partnering negotiations • Drilling design / procurement • Well evaluation • Completion design / procurement / testing

  16. SOO’s for Ultra-Deep Drilling Notice to Lessees: “Ultra deep frontier offers the potential for significant resources…” “Importance of expediting domestic exploration to address initial national need.” “Expedite exploration for new sources of hydo-carbons at ultra-deep depths.” MMS May Grant an SOO if the Following Applies: 1) Lease in primary term on Aug. 1, 2002 2) Targets below 25,000’ 3) Reasonable schedule of work leading to drilling

  17. Treasure Island, Comparison to Deepwater GOM Deepwater * Treasure Island Depth 20,000' - 30,000'+ 24,000' - 35,000'+ DHC $20 - $100 MM+ $35 - $75 MM+ Reserves .1Bn BBL - 2Bn BBL Roughly equivalent Prospect Areas Single to several blocks Same Wells Drilled (thru 2002) 2284 1 Initial Drilling Technology Adequate Inadequate Initial Prod./Dev. Technology Inadequate ? Time to 1st Production 3 - 8 years <1 - 2 years Lease Term 10 year 5 year Royalty Relief 5 - 87.5 MMBO 25 BCF (4.16 MMBOE) *Larger, deepwater prospects

  18. EH&S: A Priority • Newfield’s operating practices are often commended by the MMS. • Nominated for 2003 National SAFE Award in High Activity Category • Top 3 Finalist, 2002 SAFE Award, High Activity Category • Lake Jackson District 2001 Award,Production Operations • Lafayette District 2000 SAFE Award • Top 5 Finalist, 2000 SAFE Award, High Activity Category • Top 5 Finalist, 1998 SAFE Award, High Activity Category • National SAFE Award 1997, Small Producer Category • Houma District 1997 SAFE Award, Operations at Eugene Island 182A • Lafayette District 1996 SAFE Award

  19. May 15, 2003 Socially Responsible Fund Excels Neuberger Berman Offering Tops Market With Returns as It Eschews Some Stocks Within the energy sector, the manager [Ms. Dyott] is bullish on Newfield Exploration Co., partly because the company has consistently increased its reserves and production capacity on a per-share basis. Another plus, she said, is that Newfield ties executive compensation partly to the company's environmental, safety and health performance. That means that if a significant number of accidents occur within a division, the executive in charge of that group may see his or her compensation reduced. "There's no better way to ensure good performance than to factor this into management's paychecks," said Ms. Dyott. * NFX remains one of Neuberger’s two core E&P holdings in this fund.

  20. Forward-Looking Statements This presentation by Newfield Exploration Company includes forward-looking information. All information other than historical facts included in this presentation, including information regarding estimated proved reserves, production targets, anticipated production rates, planned capital expenditures, the number of wells planned to be drilled in the future, the relative risks and potential of planned exploratory wells, the availability of capital resources to fund capital expenditures and business strategy and other plans and objectives for future operations, is forward-looking information. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such expectations are based upon assumptions and anticipated results that are subject to numerous uncertainties. Actual results may vary significantly from those anticipated due to many factors, including drilling results, oil and gas prices, industry conditions, the prices of goods and services, the availability of drilling rigs and other support services and the availability of capital resources. In addition, the drilling of oil and gas wells and the production of hydrocarbons are subject to governmental regulations and operating risks. There are numerous additional uncertainties inherent in estimating quantities of proved oil and natural gas reserves, including many factors beyond the control of the Company. Reserve engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. As a result, estimates made by different engineers often vary from one another. In addition, results of drilling, testing and production subsequent to the date of an estimate may necessitate revisions of such estimates. Accordingly, reserve estimates are generally different from quantities of oil and natural gas that are recovered.

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