Newfield Reports Largest Gas Discovery in Company’s History (Malaysia)

Newfield Exploration Company yesterday announced a significant natural gas discovery on the Block SK 310 Production Sharing Contract (PSC) area, located 50 miles offshore Sarawak in approximately 250 feet of water. This is the Company’s second pinnacle reef natural gas discovery in the region.

The B-14 well encountered 1,800 feet of gross column and 1,585 feet of net natural gas pay in the main carbonate objective. A drill stem test was recently conducted, which confirmed commerciality of the reservoir. Newfield estimates that Gas Initially In Place (GIIP) ranges from 1.5 – 3.0 Tcf. Newfield operates Block SK 310 with a 30% interest. Partners Diamond Energy Sarawak, a wholly-owned subsidiary of Mitsubishi Corporation and PETRONAS Carigali, has 30% and 40% interests, respectively.

The B-14 discovery is located less than three miles from Newfield’s first pinnacle reef gas discovery, B-15, also located on Block SK 310 in approximately 250 feet of water. Recoverable reserves on this discovery are estimated at approximately 265 Bcf and will be developed in conjunction with the B-14 discovery.

“This is the largest conventional exploratory success that Newfield has made in its 25-year history,” said Lee K. Boothby , Newfield Chairman, President and CEO. “Recent amendments to gas terms in Malaysia make natural gas developments economically competitive with oil developments. We have multiple ‘reef’ prospects to test along trend, and additional drilling is expected to resume in the third quarter with the drilling of our B-17 prospect.”

Block SK 310 covers approximately 1.1 million acres. Newfield has identified additional prospects on the contract area with multi-Tcf of remaining gas resource potential. Newfield has committed to drill one remaining exploration well (B-17 prospect) on Block SK 310.

Boothby said, “In December 2012, we signed a new PSC for Block SK 408 and completed farming into Block SK 319. Both PSCs are in offshore Sarawak. These areas provide a combined 1.7 million acres and nearly double our acreage position offshore Malaysia. These blocks extend our successful pinnacle reef trend providing dozens of high-potential exploration targets, located in and around producing fields with existing infrastructure and pipelines in place.”

Block SK 408 covers 1.1 million acres in water depths ranging from 200 – 400 feet. There have been 16 discoveries in the block so far with existing infrastructure and production hubs located less than 10 miles from dozens of potential prospects identified to date by Newfield. The Company has a 10-well commitment on the block over a three-year initial exploration period. Newfield will operate the block with a 40% interest. Other partners include Shell (30%) and PETRONAS Carigali (30%).

Block SK 319 covers approximately 580,000 acres and is located adjacent to Block SK 408. Water depths are 300 feet or less. Newfield has identified several exploration prospects in the block and the Company has a five-well commitment over an initial three-year exploration period. Block SK 319 is operated by Shell (50%), and Newfield and PETRONAS Carigali each hold a 25% interest.

 

 April 3, 2013

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