Dec 22 - Oil and natural gas producer Newfield Exploration Co (NFX.N) terminated an oil-sales contract with Big West Oil Co LLC, saying it did not receive timely payment for crude oil deliveries made in November.
Shares of the company were down nearly 7 percent at $18.64 Monday morning on the New York Stock Exchange.
Newfield said Big West, a subsidiary of Flying J Inc, owes it about $15 million to date under the contract for deliveries of black wax production from the Monument Butte oil field.
The company is currently in discussions for a replacement contract with Big West, but said there was no certainty if or when deliveries would resume under a new arrangement, which guarantees payment for the crude oil delivered.
Newfield expects 2009 production to be reduced by about 12 billion cubic feet equivalent (Bcfe), at about 250 Bcfe, if it is unable to replace the Big West contract or find alternative markets. Newfield sees 2008 production between 235 Bcfe to 236 Bcfe.
The company said substantially all of its 2009 domestic crude oil production was hedged at prices between $107 to $128 per barrel, which would help prevent its cash flow from being materially affected by a cessation of sales to Big West.
Newfield said it has been selling 9,000 barrels of oil equivalent per day (BOPD) gross to Big West. Gross field production at Monument Butte has recently averaged about 17,000 BOPD.
The company, which recently made plans to drop two rigs in the Monument Butte field, said it could offset the revenue which would have been realized under the agreement with Big West by further reducing 2009 drilling activity at the field.
Shares of the company were down nearly 7 percent at $18.64 Monday morning on the New York Stock Exchange.
Newfield said Big West, a subsidiary of Flying J Inc, owes it about $15 million to date under the contract for deliveries of black wax production from the Monument Butte oil field.
The company is currently in discussions for a replacement contract with Big West, but said there was no certainty if or when deliveries would resume under a new arrangement, which guarantees payment for the crude oil delivered.
Newfield expects 2009 production to be reduced by about 12 billion cubic feet equivalent (Bcfe), at about 250 Bcfe, if it is unable to replace the Big West contract or find alternative markets. Newfield sees 2008 production between 235 Bcfe to 236 Bcfe.
The company said substantially all of its 2009 domestic crude oil production was hedged at prices between $107 to $128 per barrel, which would help prevent its cash flow from being materially affected by a cessation of sales to Big West.
Newfield said it has been selling 9,000 barrels of oil equivalent per day (BOPD) gross to Big West. Gross field production at Monument Butte has recently averaged about 17,000 BOPD.
The company, which recently made plans to drop two rigs in the Monument Butte field, said it could offset the revenue which would have been realized under the agreement with Big West by further reducing 2009 drilling activity at the field.
