NEWFIELD EXPLORATION COMPANY 363 North Sam Houston Parkway East All Grown Up Suite 2020 NEWFIELD EXPLORATION COMPANY / 2005 ANNUAL REPORT Houston, Texas 77060 281-847-6000 www.newfield.com NEWFIELD EXPLORATION COMPANY / 2005 ANNUAL REPORT COMPANY NEWFIELD EXPLORATION ‘05 Newfield Exploration Company 363 N. Sam Houston Parkway E., Suite 2020 Houston, Texas 77060 Ph: 281-847-6000 Fax: 281-405-4242 Newfield Exploration Mid-Continent Inc. ‘04 110 West 7th, Suite 1300 Tulsa, Oklahoma 74119 Ph: 918-582-2690 Fax: 918-582-2757 Newfield Rocky Mountains Inc. 1401 Seventeenth Street, Suite 1000 Denver, Colorado 80202 Ph: 303-893-0102 ‘03 Fax: 303-893-0103 Newfield Petroleum UK Limited First Floor 21 Dartmouth Street London SW1H 9BP Ph: + 44 (0) 20 7304 7012 Fax: + 44 (0) 20 7304 7094 ‘02 Newfield Sarawak Malaysia Inc. Newfield Peninsula Malaysia Inc. Level 53, Tower 2, Petronas Twin Towers Kuala Lumpur City Centre 50088 Kuala Lumpur Ph: + (603) 2382 4148 Fax: + (603) 2382 6003 Newfield China LDC Fortune Plaza ‘01 No.7 Dongsanhuan Zhong Road, Suite 3501B Chaoyang District, Beijing 100020, P.R. China Ph: + 8613511008725 CORPORATE INFORMATION Executive Officers Directors DAVID A. TRICE (57) PHILIP J. BURGUIERES (***) (62) Chairman, President and Chief Executive Officer Chief Executive Officer JUANITA F. ROMANS (**) (***) (55) EMC Holdings, LLC Senior Vice President of Memorial DAVID F. SCHAIBLE (45) Hermann Healthcare System and Executive Vice President – Vice Chairman Chief Executive Officer of Memorial Hermann Operations and Acquisitions Houston Texans Hospital ELLIOTT PEW (51) PAMELA J. GARDNER (**) (***) (49) DAVID F. SCHAIBLE (45) Executive Vice President – Exploration President, Business Operations of Executive Vice President – Houston McLane Company TERRY W. RATHERT (53) Operations and Acquisitions d/b/a Houston Astros Baseball Club Senior Vice President, Newfield Exploration Company Chief Financial Officer & Secretary DENNIS R. HENDRIX (*) (***) ( 66) C.E. (CHUCK) SHULTZ (*) (66) Retired Chairman W. MARK BLUMENSHINE (47) Chairman and Chief Executive Officer PanEnergy Corp Vice President – Land Dauntless Energy Inc. JOHN RANDOLPH KEMP III (*) (**) (61) MONA LEIGH BERNHARDT (39) J. TERRY STRANGE (**) (***) (62) Retired President Vice President – Human Resources Retired Vice Chairman Exploration Production, Americas, Conoco, Inc. LEE K. BOOTHBY (44) KPMG, LLP J. MICHAEL LACEY (*) (60) Vice President – Mid-Continent DAVID A. TRICE (57) Retired Senior Vice President – Chairman, President and STEPHEN C. CAMPBELL (37) Exploration and Production Chief Executive Officer Vice President – Investor Relations Devon Energy Corporation Newfield Exploration Company GEORGE T. DUNN (48) JOSEPH H. NETHERLAND (*) (***) (59) Vice President – Gulf Coast Chairman, President and CEO (*) MEMBER OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE JAMES J. METCALF (48) FMC Technologies, Inc. (**) MEMBER OF THE AUDIT COMMITTEE Vice President – Drilling HOWARD H. NEWMAN (***) (58) (***) MEMBER OF THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE GARY D. PACKER (43) Vice Chairman Vice President – Rocky Mountains Warburg Pincus LLC WILLIAM D. SCHNEIDER (54) THOMAS G. RICKS (**) (***) (52) All Vice President – International Chief Investment Officer H&S Ventures L.L.C. MARK J. SPICER (46) Grown Up Vice President – Information Technology JAMES T. ZERNELL (48) Vice President - Production BRIAN L. RICKMERS (37) Controller and Assistant Secretary SUSAN G. RIGGS (48) Treasurer Market Information Annual Meeting “There is no greater joy in life than starting with nothing and The Company’s common stock is traded on the NYSE under the symbol The Annual Meeting of Stockholders of Newfield Exploration Company “NFX.” The stock began trading November 12, 1993. will be held at 11 a.m. on May 4, 2006 on the fourth floor of the Company’s office located at 363 North Sam Houston Parkway East, winding up with something. That’s what parents do in raising children. Houston, TX 77060. Transfer Agent For information regarding change of address or other matters concerning That’s what artists do. That’s what we did in founding Newfield.” your shares, please contact the transfer agent directly at: Additional Information For copies of our recent publications, please visit our website at American Stock Transfer & Trust Company www.newfield.com or contact Investor Relations at the corporate address. 59 Maiden Lane New York, NY 10038 (877) 777-0800, ext. 6820 - Joe B. Foster, Newfield Founder www.amstock.com May 4, 1995 COMPANY PROFILE Newfield Exploration Company (NYSE:NFX) is an independent crude oil and natural gas exploration and production company headquartered in Houston, Texas. Our domestic areas of operation include the onshore Gulf Coast, the Rocky Mountains, the Anadarko and Arkoma Basins of the Mid-Continent and the Gulf of Mexico. We also have operations offshore Malaysia and China and in the U.K. North Sea. We were founded in 1989 and went public in 1993. Our sole focus area until the mid-1990s was the shallow waters of the Gulf of Mexico. By year-end 2005, more than 70% of our proved reserves were located onshore in the U.S. We are proud of our profitable track record of growing both production and reserves. At December 31, 2005, we had proved reserves of approximately 2 Tcfe, of which 70% were natural gas and 68% were proved developed. SUMMARY FINANCIAL AND RESERVE DATA Year Ended December 31, 2005 2004 2003 2002 2001 YEAR-END 2005 RESERVES BY AREA (In millions, except per share data) 8% Oil and gas revenues $ 1,762 $ 1,353 $ 1,017 $ 627 $ 714 INTERNATIONAL Income from operations 887 551 383 168 185 29% MID-CONTINENT 20% Net income 348 312 200 74 119 ROCKIES Basic earnings per common share $ 2.78 $ 2.68 $ 1.83 $ 0.82 $ 1.35 Diluted earnings per common share $ 2.73 $ 2.63 $ 1.78 $ 0.81 $ 1.28 23% 20% ONSHORE GULF OF Weighted average number GULF COAST MEXICO of shares outstanding (basic) 125 117 109 90 89 Weighted average number of shares outstanding (diluted) 128 119 113 99 98 2.0 Tcfe Capital expenditures $ 1,163 $ 1,701 $ 678 $ 889 $ 847 Net cash provided by continuing 2006 operating activities 1,109 997 659 383 496 PROJECTED PRODUCTION BY AREA Net cash used in continuing investing activities (1,036) (1,599) (615) (502) (755) 5% Net cash provided by (used in) INTERNATIONAL 19% 9% MID-CONTINENT continuing financing activities (88) 644 (85) 137 273 ROCKIES Total assets $ 5,081 $ 4,327 $ 2,733 $ 2,316 $ 1,663 Long-term debt 870 992 643 710 429 29% 38% Convertible preferred securities — — — 144 144 ONSHORE GULF OF GULF COAST MEXICO Stockholders’ equity 2,378 2,017 1,369 1,009 710 Oil and condensate reserves (MMBbls) 101.6 90.5 37.8 34.0 31.0 Gas reserves (Bcf) 1,391 1,241 1,090 977 718 >700 MMcfe/d Total proved reserves (Bcfe) 2,001 1,784 1,317 1,181 904 2005 ANNUAL REPORT 1 2005 HIGHLIGHTS DEAR FELLOW STOCKHOLDERS MARCH 1, 2006 Although not a “highlight,” the hurricane season of 2005 will not be forgotten. We deferred 22 Bcfe of Gulf of Mexico production due to five “named” e’ve grown up! The pages of this year’s annual report storms. Damage to industry infrastructure was reflect our progress and our maturation as a company. severe. Our offshore personnel and contractors worked around the clock to find innovative ways WWe have successfully transitioned from a Gulf of to restore production. Please read the tribute to Mexico focused company to one with a diverse asset base. them on page 10. With our growth has come stability and the flexibility to continue We made several significant exploration discover- ies, leading to in-hand development projects that profitable growth of our production and reserves. I am proud of will provide visible future growth. Discoveries our progress and the men and women at Newfield that continue included Grove in the U.K. North Sea and Wrigley in to make good things happen. the deepwater Gulf of Mexico. Both are projected to be on-line in the second half of 2006. The market took note of our growth — our share price We replaced 190% of 2005 production with the increased nearly 70% year-over-year. This represented our best addition of new reserves. We added 467 Bcfe of annual share price performance since 2000 and the third best proved reserves in 2005, all but 19 Bcfe through the drillbit. Year-end proved reserves increased in our history. In the broader market, our performance also 12% to 2 Tcfe. More than 70% of our reserves are was exemplary — we finished as the 17th best performer in now located onshore in the U.S. the S&P 400 Mid Cap Index. We assimilated the Inland Resources acquisition of 2004 and drilled nearly 200 wells in the Monument Unfortunately, 2005 will be most remembered for the Butte Field in Utah. We’ve grown production 25%, unprecedented devastation that the hurricane season inflicted exiting 2005 at more than 10,000 BOPD. We expanded our interests in the Uinta Basin by farm- on the Gulf Coast and offshore production infrastructure. ing into 32,000 gross acres. In 2005, we entered Our industry was hit with five “named” storms that destroyed the Williston Basin through a joint venture covering 115 platforms and shut-in about 675 Bcf of gas and 134 million 18,000 gross acres. barrels of oil to date. This loss of production propelled commodity We expanded our holdings offshore Malaysia by adding PM 323, a 320,000-acre block. PM 323 prices to record levels and reminded everyone that more than a has several undeveloped discoveries and promis- quarter of the U.S.’s energy supply and the lion’s share of the ing leads. During 2005, our first exploration well resulted in the Puteri discovery on PM 318, which country’s refining capacity is located in the Gulf Coast region.