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May 07 Businessexcellence 79 The devastation of hurricane Katrina in 2005 had a profound effect on businesses of all kinds, but perhaps none more so than those in the oil and gas industry with operations in the Gulf of Mexico. “In some respects 2006 was a very challenging year,” said David Trice, chairman, president and CEO of Newfield Exploration, in an earnings conference call on 8 February this year. “The hurricane of 2005 had lingering effects . . . and plagued offshore operations for much of the year. We were not immune and our ability to forecast the timing of our developments was negatively impacted.” Nevertheless, the Houston, Texas-based independent crude oil and natural gas exploration and production company still managed to be recognized as one of IndustryWeek’s 50 Best Manufacturing Companies for 2006, and still managed to grow. “We ended the year a much larger company,” said Trice, “making this the 18th consecutive year that we replaced annual production with new reserves.” Founded in 1989, Newfield is an independent natural gas and oil company active in the exploration, development, and acquisition of hydrocarbons; around 80 percent of its proved reserves are gas, the other 20 percent being oil. The company’s sole focus area until the mid- 1990s was the shallow waters of the Gulf of Mexico, but subsequent acquisitions and drilling successes have provided a more balanced portfolio of onshore and offshore assets. By the end of 2005, more than 70 percent of its proved reserves were located in the US onshore Gulf Coast of South Texas and Louisiana, the Anadarko and Arkoma Basins in Oklahoma and Texas (known as its mid-continent region), and the Rocky Mountains in Utah. Newfield also has overseas operations in China’s Bohai Bay, the UK North Sea, and an area offshore Malaysia, for which the platform was installed last year. The Malaysian operations were established in early 2004 and include exploration and development opportunities in shallow water as well as high potential exploration prospects in deepwater. Abu, Malaysia, is one of three development projects currently underway, the others being Grove, in the UK North Sea, where Newfield operates with an 85 percent working interest and Wrigley, Deepwater Gulf of Mexico, which is being prepared for first production after final hurricane repairs are complete, where Newfield has a 50 percent working interest in gas production. Trice said he expected 2007 to be an excellent year for Newfield, with the development projects fueling near-term production and reserve growth. “The lion’s share of this year’s budget is dedicated to development projects that will add significant growth in 2007 and beyond,” he said. “We drilled 665 wells in 2006—our most active year. We expect to drill an equal amount of wells in 2007.” Newfield is strictly an upstream exploration and production company, and finds itself increasingly involved in producing resources that were previously considered non-viable. Energy prices have contributed to that, of course, but so has a determined focus on efficiency. An examination of internal processes after the Sarbanes-Oxley Act (of 2002) led to Newfield Exploration Platform for expansion Newfield Exploration continues to expand despite the damage from hurricane Katrina and the world shortage of skilled engineers