UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2016
OR
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                        to                       .

Commission File Number: 1-12534

NEWFIELD EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
Delaware
72-1133047
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification Number)

4 Waterway Square Place
Suite 100
The Woodlands, Texas 77380
(Address and Zip Code of principal executive offices)

(281) 210-5100
(Registrant’s telephone number, including area code)
     
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ  No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer  þ      
 
Accelerated filer  ¨    
 
Non-accelerated filer  ¨      
 
Smaller reporting company  ¨
(Do not check if a smaller reporting company)
     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ¨  No  þ

As of April 29, 2016 , there were 198,485,340 shares of the registrant’s common stock, par value $0.01 per share, outstanding.
 
 
 
 
 


TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



ii



NEWFIELD EXPLORATION COMPANY
CONSOLIDATED BALANCE SHEET
(In millions, except share data)
(Unaudited)
 
 
March 31, 
 2016
 
December 31, 
 2015
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
537

 
$
5

Accounts receivable, net
 
245

 
262

Inventories
 
31

 
34

Derivative assets
 
234

 
284

Other current assets
 
41

 
40

Total current assets
 
1,088

 
625

Oil and gas properties, net — full cost method ($900 and $780 were excluded from amortization at March 31, 2016 and December 31, 2015, respectively)
 
3,403

 
3,819

Other property and equipment, net
 
170

 
172

Derivative assets
 
65

 
105

Long-term investments
 
21

 
20

Other assets
 
30

 
27

Total assets
 
$
4,777

 
$
4,768

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 

 
 

Accounts payable
 
$
49

 
$
41

Accrued liabilities
 
398

 
533

Advances from joint owners
 
51

 
58

Asset retirement obligations
 
3

 
2

Derivative liabilities
 
24

 
13

Total current liabilities
 
525

 
647

Other liabilities
 
59

 
48

Derivative liabilities
 
7

 
9

Long-term debt
 
2,429

 
2,467

Asset retirement obligations
 
193

 
192

Deferred taxes
 
26

 
26

Total long-term liabilities
 
2,714

 
2,742

Commitments and contingencies (Note 11 )
 
 
 
 
Stockholders' equity:
 
 

 
 

Preferred stock ($0.01 par value, 5,000,000 shares authorized; no shares issued)
 
—

 
—

Common stock ($0.01 par value, 300,000,000 shares authorized at March 31, 2016 and December 31, 2015; 198,823,081 and 164,102,786 shares issued at March 31, 2016 and December 31, 2015, respectively)
 
2

 
2

Additional paid-in capital
 
3,221

 
2,436

Treasury stock (at cost, 685,517 and 612,469 shares at March 31, 2016 and December 31, 2015, respectively)
 
(24
)
 
(22
)
Accumulated other comprehensive gain (loss)
 
(2
)
 
(2
)
Retained earnings (deficit)
 
(1,659
)
 
(1,035
)
Total stockholders' equity
 
1,538

 
1,379

Total liabilities and stockholders' equity
 
$
4,777

 
$
4,768


The accompanying notes to consolidated financial statements are an integral part of this statement.

1

NEWFIELD EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share data)
(Unaudited)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Oil, gas and NGL revenues
 
$
284

 
$
349

 
 
 
 
 
Operating expenses:
 
 

 
 

Lease operating
 
61

 
75

Transportation and processing
 
63

 
49

Production and other taxes
 
10

 
13

Depreciation, depletion and amortization
 
177

 
237

General and administrative
 
44

 
63

Ceiling test and other impairments
 
506

 
792

Other
 
1

 
4

Total operating expenses
 
862

 
1,233

Income (loss) from operations
 
(578
)
 
(884
)
 
 
 
 
 
Other income (expense):
 
 

 
 

Interest expense
 
(41
)
 
(44
)
Capitalized interest
 
9

 
7

Commodity derivative income (expense)
 
(17
)
 
153

Other, net
 
1

 
8

Total other income (expense)
 
(48
)
 
124

 
 
 
 
 
Income (loss) before income taxes
 
(626
)
 
(760
)
 
 
 
 
 
Income tax provision (benefit):
 
 

 
 

Current
 
(2
)
 
3

Deferred
 
—

 
(283
)
Total income tax provision (benefit)
 
(2
)
 
(280
)
Net income (loss)
 
$
(624
)
 
$
(480
)
 
 
 
 
 
Earnings (loss) per share:
 
 

 
 

Basic
 
$
(3.52
)
 
$
(3.30
)
Diluted
 
$
(3.52
)
 
$
(3.30
)
Weighted-average number of shares outstanding for basic earnings (loss) per share
 
177

 
145

Weighted-average number of shares outstanding for diluted earnings (loss) per share
 
177

 
145


The accompanying notes to consolidated financial statements are an integral part of this statement.

2

NEWFIELD EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)

 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
Net income (loss)
 
$
(624
)
 
$
(480
)
Other comprehensive income (loss):
 
 

 
 

Unrealized gain (loss) on investments, net of tax
 
—

 
—

Other comprehensive income (loss), net of tax
 
—

 
—

Comprehensive income (loss)
 
$
(624
)
 
$
(480
)

The accompanying notes to consolidated financial statements are an integral part of this statement.


3

NEWFIELD EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
(Unaudited)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Cash flows from operating activities:
 
 
Net income (loss)
 
$
(624
)
 
$
(480
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 

 
 

Depreciation, depletion and amortization
 
177

 
237

Deferred tax provision (benefit)
 
—

 
(283
)
Stock-based compensation
 
8

 
15

Unrealized (gain) loss on derivative contracts
 
99

 
(32
)
Ceiling test and other impairments
 
506

 
792

Other, net
 
4

 
6

Changes in operating assets and liabilities:
 
 

 
 

(Increase) decrease in accounts receivable
 
15

 
38

(Increase) decrease in inventories
 
(4
)
 
2

(Increase) decrease in other current assets
 
(1
)
 
4

(Increase) decrease in other assets
 
(4
)
 
1

Increase (decrease) in accounts payable and accrued liabilities
 
(102
)
 
(105
)
Increase (decrease) in advances from joint owners
 
(6
)
 
14

Increase (decrease) in other liabilities
 
4

 
(4
)
Net cash provided by (used in) operating activities
 
72

 
205

Cash flows from investing activities:
 
 

 
 

Additions to oil and gas properties
 
(273
)
 
(511
)
Acquisitions of oil and gas properties
 
(1
)
 
—

Proceeds from sales of oil and gas properties
 
3

 
29

Additions to other property and equipment
 
(4
)
 
(4
)
Net cash provided by (used in) investing activities
 
(275
)
 
(486
)
Cash flows from financing activities:
 
 

 
 

Proceeds from borrowings under credit arrangements
 
536

 
701

Repayments of borrowings under credit arrangements
 
(575
)
 
(1,147
)
Proceeds from issuance of senior notes
 
—

 
691

Debt issue costs
 
—

 
(8
)
Proceeds from issuances of common stock, net
 
776

 
815

Purchases of treasury stock, net
 
(2
)
 
(1
)
Other
 
—

 
(1
)
Net cash provided by (used in) financing activities
 
735

 
1,050

Increase (decrease) in cash and cash equivalents
 
532

 
769

Cash and cash equivalents, beginning of period
 
5

 
14

Cash and cash equivalents, end of period
 
$
537

 
$
783


The accompanying notes to consolidated financial statements are an integral part of this statement.

4

NEWFIELD EXPLORATION COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Additional
Paid-in
Capital
 
Retained Earnings
(Deficit)
 
Accumulated
Other
 Comprehensive
Gain (Loss)
 
 Total
Stockholders' Equity
 
 
Common Stock
 
Treasury Stock
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Balance, December 31, 2015
 
164.1

 
$
2

 
(0.6
)
 
$
(22
)
 
$
2,436

 
$
(1,035
)
 
$
(2
)
 
$
1,379

Issuances of common stock
 
34.7

 
—

 
 
 
 
 
776

 
 
 
 
 
776

Stock-based compensation
 
 
 
 
 
 
 
 
 
9

 
 
 
 
 
9

Treasury stock, net
 
 
 
 
 
(0.1
)
 
(2
)
 
—

 
 
 
 
 
(2
)
Net income (loss)
 
 
 
 
 
 
 
 
 
 
 
(624
)
 
 
 
(624
)
Balance, March 31, 2016
 
198.8

 
$
2

 
(0.7
)
 
$
(24
)
 
$
3,221

 
$
(1,659
)
 
$
(2
)
 
$
1,538


The accompanying notes to consolidated financial statements are an integral part of this statement.

5


NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1 .      Organization and Summary of Significant Accounting Policies
   
Organization and Principles of Consolidation
     
We are an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids (NGLs). Our operations are focused primarily on large scale, onshore liquids-rich resource plays in the United States. Our principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota, the Uinta Basin of Utah and the Maverick and Gulf Coast basins of Texas. In addition, we have oil developments offshore China.

Our consolidated financial statements include the accounts of Newfield Exploration Company, a Delaware corporation, and its subsidiaries. We proportionately consolidate our interests in oil and natural gas exploration and production ventures and partnerships in accordance with industry practice. All significant intercompany balances and transactions have been eliminated. Unless otherwise specified or the context otherwise requires, all references in these notes to “Newfield,” “we,” “us,” “our” or the “Company” are to Newfield Exploration Company and its subsidiaries.

These unaudited consolidated financial statements reflect, in the opinion of our management, all adjustments, consisting only of normal and recurring adjustments, necessary to fairly state our financial position as of, and results of operations, for the periods presented. These financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Interim period results are not necessarily indicative of results of operations or cash flows for a full year.

These consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015 .
  
Risks and Uncertainties

As an independent oil and natural gas producer, our revenue, profitability and future rate of growth are substantially dependent on prevailing prices for oil, natural gas and NGLs. Historically, the energy markets have been very volatile, and there can be no assurance that commodity prices will not be subject to wide fluctuations in the future. A substantial or extended decline in commodity prices could have a material adverse effect on our financial position, results of operations, cash flows, access to capital and on the quantities of oil, natural gas and NGL reserves that we can economically produce. Beginning in the fourth quarter of 2014, crude oil prices declined significantly primarily due to global supply and demand imbalances. Crude oil prices continued to decline in 2015 and have remained depressed in the first quarter of 2016. Other risks and uncertainties that could affect us in the current price environment include, but are not limited to, counterparty credit risk for our receivables, responsibility for decommissioning liabilities for offshore interests we no longer own, access to credit markets, regulatory risks and ability to meet financial ratios and covenants in our financing agreements.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities; disclosure of contingent assets and liabilities at the date of the financial statements; the reported amounts of revenues and expenses during the reporting period; and the quantities and values of proved oil, natural gas and NGL reserves used in calculating depletion and assessing impairment of our oil and gas properties. Actual results could differ significantly from these estimates. Our most significant estimates are associated with the quantities of proved oil, natural gas and NGL reserves, the timing and amount of transfers of our unevaluated properties into our amortizable full cost pool, the recoverability of our deferred tax assets and the fair value of our derivative contracts.

Reclassifications

Certain reclassifications have been made to prior years' reported amounts in order to conform to the current year presentation. These reclassifications did not impact our net income (loss), stockholders' equity or cash flows.


6
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Restricted Cash

We have restricted cash of $17 million included in "Other assets" on our consolidated balance sheet at March 31, 2016 that represents amounts held in escrow accounts to satisfy future plug and abandonment obligations for our China operations. These amounts are restricted as to their current use and will be released as we plug and abandon wells and facilities in our China field. Consistent with our other plug and abandonment activities, changes in restricted cash are included in cash flows from operating activities in our consolidated statement of cash flows.

New Accounting Requirements

In March 2016, the Financial Accounting Standards Board (FASB) issued guidance regarding the simplification of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of this guidance on our financial statements.

In February 2016, the FASB issued guidance regarding the accounting for leases. The guidance requires recognition of most lease assets and liabilities by lessees for those leases classified as operating leases. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for interim and annual periods beginning after December 15, 2018. We are currently evaluating the impact of this guidance on our financial statements.

In January 2016, the FASB issued guidance regarding several broad topics related to the recognition and measurement of financial assets and liabilities. The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements.

In August 2014, the FASB issued guidance regarding disclosures of uncertainties about an entity's ability to continue as a going concern. The guidance applies prospectively to all entities, requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern and disclose certain information when substantial doubt is raised. We will adopt this guidance for the annual period ending December 31, 2016.

In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). In July 2015, the FASB approved a deferral of the effective date by one year. As a result, the guidance is effective for interim and annual periods beginning on or after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements.

2 .    Accounts Receivable

Accounts receivable consisted of the following:
 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
Revenue
 
$
97

 
$
94

Joint interest
 
119

 
125

Other
 
45

 
59

Reserve for doubtful accounts
 
(16
)
 
(16
)
Total accounts receivable, net
 
$
245

 
$
262


3.      Inventories
     
Inventories primarily consist of tubular goods and well equipment held for use in our oil and natural gas operations and oil produced but not sold in our China operations. At March 31, 2016 and December 31, 2015, the crude oil inventory from our China operations consisted of approximately 180,000 and 335,000 barrels of crude oil, respectively.



7
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

4 .       Derivative Financial Instruments
     
Commodity Derivative Instruments
     
We utilize derivative strategies that consist of either a single derivative instrument or a combination of instruments to manage the variability in cash flows associated with the forecasted sale of our future domestic oil and natural gas production. While the use of derivative instruments may limit or partially reduce the downside risk of adverse commodity price movements, their use also may limit future income from favorable commodity price movements.

In addition to the derivative strategies outlined in our Annual Report on Form 10-K for the year ended December 31, 
 2015 , we also utilize swaptions from time to time. A swaption is an option to exercise a swap where the buyer (counterparty) of the swaption purchases the right from the seller (Newfield), but not the obligation, to enter into a fixed-price swap with the seller on a predetermined date (expiration date). The swap price is a fixed price determined at the time of the swaption contract. If the swaption is exercised, the contract will become a swap treated consistent with our other fixed-price swaps.

Our oil and gas derivative contracts are settled based upon reported prices on the NYMEX. The estimated fair value of these contracts is based upon various factors, including closing exchange prices on the NYMEX, over-the-counter quotations, estimated volatility, non-performance risk adjustments using credit default swaps and time to maturity. The calculation of the fair value of options requires the use of an option-pricing model. See Note 5 , “ Fair Value Measurements .”

At March 31, 2016 , we had outstanding derivative positions as set forth in the tables below.

Crude Oil
 
 
 
 
NYMEX Contract Price Per Bbl
 
 
 
 
 
 
 
 
 
 
 
 
Collars
 
Estimated Fair Value
Asset (Liability)
Period and Type of Instrument
 
Volume in MBbls
 
Swaps
(Weighted Average)
 
Purchased Calls (Weighted Average) (2)
 
Sold Puts
(Weighted Average) (1)
 
Floors
(Weighted Average)
 
Ceilings
(Weighted Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions)
2016:
 
 

 
 

 
 
 
 

 
 

 
 

 
 

Fixed-price swaps
 
920

 
$
42.32

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

  Fixed-price swaps with sold puts:
 
7,057

 
 
 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
 
 
89.98

 
—

 
—

 
—

 
—

 
339

Sold puts
 
 
 
—

 
—

 
74.42

 
—

 
—

 
(231
)
  Collars with sold puts:
 
4,673

 
 
 
 
 
 
 
 
 
 
 
 
Collars
 
 
 
—

 
—

 
—

 
90.00

 
96.10

 
225

Sold puts
 
 
 
—

 
—

 
75.00

 
—

 
—

 
(156
)
Swaptions (3)
 
—

 
42.67

 
—

 
—

 
—

 
—

 
(14
)
  Purchased calls
 
8,181

 
—

 
73.35

 
—

 
—

 
—

 
1

2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
4,380

 
45.38

 
—

 
—

 
—

 
—

 
2

  Fixed-price swaps with sold puts:
 
4,468

 
 
 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
 
 
88.37

 
—

 
—

 
—

 
—

 
190

Sold puts
 
 
 
—

 
—

 
73.28

 
—

 
—

 
(128
)
  Collars with sold puts:
 
2,080

 
 
 
 
 
 
 
 
 
 
 
 
Collars
 
 
 
—

 
—

 
—

 
90.00

 
95.59

 
93

Sold puts
 
 
 
—

 
—

 
75.00

 
—

 
—

 
(64
)
  Purchased calls
 
6,548

 
—

 
73.81

 
—

 
—

 
—

 
5

Total
 
$
262



8
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

_________________
(1)
For the volumes with sold puts, if the market prices remain below our sold puts at contract settlement, we will receive the market price plus the following:

•
the difference between our floors and our sold puts for collars with sold puts; or
•
the difference between our swaps and our sold puts for fixed-price swaps with sold puts.
We have effectively locked in the spreads noted above (less the deferred call premium) for a portion of the volumes with sold puts through the use of purchased calls.
(2)
We deferred the premiums related to the purchased calls until contract settlement. At March 31, 2016 , the deferred premiums totaled $21 million .

(3) During the first quarter of 2016 , we sold crude oil swaption contracts that, if exercised on their expiration date in June 2016 , would protect 4,416 MBbls of July through December 2016 production with $42.67 per Bbl fixed price swaps.

Natural Gas
 
 
 
 
NYMEX Contract Price Per MMBtu
 
 
 
 
 
 
 
 
 
 
Collars
 
Estimated Fair Value Asset (Liability)
Period and Type of Instrument
 
Volume in MMMBtus
 
Swaps (Weighted Average)
 
Sold Puts (Weighted Average)
 
Floors (Weighted Average)
 
Ceilings (Weighted Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions)
2016:
 
 

 
 

 
 

 
 

 
 

 
 

  Swaptions (1)
 
—

 
$
2.28

 
$
—

 
$
—

 
$
—

 
$
(8
)
  Collars
 
8,250

 
—

 
—

 
4.00

 
4.54

 
15

2017:
 
 

 
 

 
 

 
 

 
 

 
 

  Fixed-price swaps
 
27,375

 
2.73

 
—

 
—

 
—

 
(1
)
  Collars
 
29,200

 
—

 
—

 
2.64

 
2.93

 
—

Total
 
$
6

________
(1)
During the first quarter of 2016 , we sold natural gas swaption contracts that, if exercised on their expiration date in June 2016 , would protect 36,800 MMMBtus of July through December 2016 production with $2.28 per MMBtu fixed price swaps.

Additional Disclosures about Derivative Financial Instruments

We had derivative financial instruments recorded in our consolidated balance sheet as assets (liabilities) at their respective estimated fair value, as set forth below.

9
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

 
 
Derivative Assets
 
Derivative Liabilities
 
 
Gross Fair Value
 
Offset in Balance Sheet
 
Balance Sheet Location
 
Gross Fair Value
 
Offset in Balance Sheet
 
Balance Sheet Location
 
 
 
 
Current
 
Noncurrent
 
 
 
Current
 
Noncurrent
 
 
(In millions)
 
(In millions)
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil positions
 
$
803

 
$
(519
)
 
$
219

 
$
65

 
$
(541
)
 
$
519

 
$
(15
)
 
$
(7
)
Natural gas positions
 
15

 
—

 
15

 
—

 
(9
)
 
—

 
(9
)
 
—

Total
 
$
818

 
$
(519
)
 
$
234

 
$
65

 
$
(550
)
 
$
519

 
$
(24
)
 
$
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Oil positions
 
$
1,005

 
$
(638
)
 
$
262

 
$
105

 
$
(660
)
 
$
638

 
$
(13
)
 
$
(9
)
Natural gas positions
 
22

 
—

 
22

 
—

 
—

 
—

 
—

 
—

Total
 
$
1,027

 
$
(638
)
 
$
284

 
$
105

 
$
(660
)
 
$
638

 
$
(13
)
 
$
(9
)
 
The amount of gain (loss) recognized in “Commodity derivative income (expense)” in our consolidated statement of operations related to our derivative financial instruments follows:
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
 
 
(In millions)
Derivatives not designated as hedging instruments:
 
 
 
 
Realized gain (loss) on oil positions
 
$
71

 
$
96

Realized gain (loss) on natural gas positions
 
11

 
25

Total realized gain (loss)
 
82

 
121

Unrealized gain (loss) on oil positions
 
(83
)
 
37

Unrealized gain (loss) on natural gas positions
 
(16
)
 
(5
)
Total unrealized gain (loss)
 
(99
)
 
32

Total
 
$
(17
)
 
$
153


The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty, and we have netting arrangements with all of our counterparties that provide for offsetting payables against receivables from separate derivative instruments with that counterparty. At March 31, 2016 , 10 of our 15 counterparties accounted for approximately 85% of our contracted volumes, with the largest counterparty accounting for approximately 12% .

At March 31, 2016 , approximately 86% of our volumes subject to derivative instruments are with lenders under our credit facility. Our credit facility, senior notes and substantially all of our derivative instruments contain provisions that provide for cross defaults and acceleration of those debt and derivative instruments in certain situations. 

5 .       Fair Value Measurements
     
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The authoritative guidance requires disclosure of the framework for measuring fair value and requires that fair value measurements be classified and disclosed in one of the following categories:

Level 1:
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that we

10
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity fixed-price swaps and certain investments.
Level 3:
Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Level 3 instruments primarily include derivative instruments, such as commodity options (i.e., price collars, sold puts, purchased calls or swaptions) and other financial investments.
•
Our valuation models for derivative contracts are primarily industry-standard models (i.e., Black-Scholes) that consider various inputs including: (a) forward prices for commodities, (b) time value, (c) volatility factors, (d) counterparty credit risk and (e) current market and contractual prices for the underlying instruments.

•
Our valuation model for the Stockholder Value Appreciation Program (SVAP) was a Monte Carlo simulation that was based on a probability model and considers various inputs including: (a) the measurement date stock price, (b) time value and (c) historical and implied volatility.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy.

The determination of the fair values of our derivative contracts incorporates various factors, which include not only the impact of our non-performance risk on our liabilities but also the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits, letters of credit and priority interests), if any. We utilize credit default swap values to assess the impact of non-performance risk when evaluating both our liabilities to, and receivables from, counterparties.































11
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Recurring Fair Value Measurements

The following table summarizes the valuation of our assets and liabilities that are measured at fair value on a recurring basis.
 
 
Fair Value Measurement Classification
 
 
 
 
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs (Level 3)
 
Total
 
 
(In millions)
As of December 31, 2015:
 
 
 
 
 
 
 
 
Money market fund investments
 
$
2

 
$
—

 
$
—

 
$
2

Deferred compensation plan assets
 
5

 
—

 
—

 
5

Equity securities available-for-sale
 
8

 
—

 
—

 
8

Oil and gas derivative swap contracts
 
—

 
675

 
—

 
675

Oil and gas derivative option contracts
 
—

 
—

 
(308
)
 
(308
)
Stock-based compensation liability awards
 
(12
)
 
—

 
—

 
(12
)
Total
 
$
3

 
$
675

 
$
(308
)
 
$
370

 
 
 

 
 

 
 

 
 

As of March 31, 2016:
 
 

 
 

 
 

 
 

Money market fund investments
 
$
529

 
$
—

 
$
—

 
$
529

Deferred compensation plan assets
 
5

 
—

 
—

 
5

Equity securities available-for-sale
 
8

 
—

 
—

 
8

Oil and gas derivative swap contracts
 
—

 
530

 
—

 
530

Oil and gas derivative option and swaption contracts
 
—

 
—

 
(262
)
 
(262
)
Stock-based compensation liability awards
 
(14
)
 
—

 
—

 
(14
)
Total
 
$
528

 
$
530

 
$
(262
)
 
$
796



























12
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Level 3 Fair Value Measurements

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the indicated periods.    
 
 
Derivatives
 
Stock-Based Compensation
 
Total
 
 
 
Balance at January 1, 2015
 
$
(381
)
 
$
(3
)
 
$
(384
)
Realized or unrealized gains (losses) included in earnings
 
(21
)
 
(5
)
 
(26
)
Purchases, issuances, sales and settlements:
 
 

 
 

 
 

Settlements
 
70

 
—

 
70

Transfers into Level 3
 
—

 
—

 
—

Transfers out of Level 3
 
—

 
—

 
—

Balance at March 31, 2015
 
$
(332
)
 
$
(8
)
 
$
(340
)
Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at March 31, 2015
 
$
(4
)
 
$
(5
)
 
$
(9
)
 
 
 
 
 
 
 
Balance at January 1, 2016
 
$
(308
)
 
$
—

 
$
(308
)
Realized or unrealized gains (losses) included in earnings
 
(46
)
 
—

 
(46
)
Purchases, issuances, sales and settlements:
 
 

 
 

 
 

Settlements
 
92

 
—

 
92

Transfers into Level 3
 
—

 
—

 
—

Transfers out of Level 3
 
—

 
—

 
—

Balance at March 31, 2016
 
$
(262
)
 
$
—

 
$
(262
)
Change in unrealized gains or losses included in earnings relating to Level 3 instruments still held at March 31, 2016
 
$
(32
)
 
$
—

 
$
(32
)

Qualitative Disclosures about Unobservable Inputs for Level 3 Fair Value Measurements

Derivatives.   Our valuation models for Level 3 derivative contracts are primarily industry-standard models that consider various factors, including certain significant unobservable inputs such as volatility factors and counterparty credit risk. The calculation of the fair value of our option contracts requires the use of an option-pricing model. The estimated future prices are compared to the strike prices fixed by our derivative contracts, and the resulting estimated future cash inflows or outflows over the contractual life are discounted to calculate the fair value. These pricing and discounting variables are sensitive to market volatility as well as changes in future price forecasts, regional price differences and interest rates. Significant increases (decreases) in the quoted forward prices for commodities generally lead to corresponding decreases (increases) in the fair value measurement of our oil and gas derivative contracts. Significant changes in the volatility factors utilized in our option-pricing model can cause significant changes in the fair value measurement of our oil and gas derivative contracts. Historically, we have not experienced significant changes in the fair value of our derivative contracts resulting from changes in counterparty credit risk as the counterparties for all of our derivative transactions have an “investment grade” credit rating. See Note 4 , " Derivative Financial Instruments ," for additional discussion of our derivative instruments.
 
Stock-Based Compensation. The calculation of the fair value of the SVAP liability required the use of a probability-based Monte Carlo simulation, which included unobservable inputs. The simulation predicted multiple scenarios of future stock returns over the performance period, which were discounted to calculate the fair value. The fair value was recognized over a service period derived from the simulation. The SVAP performance period and program ended December 31, 2015.







13
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Quantitative Disclosures about Unobservable Inputs for Level 3 Fair Value Measurements  
 
 
Estimated Fair Value Asset (Liability)
 
  Quantitative Information about Level 3 Fair Value Measurements
Instrument Type
 
Valuation   Technique
 
Unobservable Input
 
Range
 
 
(In millions)
 
 
 
 
 
 
 
 
 
Oil option contracts
 
$
(269
)
 
Black-Scholes
 
Oil price volatility
 
29.27
%
 
—
 
62.39%
 
 
 
 
 
 
Credit risk
 
0.02
%
 
—
 
2.06%
Natural gas option and swaption
contracts
 
$
7

 
Black-Scholes
 
Natural gas price volatility
 
25.51
%
 
—
 
70.20%
 
 
 
 
 
 
Credit risk
 
0.03
%
 
—
 
2.06%

Fair Value of Debt
 
The estimated fair value of our notes, based on quoted prices in active markets (Level 1) as of the indicated dates, was as follows:
 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
5¾% Senior Notes due 2022
 
$
732

 
$
668

5⅝% Senior Notes due 2024
 
945

 
831

5⅜% Senior Notes due 2026
 
644

 
542


Any amounts outstanding under our revolving credit facility and money market lines of credit as of the indicated dates are stated at cost, which approximates fair value. Please see Note 10 , “Debt.”

6 .      Oil and Gas Properties

      Oil and gas properties consisted of the following:
 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
Proved
 
$
21,704

 
$
21,568

Unproved
 
900

 
780

Gross oil and gas properties
 
22,604

 
22,348

Accumulated depreciation, depletion and amortization
 
(9,214
)
 
(9,048
)
Accumulated impairment
 
(9,987
)
 
(9,481
)
Net oil and gas properties
 
$
3,403

 
$
3,819


Costs withheld from amortization as of March 31, 2016 consisted of the following:
 
 
Costs Incurred In
 
 
 
 
2016
 
2015
 
2014
 
2013
 
Total
 
 
(In millions)
 
 
Acquisition costs
 
$
23

 
$
339

 
$
165

 
$
123

 
$
650

Exploration costs
 
125

 
34

 
—

 
—

 
159

Capitalized interest
 
9

 
33

 
49

 
—

 
91

Total costs withheld from amortization (unproved)
 
$
157

 
$
406

 
$
214

 
$
123

 
$
900


We capitalized approximately $26 million and $32 million of interest and direct internal costs during the three months ended March 31, 2016 and 2015 , respectively.


14
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

At March 31, 2016 , the ceiling value of our reserves was calculated based upon SEC pricing of $46.23 per barrel for oil and $2.40 per MMBtu for natural gas, adjusted for market differentials. Using these prices, our ceiling for the U.S. did not exceed the net capitalized costs of oil and gas properties resulting in a ceiling test writedown. Our domestic ceiling test writedown was approximately $461 million ( $461 million after tax due to a full valuation allowance on related deferred tax assets) for the three months ended March 31, 2016 .

Using SEC pricing, our ceiling for China at March 31, 2016 did not exceed the net capitalized costs of oil and gas properties, resulting in a ceiling test writedown for the three months of approximately $45 million ( $45 million after tax due to a full valuation allowance on related deferred tax assets).
The continued decline of SEC pricing for oil and natural gas reserves subsequent to March 31, 2016 will likely result in additional ceiling test writedowns in the second quarter of 2016 and possibly thereafter.
7 .      Other Property and Equipment

      Other property and equipment consisted of the following:
 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
Furniture, fixtures and equipment
 
$
155

 
$
152

Gathering systems and equipment
 
115

 
115

Accumulated depreciation and amortization
 
(100
)
 
(95
)
Net other property and equipment
 
$
170

 
$
172


8 .       Income Taxes

The following table presents a reconciliation of the United States statutory income tax rate to our effective income tax rate.

 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
U.S. statutory income tax rate
 
35.0
 %
 
35.0
 %
State and local income taxes, net of federal effect
 
0.8

 
2.2

Valuation allowance, domestic
 
(34.4
)
 
—

Valuation allowance, international
 
(3.0
)
 
—

Foreign tax on foreign earnings
 
2.3

 
(0.3
)
Other
 
(0.4
)
 
(0.1
)
Effective income tax rate
 
0.3
 %
 
36.8
 %

Due to the ceiling test writedowns of our oil and gas properties in 2015, we moved from a deferred tax liability position to a deferred tax asset position in various taxing jurisdictions. With the continuation of low commodity price levels, we consider it more likely than not that the related tax benefits will not be realized and therefore, we have a valuation allowance on our domestic and China deferred tax assets. These valuation allowances significantly reduced our effective income tax rate in the first quarter of 2016.

As of March 31, 2016 , we did not have a liability for uncertain tax positions, and as such, we did not accrue related interest or penalties. The tax years 2011 through 2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.

9 .    Accrued Liabilities

Accrued liabilities consisted of the following:

15
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
Revenue payable
 
$
141

 
$
164

Accrued capital costs
 
108

 
128

Accrued lease operating expenses
 
37

 
48

Employee incentive expense
 
17

 
53

Accrued interest on debt
 
31

 
66

Taxes payable
 
20

 
25

Other
 
44

 
49

Total accrued liabilities
 
$
398

 
$
533


10 .      Debt
 
Our debt consisted of the following:
 
 
March 31, 
 2016
 
December 31, 
 2015
 
 
(In millions)
Senior unsecured debt:
 
 
 
 
Revolving credit facility — LIBOR based loans (matures in 2020)
 
$
—

 
$
—

Money market lines of credit (1)
 
—

 
39

Total credit arrangements
 
—

 
39

5¾% Senior Notes due 2022
 
750

 
750

5⅝% Senior Notes due 2024
 
1,000

 
1,000

5⅜% Senior Notes due 2026
 
700

 
700

Total senior unsecured debt
 
2,450

 
2,489

Debt issuance costs
 
(21
)
 
(22
)
Total long-term debt
 
$
2,429

 
$
2,467

________
(1)
Because we have the ability and intent to use our available credit facility capacity to repay borrowings under our money market lines of credit as of the indicated dates, amounts outstanding under these obligations, if any, are classified as long-term debt.
 
Credit Arrangements
     
In March 2016, we entered into the fifth amendment to our Credit Agreement. This amendment changed certain definitions related to our financial covenants and decreased our interest rate coverage ratio from 3.0 :1.0 to 2.5 :1.0. Our borrowing capacity remains at $1.8 billion and the facility maturity date remains June 2020. We incurred approximately $3 million of financing costs related to this amendment, which were included in "Interest expense" on our consolidated statement of operations. As of March 31, 2016 , the largest individual loan commitment by any lender was 12% of total commitments.

During the first quarter of 2016, our debt rating was downgraded by rating agencies, and as a result, our borrowing costs increased by 50 basis points. In addition, our available borrowing capacity (before any amounts drawn) under our money market lines of credit with various institutions, the availability of which is at the discretion of those financial institutions, was reduced from $195 million at December 31, 2015 to $160 million at March 31, 2016 . This borrowing capacity is subject to compliance with restrictive covenants in our credit facility.

Loans under the credit facility bear interest, at our option, equal to (a) a rate per annum equal to the higher of the prime rate announced from time to time by JPMorgan Chase Bank, N.A. or the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System during the last preceding business day plus 50 basis points, plus a

16
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

margin that is based on a grid of our debt rating (125 basis points per annum at March 31, 2016 ) or (b) the London Interbank Offered Rate, plus a margin that is based on a grid of our debt rating (225 basis points per annum at March 31, 2016 ).

Under our credit facility, we pay commitment fees on available but undrawn amounts based on a grid of our debt rating (42.5 basis points per annum at March 31, 2016 ). We incurred aggregate commitment fees under our credit facility of approximately $2 million and $1 million for each of the three-month periods ended March 31, 2016 and 2015, respectively, which were recorded in “Interest expense” on our consolidated statement of operations.

Our credit facility has restrictive financial covenants that include the maintenance of a ratio of total debt to book capitalization not to exceed 0.6 to 1.0 and maintenance of a ratio of earnings before gain or loss on the disposition of assets, interest expense, income taxes and noncash items (such as depreciation, depletion and amortization expense, unrealized gains and losses on commodity derivatives and ceiling test writedowns) to interest expense of at least 2.5 to 1.0. At March 31, 2016 , we were in compliance with all of our debt covenants.

As of March 31, 2016 , we had no letters of credit outstanding under our credit facility. Letters of credit are subject to a fronting fee of 20 basis points and annual fees based on a grid of our debt rating (225 basis points at March 31, 2016 ).     
 
The credit facility includes events of default relating to customary matters, including, among other things, nonpayment of principal, interest or other amounts; violation of covenants; inaccuracy of representations and warranties in any material respect when made; a change of control; or certain other material adverse changes in our business. Our senior notes also contain standard events of default. If any of the foregoing defaults were to occur, our lenders under the credit facility could terminate future lending commitments, and our lenders under both the credit facility and our notes could declare the outstanding borrowings due and payable. In addition, our credit facility, senior notes and substantially all of our derivative arrangements contain provisions that provide for cross defaults and acceleration of those debt and derivative instruments in certain situations.

Senior Notes and Senior Subordinated Notes

In March 2015, we issued $700 million of 5⅜% Senior Notes due 2026 and received net proceeds of $691 million (net of offering costs of approximately $9 million ). These notes were issued at par to yield 5⅜%. In April 2015, we used the net proceeds and cash on hand to redeem our $700 million aggregate principal amount of 6 ⅞% Senior Subordinated Notes due 2020. In connection with the redemption, we paid a premium of $24 million . The premium was recorded under the caption "Other income (expense) — Other, net" on our consolidated statement of operations. In addition, associated unamortized offering costs and discounts of approximately $8 million were charged to interest expense during the second quarter of 2015 as a result of the redemption.

11 .    Commitments and Contingencies

In May 2015, a lawsuit was filed against the Company alleging certain plugging and abandonment predecessor-in-interest liabilities related to offshore assets sold by the Company in 2010. The lawsuit alleges damages of approximately $23 million . The Company has responded to the petition, denied the allegations and is vigorously defending the case. The court has held that the Company must bear a "portion" of the plugging and abandonment costs, but the "exact percentage" of such costs should be determined in arbitration. The court case is stayed pending arbitration. An estimate of reasonably possible losses, if any, cannot be made at this time.

We have been named as a defendant in a number of lawsuits and are involved in various other disputes, all arising in the ordinary course of our business, such as (a) claims from royalty owners for disputed royalty payments, (b) commercial disputes, (c) personal injury claims and (d) property damage claims. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial position, cash flows or results of operations.

12.      Stockholders' Equity Activity
     
During the first quarter of 2016, we issued 34.5 million additional shares of common stock through a public equity offering. We received net proceeds of approximately $776 million, a portion of which was used to repay borrowings under our credit facility and money market lines of credit.


17
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

During the first quarter of 2015, we issued 25.3 million additional shares of common stock through a public equity offering. We received net proceeds of approximately $815 million , which were used primarily to repay all borrowings under our credit facility and money market lines of credit that were outstanding at that time.

13.      Earnings Per Share
     
The following is the calculation of basic and diluted weighted-average shares outstanding and earnings per share (EPS) for the indicated periods:
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
 
 
(In millions, except per share data)
Net income (loss)
 
$
(624
)
 
$
(480
)
 
 
 
 
 
Weighted-average shares (denominator):
 
 

 
 

Weighted-average shares — basic
 
177

 
145

Dilution effect of stock options and unvested restricted stock awards and restricted stock units outstanding at end of period (1)
 
—

 
—

Weighted-average shares — diluted
 
177

 
145

 
 
 
 
 
Earnings (loss) per share:
 
 

 
 

Basic
 
$
(3.52
)
 
$
(3.30
)
Diluted
 
$
(3.52
)
 
$
(3.30
)
_______
(1)
The effect of unvested restricted stock awards or restricted stock units and stock options has not been included in the calculation of shares outstanding for diluted EPS for the three months ended March 31, 2016 and 2015 , as their effect would have been anti-dilutive. Had we recognized net income for the quarter, incremental shares attributable to the assumed vesting of unvested restricted stock awards and restricted stock units and the assumed exercise of outstanding stock options would have increased diluted weighted-average shares outstanding by 1.2 million and 1.3 million shares for the three months ended March 31, 2016 and 2015 , respectively.

14 .      Stock-Based Compensation
     
Our stock-based compensation consisted of the following:
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
 
 
(In millions)
Equity awards
 
$
9

 
$
10

Liability awards:
 
 
 
 
Cash-settled restricted stock units
 
3

 
7

Stockholder Value Appreciation Program
 
—

 
5

Total liability awards
 
3

 
12

Total stock-based compensation
 
12

 
22

Capitalized in oil and gas properties
 
(4
)
 
(7
)
Net stock-based compensation expense
 
$
8

 
$
15


As of March 31, 2016 , we had approximately $66 million of total unrecognized stock-based compensation expense related to unvested stock-based compensation awards that vest within four years .


18
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

Equity Awards

Equity awards consist of service-based and performance- or market-based restricted stock awards and restricted stock units, stock options and stock purchase options under the Employee Stock Purchase Plan (ESPP). At March 31, 2016, we had approximately (1) 5.9 million shares available for issuance under our 2011 Omnibus Stock Plan, as amended (2011 Plan), if all future awards are stock options, or (2) 3.1 million shares available for issuance under our 2011 Plan if all future awards are restricted stock awards or restricted stock units.

Restricted Stock. The following table provides information about restricted stock awards and restricted stock unit activity.
 
 
Service-Based
Shares
 
Weighted- Average Grant Date Fair Value per Share
 
Performance/
Market-Based
Shares
 
Weighted- Average Grant Date Fair Value per Share
 
Total
Shares
 
 
(In thousands, except per share data)
Non-vested shares outstanding at January 1, 2016
 
1,700

 
$
30.30

 
1,074

 
$
23.76

 
2,774

Granted (1)
 
308

 
23.97

 
436

 
28.94

 
744

Forfeited
 
(8
)
 
27.17

 
—

 
—

 
(8
)
Vested
 
(215
)
 
30.08

 
(5
)
 
56.49

 
(220
)
Non-vested shares outstanding at March 31, 2016
 
1,785

 
$
29.24

 
1,505

 
$
25.14

 
3,290

________
(1)
In February 2016, we granted approximately 436,000 shares of restricted stock units, which based on achievement of certain performance criteria, could vest within a range of 0% to 200% of shares granted.

Employee Stock Purchase Plan. During the first three months of 2016, options to purchase approximately 65,000 shares of our common stock were granted under our ESPP. The fair value of each option was $9.20 per share. The fair value of the options granted was determined using the Black-Scholes option valuation method assuming no dividends, a risk-free interest rate of 0.47% , an expected life of six months and weighted-average volatility of 47.9% .

Stock Options. As of March 31, 2016 , we had approximately 190,000 stock options outstanding and exercisable. No stock options have been granted since 2008, except for ESPP options as discussed above.

Liability Awards

Liability awards consist of performance awards that are settled in cash instead of shares, as discussed below.

Cash-Settled Restricted Stock Units. The value of the cash-settled restricted stock units, and the associated stock-based compensation expense, is based on the Company's stock price at the end of each period. On March 31, 2016 , the last reported sales price of our common stock on the New York Stock Exchange was $33.25 per share. As of March 31, 2016 , we had a liability of $14 million for future cash settlement upon vesting of awards and unrecognized cash-settled stock-based compensation expense of approximately $14 million . The following table provides information about cash-settled restricted stock unit activity.
 
 
Cash-Settled Restricted Stock Units
 
 
(In thousands)
Non-vested units outstanding at January 1, 2016
 
708

Granted
 
295

Forfeited
 
(14
)
Vested
 
(4
)
Non-vested units outstanding at March 31, 2016
 
985



    


19
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

15 .
Segment Information

While we only have operations in the oil and gas exploration and production industry, we are organizationally structured along geographic operating segments. Our current operating segments are the United States and China. The accounting policies of our operating segments are the same as those described in Note 1, “Organization and Summary of Significant Accounting Policies,” in our Annual Report on Form 10-K for the year ended December 31, 2015.

The following tables provide the geographic operating segment information for the three-month periods ended March 31, 2016 and 2015 . Income tax allocations have been determined based on statutory rates in the applicable geographic segment. Our income tax allocation of our China operations is based on the combined statutory rates for China and the United States.

 
 
Domestic
 
China
 
Total
 
 
(In millions)
Three Months Ended March 31, 2016:
 
 
 
 
 
 
Oil, gas and NGL revenues
 
$
235

 
$
49

 
$
284

Operating expenses:
 
 
 
 
 
 
Lease operating
 
47

 
14

 
61

Transportation and processing
 
63

 
—

 
63

Production and other taxes
 
10

 
—

 
10

Depreciation, depletion and amortization
 
133

 
44

 
177

General and administrative
 
43

 
1

 
44

Ceiling test and other impairments
 
461

 
45

 
506

Other
 
1

 
—

 
1

Allocated income tax (benefit)
 
(194
)
 
(33
)
 
 
Net income (loss) from oil and gas properties
 
$
(329
)
 
$
(22
)
 
 
Total operating expenses
 
 
 
 
 
862

Income (loss) from operations
 
 
 
 
 
(578
)
Interest expense, net of interest income, capitalized interest and other
 
 
 
 
 
(31
)
Commodity derivative income (expense)
 
 
 
 
 
(17
)
Income (loss) from operations before income taxes
 
 
 
 
 
$
(626
)
Total assets
 
$
4,540

 
$
237

 
$
4,777

Additions to long-lived assets
 
$
261

 
$
—

 
$
261



20
NEWFIELD EXPLORATION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

 
 
Domestic
 
China
 
Total
 
 
(In millions)
Three Months Ended March 31, 2015:
 
 
 
 
 
 
Oil, gas and NGL revenues
 
$
303

 
$
46

 
$
349

Operating expenses:
 
 
 
 
 
 
Lease operating
 
65

 
10

 
75

Transportation and processing
 
49

 
—

 
49

Production and other taxes
 
13

 
—

 
13

Depreciation, depletion and amortization
 
212

 
25

 
237

General and administrative
 
61

 
2

 
63

Ceiling test and other impairments
 
792

 
—

 
792

Other
 
3

 
1

 
4

Allocated income tax (benefit)
 
(330
)
 
5

 


Net income (loss) from oil and gas properties
 
$
(562
)
 
$
3

 
 
Total operating expenses
 
 
 
 
 
1,233

Income (loss) from operations
 
 
 
 
 
(884
)
Interest expense, net of interest income, capitalized interest and other
 
 
 
 
 
(29
)
Commodity derivative income (expense)
 
 
 
 
 
153

Income (loss) from operations before income taxes
 
 
 
 
 
$
(760
)
Total assets
 
$
8,978

 
$
673

 
$
9,651

Additions to long-lived assets
 
$
396

 
$
12

 
$
408


16 .    Supplemental Cash Flow Information

The following table presents information about investing and financing activities that affect recognized assets and liabilities but do not result in cash receipts or payments for the indicated periods.
 
 
Three Months Ended
March 31,
 
 
2016
 
2015
 
 
(In millions)
Non-cash investing and financing activities excluded from the statement of cash flows:
 
 
 
 
(Increase) decrease in receivables for property sales
 
$
2

 
$
7

(Increase) decrease in accrued capital expenditures
 
20

 
109

(Increase) decrease in asset retirement costs
 
—

 
3



21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview
     
We are an independent energy company engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Our operations are focused primarily on large scale, onshore liquids-rich resource plays in the United States. Our principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota, the Uinta Basin of Utah and the Maverick and Gulf Coast basins of Texas. In addition, we have oil developments offshore China.

Significant first quarter 2016 highlights include:

•
34.5 million additional shares of common stock issued through a public equity offering for net proceeds of approximately $776 million, a portion of which was used to repay all outstanding borrowings under our credit facility and money market lines of credit. The remainder is being used for general corporate purposes including funding our 2016 capital budget, as needed;

•
total domestic production increased 1% from the fourth quarter of 2015 to 13.3 MMBOE. Compared to the first quarter of 2015, first quarter of 2016 domestic production increased 17% ;

•
production in the first quarter of 2016 in the Anadarko Basin of Oklahoma was 7.1 MMBOE, up 50% over the same period of 2015 and 4% over the fourth quarter of 2015. Anadarko Basin crude oil production increased more than 70% over the first quarter of 2015;

•
China production was up approximately 15% to 1.6 MMBbls over the fourth quarter of 2015 and approximately 81% over the first quarter of 2015; and

•
trend of lower consolidated lease operating expense, both recurring and major expense, continued with a 9% decrease (11% on a per BOE basis) in the first quarter of 2016 compared to the fourth quarter of 2015. Compared to the first quarter of 2015, first quarter of 2016 consolidated lease operating expense decreased 33% on a per BOE basis.

All consolidated and domestic BOE calculations above exclude natural gas produced and consumed in operations of 1.5 Bcf for the first quarter of 2016, 1.7 Bcf for the fourth quarter of 2015 and 2.2 Bcf for the first quarter of 2015.

Results of Operations            
Our operations consist of exploration, development and production activities in the United States and China.

Domestic Revenues and Production. Revenues during the first quarter of 2016 were $68 million lower than the same period of 2015. The lower revenues were attributable to a 34% decrease in the average revenue per BOE compared to the first quarter of 2015 . We increased our domestic liquids production by 15% and gas production by 20% compared to the first quarter of 2015 , reducing the impact of lower prices by $27 million and $15 million, respectively. Our Anadarko Basin oil, gas and NGL production increased by 71%, 47% and 35%, respectively. Williston Basin production increased by 20% primarily due to the sale of natural gas fuel and flare volumes that were previously produced and consumed in operations. Production in our other domestic basins declined as compared to the first quarter of 2015 due to the reduction of our development activities in those areas.

China Revenues and Production/Liftings. Revenues from China of $49 million for the first quarter of 2016 were 7% higher than the comparable period of 2015 , which is primarily due to achieving full production levels for the six development wells in the Pearl development in May 2015 , partially offset by a 41% decrease in price per barrel for crude oil and condensate. Our first quarter 2016 liftings increased 737 MBbls, or approximately 81% , over the first quarter of 2015 . During the first quarter of 2016 , we managed Pearl well production performance and maintained a plateau of 14,600 barrels of oil per day (net).









22


The following table reflects our production/liftings and average realized commodity prices:


Three Months Ended 
 March 31,

Percentage
Increase (Decrease)
 

2016

2015

Production/Liftings:

 

 

 
Domestic: (1)
 
 
 
 
 
 
Crude oil and condensate (MBbls)

5,335


4,950


8
 %
Natural gas (Bcf)

32.9


27.3


20
 %
NGLs (MBbls)

2,476


1,849


34
 %
Total (MBOE)

13,288


11,355


17
 %
China: (2)
 
 
 
 
 
 
Crude oil and condensate (MBbls)
 
1,643

 
906

 
81
 %
Total:
 
 
 
 
 
 
Crude oil and condensate (MBbls)
 
6,978

 
5,856

 
19
 %
Natural gas (Bcf)
 
32.9

 
27.3

 
20
 %
NGLs (MBbls)
 
2,476

 
1,849

 
34
 %
Total (MBOE)
 
14,931

 
12,261

 
22
 %
Average Realized Prices:

 


 


 

Domestic: (3)
 
 
 
 
 
 
Crude oil and condensate (per Bbl)

$
25.72


$
38.21


(33
)%
Natural gas (per Mcf)

1.83


2.70


(32
)%
NGLs (per Bbl)

14.75


19.96


(26
)%
Crude oil equivalent (per BOE)

17.70


26.64


(34
)%
China:
 
 
 
 
 
 
Crude oil and condensate (per Bbl)
 
$
29.89

 
$
50.78

 
(41
)%
Total:
 
 
 
 
 
 
Crude oil and condensate (per Bbl)
 
$
26.70

 
$
40.15

 
(33
)%
Natural gas (per Mcf)
 
1.83

 
2.70

 
(32
)%
NGLs (per Bbl)
 
14.75

 
19.96

 
(26
)%
Crude oil equivalent (per BOE)
 
19.04

 
28.43

 
(33
)%
________________
(1)
Excludes natural gas produced and consumed in operations of 1.5 Bcf and 2.2 Bcf during the three months ended March 31, 2016 and 2015 , respectively.
(2)
Represents our net share of volumes sold regardless of when produced.
(3)
Had we included the realized effects of derivative contracts, the average realized prices for our domestic crude oil and natural gas production would have been as follows:
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
Crude oil and condensate (per Bbl)
 
$
38.96

 
$
57.51

Natural gas (per Mcf)
 
2.18

 
3.62












23


Operating Expenses.

The following table presents information about our operating expenses:
 
 
Unit-of-Production
 
Total Amount
 
 
Three Months Ended 
 March 31,
 
Percentage
Increase (Decrease)
 
Three Months Ended 
 March 31,
 
Percentage
Increase (Decrease)
 
 
2016
 
2015
 
 
2016
 
2015
 
 
 
(Per BOE)
 
 
 
(In millions)
 
 
Domestic:
 
 
 
 
 
 
 
 
 
 
 
 
Lease operating
 
$
3.51

 
$
5.76

 
(39
)%
 
$
47

 
$
65

 
(29
)%
Transportation and processing
 
4.77

 
4.33

 
10
 %
 
63

 
49

 
29
 %
Production and other taxes
 
0.71

 
1.18

 
(40
)%
 
10

 
13

 
(29
)%
Depreciation, depletion and amortization
 
10.06

 
18.62

 
(46
)%
 
133

 
212

 
(37
)%
General and administrative
 
3.20

 
5.31

 
(40
)%
 
43

 
61

 
(29
)%
Ceiling test and other impairments
 
34.68

 
69.78

 
(50
)%
 
461

 
792

 
(42
)%
Other
 
0.05

 
0.23

 
(78
)%
 
1

 
3

 
(73
)%
Total operating expenses
 
56.98

 
105.21

 
(46
)%
 
758

 
1,195

 
(37
)%
China:
 
 
 
 
 
 
 
 
 
 
 
 
Lease operating
 
$
8.93

 
$
10.37

 
(14
)%
 
$
14

 
$
10

 
53
 %
Depreciation, depletion and amortization
 
26.75

 
27.93

 
(4
)%
 
44

 
25

 
74
 %
General and administrative
 
0.85

 
2.64

 
(68
)%
 
1

 
2

 
(42
)%
Ceiling test impairment
 
27.52

 
—

 
100
 %
 
45

 
—

 
100
 %
Other
 
—

 
1.31

 
(100
)%
 
—

 
1

 
(100
)%
Total operating expenses
 
64.05

 
42.25

 
52
 %
 
104

 
38

 
>100 %

Total:
 
 
 
 
 
 
 
 
 
 
 
 
Lease operating
 
$
4.08

 
$
6.09

 
(33
)%
 
$
61

 
$
75

 
(18
)%
Transportation and processing
 
4.25

 
4.01

 
6
 %
 
63

 
49

 
29
 %
Production and other taxes
 
0.65

 
1.10

 
(41
)%
 
10

 
13

 
(29
)%
Depreciation, depletion and amortization
 
11.89

 
19.31

 
(38
)%
 
177

 
237

 
(25
)%
General and administrative
 
2.94

 
5.11

 
(42
)%
 
44

 
63

 
(30
)%
Ceiling test and other impairments
 
33.89

 
64.62

 
(48
)%
 
506

 
792

 
(36
)%
Other
 
0.06

 
0.31

 
(81
)%
 
1

 
4

 
(77
)%
Total operating expenses
 
57.76

 
100.55

 
(43
)%
 
862

 
1,233

 
(30
)%

Domestic Operations. Excluding the effect of ceiling test impairments, our operating expenses for domestic operations for the three months ended March 31, 2016 decreased 37% over the same period of 2015 stated on a per BOE basis. The primary components within our operating expenses are as follows:

•
Lease operating expense decreased 39% on a per BOE basis primarily due to lower service costs combined with higher production volumes. Service costs per BOE declined primarily in our Anadarko, Williston and Uinta basins due to our increased focus on cost-reduction initiatives combined with downward service cost pressures in the industry due to a lower commodity price environment.

•
Transportation and processing expense per BOE increased 10% primarily due to increased gas processing fees in the Williston Basin. Additionally, oil transportation costs increased in the Williston Basin due to utilization of pipelines initiated in the second half of 2015 . These pipeline costs allow for improved realized oil prices.

•
Production and other taxes decreased 40% per BOE consistent with lower revenue totals. As a percent of total revenue, production and other taxes were 4.0% and 4.4% for the three months ended March 31, 2016 and 2015 , respectively. Our 2016 rate is lower as our development has been focused in areas with lower taxes due to horizontal well credits.


24


•
Depreciation, depletion and amortization (DD&A) decreased 46% on a per BOE basis primarily due to the impact of non-cash ceiling test impairments during 2015 . We expect a further decrease in the second quarter of 2016 as a result of the impairment recorded in the first quarter of 2016 .

•
General and administrative (G&A) expenses decreased 29% during the first quarter of 2016 compared to the first quarter of 2015 . We have lower employee-related expenses of $17 million due to a reduction of headcount and lower severance costs as compared to the prior year. In addition, lower gross stock-based compensation expense resulted in $10 million in lower G&A expenses. For the three months ended March 31, 2016 , we capitalized $17 million ($1.29 per BOE) of direct internal costs as compared to $25 million ($2.19 per BOE) during the comparable quarter of 2015 . This decrease in capitalization is consistent with the reduced exploration and development activities in the Uinta, Williston and Maverick basins during the first quarter of 2016 .

•
At March 31, 2016 , we recorded a ceiling test impairment of $461 million due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was an 8% decrease in crude oil SEC pricing and a 7% decrease in natural gas SEC pricing since December 31, 2015. These commodity price decreases are partially offset by the impact of current service cost reductions in reserve estimates. At March 31, 2015, we recorded a ceiling test impairment of $788 million due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was a 13% decrease in crude oil SEC pricing partially offset by the impact of current service cost reductions in reserve estimates. During the first quarter of 2015 , we recorded a $4 million rig impairment associated with our decision to indefinitely lay down both company-owned drilling rigs in the Uinta Basin.

China Operations. Excluding the effect of the $45 million non-cash ceiling test impairment, China operating expenses for the three months ended March 31, 2016 decreased 14% over the same period of 2015 stated on a per BOE basis. The primary components within our operating expenses are as follows:

•
On a per BOE basis, lease operating expense was 14% lower primarily due to higher production volumes.

•
DD&A increased by 74% primarily due to an 81% increase in lifting volumes, partially offset by the impact of non-cash ceiling test impairments during 2015.

•
At March 31, 2016 , we recorded a non-cash ceiling test impairment of $45 million due to a net decrease in the discounted value of our proved reserves. The primary reason for the change in value was an 8% decrease in crude oil SEC pricing since December 31, 2015.

Interest Expense . The following table presents information about interest expense. Interest expense associated with unproved oil and gas properties is capitalized into oil and gas properties.
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
 
(In millions)
Gross interest expense:
 
 
 
 
Credit arrangements
 
$
6

 
$
4

Senior notes
 
35

 
28

Senior subordinated notes
 
—

 
12

Total gross interest expense
 
41

 
44

Capitalized interest
 
(9
)
 
(7
)
Net interest expense
 
$
32

 
$
37


Gross interest expense decreased for the three months ended March 31, 2016 , as compared to the three months ended March 31, 2015 , primarily due to the redemption of our 6⅞% Senior Subordinated Notes due 2020 in April 2015. This decrease was offset by the additional interest expense associated with our $700 million 5⅜% Senior Notes due 2026 issued in March 2015 and $3 million of financing costs related to the fifth amendment to our Credit Agreement.

Capitalized interest increased for the three months ended March 31, 2016 , as compared to the three months ended March 31, 2015 , due to an increase in the average amount of unproved oil and gas properties.


25


Commodity Derivative Income (Expense). The fluctuations in commodity derivative income (expense) from period to period are due to the volatility of oil and natural gas prices and changes in our outstanding derivative instruments during these periods. The $17 million loss recognized in “Commodity derivative income (expense)” in our consolidated statement of operations related to our derivative financial instruments is comprised of a $82 million realized gain and a $99 million unrealized loss. The amount of unrealized gain (loss) on derivatives is the result of the change in the total fair value of our derivative positions from the prior year. The components of the change in the fair value of our net derivative asset (liability) follow:
 
Positions Settled in the Three Months Ended March 31, 2016
 
Positions Settling After March 31, 2016
 
Total
 
(In millions)
Net derivative asset at December 31, 2015
$
82

 
$
285

 
$
367

Settled positions (1)
(82
)
 
—

 
(82
)
Change in fair value of remaining positions and fair value of new positions
—

 
(17
)
 
(17
)
Total unrealized gain (loss)
(82
)
 
(17
)
 
(99
)
Net derivative asset (liability) at March 31, 2016
$
—

 
$
268

 
$
268

_________________
(1)
Represents the fair value of positions included in the net derivative asset as of December 31, 2015 that have settled during 2016. Actual settlement amounts differ due to the changes in the fair value of the positions between the balance sheet date and the settlement date and are reflected in the realized gain (loss) noted in Note 4 , " Derivative Financial Instruments ".

Taxes. The effective tax rates for the three months ended March 31, 2016 and 2015 were 0.3% and 36.8% , respectively. Our effective tax rate for both periods was different than the federal statutory rate of 35% due to the change in valuation allowances, non-deductible expenses, state income taxes, the differences between international and U.S. federal statutory rates, and the impact of our China earnings being taxed both in the U.S. and China. Our future effective tax rates may also be impacted by additional ceiling test writedowns or other items which generate deferred tax assets, deferred tax asset valuation allowances, and/or reversal of such valuation allowances. The following table summarizes our tax activity that derives our effective tax rate for the first quarter of 2016 .
 
 
Domestic
 
China
 
Total
 
 
 
 
(In millions)
 
 
Total income (loss) before income taxes
 
$
(570
)
 
$
(56
)
 
$
(626
)
U.S. federal statutory tax rate
 
35
 %
 
35
%
 
35
%
Tax expense (benefit) at statutory tax rate
 
(200
)
 
(19
)
 
(219
)
State and local income taxes, net of tax effect
 
(5
)
 
—

 
(5
)
Change in valuation allowances
 
216

 
18

 
234

Foreign tax on foreign earnings
 
—

 
(14
)
 
(14
)
Other
 
2

 
—

 
2

Total provision (benefit) for income taxes
 
$
13

 
$
(15
)
 
$
(2
)
Effective tax rate
 
(2
)%
 
27
%
 
0.3
%

See Note 8 , " Income Taxes " to our consolidated financial statements earlier in this report for additional disclosures.

Liquidity and Capital Resources

Beginning in the fourth quarter of 2014, crude oil prices declined significantly primarily due to global supply and demand imbalances. Crude oil prices continued to decline in 2015 and remained depressed in the first quarter of 2016. Given the future uncertainty regarding the timing and magnitude of an eventual recovery of crude oil prices, our planned capital spending for 2016 was reduced from 2015 levels to reduce deficit spending and preserve long-term liquidity.

During the first three months of 2016, as a part of our strategy to optimize long-term liquidity, we issued 34.5 million additional shares of common stock through a public equity offering and received net proceeds of approximately $776 million, a portion of which was used to repay outstanding borrowings under our credit facility and money market lines of credit. The remainder is being used for general corporate purposes, including funding our 2016 capital budget, if necessary. We also use cash flows from operations to fund our capital budget.

26



Our 2016 capital budget, excluding estimated capitalized interest and direct internal costs of approximately $100 million, is expected to be approximately $625 million - $675 million. Actual capital expenditure levels may vary significantly due to many factors, including drilling results; oil, natural gas and NGL prices; industry conditions; the prices and availability of goods and services; and the extent to which properties are acquired or non-strategic assets are sold. We continue to screen for attractive acquisition opportunities; however, the timing and size of acquisitions are unpredictable. We believe we have the operational flexibility to react quickly with our capital expenditures to changes in circumstances or fluctuations in our cash flows.

We continuously monitor our liquidity needs, coordinate our capital expenditure program with our expected cash flows and projected debt-repayment schedule, and evaluate our available alternative sources of liquidity, including selling non-strategic assets or potentially accessing debt and equity capital markets in light of current and expected economic conditions. We believe that our liquidity position and ability to generate cash flows from our operations will be adequate to fund 2016 operations and continue to meet our other obligations. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Credit Arrangements and Other Financing Activities. In March 2016, we entered into the fifth amendment to our Credit Agreement. This amendment changed certain definitions related to our financial covenants and decreased our interest rate coverage ratio from 3.0:1.0 to 2.5:1.0. Our borrowing capacity remains at $1.8 billion and the facility maturity date remains June 2020. We incurred approximately $3 million of financing costs related to this amendment, which were included in "Interest expense" on our consolidated statement of operations. At March 31, 2016 , we had available borrowing capacity (before any amounts drawn) under our money market lines of credit of $160 million , which was reduced from $195 million at December 31, 2015 due to the downgrading of our debt rating by rating agencies during the first quarter of 2016.

At March 31, 2016 , we had no borrowings outstanding under our money market lines of credit, no borrowings outstanding under our revolving credit facility and no letters of credit outstanding under our credit facility.

In April 2015, we completed the redemption of our $700 million aggregate principal of 6⅞% Senior Subordinated Notes due 2020. The transaction included a premium payment of approximately $24 million . We have no scheduled maturities of senior notes until 2022. For a more detailed description of the terms of our credit arrangements and senior notes, please see Note 10 , “Debt,” to our consolidated financial statements appearing earlier in this report.

As of April 29, 2016 , we had no outstanding borrowings and available borrowing capacity of $1.8 billion under our revolving credit facility, and cash on hand of $581 million. As of April 29, 2016 , we had no outstanding borrowings under our money market lines of credit and available capacity of $160 million.

Working Capital. Our working capital balance fluctuates primarily as a result of the timing and amount of borrowings or repayments under our credit arrangements, changes in the fair value of our outstanding commodity derivative instruments as well as the timing of receiving reimbursement of amounts paid by us for the benefit of joint venture partners. Without the effects of commodity derivative instruments, we typically have a working capital deficit or a relatively small amount of positive working capital. At March 31, 2016 , we had positive working capital of $563 million compared to negative working capital of $22 million at December 31, 2015 due to the equity issuance in the first quarter of 2016.

Cash Flows from Operations. Our primary source of capital and liquidity is cash flows from operations, which are primarily affected by the sale of our oil, natural gas and NGLs, as well as commodity prices, net of the effects of derivative contract settlements and changes in working capital.

Our net cash flows from operations were $72 million for the three months ended March 31, 2016 , which decreased compared to net cash flows from operations of $205 million for the same period in 2015 . The primary driver of lower operating cash flows was lower revenues as a result of lower commodity prices.

Cash Flows from Investing Activities. Net cash used in investing activities for the three months ended March 31, 2016 was $ 275 million compared to $486 million for the same period in 2015 . Cash used for capital expenditures in 2016 was approximately $237 million lower due to our planned reductions in capital spending in the current economic environment for our industry as compared to the first three months of 2015.

Cash Flows from Financing Activities. Net cash provided by financing activities for the three months ended March 31, 2016 was $735 million compared to net cash provided by financing activities of $1.1 billion for the same period in 2015 . During

27


the three months ended March 31, 2016 , we issued 34.5 million additional shares of common stock through a public equity offering and received net proceeds of approximately $776 million, a portion of which was used to repay all outstanding borrowings under our credit facility and money market lines of credit.

During the three months ended March 31, 2015 , we received net proceeds of $815 million through the issuance of 25.3 million additional shares of common stock through a public equity offering, which were used to repay all borrowings under our credit facility and money market lines of credit. In addition, we received proceeds of $691 million through the issuance of senior notes.

Capital Expenditures. Our capital investments for the first three months of 2016 decreased 38% compared to the same period of 2015 . The table below summarizes our capital investments.
 
Three Months Ended 
 March 31,
 
2016
 
2015
 
(In millions)
     Exploration and development (exclusive of leasehold)
$
221

 
$
346

     Acquisitions
1

 
—

     Leasing proved and unproved property (leasehold)
11

 
29

     Pipeline spending
—

 
2

         Total
$
233

 
$
377


Ceiling Test Writedown

At March 31, 2016 , the values of our U.S. and China cost center ceilings were calculated based upon SEC pricing of $46.23 per barrel for oil and $2.40 per MMBtu for natural gas, adjusted for market differentials. Using these prices, our ceiling for the U.S. did not exceed the net capitalized costs of oil and gas properties, resulting in a non-cash ceiling test writedown of approximately $461 million ( $461 million after tax due to a full valuation allowance on related deferred tax assets). Our ceiling for China did not exceed the net capitalized costs of oil and gas properties, resulting in a non-cash ceiling test writedown of approximately $45 million ( $45 million after tax due to a full valuation allowance on related deferred tax assets). Holding all other factors constant, it is likely that we will experience a ceiling test writedown in both the U.S. and China in the second quarter of 2016. It is difficult to predict with reasonable certainty the amount of expected future impairments given the many factors impacting the ceiling test calculation including, but not limited to, future pricing, operating and development costs, upward or downward reserve revisions, reserve adds, and tax attributes. Subject to these numerous factors and inherent limitations, we believe that impairments in the second quarter of 2016 could exceed $800 million. Once recorded, a ceiling test writedown is not reversible at a later date even if oil and gas prices increase. Further declines in SEC pricing could result in additional ceiling test writedowns in subsequent quarters.
Contractual Obligations

We have various contractual obligations in the normal course of our operations. For further information, please see “Management's Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2015 . There have been no material changes to the disclosure since year-end 2015 .

Commitments under Joint Operating Agreements. Most of our properties are operated through joint ventures under joint operating or similar agreements. Typically, the operator under a joint operating agreement enters into contracts, such as drilling contracts, for the benefit of all joint venture partners. Through the joint operating agreement, the non-operators reimburse, and in some cases advance, the funds necessary to meet the contractual obligations entered into by the operator. These obligations are typically shared on a “working interest” basis. The joint operating agreement provides remedies to the operator if a non-operator does not satisfy its share of the contractual obligations. Occasionally, the operator is permitted by the joint operating agreement to enter into lease obligations and other contractual commitments that are then passed on to the non-operating joint interest owners as lease operating expenses, frequently without any identification as to the long-term nature of any commitments underlying such expenses.






28


Oil and Gas Derivatives
     
We use derivative contracts to manage the variability in cash flows caused by commodity price fluctuations associated with our anticipated oil and gas production for the next   24 to 36 months. As of March 31, 2016 , we had no outstanding derivative contracts related to our NGL production. We do not use derivative instruments for trading purposes.

For a further discussion of our derivative activities, see " Oil, Natural Gas and NGL Prices " in Item 3 of this report. See the discussion and tables in Note 4 , “ Derivative Financial Instruments ,” and Note 5 , “ Fair Value Measurements ,” to our consolidated financial statements appearing earlier in this report for additional information regarding the accounting applicable to our oil and gas derivative contracts, a listing of open contracts and the estimated fair market value of those contracts as of March 31, 2016 .

Between April 1, 2016 and April 29 , 2016, we entered into additional crude oil derivative contracts. A listing of all our crude oil derivative contracts as of April 29 , 2016 follows:
 
 
 
 
NYMEX Contract Price Per Bbl
 
 
 
 
 
 
 
 
 
 
Collars
Period and Type of Instrument
 
Volume in MBbls
 
Swaps
(Weighted Average)
 
Purchased Calls (Weighted Average)
 
Sold Puts
(Weighted Average)
 
Floors
(Weighted Average)
 
Ceilings
(Weighted Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
2016:
 
 

 
 

 
 
 
 

 
 

 
 

Fixed-price swaps
 
3,553

 
$
41.73

 
$
—

 
$
—

 
$
—

 
$
—

  Fixed-price swaps with sold puts:
 
7,057

 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
 
 
89.98

 
—

 
—

 
—

 
—

Sold puts
 
 
 
—

 
—

 
74.42

 
—

 
—

  Collars with sold puts:
 
4,673

 
 
 
 
 
 
 
 
 
 
Collars
 
 
 
—

 
—

 
—

 
90.00

 
96.10

Sold puts
 
 
 
—

 
—

 
75.00

 
—

 
—

Swaptions
 
—

 
—

 
—

 
—

 
—

 
—

  Purchased calls
 
8,181

 
—

 
73.35

 
—

 
—

 
—

2017:
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
6,205

 
45.43

 
—

 
—

 
—

 
—

  Fixed-price swaps with sold puts:
 
4,468

 
 
 
 
 
 
 
 
 
 
Fixed-price swaps
 
 
 
88.37

 
—

 
—

 
—

 
—

Sold puts
 
 
 
—

 
—

 
73.28

 
—

 
—

  Collars with sold puts:
 
2,080

 
 
 
 
 
 
 
 
 
 
Collars
 
 
 
—

 
—

 
—

 
90.00

 
95.59

Sold puts
 
 
 
—

 
—

 
75.00

 
—

 
—

  Purchased calls
 
6,548

 
—

 
73.81

 
—

 
—

 
—


Accounting for Derivative Activities. As our derivative contracts are not designated for hedge accounting, they are accounted for on a mark-to-market basis. We have in the past experienced, and are likely in the future to experience non-cash volatility in our reported earnings during periods of commodity price volatility. As of March 31, 2016 , we had net derivative assets of $268 million, of which 65%, based on total contracted volumes, was measured based upon a modified Black-Scholes valuation model and, as such, were classified as a Level 3 fair value measurement. The model considers various inputs including the following:

• forward prices for commodities;
• time value;
• volatility factors;
• counterparty credit risk; and

29


• current market and contractual prices for the underlying instruments.

As a result, the value of these contracts at their respective settlement dates could be significantly different than their fair value as of March 31, 2016 . We use credit default swap values to assess the impact of non-performance risk when evaluating both our liabilities to and receivables from counterparties. See “— Critical Accounting Policies and Estimates — Commodity Derivative Activities ” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2015 and Note 4 , “ Derivative Financial Instruments ,” and Note 5 , “ Fair Value Measurements ,” to our consolidated financial statements appearing earlier in this report for additional discussion of the accounting applicable to our oil and gas derivative contracts.

New Accounting Requirements

See Note  1 , “Organization and Summary of Significant Accounting Policies,” to our consolidated financial statements in Item 1 of this report for a discussion of new accounting requirements.

Forward-Looking Information

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). All statements, other than statements of historical facts included in this report, are forward-looking, including information relating to anticipated future events or results, such as planned capital expenditures, the availability and sources of capital resources to fund capital expenditures, estimates of reserves, projected production, estimates of operating costs, planned exploratory or developed drilling, projected cash flows and liquidity, business strategy and other plans and objectives for future operations. Forward-looking statements are typically identified by use of terms such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “should,” “will,” “predict,” “potential” and similar expressions that convey the uncertainty of future events or outcomes. Although we believe that the expectations reflected in such forward-looking statements are reasonable, this information is based upon assumptions and anticipated results that are subject to numerous uncertainties and risks. Actual results may vary significantly from those anticipated due to many factors, including but not limited to, the following:

• oil, natural gas and natural gas liquids prices;
• environmental liabilities that are not covered by an effective indemnity or insurance;
• legislation or regulatory initiatives intended to address seismic activity;

• the timing and our success in discovering, producing and estimating reserves;

• sustained decline in commodity prices resulting in writedowns of assets;

• ability to develop existing reserves or acquire new reserves;
•
the availability and volatility of the securities, capital or credit markets and the cost of capital;
•
maintaining sufficient liquidity to fund our operations and business strategies;
•
the accuracy of and fluctuations in our reserves estimates due to sustained low commodity prices, incorrect assumptions and other causes;
• operating hazards inherent in the exploration for and production of oil and natural gas;
• general economic, financial, industry or business trends or conditions;
•
the impact of, and changes in, legislation, law and governmental regulations, including those related to hydraulic fracturing, climate change, seismicity and over-the-counter derivatives;
•
land, legal, regulatory, and ownership complexities inherent in the U.S. oil and gas industry;
•
the impact of regulatory approvals;

30


•
the ability and willingness of current or potential lenders, derivative contract counterparties, customers and working interest owners to fulfill their obligations to us or to enter into transactions with us in the future on terms that are acceptable to us;
•
the prices and quantities of commodities reflected in our commodity derivative arrangements as compared to the actual prices or quantities of commodities we produce or use;
•
the volatility, instrument terms and liquidity in the commodity futures and commodity and financial derivatives markets;
•
drilling risks and results;
• the prices and availability of goods and services;
• the cost and availability of drilling rigs and other support services;
• global events that may impact our domestic and international operating contracts, markets and prices;
•
our ability to monetize non-strategic assets, repay or refinance our existing indebtedness and the impact of changes in our investment ratings;
• labor conditions;
• weather conditions;
• competitive conditions;
• terrorism or civil or political unrest in a region or country;
• electronic, cyber or physical security breaches;
• changes in tax rates;
• inflation rates;
• the effect of worldwide energy conservation measures;
• the price and availability of, and demand for, competing energy sources;
• the availability (or lack thereof) of acquisition, disposition or combination opportunities; and
•
the other factors affecting our business described under the caption “ Risk Factors ” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates ” included in our 2015 Annual Report on Form 10-K.

Should one or more of the risks described above occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements in this report, as well as all other written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in this section and elsewhere in this report. These factors are not necessarily all of the important factors that could affect us. Use caution and common sense when considering these forward-looking statements. Unless securities laws require us to do so, we do not undertake any obligation to publicly correct or update any forward-looking statements whether as a result of changes in internal estimates or expectations, new information, subsequent events or circumstances or otherwise.

Commonly Used Oil and Gas Terms

Below are explanations of some commonly used terms in the oil and gas business and in this report.

Barrel or Bbl.     One stock tank barrel or 42 U.S. gallons of liquid volume.

Basis risk.     The risk associated with the sales point price for oil or gas production varying from the reference (or settlement) price for a particular derivative transaction.

31


Bcf.     Billion cubic feet.

BOE.     One barrel of oil equivalent determined using the ratio of six Mcf of natural gas to one barrel of crude oil or condensate, or 42 gallons for NGLs.

Btu.     British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.
Development well.     A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

Exploration well.     A well drilled to find a new field or new reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well.

Field.     An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature or stratigraphic condition.

Liquids. Crude oil and NGLs.

Liquids-rich.     Formations that contain crude oil or NGLs instead of, or as well as, natural gas.

MBbls.     One thousand barrels of crude oil or other liquid hydrocarbons.

MBOE.     One thousand barrels of oil equivalent.

Mcf.     One thousand cubic feet of natural gas.

MMBOE.     One million barrels of oil equivalent.

MMBtu.     One million Btus.

MMMBtu.     One billion Btus.

NGL.     Natural gas liquid. Hydrocarbons which can be extracted from wet natural gas and become liquid under various combinations of increasing pressure and lower temperature. NGLs consist primarily of ethane, propane, butane and natural gasolines.

NYMEX.     The New York Mercantile Exchange.

Proved reserves.     Those quantities of oil and natural gas, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs and under existing economic conditions, operating methods and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

SCOOP.     South-Central Oklahoma Oil Province. A field in the Anadarko Basin of Oklahoma in which we operate.

SEC pricing.     The unweighted average first-day-of-the-month commodity price for crude oil (WTI) or natural gas (NYMEX) for the prior 12 months. The SEC provides a complete definition of the pricing methodology in their guidance “ Modernization of Oil and Gas Reporting. ”

STACK.     Sooner Trend Anadarko Canadian Kingfisher. A play in the Anadarko Basin of Oklahoma in which we operate.

Working interest.     The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and a share of production, and requires the owner to pay a share of the costs of drilling and production operations.

WTI.     West Texas Intermediate, a grade of crude oil commonly used as a benchmark in oil pricing.


32

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in oil, natural gas and NGL prices, interest rates and foreign currency exchange rates as discussed below.

Oil, Natural Gas and NGL Prices
     
Our decision on the quantity and price at which we choose to enter into derivative contracts is based in part on our view of current and future market conditions. While the use of derivative contracts can limit or reduce the downside risk of adverse price movements, their use also may limit future benefits from favorable price movements. In addition, the use of derivative contracts may involve basis risk. All of our derivative transactions have been carried out in the over-the-counter market. The use of derivative contracts also involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty. At March 31, 2016 , 10 of our 15 counterparties accounted for approximately 85% of our contracted volumes with the largest counterparty accounting for approximately 12% .

As of March 31, 2016, of our remaining expected 2016 crude oil production, 12,650 MBbls were protected against price volatility through the use of collars and swaps, over 90% of which have associated sold puts. The sold puts limit our downward price protection below the weighted average of our sold puts of $74.65 per barrel. If the market price remains below $74.65 per barrel, we receive the market price for our associated production plus the difference between our sold puts and the associated floors or fixed-price swaps, which averages $15.34 per barrel. For 8,181 MBbls of our 2016 volumes, we have locked in an average minimum premium of $13.99 over the market price through the use of purchased calls. The weighted average strike price of the purchased calls approximates the weighted average strike price of the sold puts, thereby effectively locking in the value. As of March 31, 2016, of our expected 2017 crude oil production, 10,928 MBbls were protected against price volatility through the use of collars and swaps, nearly 60% of which have associated sold puts. The sold puts limit our downward price protection below the weighted average price of our sold puts of $73.83 per barrel. If the market price remains below $73.83 per barrel, we receive the market price for our associated production plus the difference between our sold puts and the associated floors or fixed-price swaps, which averages $15.06 per barrel. For 6,548 MBbls of our 2017 volumes, we have locked in an average minimum premium of $13.54 over the market price through the use of purchased calls. For a further discussion of our derivative activities, see the discussion and tables in Note 4 , “ Derivative Financial Instruments ,” to our consolidated financial statements appearing earlier in this report. For further discussion of the types of derivative positions, refer to Note 4, “Derivative Financial Instruments” within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2015 .

Interest Rates

We consider our interest rate exposure to be minimal because 100% of our obligations were at fixed rates as of March 31, 2016 . A 10% increase in LIBOR would not impact our interest costs on debt outstanding as of March 31, 2016 , but would decrease the fair value of our outstanding debt, as well as increase interest costs associated with future debt issuances or borrowings under our revolving credit facility and money market lines of credit.

Foreign Currency Exchange Rates
     
The functional currency for our China operations is the U.S. dollar. To the extent that business transactions in a foreign country are not denominated in the U.S. dollar, we are exposed to foreign currency exchange risk. We consider our current risk exposure to exchange rate movements, based on net cash flows, to be immaterial. We did not have any open derivative contracts related to foreign currencies at March 31, 2016 .

Item 4. Controls and Procedures

Disclosure Controls and Procedures
     
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow

33


timely decisions regarding required disclosure. Based upon our evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2016 .

Changes in Internal Control over Financial Reporting
     
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of our internal control over financial reporting to determine whether any changes occurred during the first quarter of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based upon our evaluation, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

We have been named as a defendant in a number of lawsuits and are involved in various other disputes, all arising in the ordinary course of our business, such as (a) claims from royalty owners for disputed royalty payments, (b) commercial disputes, (c) personal injury claims and (d) property damage claims. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial position, cash flows or results of operations.

In addition, from time to time we receive notices of violation from governmental and regulatory authorities in areas in which we operate related to alleged violations of environmental statutes or rules and regulations promulgated thereunder. We cannot predict with certainty whether these notices of violation will result in fines or penalties, or if such fines or penalties are imposed, that they would individually or in the aggregate exceed $100,000. If any fines or penalties are in fact imposed that are greater than $100,000, or we expect to be greater than $100,000, then we will disclose such fact in our subsequent filings.

Item 1A. Risk Factors

There have been no material changes with respect to the risk factors previously reported in our Annual Report on Form 10-K for the year ended December 31, 2015 .

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth certain information with respect to repurchases of our common stock during the three months ended March 31, 2016 .
Period
 
Total Number of Shares Purchased (1)
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased under the Plans or Programs
January 1 — January 31, 2016
 
4,771

 
$
30.05

 
—
 
—
February 1 — February 29, 2016
 
66,207

 
28.14

 
—
 
—
March 1 — March 31, 2016
 
2,070

 
27.67

 
—
 
—
Total
 
73,048

 
$
28.25

 
—
 
—
_______
(1)
All of the shares repurchased were surrendered by employees to pay tax withholding upon the vesting of restricted stock awards and restricted stock units. These repurchases were not part of a publicly announced program to repurchase shares of our common stock.


34


Item 6. Exhibits
Exhibit Number
 
Description
3.1
 
Fourth Amended and Restated Certificate of Incorporation of Newfield Exploration Company dated July 22, 2015 (incorporated by reference to Exhibit 3.1 to Newfield’s Current Report on Form 8-K filed with the SEC on July 27, 2015 (File No. 1-12534))
 
 
 
3.2
 
Amended and Restated Bylaws of Newfield (incorporated by reference to Exhibit 3.2 to Newfield’s Current Report on Form 8-K filed with the SEC on July 25, 2013 (File No. 1-12534))
 
 
 
†*10.1
 
Form of 2016 Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.2
 
Form of 2016 Executive Officer TSR Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.3
 
Form of 2016 Cash-Settled Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.4
 
Newfield Exploration Company Amended and Restated 2011 Annual Incentive Compensation Plan
 
 
 
*10.5
 
Fifth Amendment to Credit Agreement, dated as of March 18, 2016, by and among Newfield and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, Wells Fargo Bank, National Association, as Syndication Agent for the Lenders and the Lenders party thereto
 
 
 
†10.6
 
Amended and Restated Change of Control Severance Agreement, by and between the Company and Lawrence S. Massaro, effective as of February 10, 2016 (incorporated by reference to Exhibit 10.1 to Newfield's Current Report on Form 8-K filed with the SEC on February 12, 2016 (File No. 1-12534))
 
 
 
*31.1
 
Certification of Chief Executive Officer of Newfield Exploration Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
*31.2
 
Certification of Chief Financial Officer of Newfield Exploration Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
*32.1
 
Certification of Chief Executive Officer of Newfield Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
*32.2
 
Certification of Chief Financial Officer of Newfield Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
*101.INS
 
XBRL Instance Document
 
 
 
*101.SCH
 
XBRL Schema Document
 
 
 
*101.CAL
 
XBRL Calculation Linkbase Document
 
 
 
*101.LAB
 
XBRL Label Linkbase Document
 
 
 
*101.PRE
 
XBRL Presentation Linkbase Document
 
 
 
*101.DEF
 
XBRL Definition Linkbase Document
_______

35


*
Filed or furnished herewith.
†
Identifies management contracts and compensatory plans or arrangements.

36


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
NEWFIELD EXPLORATION COMPANY
 
 
 
Date: May 3, 2016
By:
/s/ LAWRENCE S. MASSARO
 
 
Lawrence S. Massaro
 
 
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

37

Exhibit Index
Exhibit Number
 
Description
3.1
 
Fourth Amended and Restated Certificate of Incorporation of Newfield Exploration Company dated July 22, 2015 (incorporated by reference to Exhibit 3.1 to Newfield’s Current Report on Form 8-K filed with the SEC on July 27, 2015 (File No. 1-12534))
 
 
 
3.2
 
Amended and Restated Bylaws of Newfield (incorporated by reference to Exhibit 3.2 to Newfield’s Current Report on Form 8-K filed with the SEC on July 25, 2013 (File No. 1-12534))
 
 
 
†*10.1
 
Form of 2016 Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.2
 
Form of 2016 Executive Officer TSR Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.3
 
Form of 2016 Cash-Settled Restricted Stock Unit Award Agreement under the 2011 Omnibus Stock Plan
 
 
 
†*10.4
 
Newfield Exploration Company Amended and Restated 2011 Annual Incentive Compensation Plan
 
 
 
*10.5
 
Fifth Amendment to Credit Agreement, dated as of March 18, 2016, by and among Newfield and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, Wells Fargo Bank, National Association, as Syndication Agent for the Lenders and the Lenders party thereto
 
 
 
†10.6
 
Amended and Restated Change of Control Severance Agreement, by and between the Company and Lawrence S. Massaro, effective as of February 10, 2016 (incorporated by reference to Exhibit 10.1 to Newfield's Current Report on Form 8-K filed with the SEC on February 12, 2016 (File No. 1-12534))
 
 
 
*31.1
 
Certification of Chief Executive Officer of Newfield Exploration Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
*31.2
 
Certification of Chief Financial Officer of Newfield Exploration Company pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
*32.1
 
Certification of Chief Executive Officer of Newfield Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
*32.2
 
Certification of Chief Financial Officer of Newfield Exploration Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 
*101.INS
 
XBRL Instance Document
 
 
 
*101.SCH
 
XBRL Schema Document
 
 
 
*101.CAL
 
XBRL Calculation Linkbase Document
 
 
 
*101.LAB
 
XBRL Label Linkbase Document
 
 
 
*101.PRE
 
XBRL Presentation Linkbase Document
 
 
 
*101.DEF
 
XBRL Definition Linkbase Document
_______

38

*
Filed or furnished herewith.
†
Identifies management contracts and compensatory plans or arrangements.

39

Exhibit 10.1
NEWFIELD EXPLORATION COMPANY
2011 OMNIBUS STOCK PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD

                
Awardee
Date of Award:
February 10, 2016
Vesting Dates:
 
 
First Vesting Date:
August 15, 2016
 
Second Vesting Date:
August 15, 2017
 
Third Vesting Date:
August 15, 2018
 
Fourth Vesting Date:
February 15, 2019
Number of Restricted Stock Units:
________________
Effective as of the Date of Award set forth above (the “ Date of Award ” ), the Compensation & Management Development Committee (the “ Committee ”) of the Board of Directors of Newfield Exploration Company, a Delaware corporation (the “ Company ”), hereby awards to you, the above-named awardee, that number of restricted stock units set forth above (the “ RSUs ” ), on the terms and conditions of the Newfield Exploration Company 2011 Omnibus Stock Plan, as amended and restated May 15, 2015 (the “ Plan ”), the attached Terms and Conditions (the “ Terms and Conditions ”), and this Notice of Restricted Stock Unit Award (the “ Notice ”).
The RSUs shall be subject to the prohibitions and restrictions set forth herein with respect to the sale or other disposition of such RSUs and the obligation to forfeit and surrender such RSUs to the Company (the “ Forfeiture Restrictions ”). The Forfeiture Restrictions shall lapse as to the RSUs that are awarded hereby in accordance with the following schedule provided that your employment with the Company and its direct and indirect wholly owned subsidiaries (collectively, the “ Company Group ”) has not terminated prior to the applicable Vesting Date:
(a)
on the First Vesting Date, the Forfeiture Restrictions shall lapse as to one-fourth of the RSUs subject to this Notice; and
(b)
on each succeeding Vesting Date, the Forfeiture Restrictions shall lapse as to an additional one-fourth of the RSUs subject to this Notice, so that on the Fourth Vesting Date the Forfeiture Restrictions shall have lapsed as to all of the RSUs subject to this Notice.
If a Change of Control of the Company occurs or if you die, become Disabled or your employment terminates by reason of a Qualified Retirement, in each case, before the Fourth Vesting Date, your rights to the RSUs under this Notice will be determined as provided in the attached Terms and Conditions.

1


Following the lapse of the Forfeiture Restrictions applicable to the RSUs, the Company shall issue to you, at the time of payment provided in the attached Terms and Conditions, one share of the Company’s common stock, $0.01 par value per share (the “ Common Stock ”), in exchange for each such vested RSU and thereafter you shall have no further rights with respect to such RSU, and such shares of the Common Stock shall be transferable by you (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable federal or state securities law).
Notwithstanding any provisions of the Plan, shares of Common Stock shall be transferred at the time(s) specified in this Notice and the Terms and Conditions.
The RSUs may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by will or the applicable laws of descent and distribution). Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Notice or the Terms and Conditions shall be void and the Company shall not be bound thereby. Any shares of Common Stock issued to you in exchange for the RSUs may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable federal or state securities laws. You also agree that (a) the Company may refuse to cause the transfer of any such shares of the Common Stock to be registered on the stock register of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable federal or state securities law and (b) the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of such shares of the Common Stock.
The shares of Common Stock that may be issued under the Plan are registered with the Securities and Exchange Commission under a Registration Statement on Form S-8.
Capitalized terms that are not defined herein shall have the meaning ascribed to such terms in the Plan or the Terms and Conditions.
In accepting the award of the RSUs you accept and agree to be bound by all the terms and conditions of the Plan, this Notice and the Terms and Conditions. A copy of the Plan will be furnished to you upon request.

2



IN WITNESS WHEREOF , the Committee has caused this Notice to be duly executed by an authorized officer of the Company, and Awardee has executed this Notice, all as of the date first above written.
NEWFIELD EXPLORATION COMPANY

By:                         
Name:
Title:
AWARDEE                         
                                                 
[Awardee]

3






NEWFIELD EXPLORATION COMPANY
2011 OMNIBUS STOCK PLAN

TERMS AND CONDITIONS
1.
TERMINATION OF EMPLOYMENT/CHANGE OF CONTROL. The following provisions will apply in the event your employment with the Company Group terminates, or a Change of Control of the Company occurs, in each case, prior to the Fourth Vesting Date specified in the Notice of Restricted Stock Unit Award (the “ Notice ”) to which these Terms and Conditions are attached (the “ Terms and Conditions ”):
1.1      Termination Generally . If your employment with the Company Group terminates before the Fourth Vesting Date for any reason other than one of the reasons described in Sections 1.2 through 1.5 below, the Forfeiture Restrictions then applicable to the RSUs shall not lapse and the number of RSUs then subject to the Forfeiture Restrictions shall be forfeited to the Company on the date your employment terminates.
1.2      Change of Control . The impact of a Change of Control of the Company on the RSUs shall be determined under the provisions of this Section 1.2 rather than under any provisions of the Plan dealing with vesting or the lapse of forfeiture restrictions. If a Change of Control of the Company occurs before the Fourth Vesting Date and you do not terminate employment with the Company Group before the date the Change of Control of the Company is consummated, then all remaining Forfeiture Restrictions then applicable to the RSUs shall lapse on the date the Change of Control of the Company is consummated if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A.
1.3      Disability . Notwithstanding any other provision of the Notice or these Terms and Conditions to the contrary, if before the Fourth Vesting Date you incur a Separation From Service due to your having incurred a Disability, then all remaining Forfeiture Restrictions then applicable to the RSUs shall immediately lapse on the date you incur such Separation From Service due to your Disability. For purposes of the Terms and Conditions (a) you will be treated as having a “ Disability ” if you (i) are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) are, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company Group; and (b) “ Separation From Service ” has the meaning ascribed to that term in Section 409A.
1.4      Death . Notwithstanding any other provision of the Notice or these Terms and Conditions to the contrary, if you die before the Fourth Vesting Date and before you have

1

otherwise terminated employment with the Company Group, then all remaining Forfeiture Restrictions then applicable to the RSUs shall immediately lapse on the date of the termination of your employment due to death.
1.5      Qualified Retirement . Notwithstanding any other provision of the Notice or these Terms and Conditions to the contrary, if before the Fourth Vesting Date you incur a Separation From Service as a result of your Qualified Retirement, then the number of RSUs issued to you under the Notice shall automatically be reduced (without further action by you and/or the Company) on the date you incur such Separation From Service to that number of RSUs determined under the following formula (the “ Retirement Adjusted RSUs ”):
(1) multiplied by (2) divided by (3)
where (1) is the number of the RSUs with respect to which Forfeiture Restrictions would have otherwise lapsed on the next Vesting Date following your Separation From Service due to Qualified Retirement, (2) is the number of days, if any, that have elapsed (excluding the date of your Separation From Service) since the most recent Vesting Date before the date you incur the Separation From Service due to Qualified Retirement, and (3) is the total number of days between (a) the most recent Vesting Date before the date you incur the Separation From Service due to Qualified Retirement and (b) the next Vesting Date following your Separation From Service due to Qualified Retirement.
The excess of (i) the number of RSUs that were originally awarded to you under the Notice with respect to which Forfeiture Restrictions have not lapsed as of the date of your Separation From Service due to Qualified Retirement over (ii) the Retirement Adjusted RSUs shall be immediately forfeited on the date you incur the Separation From Service due to Qualified Retirement. The Forfeiture Restrictions with respect to the Retirement Adjusted RSUs shall immediately lapse on the date you incur the Separation From Service due to your Qualified Retirement.
For purposes of the Terms and Conditions (a) “ Qualified Retirement ” means you (i) either are (A) at least age 60 and sign a non-compete agreement (the form of which is attached hereto as Exhibit A ) that is effective until your reaching age 62 or (B) are at least age 62, (ii) have at least 10 years of Qualified Service and (iii) provide the Requisite Notice; (b) “ Qualified Service ” means your continuous employment with the Company or a subsidiary of the Company during the time that such subsidiary is, directly or indirectly, a wholly owned subsidiary of the Company, plus any additional service credit granted to you (or a group of employees of which you are a member) by the Board of Directors of the Company; and (c) “ Requisite Notice ” means (i) if you are an officer of the Company, at least six months prior written notice to the Board of Directors of the Company or (ii) otherwise, at least three months prior written notice to the chief executive officer of the Company.
2.
PAYMENT IN SETTLEMENT OF VESTED RSUS . Payment in respect of vested RSUs shall be made as soon as practicable, but no later than 60 days following, as applicable (a) the Vesting Dates specified in the Notice on which the Forfeiture Restrictions applicable to the RSUs lapse; (b) the date the Change of Control of the Company is consummated if the

2

Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, in the case of vesting under Section 1.2; (c) the date of your death, in the case of vesting under Section 1.4; or (d) the date you incur a Separation From Service, in the case of vesting under Section 1.3 or 1.5; provided , that, if vesting occurs under Section 1.3 or 1.5 and you are a Specified Employee, payment in respect of vested RSUs shall instead be made on the date that is six months and one day following your Separation From Service; provided, however, that if you die before the expiration of such six-month delay period (if applicable) then payment shall be made on the date of your death. For purposes of the Terms and Conditions, “ Specified Employee ” means an individual who is, as of the date of the individual’s Separation From Service, a “specified employee” within the meaning of Section 409A, taking into account any elections made and procedures established in resolutions adopted by the Committee. As provided in the Notice, payment in settlement of vested RSUs shall be made in the form of one share of Common Stock in exchange for each vested RSU, subject to satisfaction of applicable withholding and other taxes as provided in Section 4.
3.
PROHIBITED ACTIVITY . Notwithstanding any other provision of these Terms and Conditions or the Notice, if you engage in a “Prohibited Activity,” as described below, while employed by one or more members of the Company Group or within two years after the date your employment with the Company Group terminates, then your right to receive the shares of the Common Stock, to the extent still outstanding at that time, shall be completely forfeited. A " Prohibited Activity " shall be deemed to have occurred, as determined by the Committee in its sole and absolute discretion, if you divulge any non-public, confidential or proprietary information of the Company Group, but excluding information that (a) becomes generally available to the public other than as a result of your public use, disclosure, or fault, or (b) becomes available to you on a non-confidential basis after your employment termination date from a source other than a member of the Company Group prior to the public use or disclosure by you, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.
4.
TAX WITHHOLDING . Unless otherwise specifically provided otherwise in the future by an action of the Committee (which action may not be delegated to management), the Committee hereby authorizes and specifically directs the Company to reduce the number of shares of Common Stock deliverable upon the lapse of the Forfeiture Restrictions applicable to the RSUs by the minimum number of shares of Common Stock necessary to satisfy the Company’s Minimum Statutory Withholding Obligation in accordance with the Plan; provided , that where the Fair Market Value of the shares of Common Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Common Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and you must satisfy the remaining Minimum Statutory Withholding Obligation through the payment of cash or check or withholding of cash amounts due in the appropriate amount and in compliance with the terms of the Plan, the Notice, and these Terms and Conditions.

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5.
NONTRANSFERABILITY. Neither the RSUs, the Notice nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution.
6.
CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the RSUs shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to the Notice to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.
7.
RSUs DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER . You shall not have the voting rights or any of the other rights, powers or privileges of a holder of the Common Stock with respect to the RSUs that are awarded hereby. Only after a share of the Common Stock is issued in exchange for a RSU will you have all of the rights of a stockholder with respect to such share of Common Stock issued in exchange for a RSU.
8.
NO ADVICE REGARDING RSUs. You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “ Company Parties ”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the RSUs, and (b) in deciding to accept the RSUs, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the RSUs.
9.
EMPLOYMENT RELATIONSHIP. For purposes of the Notice and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of the Company Group. The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship and the cause of such termination under the Plan, and the Committee’s determination shall be final and binding on all Persons. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the RSUs during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

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10.
FURNISH INFORMATION . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
11.
NOT AN EMPLOYMENT AGREEMENT . The Notice and the Terms and Conditions are not an employment agreement, and no provision of the Notice or these Terms and Conditions shall be construed or interpreted to create an employment relationship between you and any member of the Company Group or guarantee the right to remain employed by any member of the Company Group for any specified term.
12.
SECURITIES ACT LEGEND. If you are an officer or affiliate of the Company under the Securities Act of 1933, as amended (the “ Securities Act ”), you consent to the placing on any certificate for the shares of the Common Stock issued under the Notice an appropriate legend restricting resale or other transfer of such shares except in accordance with the Securities Act and all applicable rules thereunder.
13.
LIMIT OF LIABILITY . Under no circumstances will any member of the Company Group be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any Person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Notice, the Terms and Conditions or the RSUs granted thereunder.
14.
EXECUTION OF RECEIPTS AND RELEASES . Any payment of cash or any issuance or transfer of shares of Common Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance to execute a release and receipt therefor in such form as it shall determine.
15.
FUNDING. You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Notice and the Terms and Conditions. Your right to receive payments under the Notice and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
16.
NO GUARANTEE OF INTERESTS . The Board of Directors and the Company do not guarantee the Common Stock of the Company from loss or depreciation.
17.
INFORMATION CONFIDENTIAL . As partial consideration for the granting of the award under the Notice and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Notice; provided, however, that such information may be disclosed as required by law and may be given in

5

confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.
18.
SUCCESSORS . These Terms and Conditions and the Notice shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
19.
SEVERABILITY . If any provision of these Terms and Conditions or the Notice is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions and the Notice shall be construed and enforced as if the illegal or invalid provision had never been included.
20.
HEADINGS . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
21.
GOVERNING LAW . All questions arising with respect to the provisions of these Terms and Conditions and the Notice shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock.
22.
CONSENT TO TEXAS JURISDICTION AND VENUE . You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the RSUs, these Terms and Conditions, or the Notice. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.
23.
AMENDMENT . These Terms and Conditions and the Notice may be amended by the Committee at any time; provided , that no such amendment shall adversely affect the RSUs in any material way, without your written consent.
24.
MISCELLANEOUS . The Notice is awarded pursuant to and is subject to all of the terms and conditions of the Plan (including any amendments thereto) and these Terms and Conditions. In the event of a conflict between these Terms and Conditions, the Plan and the Notice, the Plan provisions will control. The term “ you ” and “ your ” refer to the Awardee named in the Notice. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Notice.


6

EXHIBIT A
NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (this “ Agreement ”) is dated as of [date of Qualified Retirement] and is by and between Newfield Exploration Company, a Delaware corporation (the “ Company ”), and ________________, a retiring employee of the Company (“ Retiring Employee ”).
R E C I T A L S:
WHEREAS , Retiring Employee has been granted the awards set forth on Annex A hereto (the “ Awards ”) by the Company;
WHEREAS , pursuant to the terms of the agreements governing the Awards (the “ Award Agreements ”), Retiring Employee is entitled to certain benefits (the “ Retirement Benefits ”) if Retiring Employee’s termination of employment with the Company is by reason of a “Qualified Retirement” (as defined in each of the Award Agreements); and
WHEREAS , it is a condition to Retiring Employee being entitled to the Retirement Benefits that Retiring Employee enter into a Non-Compete Agreement substantially in the form of this Agreement;
NOW, THEREFORE , in consideration of the premises, the Retirement Benefits to be provided to Retiring Employee and the other covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.     Definitions; Rules of Construction .
(a)     Definitions . The following capitalized terms shall have the meaning given to it below:
“ Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person and, if such specified Person is a natural person, the immediate family members of such specified Person. “Control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or manager, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“ Competing Business ” means any business involved in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect crude oil or natural gas

A-1

within the Covered Area; provided, however, that “Competing Business” shall not include any business that provides services solely to assist other Persons in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas but does not itself acquire or develop, or explore for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas within the Covered Area.
“ Covered Area ” means (i) the United States of America and (ii) any foreign jurisdiction (A) in which the Company is operating or (B) with respect to which the Company is actively considering for operations, in the case of clause (ii) only, as of the date hereof.
“ Person ” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
“ Term ” means the period commencing on the date hereof and ending on the date on which Retiring Employee attains the age of 62.
(b)     Rules of Construction . For purposes of this Agreement (i) unless the context otherwise requires, (A) “or” is not exclusive; (B) words applicable to one gender shall be construed to apply to each gender; (C) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement and (D) the term “Section” refers to the specified Section of this Agreement, (ii) the Section and other headings and titles contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (iii) a reference to any Person includes such Person’s successors and assigns.
2.     Non-Competition and Non-Solicitation . During the Term, Retiring Employee covenants and agrees with the Company that Retiring Employee shall not, directly or indirectly, individually, through an Affiliate or otherwise (including as an officer, director, employee or consultant) own an interest or engage in, participate with or provide any financial or other support, assistance or advice to any Competing Business; provided , however , that Retiring Employee may (a) when taken together with the ownership, directly or indirectly, of all of his Affiliates, own, solely as an investment, up to 5% of any class of securities of any Person if such securities are listed on any national securities exchange or traded on the Nasdaq Stock Market so long as Retiring Employee is not a director, officer, employee of, or analogously employed or engaged by, such Person or any of such Person’s Affiliates or (b) own securities issued by the Company. In addition, Retiring Employee agrees that during the Term he shall not, directly or indirectly: (i) interfere with the relationship of the Company or any Affiliate of the Company, or endeavor to entice away from the Company or any Affiliate of the Company, any individual or entity who was or is a material customer or material supplier of, or who has maintained a material business relationship with, the Company or its Affiliates, (ii) establish (or take preliminary steps to establish) a business with, or cause or attempt to cause others to establish (or take preliminary steps to establish) a business with, any employee or agent of the Company or any of its Affiliates, if such business competes with or will compete with the Company or any of its Affiliates, or (iii) employ, engage as a consultant or adviser, or solicit employment, engagement as a consultant or adviser, of any employee or agent of the Company or any of its Affiliates, or cause or attempt to cause any individual or entity to do any of the foregoing. Retiring Employee agrees that the restrictions contained in this Section 2 are

A-2

necessary to protect Company’s goodwill and confidential information the Company has provided to Retiring Employee.
3.     Specific Performance; Injunctive Relief . Retiring Employee specifically acknowledges and agrees that the Company, in providing the Retirement Benefits, has relied on the agreements and covenants of Retiring Employee contained in this Agreement and that the terms of this Agreement are reasonable and necessary for the protection of the Company. Retiring Employee specifically acknowledges and agrees that any breach or threatened breach by Retiring Employee of his or her agreements and covenants contained herein would cause the Company irreparable harm not compensable solely in damages. Retiring Employee further acknowledges and agrees that it is essential to the effective enforcement of this Agreement that Company be entitled to the remedies of specific performance, injunctive relief and similar remedies and Retiring Employee agrees to the granting of any such remedies upon a breach or threatened breach by Retiring Employee of any of the terms hereof. The Company also shall be entitled to pursue any other remedies (at law or in equity) available to it for any breach or threatened breach of this Agreement, including the recovery of money damages.
4.     Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. The parties agree to cooperate in any revision of this Agreement that may be necessary to meet the requirements of law. The parties further agree that a court may revise any provision of this Agreement to render the Agreement enforceable to the maximum extent possible.
5.     Amendment; Modification; Waiver . No amendment or modification of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Company and Retiring Employee, except that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions. No single waiver of any of the provisions of this Agreement shall be deemed to or shall constitute, absent an express statement otherwise, a continuous waiver of such provision or a waiver of any other provision hereof (whether or not similar).
6.     Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any covenant or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available.
7.     No Effect on Retiring Employee’s Obligations . This Agreement shall in no way affect any other duties or obligations Retiring Employee owes to the Company by contract, law or otherwise.
8.     Legal Fees . If either party hereto institutes any legal proceedings against the other for breach of any provision hereof, the losing party shall be liable for the costs and expenses of the prevailing party, including without limitation its reasonable attorneys’ fees.

A-3

9.     Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.     Governing Law; Consent to Jurisdiction and Venue . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas applicable to agreements made and to be performed wholly within that jurisdiction. Venue shall lie exclusively with the district courts of Montgomery County, Texas, and such courts shall have jurisdiction to hear all matters arising from this Agreement.

[ Signature page follows. ]

A-4

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by an authorized officer and Retiring Employee has executed this Agreement, in each case, as of the day and year first above written.


NEWFIELD EXPLORATION COMPANY



By:                           
Name:
Title:



RETIRING EMPLOYEE



                                                 
[Retiring Employee]    



A-5

ANNEX A

[insert list of awards]

 





















































A-6

Exhibit 10.2
NEWFIELD EXPLORATION COMPANY
2011 OMNIBUS STOCK PLAN

NOTICE OF RESTRICTED STOCK UNIT AWARD
TOTAL STOCKHOLDER RETURN (TSR)

                
Awardee
Date of Award:
February 10, 2016
Target Number of Restricted Stock Units:
_______________


    Effective as of the Date of Award set forth above (the “ Date of Award ” ), the Compensation & Management Development Committee (the “ Committee ”) of the Board of Directors of Newfield Exploration Company, a Delaware corporation (the “ Company ”), hereby awards to you, the above-named awardee, the target number of restricted stock units (the “ TSR Restricted Stock Units ”) set forth above (the “ Target Restricted Stock Units ” ), on the terms and conditions of the Newfield Exploration Company 2011 Omnibus Stock Plan, as amended and restated May 15, 2015 (the “ Plan ”), the attached Terms and Conditions (the “ Terms and Conditions ”), and this Notice of Restricted Stock Unit Award Total Stockholder Return (TSR) (the “ Notice ”).
The TSR Restricted Stock Units shall be subject to the prohibitions and restrictions set forth herein with respect to the sale or other disposition of such TSR Restricted Stock Units and the obligation to forfeit and surrender such TSR Restricted Stock Units to the Company (the “ Forfeiture Restrictions ”). The Forfeiture Restrictions shall lapse at the time and in the manner described in the attached Terms and Conditions. The number of TSR Restricted Stock Units that may become Earned Restricted Stock Units in respect of this award upon lapse of the Forfeiture Restrictions may range from 0% to 200% of the Target Restricted Stock Units, as described in the Terms and Conditions.
Following the lapse of the Forfeiture Restrictions applicable to the TSR Restricted Stock Units, the Company shall issue to you, at the time of payment provided in the attached Terms and Conditions, one share of the Company’s common stock, $0.01 par value per share (the “ Common Stock ”), in exchange for each Earned Restricted Stock Unit and thereafter you shall have no further rights with respect to the TSR Restricted Stock Units, and such shares of the Common Stock shall be transferable by you (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable federal or state securities law).
Notwithstanding any provisions of the Plan, shares of Common Stock shall be transferred at the time(s) specified in this Notice and the Terms and Conditions.
The TSR Restricted Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by will or the

1


applicable laws of descent and distribution). Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Notice or the Terms and Conditions shall be void and the Company shall not be bound thereby. Any shares of Common Stock issued to you in exchange for the Earned Restricted Stock Units may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable federal or state securities laws. You also agree that (a) the Company may refuse to cause the transfer of any such shares of the Common Stock to be registered on the stock register of the Company if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable federal or state securities law; and (b) the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of such shares of the Common Stock.
The shares of Common Stock that may be issued under the Plan are registered with the Securities and Exchange Commission under a Registration Statement on Form S-8.
Capitalized terms that are not defined herein shall have the meaning ascribed to such terms in the Plan or the Terms and Conditions.
In accepting the award of the TSR Restricted Stock Units you accept and agree to be bound by all the terms and conditions of the Plan, this Notice and the Terms and Conditions. A copy of the Plan will be furnished to you upon request.
IN WITNESS WHEREOF , the Committee has caused this Notice to be duly executed by an authorized officer of the Company, and Awardee has executed this Notice, all as of the date first above written.
NEWFIELD EXPLORATION COMPANY


By:                         
Name:
Title:

AWARDEE

                                                     
[Awardee]


2






NEWFIELD EXPLORATION COMPANY
2011 OMNIBUS STOCK PLAN
TERMS AND CONDITIONS
1.
CONTINUOUS EMPLOYMENT REQUIREMENT. If, prior to the last day of the Performance Period, your employment with the Company and all direct and indirect wholly owned subsidiaries (collectively, the “ Company Group ”) is terminated for any reason other than your death, Disability or Qualified Retirement, you shall, for no consideration, forfeit to the Company all TSR Restricted Stock Units to the extent then subject to Forfeiture Restrictions (the “ Continuous Employment Requirement ”). For the avoidance of doubt, if before the end of the Performance Period you incur a Separation From Service due to your death, Disability or Qualified Retirement, then you shall be deemed to have satisfied the Continuous Employment Requirement and to have earned the number of Earned Restricted Stock Units that you would have actually earned had you remained employed through the end of the Performance Period determined in accordance with Section 2 as of the end of the Performance Period.
2.
TSR VESTING OBJECTIVE. If the Continuous Employment Requirement is satisfied, the Forfeiture Restrictions applicable to the award evidenced by the Notice of Restricted Stock Unit Award Total Stockholder Return (TSR) (the “ Notice ”) to which these Terms and Conditions are attached (the “ Terms and Conditions ”), shall lapse and you shall be entitled to receive Common Stock in respect of Earned Restricted Stock Units upon the Committee’s certification of its determination of the Company’s TSR Rank in respect of the Performance Period with regard to Total Stockholder Return as compared to the Total Stockholder Return of the Peer Companies as outlined in these Terms and Conditions (the “ TSR Vesting Objective ”). The Committee shall have the sole discretion for determining the level of achievement with respect to the TSR Vesting Objective and the resulting number of Earned Restricted Stock Units, and any such determinations shall be conclusive.
3.
DEFINITIONS. For purposes of these Terms and Conditions, the following terms shall have the indicated meanings:
(a)    “ Disability ” shall have the meaning ascribed to that term under Section 409A.     
(b)    “ Earned Restricted Stock Units ” means the number of TSR Restricted Stock Units determined to be earned for the Performance Period, subject to your satisfaction of the Continuous Employment Requirement, which shall be determined as follows:

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TSR Rank
Percentage of Target Restricted Stock Units that Become Earned Restricted Stock Units
First Quartile
1-3
200%
4
180%
5
160%
Second Quartile
6
140%
7
130%
8
120%
9
110%
10
100%
Third Quartile
11
90%
12
80%
13
70%
14
60%
15
50%
Fourth Quartile
16-20
0%

Any TSR Restricted Stock Units that do not become Earned Restricted Stock Units as of the end of the Performance Period shall terminate and be cancelled upon the expiration of the Performance Period.

(c)    “ Peer Company ” means (A) one of the following companies (or their publicly-held successors, whether it be through a transaction involving cash, stock or any combination thereof, as of the closing date of such purchase, merger or combination thereof, or if the successor is not a publicly-held successor (e.g. private-equity firm), the peer company shall be replaced by the EPX Index (aka Sig Oil Exploration & Production) as of the closing date of the purchase, merger or combination thereof), that (B) has had its primary common equity security listed or traded on a national securities exchange throughout the Performance Period:
Bill Barrett Corp.
Energen Corp.
PDC Energy, Inc.
Carrizo Oil & Gas Inc.
EP Energy
Pioneer Natural Resources Co.
Chesapeake Energy Corp.
Jones Energy
QEP Resources, Inc.
Cimarex Energy Co.
Marathon Oil Corp.
SM Energy Co.
Concho Resources Inc.
Matador Resources Co.
Whiting Petroleum Corp.
Continental Resources Inc.
Noble Energy, Inc.
WPX Energy, Inc.
Devon Energy Corp.
 
 

(d)    “ Performance Period ” means the period commencing January 1, 2016 and ending December 31, 2018.

2


(e)    “ Qualified Retirement ” means you (i) either are (A) at least age 60 and sign a non-compete agreement (the form of which is attached hereto as Exhibit A ) that is effective until your reaching age 62 or (B) are at least age 62, (ii) have at least 10 years of Qualified Service and (iii) provide the Requisite Notice.
(f)     “ Qualified Service ” means your continuous employment with the Company or a subsidiary of the Company during the time that such subsidiary is, directly or indirectly, a wholly owned subsidiary of the Company, plus any additional service credit granted to you (or a group of employees of which you are a member) by the Board of Directors of the Company.
(g)      “ Requisite Notice ” means (i) if you are an officer of the Company, at least six months prior written notice to the Board of Directors of the Company or (ii) otherwise, at least three months prior written notice to the chief executive officer of the Company.     
(h)    “ Section 409A ” means section 409A of the Internal Revenue Code of 1986, as amended, and the final Department of Treasury regulations issued thereunder.
(i)    “ Separation From Service ” has the meaning ascribed to that term in Section 409A.     
(j)    “ TSR Rank ” means the Company’s rank from one to the number that is equal to one plus the total number of Peer Companies (including the EPX Index, if applicable) at the end of the Performance Period, with the Company and each such Peer Company (including the EPX Index, if applicable) together ranked from best to worst based on the Total Stockholder Return of the Company and each such Peer Company (including the EPX Index, if applicable) for the Performance Period.
(k)    “ Total Stockholder Return ” for the Performance Period means the rate of return (expressed as a percentage) achieved with respect to the Common Stock of the Company or the primary common equity security of each Peer Company (including the EPX Index, if applicable): (A) if $100 was invested in each such security or index on January 1, 2016 assuming a purchase price equal to the average closing price of each such security or index for all the trading days during the month of January 2016; (B) if the record date for any dividend to be paid with respect to a particular security occurs during the Performance Period, such dividend was reinvested in such security as of the ex-dividend date for such dividend (using the closing price of such security on such ex-dividend date); and (C) if the valuation of such security or such index at the end of the Performance Period is assumed to be the average closing price of each such security or index for all of the trading days during the month of December 2018 (the “ Closing Value ”). For clarification purposes, if a Peer Company merges or is acquired by another publicly-held company, or if a Peer Company is replaced by the EPX Index, the calculation of Total Stockholder Return for such Peer Company shall be the Total Stockholder Return of such company through the closing date of the corresponding acquisition or merger, and after factoring in the applicable conversion into the successor publicly-held company, the Total Stockholder Return of such successor publicly-held company or EPX Index on the trading date immediately following the closing

3


date of the corresponding acquisition or merger going forward. In addition, notwithstanding anything herein to the contrary, if a Peer Company ceases to be a publicly traded company at any time during the Performance Period due to or following its bankruptcy or de-listing, such company shall remain a Peer Company with its Total Stockholder Return automatically deemed to occupy the lowest available rank (i.e., if a Peer Company has been de-listed or has filed bankruptcy, then any subsequent Peer Company to be de-listed or to file bankruptcy will occupy the next to lowest rank) among the Peer Companies (including the EPX Index, if applicable, and the Company) for the Performance Period.
4.
CHANGE OF CONTROL . The impact of a Change of Control of the Company on the TSR Restricted Stock Units shall be determined under the provisions of this Section 4 rather than under any provisions of the Plan dealing with vesting or the lapse of forfeiture restrictions. If a Change of Control of the Company occurs before the end of the Performance Period and you do not terminate employment with the Company Group before the date the Change of Control of the Company is consummated, then if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, upon the consummation of such Change of Control, you shall be deemed to have earned a number TSR Restricted Stock Units equal to the number of Earned Restricted Stock Units you would have earned in accordance with Section 2, but assuming that (a) the Performance Period ended on the date the Change of Control of the Company is consummated, (b) the determination of whether, and to what extent, the TSR Vesting Objective is achieved shall be based on actual performance through the date the Change of Control of the Company is consummated, and (c) the Closing Value for the Company and each Peer Company (including the EPX Index, if applicable) is equal to the average closing price of the Common Stock or the primary common equity security of each Peer Company, as applicable, for all trading days during the 30-day period ending on the date the Change of Control of the Company is consummated, instead of calculating the Closing Value as of December 31, 2018.
5.
PAYMENT IN SETTLEMENT OF EARNED RSUS . The Committee shall determine and certify of the level of achievement of the TSR Vesting Objective as soon as administratively practicable following the end of the Performance Period (or shortened Performance Period, in the event of a Change of Control). If you have satisfied the Continuous Employment Requirement, payment in respect of Earned Restricted Stock Units shall be made to you as soon as practicable, but no later than 60 days following, as applicable (a) the last day of the Performance Period (including in the case of your Separation From Service due to your death, Disability or Qualified Retirement); or (b) the date the Change of Control of the Company is consummated if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, in the case of vesting under Section 4. As provided in the Notice, payment in settlement of Earned Restricted Stock Units shall be made in the form of one share of Common Stock in exchange for each Earned Restricted Stock Unit, subject to satisfaction of applicable withholding and other taxes as provided in Section 7.

4


6.
PROHIBITED ACTIVITY . Notwithstanding any other provision of these Terms and Conditions or the Notice, if you engage in a “Prohibited Activity,” as described below, while employed by one or more members of the Company Group or within two years after the date your employment with the Company Group terminates, then your right to receive the shares of the Common Stock, to the extent still outstanding at that time, shall be completely forfeited. A " Prohibited Activity " shall be deemed to have occurred, as determined by the Committee in its sole and absolute discretion, if you divulge any non-public, confidential or proprietary information of the Company Group, but excluding information that (a) becomes generally available to the public other than as a result of your public use, disclosure, or fault, or (b) becomes available to you on a non-confidential basis after your employment termination date from a source other than a member of the Company Group prior to the public use or disclosure by you, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.
7.
TAX WITHHOLDING . Unless otherwise specifically provided otherwise in the future by an action of the Committee (which action may not be delegated to management), the Committee hereby authorizes and specifically directs the Company to reduce the number of shares of Common Stock deliverable upon the lapse of the Forfeiture Restrictions applicable to the TSR Restricted Stock Units that become Earned Restricted Stock Units by the minimum number of shares of Common Stock necessary to satisfy the Company’s Minimum Statutory Withholding Obligation in accordance with the Plan; provided , that where the Fair Market Value of the shares of Common Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares of Common Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and you must satisfy the remaining Minimum Statutory Withholding Obligation through the payment of cash or check or withholding of cash amounts due in the appropriate amount and in compliance with the terms of the Plan, the Notice, and these Terms and Conditions.
8.
NONTRANSFERABILITY. Neither the TSR Restricted Stock Units, the Notice nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution.
9.
CAPITAL ADJUSTMENTS AND REORGANIZATIONS. The existence of the TSR Restricted Stock Units shall not affect in any way the right or power of the Company or any company the stock of which is awarded pursuant to the Notice to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.
10.
RESTRICTED STOCK UNITS DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER . You shall not have the voting rights or any of the other rights, powers or privileges of a holder of the Common Stock with respect to the TSR Restricted Stock

5


Units that are awarded hereby. Only after a share of the Common Stock is issued in exchange for an Earned Restricted Stock Unit will you have all of the rights of a stockholder with respect to such share of Common Stock issued in exchange for the Earned Restricted Stock Unit.
11.
NO ADVICE REGARDING RESTRICTED STOCK UNIT AWARD. You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “ Company Parties ”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the TSR Restricted Stock Units, and (b) in deciding to accept the TSR Restricted Stock Units, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the TSR Restricted Stock Units.
12.
EMPLOYMENT RELATIONSHIP. For purposes of the Notice and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of the Company Group. The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship and the cause of such termination under the Plan, and the Committee’s determination shall be final and binding on all Persons. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the TSR Restricted Stock Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
13.
FURNISH INFORMATION . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
14.
NOT AN EMPLOYMENT AGREEMENT . The Notice and the Terms and Conditions are not an employment agreement, and no provision of the Notice or these Terms and Conditions shall be construed or interpreted to create an employment relationship between you and any member of the Company Group or guarantee the right to remain employed by any member of the Company Group for any specified term.
15.
SECURITIES ACT LEGEND. If you are an officer or affiliate of the Company under the Securities Act of 1933, as amended (the “ Securities Act ”), you consent to the placing on

6


any certificate for the shares of the Common Stock issued under the Notice an appropriate legend restricting resale or other transfer of such shares except in accordance with the Securities Act and all applicable rules thereunder.
16.
LIMIT OF LIABILITY . Under no circumstances will any member of the Company Group be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any Person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Notice, the Terms and Conditions or the TSR Restricted Stock Units granted thereunder.
17.
EXECUTION OF RECEIPTS AND RELEASES . Any payment of cash or any issuance or transfer of shares of Common Stock or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment or issuance to execute a release and receipt therefor in such form as it shall determine.
18.
FUNDING. You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Notice and the Terms and Conditions. Your right to receive payments under the Notice and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
19.
NO GUARANTEE OF INTERESTS . The Board of Directors and the Company do not guarantee the Common Stock of the Company from loss or depreciation.
20.
INFORMATION CONFIDENTIAL . As partial consideration for the granting of the award under the Notice and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Notice; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.
21.
SUCCESSORS . These Terms and Conditions and the Notice shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
22.
SEVERABILITY . If any provision of these Terms and Conditions or the Notice is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions

7


and the Notice shall be construed and enforced as if the illegal or invalid provision had never been included.
23.
HEADINGS . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
24.
GOVERNING LAW . All questions arising with respect to the provisions of these Terms and Conditions and the Notice shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law. The obligation of the Company to sell and deliver Common Stock is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Common Stock.
25.
CONSENT TO TEXAS JURISDICTION AND VENUE . You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the TSR Restricted Stock Units, these Terms and Conditions, or the Notice. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.
26.
AMENDMENT . These Terms and Conditions and the Notice may be amended by the Committee at any time; provided , that no such amendment shall adversely affect the TSR Restricted Stock Units in any material way, without your written consent.
27.
MISCELLANEOUS . The Notice is awarded pursuant to and is subject to all of the terms and conditions of the Plan (including any amendments thereto) and these Terms and Conditions. In the event of a conflict between these Terms and Conditions, the Plan and the Notice, the Plan provisions will control. The term “ you ” and “ your ” refer to the Awardee named in the Notice. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Plan or the Notice.



8


EXHIBIT A
NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (this “ Agreement ”) is dated as of [date of Qualified Retirement] and is by and between Newfield Exploration Company, a Delaware corporation (the “ Company ”), and ________________, a retiring employee of the Company (“ Retiring Employee ”).
R E C I T A L S:
WHEREAS , Retiring Employee has been granted the awards set forth on Annex A hereto (the “ Awards ”) by the Company;
WHEREAS , pursuant to the terms of the agreements governing the Awards (the “ Award Agreements ”), Retiring Employee is entitled to certain benefits (the “ Retirement Benefits ”) if Retiring Employee’s termination of employment with the Company is by reason of a “Qualified Retirement” (as defined in each of the Award Agreements); and
WHEREAS , it is a condition to Retiring Employee being entitled to the Retirement Benefits that Retiring Employee enter into a Non-Compete Agreement substantially in the form of this Agreement;
NOW, THEREFORE , in consideration of the premises, the Retirement Benefits to be provided to Retiring Employee and the other covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.     Definitions; Rules of Construction .
(a)     Definitions . The following capitalized terms shall have the meaning given to it below:
“ Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person and, if such specified Person is a natural person, the immediate family members of such specified Person. “Control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or manager, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“ Competing Business ” means any business involved in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect crude oil or natural gas

A-1


within the Covered Area; provided, however, that “Competing Business” shall not include any business that provides services solely to assist other Persons in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas but does not itself acquire or develop, or explore for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas within the Covered Area.
“ Covered Area ” means (i) the United States of America and (ii) any foreign jurisdiction (A) in which the Company is operating or (B) with respect to which the Company is actively considering for operations, in the case of clause (ii) only, as of the date hereof.
“ Person ” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
“ Term ” means the period commencing on the date hereof and ending on the date on which Retiring Employee attains the age of 62.
(b)     Rules of Construction . For purposes of this Agreement (i) unless the context otherwise requires, (A) “or” is not exclusive; (B) words applicable to one gender shall be construed to apply to each gender; (C) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement and (D) the term “Section” refers to the specified Section of this Agreement, (ii) the Section and other headings and titles contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (iii) a reference to any Person includes such Person’s successors and assigns.
2.     Non-Competition and Non-Solicitation . During the Term, Retiring Employee covenants and agrees with the Company that Retiring Employee shall not, directly or indirectly, individually, through an Affiliate or otherwise (including as an officer, director, employee or consultant) own an interest or engage in, participate with or provide any financial or other support, assistance or advice to any Competing Business; provided , however , that Retiring Employee may (a) when taken together with the ownership, directly or indirectly, of all of his Affiliates, own, solely as an investment, up to 5% of any class of securities of any Person if such securities are listed on any national securities exchange or traded on the Nasdaq Stock Market so long as Retiring Employee is not a director, officer, employee of, or analogously employed or engaged by, such Person or any of such Person’s Affiliates or (b) own securities issued by the Company. In addition, Retiring Employee agrees that during the Term he shall not, directly or indirectly: (i) interfere with the relationship of the Company or any Affiliate of the Company, or endeavor to entice away from the Company or any Affiliate of the Company, any individual or entity who was or is a material customer or material supplier of, or who has maintained a material business relationship with, the Company or its Affiliates, (ii) establish (or take preliminary steps to establish) a business with, or cause or attempt to cause others to establish (or take preliminary steps to establish) a business with, any employee or agent of the Company or any of its Affiliates, if such business competes with or will compete with the Company or any of its Affiliates, or (iii) employ, engage as a consultant or adviser, or solicit employment, engagement as a consultant or adviser, of any employee or agent of the Company or any of its Affiliates, or cause or attempt to cause any individual or entity to do any of the foregoing. Retiring Employee agrees that the restrictions contained in this Section 2 are

A-2


necessary to protect Company’s goodwill and confidential information the Company has provided to Retiring Employee.
3.     Specific Performance; Injunctive Relief . Retiring Employee specifically acknowledges and agrees that the Company, in providing the Retirement Benefits, has relied on the agreements and covenants of Retiring Employee contained in this Agreement and that the terms of this Agreement are reasonable and necessary for the protection of the Company. Retiring Employee specifically acknowledges and agrees that any breach or threatened breach by Retiring Employee of his or her agreements and covenants contained herein would cause the Company irreparable harm not compensable solely in damages. Retiring Employee further acknowledges and agrees that it is essential to the effective enforcement of this Agreement that Company be entitled to the remedies of specific performance, injunctive relief and similar remedies and Retiring Employee agrees to the granting of any such remedies upon a breach or threatened breach by Retiring Employee of any of the terms hereof. The Company also shall be entitled to pursue any other remedies (at law or in equity) available to it for any breach or threatened breach of this Agreement, including the recovery of money damages.
4.     Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. The parties agree to cooperate in any revision of this Agreement that may be necessary to meet the requirements of law. The parties further agree that a court may revise any provision of this Agreement to render the Agreement enforceable to the maximum extent possible.
5.     Amendment; Modification; Waiver . No amendment or modification of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Company and Retiring Employee, except that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions. No single waiver of any of the provisions of this Agreement shall be deemed to or shall constitute, absent an express statement otherwise, a continuous waiver of such provision or a waiver of any other provision hereof (whether or not similar).
6.     Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any covenant or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available.
7.     No Effect on Retiring Employee’s Obligations . This Agreement shall in no way affect any other duties or obligations Retiring Employee owes to the Company by contract, law or otherwise.
8.     Legal Fees . If either party hereto institutes any legal proceedings against the other for breach of any provision hereof, the losing party shall be liable for the costs and expenses of the prevailing party, including without limitation its reasonable attorneys’ fees.

A-3


9.     Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.     Governing Law; Consent to Jurisdiction and Venue . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas applicable to agreements made and to be performed wholly within that jurisdiction. Venue shall lie exclusively with the district courts of Montgomery County, Texas, and such courts shall have jurisdiction to hear all matters arising from this Agreement.

[ Signature page follows. ]

A-4


IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by an authorized officer and Retiring Employee has executed this Agreement, in each case, as of the day and year first above written.


NEWFIELD EXPLORATION COMPANY




By:                           
Name:
Title:



RETIRING EMPLOYEE



                                                 
[Retiring Employee]    




A-5


ANNEX A

[insert list of awards]





A-6



Exhibit 10.3
NEWFIELD EXPLORATION COMPANY
CASH-SETTLED RESTRICTED STOCK UNIT AWARD AGREEMENT

                
Awardee
Date of Award:
February 10, 2016
Vesting Dates:
First Vesting Date: August 15, 2016
Second Vesting Date: August 15, 2017
Third Vesting Date: August 15, 2018
Fourth Vesting Date: February 15, 2019
Number of Restricted Stock Units:
__________________
Effective as of the Date of Award set forth above (the “ Date of Award ” ), the Compensation & Management Development Committee (the “ Committee ”) of the Board of Directors of Newfield Exploration Company, a Delaware corporation (the “ Company ”), hereby awards to you, the above-named awardee, that number of Cash-Settled Restricted Stock Units set forth above, on the terms and conditions of the attached Terms and Conditions (the “ Terms and Conditions ”) and this Cash-Settled Restricted Stock Unit Award Agreement (the “ Agreement ”).
A “ Cash-Settled Restricted Stock Unit ” is a right to receive a cash payment equal to the Fair Market Value (as defined below) of a share of the Company’s common stock, $.01 par value per share (the “ Common Stock ”), on the applicable Vesting Date.
The Cash-Settled Restricted Stock Units shall be subject to the prohibitions and restrictions set forth herein with respect to the sale or other disposition of such Cash-Settled Restricted Stock Units and the obligation to forfeit and surrender such Cash-Settled Restricted Stock Units to the Company (the “ Forfeiture Restrictions ”). The Forfeiture Restrictions shall lapse as to the Cash-Settled Restricted Stock Units that are awarded hereby in accordance with the following schedule provided that your employment with the Company and its direct and indirect wholly-owned subsidiaries (collectively, the “ Company Group ”) has not terminated prior to the applicable Vesting Date:
(a)
on the First Vesting Date, the Forfeiture Restrictions shall lapse as to one-fourth of the Cash-Settled Restricted Stock Units subject to this Agreement; and
(b)
on each succeeding Vesting Date, the Forfeiture Restrictions shall lapse as to an additional one-fourth of the Cash-Settled Restricted Stock Units subject to this Agreement, so that on the Fourth Vesting Date the Forfeiture Restrictions shall have lapsed as to all of the Cash-Settled Restricted Stock Units subject to this Agreement.
If a Change of Control (as that term is defined below) of the Company occurs or if you die, become Disabled or your employment terminates by reason of a Qualified Retirement, in each case,

1



before the Fourth Vesting Date, your rights to the Cash-Settled Restricted Stock Units under this Agreement will be determined as provided in the attached Terms and Conditions.
Following the lapse of the Forfeiture Restrictions applicable to a Cash-Settled Restricted Stock Unit, the Company shall pay to you, at the time of payment provided in the attached Terms and Conditions, an amount in cash equal to the Fair Market Value of one share of the Common Stock on the applicable Vesting Date in exchange for each such vested Cash-Settled Restricted Stock Unit and thereafter you shall have no further rights with respect to such Cash-Settled Restricted Stock Unit. The Cash-Settled Restricted Stock Units may be not sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by will or the applicable laws of descent and distribution). Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement or the Terms and Conditions shall be voided and the Company shall not be bound thereby.
For purposes of this Agreement and the Terms and Conditions:
(a) “ Change of Control ” means the occurrence of any of the following events: (i) the Company is not the surviving Person in any merger, consolidation or other reorganization (or survives only as a subsidiary of another Person), (ii) the consummation of a merger or consolidation of the Company with another Person and as a result of such merger or consolidation less than fifty percent (50%) of the outstanding voting securities of the surviving or resulting corporation will be issued in respect of the capital stock of the Company, (iii) the Company sells, leases or exchanges all or substantially all of its assets to any other Person, (iv) the Company is to be dissolved and liquidated, (v) any Person, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including the power to vote) of more than fifty percent (50%) of the outstanding shares of the Company’s voting stock (based upon voting power) or (vi) as a result of or in connection with a contested election of directors, the individuals who were directors of the Company before such election cease to constitute a majority of the Board. The definition of “Change of Control” shall be limited to the extent necessary to comply with the definition of “change in the ownership or effective control” of the corporation, or “change in the ownership of a substantial portion of the assets” of the corporation, within the meaning of section 409A of the Internal Revenue Code of 1986, as amended, and the final Department of Treasury Regulations issued thereunder (“ Section 409A ”).
(b) “ Person ” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
(c) “ Fair Market Value ” means, as of any specified date, if the Common Stock is traded on a national stock exchange, (i) the mean of the high and low sales prices of the Common Stock reported on the stock exchange composite tape on that date (or such other reporting service approved by the Committee); or (ii) if no prices are reported on that date, on the last preceding date on which such prices of the Common Stock were so reported. If the Common Stock is traded over the counter at the time a determination of its Fair Market Value is required to be made hereunder, its Fair Market Value shall be deemed to be equal to the average between (A) the reported high and low price or (B) the closing bid and asked prices, as applicable, of Common Stock on the most recent date on which Common Stock was publicly traded. If the Common Stock is not publicly traded at the time a determination of its Fair Market Value is required to be made hereunder, the determination of its Fair Market Value shall be made by the Committee in such manner as it deems appropriate, which

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method or manner shall comply with the requirements of a reasonable valuation method as described under Section 409A.
If during the period in which you hold the Cash-Settled Restricted Stock Units, the Company pays a dividend in shares of the Common Stock with respect to the outstanding shares of the Common Stock, then the Company will increase the number of Cash-Settled Restricted Stock Units that have not then been previously exchanged by the Company for the payment described above by an amount equal to the product of (a) the number of Cash-Settled Restricted Stock Units that have not been forfeited to or exchanged by the Company and (b) the number of shares of the Common Stock paid by the Company per share of the Common Stock (collectively, the “ Stock Dividend Restricted Stock Units ”). Each Stock Dividend Restricted Stock Unit will be subject to same Forfeiture Restrictions and other restrictions, limitations and conditions applicable to the Cash-Settled Restricted Stock Unit for which such Stock Dividend Restricted Stock Unit was awarded and will be exchanged for the payment described above at the same time and on the same basis as such Cash-Settled Restricted Stock Unit.
Capitalized terms that are not defined herein shall have the meaning ascribed to such terms in the Terms and Conditions.
In accepting the award of the Cash-Settled Restricted Stock Units, you accept and agree to be bound by all the terms and conditions of this Agreement and the Terms and Conditions.

IN WITNESS WHEREOF , the Committee has caused this Agreement to be duly executed by an authorized officer of the Company, and Awardee has executed this Agreement, all as of the date first above written.

NEWFIELD EXPLORATION COMPANY



By:                         
Name:
Title:


AWARDEE
                        
                                                     
[Awardee]

3






NEWFIELD EXPLORATION COMPANY
CASH-SETTLED RESTRICTED STOCK UNIT AWARD
TERMS AND CONDITIONS
1.
TERMINATION OF EMPLOYMENT/CHANGE OF CONTROL. The following provisions will apply in the event your employment with the Company Group terminates, or a Change of Control of the Company occurs, in each case, prior to the Fourth Vesting Date specified in the Cash-Settled Restricted Stock Unit Award Agreement (the “ Agreement ”) to which these Terms and Conditions are attached (the “ Terms and Conditions ”).
1.1      Termination Generally . If your employment with the Company Group terminates before the Fourth Vesting Date for any reason other than one of the reasons described in Sections 1.2 through 1.5 below, the Forfeiture Restrictions then applicable to the Cash-Settled Restricted Stock Units shall not lapse and the number of Cash-Settled Restricted Stock Units then subject to the Forfeiture Restrictions shall be forfeited to the Company on the date your employment terminates.
1.2      Change of Control . If a Change of Control of the Company occurs before the Fourth Vesting Date and you do not terminate employment with the Company Group before the date the Change of Control of the Company is consummated, then all remaining Forfeiture Restrictions then applicable to the Cash-Settled Restricted Stock Units shall lapse on the date the Change of Control of the Company is consummated if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A.
1.3      Disability . Notwithstanding any other provision of the Agreement or these Terms and Conditions to the contrary, if before the Fourth Vesting Date you incur a Separation From Service due to your having incurred a Disability, then all remaining Forfeiture Restrictions then applicable to the Cash-Settled Restricted Stock Units shall immediately lapse on the date you incur such Separation From Service due to your Disability. For purposes of the Terms and Conditions (a) you will be treated as having a “ Disability ” if you (i) are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) are, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company Group; and (b) “ Separation From Service ” has the meaning ascribed to that term in Section 409A.
1.4      Death . Notwithstanding any other provision of the Agreement or these Terms and Conditions to the contrary, if you die before the Fourth Vesting Date and before you have otherwise terminated employment with the Company Group, then all remaining Forfeiture

1


Restrictions then applicable to the Cash-Settled Restricted Stock Units shall immediately lapse on the date of the termination of your employment due to death.
1.5      Qualified Retirement . Notwithstanding any other provision of the Agreement or these Terms and Conditions to the contrary, if before the Fourth Vesting Date you incur a Separation From Service as a result of your Qualified Retirement, then the number of Cash-Settled Restricted Stock Units issued to you under the Agreement shall automatically be reduced (without further action by you and/or the Company) on the date you incur such Separation From Service to that number of Cash-Settled Restricted Stock Units determined under the following formula (the “ Retirement Adjusted Cash-Settled Restricted Stock Units ”):
(1) multiplied by (2) divided by (3)
where (1) is the number of the Cash-Settled Restricted Stock Units with respect to which Forfeiture Restrictions would have otherwise lapsed on the next Vesting Date following your Separation From Service due to Qualified Retirement, (2) is the number of days, if any, that have elapsed (excluding the date of your Separation From Service) since the most recent Vesting Date before the date you incur the Separation From Service due to Qualified Retirement, and (3) is the total number of days between (a) the most recent Vesting Date before the date you incur the Separation From Service due to Qualified Retirement and (b) the next Vesting Date following your Separation From Service due to Qualified Retirement.
The excess of (i) the number of Cash-Settled Restricted Stock Units that were originally awarded to you under the Agreement with respect to which Forfeiture Restrictions have not lapsed as of the date of your Separation From Service due to Qualified Retirement over (ii) the Retirement Adjusted Cash-Settled Restricted Stock Units shall be immediately forfeited on the date you incur the Separation From Service due to Qualified Retirement. The Forfeiture Restrictions with respect to the Retirement Adjusted Cash-Settled Restricted Stock Units shall immediately lapse on the date you incur the Separation From Service due to your Qualified Retirement.
For purposes of the Terms and Conditions (a) “ Qualified Retirement ” means you (i) either are (A) at least age 60 and sign a non-compete agreement (the form of which is attached hereto as Exhibit A ) that is effective until your reaching age 62 or (B) are at least age 62, (ii) have at least 10 years of Qualified Service and (iii) provide the Requisite Notice; (b) “ Qualified Service ” means your continuous employment with the Company or a subsidiary of the Company during the time that such subsidiary is, directly or indirectly, a wholly owned subsidiary of the Company plus any additional service credit granted to you (or a group of employees of which you are a member) by the Board of Directors of the Company; and (c) “ Requisite Notice ” means (i) if you are an officer of the Company, at least six months prior written notice to the Board of Directors of the Company or (ii) otherwise, at least three months prior written notice to the chief executive officer of the Company.
2.
PAYMENT IN SETTLEMENT OF VESTED CASH-SETTLED RSUS . Payment in respect of vested Cash-Settled Restricted Stock Units shall be made as soon as practicable,

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but no later than 60 days following, as applicable (a) the Vesting Dates specified in the Agreement on which the Forfeiture Restrictions applicable to the Cash-Settled Restricted Stock Units lapse; (b) the date the Change of Control of the Company is consummated if the Change of Control of the Company qualifies as a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation, within the meaning of Section 409A, in the case of vesting under Section 1.2; (c) the date of your death, in the case of vesting under Section 1.4; or (d) the date you incur a Separation From Service, in the case of vesting under Section 1.3 or 1.5; provided , that, if vesting occurs under Section 1.3 or 1.5 and you are a Specified Employee, payment in respect of vested Cash-Settled Restricted Stock Units shall instead be made on the date that is six months and one day following your Separation From Service; provided, however, that if you die before the expiration of such six-month delay period (if applicable) then payment shall be made on the date of your death. For purposes of the Terms and Conditions, “ Specified Employee ” means an individual who is, as of the date of the individual’s Separation From Service, a “specified employee” within the meaning of Section 409A, taking into account any elections made and procedures established in resolutions adopted by the Committee. As provided in the Agreement, payment in settlement of vested Cash-Settled Restricted Stock Units shall be made in the form of a cash payment equal to the Fair Market Value of one share of Common Stock on the applicable Vesting Date in exchange for each vested Cash-Settled Restricted Stock Unit, subject to satisfaction of applicable withholding and other taxes as provided in Section 4.
3.
PROHIBITED ACTIVITY . Notwithstanding any other provision of these Terms and Conditions or the Agreement, if you engage in a “Prohibited Activity,” as described below, while employed by one or more members of the Company Group or within two years after the date your employment with the Company Group terminates, then your right to receive a payment with respect to a Cash-Settled Restricted Stock Unit, to the extent still outstanding at that time, shall be completely forfeited. A “ Prohibited Activity " shall be deemed to have occurred, as determined by the Committee in its sole and absolute discretion, if you divulge any non-public, confidential or proprietary information of the Company Group, but excluding information that (a) becomes generally available to the public other than as a result of your public use, disclosure, or fault, or (b) becomes available to you on a non-confidential basis after your employment termination date from a source other than a member of the Company Group prior to the public use or disclosure by you, provided that such source is not bound by a confidentiality agreement or otherwise prohibited from transmitting the information by a contractual, legal or fiduciary obligation.
4.
TAX WITHHOLDING . To the extent that the receipt of the Cash-Settled Restricted Stock Units or the lapse of any applicable Forfeiture Restrictions or payment in settlement thereof results in income, wages or other compensation to you for any income, employment or other tax purposes with respect to which the Company has a withholding obligation, you shall deliver to the Company at the time of such receipt, lapse or payment, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if you fail to do so, the Company is authorized to withhold from any payment with respect to a Cash-Settled Restricted Stock Unit made under the

3



Agreement or from any cash or stock remuneration or other payment then or thereafter payable to you any tax required to be withheld by reason of such taxable income, wages or compensation including (without limitation) shares of the Common Stock sufficient to satisfy the withholding obligation.
5.
NONTRANSFERABILITY. Neither the Cash-Settled Restricted Stock Units, the Agreement nor the Terms and Conditions is transferable by you otherwise than by will or by the laws of descent and distribution. The community interest, if any, of any spouse of Awardee in any of the Cash-Settled Restricted Stock Units shall be subject to all of the terms, conditions and restrictions of the Agreement and the Terms and Conditions, and shall be forfeited and surrendered to the Company upon the occurrence of any of the events requiring Awardee’s interest in such Cash-Settled Restricted Stock Units to be so forfeited and surrendered pursuant to the Agreement or the Terms and Conditions.
6.
CAPITAL ADJUSTMENTS AND REORGANIZATIONS.
6.1      The existence of the Cash-Settled Restricted Stock Units shall not affect in any way the right or power of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in its capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.
6.2      If the Company shall effect a subdivision or consolidation of the Common Stock or other capital readjustment or other increase or reduction of the number of shares of the Common Stock outstanding (other than the payment of a stock dividend with respect to the Common Stock), without receiving compensation therefor in money, services or property, then the number of Cash-Settled Restricted Stock Units awarded under the Agreement shall be appropriately adjusted in the same manner as if you were the holder of an equivalent number of shares of the Common Stock immediately prior to the event requiring the adjustment.
7.
CASH-SETTLED RESTRICTED STOCK UNITS DO NOT AWARD ANY RIGHTS OF A STOCKHOLDER . You shall not have the voting rights or any of the other rights, powers or privileges of a holder of the Common Stock with respect to the Cash-Settled Restricted Stock Units that are awarded hereby.
8.
NO ADVICE REGARDING CASH-SETTLED RSUs. You acknowledge and agree that (a) you are not relying upon any written or oral statement or representation of the Company Group, or any of its respective employees, directors, officers, attorneys or agents (collectively, the “ Company Parties ”) regarding the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the Cash-Settled Restricted Stock Units, and (b) in deciding to accept the Cash-Settled Restricted Stock Units, you are relying on your own judgment and the judgment of the professionals of your choice with whom you have consulted. You hereby release, acquit and forever discharge the Company Parties from all actions, causes of actions, suits, debts, obligations,

4



liabilities, claims, damages, losses, costs and expenses of any nature whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax effects associated with your receipt and holding of, the lapse of Forfeiture Restrictions with respect to and the settlement of the Cash-Settled Restricted Stock Units.
9.
EMPLOYMENT RELATIONSHIP. For purposes of the Agreement and these Terms and Conditions, you shall be considered to be in the employment of the Company Group as long as you have an employment relationship with a member of the Company Group. The Committee shall determine any questions as to whether and when there has been a termination of such employment relationship and the cause of such termination and the Committee’s determination shall be final and binding on all Persons. The Committee may, in its sole discretion, determine that if you are on leave of absence for any reason you will be considered to still be in the employ of, or providing services for, the Company or the Company Group, provided that rights to the Cash-Settled Restricted Stock Units during a leave of absence will be limited to the extent to which those rights were earned or vested when the leave of absence began. Records of the Company or of the Company Group regarding your period of service, termination of service and the reason(s) therefor, and other matters shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.
10.
FURNISH INFORMATION . You agree to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.
11.
NOT AN EMPLOYMENT AGREEMENT . The Agreement and the Terms and Conditions are not an employment agreement, and no provision of the Agreement or these Terms and Conditions shall be construed or interpreted to create an employment relationship between you and any member of the Company Group or guarantee the right to remain employed by any member of the Company Group for any specified term.
12.
LIMIT OF LIABILITY . Under no circumstances will any member of the Company Group be liable for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any Person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought. No member of the Company Group and no member of the Board of Directors shall be liable for any act, omission or determination taken or made in good faith with respect to the Agreement, the Terms and Conditions or the Cash-Settled Restricted Stock Units granted thereunder.
13.
EXECUTION OF RECEIPTS AND RELEASES . Any payment of cash or other property to you, or to your legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such Persons hereunder. The Company may require you or your legal representative, heir, legatee or distributee, as a condition precedent to such payment to execute a release and receipt therefor in such form as it shall determine.

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14.
FUNDING. You shall have no right, title, or interest whatsoever in or to any assets of the Company or any investments that the Company may make to aid it in meeting its obligations under the Agreement and the Terms and Conditions. Your right to receive payments under the Agreement and the Terms and Conditions shall be no greater than the rights of an unsecured general creditor of the Company.
15.
NO GUARANTEE OF INTERESTS . The Board of Directors and the Company do not guarantee the Common Stock of the Company underlying the Cash-Settled Restricted Stock Units from loss or depreciation.
16.
INFORMATION CONFIDENTIAL . As partial consideration for the granting of the award under the Agreement and the Terms and Conditions, you hereby agree to keep confidential all information and knowledge, except that which has been disclosed in any public filings required by law, that you have relating to these Terms and Conditions or the Agreement; provided, however, that such information may be disclosed as required by law and may be given in confidence to your spouse and tax and financial advisors. In the event any breach of this promise comes to the attention of the Company, it shall take into consideration that breach in determining whether to recommend the grant of any future similar award to you, as a factor weighing against the advisability of granting any such future award to you.
17.
SUCCESSORS . These Terms and Conditions and the Agreement shall be binding upon you, your legal representatives, heirs, legatees and distributees, and upon the Company, its successors and assigns.
18.
SEVERABILITY . If any provision of these Terms and Conditions or the Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and these Terms and Conditions and the Agreement shall be construed and enforced as if the illegal or invalid provision had never been included.
19.
HEADINGS . The titles and headings of Sections are included for convenience of reference only and are not to be considered in construction of the provisions hereof.
20.
GOVERNING LAW . All questions arising with respect to the provisions of these Terms and Conditions and the Agreement shall be determined by application of the laws of Delaware, without giving any effect to any conflict of law provisions thereof, except to the extent Delaware state law is preempted by federal law.
21.
CONSENT TO TEXAS JURISDICTION AND VENUE . You hereby consent and agree that state courts located in Montgomery County, Texas and the United States District Court for the Southern District of Texas each shall have personal jurisdiction and proper venue with respect to any dispute between you and the Company arising in connection with the Cash-Settled Restricted Stock Units, these Terms and Conditions, or the Agreement. In any dispute with the Company, you will not raise, and you hereby expressly waive, any objection or defense to such jurisdiction as an inconvenient forum.

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22.
AMENDMENT . These Terms and Conditions and the Agreement may be amended by the Committee at any time; provided , that no such amendment shall adversely affect the Cash-Settled Restricted Stock Units in any material way, without your written consent.
23.
MISCELLANEOUS . The term “ you ” and “ your ” refer to the Awardee named in the Agreement. Capitalized terms that are not defined herein shall have the meanings ascribed to such terms in the Agreement.


7



EXHIBIT A
NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (this “ Agreement ”) is dated as of [date of Qualified Retirement] and is by and between Newfield Exploration Company, a Delaware corporation (the “ Company ”), and ________________, a retiring employee of the Company (“ Retiring Employee ”).
R E C I T A L S:
WHEREAS , Retiring Employee has been granted the awards set forth on Annex A hereto (the “ Awards ”) by the Company;
WHEREAS , pursuant to the terms of the agreements governing the Awards (the “ Award Agreements ”), Retiring Employee is entitled to certain benefits (the “ Retirement Benefits ”) if Retiring Employee’s termination of employment with the Company is by reason of a “Qualified Retirement” (as defined in each of the Award Agreements); and
WHEREAS , it is a condition to Retiring Employee being entitled to the Retirement Benefits that Retiring Employee enter into a Non-Compete Agreement substantially in the form of this Agreement;
NOW, THEREFORE , in consideration of the premises, the Retirement Benefits to be provided to Retiring Employee and the other covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.     Definitions; Rules of Construction .
(a)     Definitions . The following capitalized terms shall have the meaning given to it below:
“ Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person and, if such specified Person is a natural person, the immediate family members of such specified Person. “Control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or manager, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
“ Competing Business ” means any business involved in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect crude oil or natural gas

A-1


within the Covered Area; provided, however, that “Competing Business” shall not include any business that provides services solely to assist other Persons in the acquisition or development of, or exploration for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas but does not itself acquire or develop, or explore for, crude oil or natural gas or any rights in or with respect to crude oil or natural gas within the Covered Area.
“ Covered Area ” means (i) the United States of America; and (ii) any foreign jurisdiction (A) in which the Company is operating or (B) with respect to which the Company is actively considering for operations, in the case of clause (ii) only, as of the date hereof.
“ Person ” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
“ Term ” means the period commencing on the date hereof and ending on the date on which Retiring Employee attains the age of 62.
(b)     Rules of Construction . For purposes of this Agreement (i) unless the context otherwise requires, (A) “or” is not exclusive; (B) words applicable to one gender shall be construed to apply to each gender; (C) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement and (D) the term “Section” refers to the specified Section of this Agreement, (ii) the Section and other headings and titles contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement, (iii) a reference to any Person includes such Person’s successors and assigns.
2.     Non-Competition and Non-Solicitation . During the Term, Retiring Employee covenants and agrees with the Company that Retiring Employee shall not, directly or indirectly, individually, through an Affiliate or otherwise (including as an officer, director, employee or consultant) own an interest or engage in, participate with or provide any financial or other support, assistance or advice to any Competing Business; provided , however , that Retiring Employee may (a) when taken together with the ownership, directly or indirectly, of all of his Affiliates, own, solely as an investment, up to 5% of any class of securities of any Person if such securities are listed on any national securities exchange or traded on the Nasdaq Stock Market so long as Retiring Employee is not a director, officer, employee of, or analogously employed or engaged by, such Person or any of such Person’s Affiliates or (b) own securities issued by the Company. In addition, Retiring Employee agrees that during the Term he shall not, directly or indirectly: (i) interfere with the relationship of the Company or any Affiliate of the Company, or endeavor to entice away from the Company or any Affiliate of the Company, any individual or entity who was or is a material customer or material supplier of, or who has maintained a material business relationship with, the Company or its Affiliates, (ii) establish (or take preliminary steps to establish) a business with, or cause or attempt to cause others to establish (or take preliminary steps to establish) a business with, any employee or agent of the Company or any of its Affiliates, if such business competes with or will compete with the Company or any of its Affiliates, or (iii) employ, engage as a consultant or adviser, or solicit employment, engagement as a consultant or adviser, of any employee or agent of the Company or any of its Affiliates, or cause or attempt to cause any individual or entity to do any of the foregoing. Retiring Employee agrees that the restrictions contained in this Section 2 are

A-2


necessary to protect Company’s goodwill and confidential information the Company has provided to Retiring Employee.
3.     Specific Performance; Injunctive Relief . Retiring Employee specifically acknowledges and agrees that the Company, in providing the Retirement Benefits, has relied on the agreements and covenants of Retiring Employee contained in this Agreement and that the terms of this Agreement are reasonable and necessary for the protection of the Company. Retiring Employee specifically acknowledges and agrees that any breach or threatened breach by Retiring Employee of his or her agreements and covenants contained herein would cause the Company irreparable harm not compensable solely in damages. Retiring Employee further acknowledges and agrees that it is essential to the effective enforcement of this Agreement that Company be entitled to the remedies of specific performance, injunctive relief and similar remedies and Retiring Employee agrees to the granting of any such remedies upon a breach or threatened breach by Retiring Employee of any of the terms hereof. The Company also shall be entitled to pursue any other remedies (at law or in equity) available to it for any breach or threatened breach of this Agreement, including the recovery of money damages.
4.     Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. The parties agree to cooperate in any revision of this Agreement that may be necessary to meet the requirements of law. The parties further agree that a court may revise any provision of this Agreement to render the Agreement enforceable to the maximum extent possible.
5.     Amendment; Modification; Waiver . No amendment or modification of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the Company and Retiring Employee, except that any of the terms or provisions of this Agreement may be waived in writing at any time by the party that is entitled to the benefits of such waived terms or provisions. No single waiver of any of the provisions of this Agreement shall be deemed to or shall constitute, absent an express statement otherwise, a continuous waiver of such provision or a waiver of any other provision hereof (whether or not similar).
6.     Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any covenant or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative with, and not exclusive of, any rights or remedies otherwise available.
7.     No Effect on Retiring Employee’s Obligations . This Agreement shall in no way affect any other duties or obligations Retiring Employee owes to the Company by contract, law or otherwise.
8.     Legal Fees . If either party hereto institutes any legal proceedings against the other for breach of any provision hereof, the losing party shall be liable for the costs and expenses of the prevailing party, including without limitation its reasonable attorneys’ fees.

A-3


9.     Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.     Governing Law; Consent to Jurisdiction and Venue . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas applicable to agreements made and to be performed wholly within that jurisdiction. Venue shall lie exclusively with the district courts of Montgomery County, Texas, and such courts shall have jurisdiction to hear all matters arising from this Agreement.

[ Signature page follows. ]

A-4


IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by an authorized officer and Retiring Employee has executed this Agreement, in each case, as of the day and year first above written.


NEWFIELD EXPLORATION COMPANY




By:                           
Name:
Title:



RETIRING EMPLOYEE



                                                 
[Retiring Employee]    


A-5


ANNEX A

[insert list of awards]
























































A-6

Exhibit 10.4
NEWFIELD EXPLORATION COMPANY
AMENDED AND RESTATED
2011 ANNUAL INCENTIVE COMPENSATION PLAN

This Amended and Restated 2011 Annual Incentive Compensation (this “ Amended and Restated 2011 Plan ”) of Newfield Exploration Company, a Delaware corporation (the “ Company ”), is effective as of February 10, 2016.
Recitals :
WHEREAS , effective for the Performance Period beginning on January 1, 1993, the Board of Directors (the “ Board ”) of the Company adopted the 1993 Annual Incentive Plan (the “ 1993 Plan ”), which plan had a purpose substantially similar to this Amended and Restated 2011 Plan;
WHEREAS , effective for the Performance Period beginning January 1, 2003, the Board adopted the 2003 Annual Incentive Plan (the “ 2003 Plan ”) and terminated the 1993 Plan effective as of December 31, 2002;
WHEREAS , effective January 1, 2005, the Board adopted the First Amended and Restated 2003 Incentive Plan (“ First Amended 2003 Plan ”) to provide for the termination of the 2003 Plan upon a change of control, to conform the 2003 Plan to legislation affecting deferred compensation arrangements and to amend the 2003 Plan in other respects;
WHEREAS , effective July 27, 2007, the Board adopted the Second Amended and Restated 2003 Incentive Plan (the “ Second Amended 2003 Plan ”) to further amend and restate the First Amended 2003 Plan to incorporate certain further changes to comply with Section 409A of the Internal Revenue Code of 1986 and to conform the definition of Change of Control in the First Amended 2003 Plan to the definition used in other arrangements;
WHEREAS , effective January 1, 2011 the Board adopted the 2011 Annual Incentive Compensation Plan (the “ 2011 Plan ”) and terminated the Second Amended 2003 Plan, with any awards granted under the 2003 Plan, the First Amended 2003 Plan or the Second Amended 2003 Plan remaining in effect in accordance with the applicable terms and conditions of such awards;
WHEREAS , effective February 10, 2016, the Compensation & Management Development Committee of the Board (the “ Committee ”), in accordance with the authority previously vested in it by the Board pursuant to the Committee’s charter and otherwise, approved an amendment to the 2011 Plan to specify the treatment of awards under the 2011 Plan upon the occurrence of a change in control; and
WHEREAS , the Company desires to adopt this Amended and Restated 2011 Plan to incorporate such amendment, effective February 10, 2016.

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NOW, THEREFORE , in consideration of the foregoing and for the purpose described below, effective as of the date first written above, the Company hereby adopts this Amended and Restated 2011 Plan as set forth herein.
I.
Purpose
This Amended and Restated 2011 Plan is intended to provide a means whereby employees of the Company and its Subsidiaries may develop a sense of proprietorship and personal involvement in the development and financial success of the Company and its Subsidiaries, to attract and retain employees of outstanding competence and ability and to encourage them to remain with and devote their best efforts to the business of the Company and its Subsidiaries, and to reward such employees for outstanding performance, thereby advancing the interests of the Company and aligning employee interests with those of the Company’s stockholders. To this end, the Amended and Restated 2011 Plan provides a means of annually rewarding participants based on the overall performance of the Company and its business units and, where appropriate, on a participant’s personal performance.  
II.
Definitions
Where the following words and phrases appear in this Amended and Restated 2011 Plan, they shall have the respective meanings set forth below unless their context clearly indicates to the contrary:
a)    “ Award ” means an amount granted to an Eligible Employee pursuant to Article V that is payable on or before March 1 following the Performance Period.
b)    “ Board ” means the Board of Directors of the Company.
c)    “ Change of Control ” means the occurrence of any of the following:
i)
the Company is not the surviving Person in any merger, consolidation or other reorganization (or survives only as a subsidiary of another Person);
ii)
the consummation of a merger or consolidation of the Company with another Person pursuant to which less than 50% of the outstanding voting securities of the surviving or resulting corporation are issued in respect of the capital stock of the Company;
iii)
the Company sells, leases or exchanges all or substantially all of its assets to any other Person;
iv)
the Company is to be dissolved and liquidated;

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v)
any Person, including a “group” as contemplated by Section13(d)(3) of the Securities Exchange Act of 1934, acquires or gains ownership or control (including the power to vote) of more than 50% of the outstanding shares of the Company’s voting stock (based upon voting power); or
vi)
as a result of or in connection with a contested election of directors, the Persons who were directors of the Company before such election cease to constitute a majority of the Board.
Notwithstanding the foregoing, the definition of “Change of Control” shall not include (A) any merger, consolidation, reorganization, sale, lease, exchange, or similar transaction involving solely the Company and one or more Persons that were wholly owned, directly or indirectly, by the Company immediately prior to such event, and (B) any event that is not a “change in control event” within the meaning of Section 409A.
d)    “ Code ” means the Internal Revenue Code of 1986, as amended.
e)
“ Committee ” means the Compensation & Management Development Committee of the Board.
f)    “ Company ” means Newfield Exploration Company and its successors.
g)    “ Effective Date ” means February 10, 2016.
h)
“ Eligible Employee ” means, with respect to a particular Performance Period, each employee of the Company or a Subsidiary who was (i) employed by the Company or a Subsidiary on both October 1 and December 31 of such Performance Period and (ii) recommended by the Chief Executive Officer of the Company to receive an Award.
i)
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
j)
“ Incentive Pool ” means the aggregate amount to be awarded with respect to a particular Performance Period as determined pursuant to Article IV.
k)
“ Performance Period ” means any calendar year beginning on or after January 1, 2011.
l)
“ Person ” means any individual, partnership, corporation, limited liability company, trust, incorporated or unincorporated organization or association or other legal entity of any kind.
m)
“ Section 409A ” means Section 409A of the Code and any applicable regulations or rulings thereunder.

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n)
“ Subsidiary ” means any entity that is consolidated with the Company for financial accounting purposes in accordance with generally accepted accounting principles.
III.
Administration of Plan
This Amended and Restated 2011 Plan shall be administered by the Committee. The Committee is authorized to interpret this Amended and Restated 2011 Plan and may from time to time adopt such rules and regulations, consistent with the provisions of this Amended and Restated 2011 Plan, as it may deem advisable to carry out this Amended and Restated 2011 Plan. All determinations made by the Committee under this Amended and Restated 2011 Plan, and all interpretations of this Amended and Restated 2011 Plan by the Committee, shall be final and binding on all interested parties.

IV.
Determination of Incentive Pool
The amount of the Incentive Pool for a particular Performance Period shall be determined in good faith by the Committee on an annual basis, taking into consideration various factors, including, without limitation, earnings per share, total shareholder return, cash return on capitalization, increased revenue, revenue ratios, net income, stock price, market share, return on equity, return on assets, return on capital, return on capital compared to cost of capital, return on capital employed, return on invested capital, shareholder value, net cash flow, operating income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost ratios, profit after tax, performance relative to a peer group and amounts recommended by the Chief Executive Officer or any consultant engaged by the Committee. As soon as administratively feasible immediately before or immediately after the end of a Performance Period, the Committee shall determine the amount of the Incentive Pool with respect to such Performance Period. If the financial information for such Performance Period is not final at the time that the Committee meets to determine the amount of the Incentive Pool, the Committee may use the then best available estimates of such financial information to determine the amount of the Incentive Pool. Such determination shall be in writing and shall be filed with the appropriate records of the Company.
V.
Grant of Awards
At any time and from time to time after the determination of the Incentive Pool with respect to a Performance Period and prior to the February 28 following the end of such Performance Period, the Committee shall grant Awards to those Eligible Employees that the Committee, in its discretion, determines should receive Awards. The amount of such Awards shall be determined by the Committee in its discretion and shall not exceed, in the aggregate, the Incentive Pool. The Committee shall consider the recommendations of the Chief Executive Officer of the Company in making such determinations.

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VI.
Duration, Amendment and Termination
a)
The Board shall have the right to amend this Amended and Restated 2011 Plan from time to time, to terminate it entirely or to direct the discontinuance of Awards either temporarily or permanently. The Board may make any amendment to any outstanding Award that it believes is necessary or helpful to comply with any applicable law including, without limitation, Section 409A. However, no amendment, discontinuance or termination of this Amended and Restated 2011 Plan shall operate to annul an outstanding Award unless otherwise provided by the terms of this Amended and Restated 2011 Plan. The term of this Amended and Restated 2011 Plan shall be from its Effective Date until terminated by the Board.
b)
In furtherance, and not in limitation, of paragraph (a) above, at any time determined by the Board, this Amended and Restated 2011 Plan may be restructured by the Board to, among any other alterations or changes determined by the Board in its sole discretion, (i) alter the eligibility requirements for awards under such plan or (ii) provide for a Performance Period that is shorter or longer.
c)
Notwithstanding any provision of this Amended and Restated 2011 Plan to the contrary, in the event of a Change in Control: (i) the Committee shall determine the amount of the Incentive Pool assuming that (A) the Performance Period ended on the date of the Change of Control, and (B) the determination of whether, and to what extent, the Company has satisfied the applicable performance factors shall be based on actual performance of the Company through the date of the Change of Control; and (ii) each Eligible Employee shall be deemed to have earned an amount equal to the full amount of the Award that such Eligible Employee would have been entitled to receive based on the Incentive Pool determined in accordance with clause (i) of this paragraph, multiplied by the fraction, the numerator of which is the number of days the Eligible Employee was employed by the Company or its Subsidiaries during the Performance Period and the denominator of which is the total number of days in the Performance Period (the “ Pro-Rata Award ”), which Pro-Rata Award shall be paid to the Eligible Employee in cash within 30 days of the Change in Control.
VII.
Miscellaneous
a)
Neither this Amended and Restated 2011 Plan nor any grant of Awards under this Amended and Restated 2011 Plan shall confer on any employee the right to continued employment by the Company or any Subsidiary, or affect in any way the right of the Company or such Subsidiary to terminate the employment of such employee at any time. Any question as to whether and when there has been a termination of an employee’s employment and the cause of such termination shall be determined by the Committee, and its determination shall be final.

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b)
Except to the extent set forth herein as to the rights of the estates or beneficiaries of employees to receive payments, Awards under this Amended and Restated 2011 Plan are non-assignable and non-transferable and are not subject to anticipation, adjustment, alienation, encumbrance, garnishment, attachment or levy of any kind.
c)
Neither the establishment of this Amended and Restated 2011 Plan nor the granting of Awards shall be deemed to create a trust. This Amended and Restated 2011 Plan and all unpaid awards shall constitute an unfunded, unsecured liability of the Company to make payments in accordance with the provisions of this Amended and Restated 2011 Plan, and no Person shall have any security or other interest in any assets of the Company or otherwise.
d)
The existence of this Amended and Restated 2011 Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to authorize or consummate any merger or consolidation of the Company, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.
e)
Neither the officers nor the directors of the Company nor the members of the Committee shall under any circumstances have any liability with respect to this Amended and Restated 2011 Plan or its administration except for gross and intentional malfeasance. The officers and directors of the Company and the members of the Committee may rely upon opinions of counsel as to all matters, including the creation, operation and interpretation of this Amended and Restated 2011 Plan.
f)
No portion of this Amended and Restated 2011 Plan shall be effective at any time when such portion violates an applicable state or federal law, regulation or governmental order or directive that is subject to sanctions, whether direct or indirect.
VIII.
Compliance with Section 409A
The Company intends that this Amended and Restated 2011 Plan by its terms and in operation meet the requirements of Section 409A so that compensation deferred under this Amended and Restated 2011 Plan (and applicable investment earnings) shall not be included in income under Section 409A. Any ambiguities in this Amended and Restated 2011 Plan shall be construed to effect this intent. If any provision of this Amended and Restated 2011 Plan is found to be in violation of Section 409A, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render such provision in conformity with Section 409A, or shall be deemed excised from this Amended and Restated 2011 Plan, and this Amended and Restated 2011 Plan shall be construed and enforced to the maximum extent permitted by Section 409A as if such provision had been originally incorporated in this Amended and Restated 2011 Plan as so modified or restricted, or as if such provision had not been originally incorporated in this Amended and Restated 2011 Plan, as the case may be.

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Exhibit 10.5
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “ Fifth Amendment ”) dated as of March 18, 2016, among NEWFIELD EXPLORATION COMPANY, a Delaware corporation, (the “ Borrower ”); each of the lenders party to the Credit Agreement referred to below (collectively, the “ Lenders ”); JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”); and WELLS FARGO BANK, NATIONAL ASSOCIATION as syndication agent for the Lenders.
R E C I T A L S
A.    The Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of June 2, 2011 (as amended by that certain First Amendment to Credit Agreement dated as of September 27, 2011, that certain Second Amendment to Credit Agreement dated as of April 29, 2013, that certain Third Amendment to Credit Agreement dated as of June 25, 2013, and that certain Fourth Amendment to Credit Agreement dated as of March 5, 2015, the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.
B.    The Borrower, the Administrative Agent and the Lenders desire to amend certain provisions of the Credit Agreement.
C.    NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter into this Fifth Amendment and in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Defined Terms . Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this Fifth Amendment. Unless otherwise indicated, all section references in this Fifth Amendment refer to sections of the Credit Agreement.
Section 2. Amendments to Credit Agreement .
2.1      Existing Definitions . Section 1.01 of the Credit Agreement is hereby amended by deleting the following defined terms in their entirety, and replacing each of them with the following:
“ Agreement ” means this Credit Agreement, as amended by that certain First Amendment to Credit Agreement dated as of September 27, 2011, as amended by that certain Second Amendment to Credit Agreement dated as of April 29, 2013, as amended by that certain Third Amendment to Credit Agreement dated as of June 25, 2013, as amended by that certain Fourth Amendment to Credit Agreement dated as of March 5, 2015, as amended by that certain Fifth Amendment to Credit Agreement dated as of

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March 18, 2016, and as the same may from time to time be amended, modified, supplemented or restated.
“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted Eurodollar Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, the Adjusted Eurodollar Rate for any day shall be based on the Eurodollar Rate at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted Eurodollar Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Eurodollar Rate, respectively.
“ Consolidated EBITDAX ” means, with respect to the Borrower and its Subsidiaries, for any period, Consolidated Net Income for that period, plus (a) to the extent included in determining Consolidated Net Income for that period, (i) the aggregate amount of Consolidated Interest Expense for that period, (ii) the aggregate amount of letter of credit fees paid by the Borrower and its Subsidiaries during that period, (iii) the aggregate amount of income and franchise tax expense of the Borrower and its Subsidiaries for that period, (iv) any extraordinary or non-recurring losses or charges for such period (including, but not limited to, losses and charges associated with the termination or settlement of contracts and reorganization charges), (v) losses on the disposition of assets, (vi) all amounts attributable to depreciation, depletion, amortization, ceiling test write-downs and other non-cash charges and expenses of the Borrower and its Subsidiaries for that period, (vii) exploration and abandonment expenses and (viii) all other non-cash items reducing such Consolidated Net Income for such period, and, minus (b) to the extent included in determining Consolidated Net Income for that period, (i) any extraordinary or non-recurring income or gains for such period (including, but not limited to, income and gains associated with the termination or settlement of contracts and reorganization charges), (ii) gains on the disposition of assets, and (iii) all other non-cash items increasing Consolidated Net Income for such period; provided, however, non-cash income or gains in respect of deferred revenue, production payments and other matters included in the definition of Indebtedness shall not be subtracted from Consolidated Net Income under clause (b).
“ Consolidated Interest Expense ” means, with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, the sum of (i) gross interest expense (whether cash or accrued) of the Borrower and its Subsidiaries for such period on a consolidated basis in accordance with GAAP, including to the extent included in interest expense in accordance

2



with GAAP (x) the amortization of debt discounts and (y) the portion of any payments or accruals with respect to Capital Lease Obligations allocable to interest expense and (ii) capitalized interest of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP; provided, that Consolidated Interest Expense shall not include non-cash amortization of debt issuance costs.
“ Consolidated Net Income ” means, for any period, net income of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that the calculation of Consolidated Net Income shall exclude any non-cash charges or losses and any non-cash income or gains, in each case, required to be included in net income of the Borrower and its Restricted Subsidiaries as a result of the application of FASB Accounting Standards Codifications 718, 815, 410 and 360 but shall expressly include any cash charges or payments that have been incurred as a result of the termination of any Swap Agreement.
“ Defaulting Lender ” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied or, in the case of clause (iii) above, such Lender notifies the Administrative Agent in writing of a good faith dispute with respect to the amount of such payment, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied), (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, (d) has become the subject of a Bankruptcy Event, or (e) has become the subject of a Bail-In Action.

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“ Federal Funds Effective Rate ” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate.
2.2      Additional Definitions . Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions in the appropriate alphabetical order to read as follows:
“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“ EEA Financial Institution ” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“ EEA Resolution Authority ” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“ NYFRB ” means the Federal Reserve Bank of New York.
“ NYFRB Rate ” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day(or for any day that is not a Banking Day, for the immediately preceding Banking Day); provided that if none of such

4



rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“ Overnight Bank Funding Rate ” means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions, (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).
“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
2.3      Amendment to Section 2.16 . Section 2.16 of the Credit Agreement is hereby amended by inserting the following new Subsection 2.16(i) where alphabetically appropriate:
(i)    For purposes of determining withholding Taxes imposed under FATCA, from and after the Fifth Amendment Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Loans and this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).
2.4      Amendment to Section 2.19 . Section 2.19 of the Credit Agreement is hereby amended by inserting the words “or a Bail-In Action” immediately following the words “a Bankruptcy Event” in clause (i) of the penultimate paragraph of such Section.
2.5      Amendment to Article III . Article III of the Credit Agreement is hereby amended by inserting the following new Section 3.14 where numerically appropriate:
Section 3.14      EEA Financial Institutions . Neither the Borrower nor any of its Subsidiaries is an EEA Financial Institution.
2.6      Amendment to Section 6.04(b) . Section 6.04(b) of the Credit Agreement is hereby amended by deleting the phrase “3.0 to 1.0” and replacing it with “2.5 to 1.0.”

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2.7      Amendment to Article IX . Article IX of the Credit Agreement is hereby amended by inserting the following new Section 9.16 where numerically appropriate:
Section 9.16     Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.
Section 3. Conditions Precedent . This Fifth Amendment shall become effective on the date (such date, the “ Fifth Amendment Effective Date ”), when each of the following conditions is satisfied (or waived in accordance with Section 9.02 of the Credit Agreement):
3.1      The Administrative Agent (or its counsel) shall have received from the Required Lenders and the Borrower either (a) a counterpart of this Agreement signed on behalf of such party or (b) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

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3.2      The Administrative Agent, Lenders and Arrangers shall have received all fees and other amounts due and payable on or prior to the Fifth Amendment Effective Date, including but not limited to, (a) an upfront fee payable to the Administrative Agent for the account of each Lender that has consented to this Fifth Amendment by submitting its signature page on or before 5:00 p.m. New York time on March 16, 2016 in an amount equal to 20 basis points on the amount of each such Lender’s commitment under the Credit Agreement in effect on the Fifth Amendment Effective Date and (b) to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.
The Administrative Agent is hereby authorized and directed to declare this Fifth Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 3 or the waiver of such conditions as permitted in Section 9.02 of the Credit Agreement. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.
Section 4. Miscellaneous .
4.1      Confirmation . The provisions of the Credit Agreement, as amended by this Fifth Amendment, shall remain in full force and effect following the effectiveness of this Fifth Amendment.
4.2      Ratification and Affirmation . The Borrower hereby ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby.
4.3      Loan Document . This Fifth Amendment is a Loan Document.
4.4      Representations and Warranties . The Borrower hereby represents and warrants to the Lenders that:
(a)    the execution and delivery by the Borrower of this Fifth Amendment are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Fifth Amendment has been duly executed and delivered by the Borrower, and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law; and
(b)    as of the date hereof, after giving effect to the terms of this Fifth Amendment:
(i)      all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (except that any such representations and warranties that are qualified as to materiality shall be true and correct in all respects), except to the extent any such representations and

7



warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date;
(ii)      no Default or Event of Default has occurred and is continuing; and
(iii)      no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.
4.5      Counterparts . This Fifth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Fifth Amendment by facsimile or other electronic transmission (i.e. a “pdf” or a “tif”) shall be effective as delivery of a manually executed counterpart hereof.
4.6      NO ORAL AGREEMENT . THIS FIFTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
4.7      GOVERNING LAW . THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURES BEGIN NEXT PAGE]


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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be duly executed as of the date first written above.


BORROWER:
NEWFIELD EXPLORATION COMPANY


 
By:    /s/ Lawrence S. Massaro     
   Lawrence S. Massaro
   Executive Vice President and
   Chief Financial Officer

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



ADMINISTRATIVE AGENT AND LENDER:
JPMORGAN CHASE BANK, N.A.


 
By:    /s/ Anson Williams        
   Name: Anson Williams
   Title: Authorized Officer

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
WELLS FARGO BANK, NATIONAL ASSOCIATION


 
By:    /s/ Ellen Cheng        
   Name: Ellen Cheng
    Title: Vice President


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.


 
By:    /s/ Kevin Sparks        
   Name: Kevin Sparks
    Title: Director


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
THE BANK OF NOVA SCOTIA


 
By:    /s/ John Frazell        
   Name: John Frazell
    Title: Director

 
 
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
SCOTIABANK, INC.


 
By:    /s/ J.F. Todd        
   Name: J.F. Todd
    Title: Managing Director

 
 
 
 


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
U.S. BANK NATIONAL ASSOCIATION


 
By:    /s/ Nicholas T. Hanford        
   Name: Nicholas T. Hanford
    Title: Vice President


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
SUMITOMO MITSUI BANKING CORPORATION


 
By:    /s/ James D. Weinstein        
   Name: James D. Weinstein
    Title: Managing Director


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH


 
By:    /s/ Nupur Kumar        
   Name: Nupur Kumar
    Title: Authorized Signatory


By:    /s/ Lorenz Meier        
   Name: Lorenz Meier
    Title: Authorized Signatory



Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
BMO HARRIS BANK N.A.


 
By:    /s/ Melissa Guzmann        
   Name: Melissa Guzmann
    Title: Vice President


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH


 
By:    /s/ Trudy Nelson        
   Name: Trudy Nelson
    Title: Authorized Signatory


 
By:    /s/ William M. Reid        
   Name: William M. Reid
    Title: Authorized Signatory


    
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
GOLDMAN SACHS BANK USA


 
By:    /s/ Jerry Li        
   Name: Jerry Li
    Title: Authorized Signatory


 
 
    
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
MIZUHO BANK LTD.


 
By:    /s/ Leon Mo        
   Name: Leon Mo
    Title: Authorized Signatory


 
 
    
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
FIFTH THIRD BANK


 
By:    /s/ Jonathan H. Lee        
   Name: Jonathan H. Lee
    Title: Director


 
 
    
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
SOCIÉTÉ GÉNÉRALE


 
By:    /s/ David M. Bornstein        
   Name: David M. Bornstein
    Title: Director



 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
ROYAL BANK OF CANADA


 
By:    /s/ Kristan Spivey        
   Name: Kristan Spivey
    Title: Authorized Signatory


 
 
    
 
 

Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company



 
 
LENDER:
BARCLAYS BANK PLC


 
By:    /s/ Ronnie Glenn        
   Name: Ronnie Glenn
    Title: Vice President


 
 
    
 
 


Signature Page to Fifth Amendment to Credit Agreement – Newfield Exploration Company


Exhibit 31.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
OF NEWFIELD EXPLORATION COMPANY
PURSUANT TO 15 U.S.C. SECTION 7241, AS ADOPTED
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Lee K. Boothby, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2016 of Newfield Exploration Company (the “Registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
a.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b.
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
Date:  May 3, 2016
By:
/s/ LEE K. BOOTHBY
 
 
Lee K. Boothby
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)




Exhibit 31.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER
OF NEWFIELD EXPLORATION COMPANY
PURSUANT TO 15 U.S.C. SECTION 7241, AS ADOPTED
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Lawrence S. Massaro, certify that:
1.
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2016 of Newfield Exploration Company (the “Registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s Board of Directors (or persons performing the equivalent functions):
a.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
b.
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date:  May 3, 2016
By:
/s/ LAWRENCE S. MASSARO
 
 
Lawrence S. Massaro
 
 
Executive Vice President and Chief Financial Officer
 
 
(Principal Financial Officer)




Exhibit 32.1




CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
OF NEWFIELD EXPLORATION COMPANY
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002


In connection with the accompanying quarterly report on Form 10-Q for the quarterly period ended March 31, 2016 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lee K. Boothby, President and Chief Executive Officer of Newfield Exploration Company (the “Company”), hereby certify, to my knowledge, that:
1.
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: May 3, 2016
  /s/ LEE K. BOOTHBY
 
  Lee K. Boothby
 
    (Principal Executive Officer)




Exhibit 32.2




CERTIFICATION OF
CHIEF FINANCIAL OFFICER
OF NEWFIELD EXPLORATION COMPANY
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002


In connection with the accompanying quarterly report on Form 10-Q for the quarterly period ended March 31, 2016 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lawrence S. Massaro, Executive Vice President and Chief Financial Officer of Newfield Exploration Company (the “Company”), hereby certify, to my knowledge, that:
1.
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  May 3, 2016
/s/ LAWRENCE S. MASSARO
 
Lawrence S. Massaro
 
(Principal Financial Officer)