Newfield Exploration Company (NYSE: NFX) has reported that it has increased its 2011 capex to $1.9 billion. The company’s original budget was slated at $1.7 billion. The increase will support Newfield’s robust shale exploration program across the U.S.

Rocky Mountains

The largest contributor to Newfield’s 2011 estimated increase in domestic oil production is its Rocky Mountain focus area. Production in the first quarter of 2011 increased 27% over the same period of 2010. During the first quarter of 2011, Newfield’s sales were approximately 2.3 MMBOE, or 25,000 BOE/d. For the full year 2011, Newfield expects that its Rocky Mountain production will grow more than 25% over 2010 annual volumes and exit 2011 at a rate of approximately 33,000 BOE/d. Approximately two-thirds of the region’s production is oil.

Greater Monument Butte Field Area – Newfield continues to run five operated rigs in the Uinta Basin. Sales in the region averaged approximately 18,200 BO/d (net) during the first quarter as field inventory levels were drawn down to near-normal operating levels. The company expects to grow 2011 production from the area by about 15% over 2010 levels.

During the first quarter, Newfield announced the signing of two separate purchase and sale agreements to acquire assets in the Uinta Basin from Harvest Natural Resources and an unnamed private company for $308 million. The transactions will add approximately 70,000 net acres in the Uinta Basin. The acreage is largely undeveloped and located adjacent and north of Monument Butte. The transactions are expected to close in the second quarter of 2011, pending customary closing processes.

In addition, Newfield and partner, Ute Energy, recently executed a third Exploration and Development Agreement. As a result, Newfield added approximately 11,000 net Tribal acres. Inclusive of these recent transactions, Newfield will own interest in approximately 250,000 net acres in the Uinta Basin.

Williston Basin – Newfield is running five operated drilling rigs in the Williston Basin. Current net production is about 5,000 BOE/d and the company has 10 wells in various stages of completion (average lateral length approximately 8,600’). Dedicated fracture stimulation services arrived in the field in April and completions are underway with initial volumes from the new wells expected late in the second quarter of 2011.

Substantially all of the company’s planned wells in 2011 are super extended lateral (SXLs) wells. Three horizontal wells were recently completed with an average initial gross production rate (24-hour) of approximately 3,900 BOE/d. This average includes a recent record completion which had an initial gross production rate (24-hour average) of 4,468 BOE/d.

Newfield has approximately 161,000 net acres in the Williston Basin.

Southern Alberta Basin – To date, Newfield has drilled seven vertical wells, completed and placed on production two horizontal wells, and is preparing to drill an eighth vertical well. All of the wells to date have encountered oil. Newfield has 280,000 net acres in the play, located in Glacier County, Montana. Multiple prospective geologic formations throughout the acreage are planned for evaluation.

Mid-Continent

Granite Wash – Newfield continues to run a four-rig program in the Granite Wash play, located primarily in Wheeler County, Texas. To date, the company has completed 39 wells in the play with gross initial production averaging approximately 16 MMcfe/d (24-hour rate). Newfield has successfully assessed 10 geologic intervals and additional prospective horizons remain. For 2011, the company plans to drill 28 - 33 wells and grow production more than 20% over 2010. Current net production from the area is approximately 110 MMcfe/d.

The 2011 Granite Wash program is focused on the liquids-rich geologic intervals within the play. Since 2009, Newfield has completed 21 wells in the high BTU Marmaton formations with initial 24-hour rates averaging over 17 MMcfe/d (gross). Recent Marmaton completions include: the Dupont1-1H with gross initial production of 22 MMcfe/d and the Britt Ranch G44W-14H with gross initial production of 22 MMcfe/d. Newfield continues to make efficiency gains in its drilling programs. A recent “best in class” 4,700’ lateral well was drilled and cased in 25 days. Newfield’s average working interest in the Granite Wash play is approximately 75%.

Over the last year, Newfield added more than 10,000 net acres in the Granite Wash play. Assessment of new areas is planned for the second half of 2011.

Woodford Shale – The company’s activities in the Arkoma Basin are substantially focused on the “oily Woodford.” This relatively new play for the company is prospective on approximately 15% of the company’s 172,000 net acres in the basin.

The six most recent "oily Woodford" wells have an average lateral length of approximately 8,700’ and were drilled and completed for an average of approximately $8.3 million (gross). Newfield has an approximate 96% working interest in these wells. The peak gross initial production rates of five of these wells averaged more than 1,500 BOE/d and their 30-day average rate was 930 BOE/d.

For 2011, Newfield plans to run 2-3 operated rigs in the Arkoma Basin, primarily focusing on the oil and "liquids rich" portion of the play.

Onshore Texas

Eagle Ford Shale – Newfield is running 2 -3 operated rigs and continues to assess its 335,000 net acre position in the Maverick Basin (approximate 85% working interest). Drilling and completion operations in the basin ceased in October 2010 due to seasonal hunting stipulations. Activities resumed in February 2011. Contracted fracture stimulation services are in the field and five wells have been drilled and are planned for completion in the second quarter of 2011.

Recent wells have lateral lengths of approximately 5,000’ and are averaging less than days to drill and case. Efficiency gains in drilling have reduced drill and case costs to less than $2 million (gross) per well. Completion services remain tight throughout the Eagle Ford Shale and are averaging $4.5 – $5.0 million (gross) per well