nfxdcp11k-12312008.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________________
FORM
11-K
_____________________________
(Mark
One)
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31, 2008
OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
to
COMMISSION
FILE NO. 1-12534
_____________________________
NEWFIELD
EXPLORATION COMPANY
DEFERRED
COMPENSATION PLAN
(Full
title of the Plan and the address of the Plan, if different from that of the
issuer named below)
_____________________________
NEWFIELD
EXPLORATION COMPANY
363
NORTH SAM HOUSTON PARKWAY EAST
SUITE
100
HOUSTON,
TEXAS 77060
(281) 847-6000
(Name
of issuer of the securities held pursuant to the Plan
and
the address of its principal executive office)
NEWFIELD EXPLORATION COMPANY DEFERRED COMPENSATION
PLAN
DECEMBER
31, 2008
TABLE
OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the
Participants and Plan Administrator of the
Newfield
Exploration Company Deferred Compensation Plan
We have
audited the accompanying Statement of Financial Condition of the Newfield
Exploration Company Deferred Compensation Plan (the “Plan”) as of December 31,
2008, and the related Statement of Income and Changes in Plan Equity for the
year then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Plan as of December 31, 2008,
and the results of its operations for the year then ended in conformity with
accounting principles generally accepted in the United States of
America.
/s/ McConnell & Jones LLP
Houston,
Texas
June 26,
2009
NEWFIELD EXPLORATION COMPANY DEFERRED COMPENSATION
PLAN
STATEMENT
OF FINANCIAL CONDITION
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December
31, 2008
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Assets
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Investments, at fair value
(Note 3)
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$ |
2,963,331 |
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Plan
Equity
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$ |
2,963,331 |
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See
accompanying Notes to Financial Statements.
NEWFIELD EXPLORATION COMPANY DEFERRED COMPENSATION
PLAN
STATEMENT
OF INCOME AND CHANGES IN PLAN EQUITY
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Year
Ended
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December
31, 2008
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INCOME
(LOSS):
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Investment
income (loss), net:
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Dividends
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$ |
85,900 |
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Net depreciation of
investments
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(1,893,176 |
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Total investment
loss
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(1,807,276 |
) |
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Contributions:
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Participant
contributions
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538,982 |
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Employer
contributions
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64,046 |
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Total
contributions
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603,028 |
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DEDUCTIONS:
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Expenses:
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Benefit
payments
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(158,917 |
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Total
expenses
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(158,917 |
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NET
DECREASE IN PLAN EQUITY
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(1,363,165 |
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PLAN
EQUITY:
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Beginning of
year
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4,326,496 |
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End
of year
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$ |
2,963,331 |
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See
accompanying Notes to Financial Statements.
NEWFIELD EXPLORATION COMPANY DEFERRED COMPENSATION
PLAN
NOTES TO
FINANCIAL STATEMENTS
DECEMBER
31, 2008
NOTE
1 – DESCRIPTION OF THE PLAN
The
following brief description of the Newfield Exploration Company Deferred
Compensation Plan (the “Plan”) is provided for general information purposes
only. Participants should refer to the Plan document for more
complete information.
General: The
Plan is a nonqualified supplemental deferred compensation plan adopted effective
as of April 1, 1997 and last amended and restated effective as of November 6,
2008. Generally, the purpose of the Plan is to recognize the value to
Newfield Exploration Company (“Newfield”) of the past and present services of
the employees covered by the Plan and to encourage and assure their continued
service with Newfield by making more adequate provision for their future
retirement security.
The Plan
Committee, authorized by the Compensation & Management Development Committee
of Newfield’s Board of Directors, serves as the Plan Administrator (the “Plan
Administrator”).
Eligibility and
Vesting: The Plan covers key employees (the “Participants”)
who are designated by the Compensation & Management Development Committee of
Newfield’s Board of Directors. Participation is voluntary and
Participants can elect to contribute up to ninety percent (90%) of the
Participant’s base salary and up to one hundred percent (100%) of the
Participant’s bonus compensation. Participants are 100% vested in the
Plan at all times.
Participant
Accounts: An account is maintained for each Participant in the
Plan. The Plan Administrator will select one or more phantom
investment funds that will serve as hypothetical investment options for a
Participant’s account. Each Participant will treat the amounts
credited to his account as if they were invested in one or more phantom
investment funds.
Effective
November 6, 2008, Newfield amended and restated the Plan to provide Participants
with the ability to elect to have all or part of a Participant’s deferred
amounts credited to his account in the form of Newfield common
stock. These shares are held in a grantor trust. Once
Newfield common stock has been credited to the Participant’s account, it may not
be transferred or liquidated by the Participant and shall remain in the account
until such dates as specified in the Plan following the Participant’s separation
from service, as defined in the Plan, at which time Newfield common stock shall
be transferred to the Participant’s personal brokerage account, as designated at
that time by the Participant; hence, it cannot be settled in
cash. The number of shares of common stock credited to the
Participant’s account shall be adjusted, as appropriate, to reflect any stock
split, stock dividends, reverse splits and any other recapitalization
transactions. Participants who elect to have all or a portion of
their deferrals credited in Newfield’s common stock are entitled to give voting
directions to the Plan Committee, and the Plan Committee will arrange for the
distribution to members of all communications directed generally to the
stockholders of Newfield regarding voting and solicitations.
Company
Deferrals: For each year during which a Participant has made
the maximum elective contributions under Newfield’s 401(k) plan, Newfield will
credit that Participant’s account with an amount equal to 100% of the
compensation deferrals made by that Participant, up to 8% of the Participant’s
base salary for that year and reduced by any matching contributions made for the
account of the Participant under Newfield’s 401(k) plan for that year or such
lesser amount as may be credited consistent with section 409A of the Internal
Revenue Code.
Distributions: Participants
elect the form of payment of their compensation deferrals in the form of (a) a
lump sum or (b) monthly installment payments for a period of not less than one
year and not more than 10 years. Participants are eligible for
distribution of their benefits upon death, separation from service (as defined
in the Plan) and in certain cases of severe financial hardship. If a
change of control (as defined in the Plan) occurs, the Compensation &
Management Development Committee may terminate the Plan within 30 days before or
12 months after a change of control and distribute each Participant’s account
within 12 months of the date of the Plan termination.
Trust: The
Plan is a nonqualified supplemental deferred compensation
plan. Newfield established a Grantor (Rabbi) Trust (the “Trust”) for
the Plan, in which Charles Schwab Trust Company (“Schwab”) serves as the
trustee. The Trust shall be governed by and subject to the terms of a
trust agreement entered into between Newfield, as grantor, and the
trustee. Plan Participants are considered to be unsecured creditors,
with no secured or preferential rights to any assets of
Newfield. Assets held by the Trust are available to Newfield’s
general creditors in the event of insolvency of Newfield.
NEWFIELD
EXPLORATION COMPANY DEFERRED COMPENSATION PLAN
NOTES TO
FINANCIAL STATEMENTS – (Continued)
DECEMBER
31, 2008
As of
December 31, 2008, the Trust assets were primarily invested in various mutual
funds and shares of Newfield common stock.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Accounting: The Plan’s financial statements are prepared using
the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America (“US GAAP”).
Use of
Estimates: The preparation of financial statements in
conformity with US GAAP requires the Plan Administrator to make estimates and
assumptions that affect the reported amounts of assets, changes therein, and the
accompanying notes to the financial statements. Actual results could
differ from those estimates.
Risks and
Uncertainties: The Plan provides for various investment
options. The underlying investment securities are exposed to various
risks, such as interest rate, liquidity risk, credit and overall market
volatility risk. Due to the general level of risk associated with
certain investment securities and the level of uncertainty related to changes in
the value of investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near term and
that such change could materially affect the amount reported in the Statement of
Financial Condition.
Investments: The
Plan’s investments include various publicly traded mutual funds and shares of
Newfield common stock both of which are valued based on quoted market prices on
the last business day of the Plan year. The change in market value of
the investments is reflected in the Statement of Income and Changes in Plan
Equity as appreciation/depreciation in the fair value of
investments. Realized gains and losses on investments are calculated
using average costs. Interest is recorded as earned.
Investments
are reported at fair value. Fair value, as defined by Financial
Accounting Standards Board Statement No. 157, “Fair Value Measurements”
(“SFAS No. 157”), 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. See Note 4 for a discussion of
fair value measurements.
NOTE
3 – INVESTMENTS
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Investments
at fair value based on quoted market prices at December 31,
2008:
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Newfield Exploration Company
Common Stock (14,439 shares)
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$ |
285,170
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* |
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Schwab Retirement Advtg Money
Fund
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358,546
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American Beacon Lg Cap Value
Instl Fund
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81,435 |
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Columbia Small Cap Value II
Z
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18,928 |
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First American Mid Cap
Value
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53,942 |
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Harbor Bond
Fund
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76,251 |
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Harbor Capital Appreciation
Fund
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515 |
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Schwab Inst Select S&P 500
Fund
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81,118 |
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Nicholas-Applegate Mini Growth
Instl
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148,165 |
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Rainier
Small/Mid Cap Equity Instl
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213,835
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T.
Rowe Price Retirement Income FD
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535,768
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T. Rowe Price Retirement
2010
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297,445
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T. Rowe Price Retirement
2020
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16,098 |
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T. Rowe Price Retirement
2030
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89,354 |
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Vanguard Total Intl Stock Index
Fund
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12,674 |
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UMB
Scout Intl Fund
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168,161
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Vanguard Small Cap Growth Index
Fund
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525,926
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$ |
2,963,331 |
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____________
*
Investments representing 5% or more of the Plan’s equity at December 31,
2008
NEWFIELD
EXPLORATION COMPANY DEFERRED COMPENSATION PLAN
NOTES TO
FINANCIAL STATEMENTS – (Continued)
DECEMBER
31, 2008
NOTE
4 – FAIR VALUE MEASUREMENTS
On
January 1, 2008, the Plan adopted SFAS No. 157, “Fair Value Measurements”
(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in accordance with US GAAP and expands disclosure
requirements about fair value measurements. Under SFAS No. 157, fair value is
considered to be the exchange price in an orderly transaction between market
participants to sell an asset or transfer a liability at the measurement date.
The fair value definition under SFAS No. 157 focuses on an exit price, which is
the price that would be received by the Plan to sell an asset or paid to
transfer a liability versus an entry price, which would be the price paid to
acquire an asset or received to assume a liability.
SFAS
No.157 provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets (Level 1) and the lowest priority to unobservable inputs (Level
3). The three levels of the fair value hierarchy under SFAS No.157
are described below:
Level 1: unadjusted quoted prices for
identical assets in active markets that the Plan has the ability to
access.
Level 2: quoted prices for
similar assets in active markets, quoted prices for identical or similar assets
in inactive markets, and interest rates, credit risk, etc. that are determined
for an asset, either directly or indirectly, based on independent market
data.
Level 3: significant unobservable
inputs for the fair value measurement of the assets.
Following
is a description of the valuation methodologies used for assets measured at fair
value:
Common stock: Valued at the
closing price reported on the New York Stock Exchange.
Mutual funds: Valued at the
net asset value, based on quoted market prices in active markets, of shares held
by the Plan at year end.
The
following table sets forth by level, within the fair value hierarchy, the Plan’s
assets at fair value as of December 31, 2008:
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Level
1
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Level
2
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Level
3
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Total
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Common
stock
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$ |
285,170 |
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$ |
— |
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$ |
— |
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$ |
285,170 |
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Mutual
funds
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2,678,161 |
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— |
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— |
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2,678,161 |
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Total
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$ |
2,963,331 |
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$ |
— |
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$ |
— |
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$ |
2,963,331 |
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NEWFIELD
EXPLORATION COMPANY DEFERRED COMPENSATION PLAN
NOTES TO
FINANCIAL STATEMENTS – (Continued)
DECEMBER
31, 2008
NOTE
5 – ADMINISTRATIVE EXPENSES OF THE PLAN
All
administrative expenses of the Plan and any brokerage fees for the purchase of
shares on behalf of Participants are paid by Newfield.
NOTE
6 – PLAN TERMINATION
Although
it has not expressed any intent to do so, the Compensation & Management
Development Committee retains the right to amend or terminate the Plan at any
time. If the Plan is terminated, all sums credited to individual
accounts would be distributed to the Participants as provided in the
Plan. If a change of control (as defined in the Plan) occurs, the
Compensation & Management Development Committee may terminate the Plan
within 30 days before or 12 months after a change of control and distribute each
Participant’s account within 12 months of the date of the Plan
termination.
NOTE
7 – TAX STATUS
The Plan,
being operated as a nonqualified deferred compensation plan, is not subject to
Federal income tax. A nonqualified deferred compensation arrangement
effectively defers compensation for individual Participants. A
Participant will not incur federal income tax liability when the compensation is
deferred pursuant to the Plan or when investment gains and losses are credited
or charged to a Participant’s account. Rather, a Participant will
incur federal income tax liability for such contributions and income only when
distributions are made to a Participant.
The Plan
is not qualified under Section 401(a) of the Internal Revenue Code and is not
subject to the provisions of the Employee Retirement Income Security Act of
1974.
NOTE
8 – NEW ACCOUNTING PRONOUNCEMENT
In April
2009, the FASB issued FSP FAS 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”). Under FSP FAS 157-4, if the reporting entity has determined
that the volume and level of market activity has significantly decreased and
transactions are not orderly, further analysis is required and adjustments to
the quoted prices or transactions might be needed. FSP FAS 157-4 is
effective for interim and annual reporting periods ending after June 15,
2009. Newfield is currently evaluating the impact FSP FAS 157-4 will
have on the Plan’s financial statements.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator of the Plan has duly caused this annual report to be signed on its
behalf by the undersigned thereunto duly authorized.
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NEWFIELD
EXPLORATION COMPANY
DEFERRED
COMPENSATION PLAN
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Date:
June 26, 2009
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By: /s/ MONA LEIGH
BERNHARDT
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Mona
Leigh Bernhardt
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Plan
Administrator
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INDEX
TO EXHIBITS
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Exhibit
No.
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Description
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23.1
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Consent
of Independent Registered Public Accounting Firm — McConnell & Jones
LLP
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