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, nat ural gas and natural gas liquids (NGLs) . Our principal domestic areas of operation include the Mid-Continent, the Rocky Mountains and onshore Gulf Coast . Internationally, we focus on offshore oil developments in Malaysia and China. Our financial statements include the accounts of Newfield Exploration Company, a Delaware cor p oration, and its subsidiaries. We proportionately consolidate our interests in oil and natural gas exploration and production ventures and partnerships in acc ordance with in dustry practice. All significant intercompany balances and tra n sactions have been eliminated. Unless otherwise specified or the context otherwise requires, all references in these no tes to  Newfield,   we,   us,   our  or the  Company  are to Newfield Exploration Company and its subsidiaries. Dependence on Commodity Prices As an independent oil and natural gas producer, our revenue, profitability and future rate of growth are substantially dependent on pre v ailing prices for oil , natural gas and NGLs . Historically, the energy markets have been very volatile, and there c an be no assurance that commodity prices will not be subject to w i de fluctuations in the future. A substantia l or extended decline in commodity prices could have a material adverse effect on our financial position, results of operations, cash flows and access to capital and on the quantities of oil , natural gas and NGL reserves that we can economically produce. 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 amo unts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, the reported amo