NEWFIELD EXPLORATION CO /DE/, PRE 14A, 1997-03-07

NEWFIELD EXPLORATION CO /DE/
PRE 14A, 1997-03-07
CRUDE PETROLEUM & NATURAL GAS

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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

FILED BY THE REGISTRANT [X]
FILED BY PARTY OTHER THAN REGISTRANT [ ]

CHECK THE APPROPRIATE BOX:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

NEWFIELD EXPLORATION COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

THE BOARD OF DIRECTORS OF THE REGISTRANT
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)

[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11

1) Title of each class of securities to which transactions applies:

----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:

-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)

-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

-----------------------------------------------------------------------

[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS
PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILINGS.

1) Amount Previously Paid:

-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:

-----------------------------------------------------------------------
3) Filing Party:

-----------------------------------------------------------------------
4) Date Filed:

-----------------------------------------------------------------------

- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.

<PAGE> 2

[LOGO]

NEWFIELD EXPLORATION COMPANY
HOUSTON, TEXAS

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

MAY 1, 1997

To the Stockholders:

The 1997 Annual Meeting of Stockholders (the "Annual Meeting") of Newfield
Exploration Company (the "Company") will be held on Thursday, May 1, 1997, at
11:00 a.m., local time, in the Ballroom of the Wyndham Greenspoint Hotel, 12400
Greenspoint Drive, Houston, Texas, for the following purposes:

(1) To elect eight directors to serve until the 1998 Annual Meeting of
Stockholders;

(2) To consider and act upon a proposal to amend Article Fourth of the
Company's Second Restated Certificate of Incorporation to increase
the number of shares of common stock authorized for issuance from
50,000,000 to 100,000,000 shares;

(3) To consider and act upon an amendment to the Company's 1995
Non-Employee Director Restricted Stock Plan;

(4) To ratify the selection of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending December 31,
1997; and

(5) To transact such other business as may properly come before such
meeting or any adjournment(s) thereof.

The close of business on March 7, 1997, has been fixed as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting or any adjournment(s) thereof.

You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, WE ASK THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.

By Order of the Board of Directors

Terry W. Rathert
Secretary
March [17], 1997
<PAGE> 3

[LOGO]

NEWFIELD EXPLORATION COMPANY

363 N. SAM HOUSTON PKWY E.
SUITE 2020
HOUSTON, TEXAS 77060
(713) 847-6000
---------------------------

PROXY STATEMENT
---------------------------

SOLICITATION AND REVOCABILITY OF PROXIES

The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company for use at the Annual Meeting to be held on Thursday, May 1,
1997, at 11:00 a.m., local time, in the Ballroom of the Wyndham Greenspoint
Hotel, 12400 Greenspoint Drive, Houston, Texas, or at any adjournment(s)
thereof. The solicitation of proxies by the Board of Directors of the Company
(the "Board of Directors") will be conducted primarily by mail. In addition,
officers, directors and employees of the Company may solicit proxies personally
or by telephone, telegram or other forms of wire or facsimile communication. The
Company will reimburse brokers, custodians, nominees and fiduciaries for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of common stock of the Company ("Common Stock"). The costs of the
solicitation will be borne by the Company. This proxy statement and the form of
proxy were first mailed to stockholders of the Company on or about March [18],
1997.

The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the proxies will be voted at the Annual Meeting.

At the close of business on March 7, 1997, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 35,235,927 outstanding shares of Common Stock, each share of
which is entitled to one vote. Common Stock is the only class of outstanding
securities of the Company entitled to notice of and to vote at the Annual
Meeting.

The Company's annual report to stockholders for the year ended December 31,
1996, including financial statements, is being mailed herewith to all
stockholders entitled to vote at the Annual Meeting. The annual report does not
constitute a part of the proxy soliciting material.

ITEM 1.

ELECTION OF DIRECTORS

Eight directors are to be elected at the Annual Meeting. The nominees for
election as directors are Joe B. Foster, Robert W. Waldrup, Charles W. Duncan,
Jr., Jeffrey A. Harris, Howard H. Newman, Thomas G. Ricks, C. E. (Chuck) Shultz
and Dale E. Zand. If elected, each director will serve until the Company's 1998
Annual Meeting of Stockholders and until his successor shall have been elected
and qualified. Each of the nominees for director currently serves as a director
of the Company. All of the current director nominees are required to stand for
election at the Annual Meeting because directors hold annual terms. A plurality
of the votes cast in person or by proxy by the holders of Common Stock is
required to elect a director. Accordingly, abstentions and "broker non-votes"
will have no effect on the outcome of the election assuming a quorum is present
or represented by proxy at the Annual Meeting. A broker non-vote occurs if a
broker or other nominee
<PAGE> 4

does not have discretionary authority and has not received instructions with
respect to a particular item. Stockholders may not cumulate their votes in the
election of directors.

Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual Meeting,
the persons named in the enclosed proxy will vote for the election of such other
person(s) as may be nominated by the Board of Directors.

The following table sets forth information regarding the names, ages as of
February 28, 1997, principal occupations of the nominees, other directorships in
certain companies held by them, and the length of continuous service as a
director of the Company.

<TABLE>
<CAPTION>
DIRECTOR
NOMINEES PRINCIPAL OCCUPATION AND DIRECTORSHIPS SINCE AGE
-------- -------------------------------------- -------- ---
<S> <C> <C> <C>
Joe B. Foster........................ Chairman of the Board, President and Chief 1988 62
Executive Officer of the Company; Director, Baker
Hughes Incorporated and New Jersey Resources
Corporation
Robert W. Waldrup.................... Vice President -- Operations of the Company 1992 52
Charles W. Duncan, Jr................ Private investments; Director, American Express 1990 70
Company, The Coca-Cola Company, PanEnergy
Corporation and United Technologies Corporation
Jeffrey A. Harris.................... Managing Director of E.M. Warburg, Pincus & Co., 1995 41
LLC.; Director, Comcast UK Cable Partners
Limited, Knoll, Inc., Industri-Matematik
International, Inc. and ECsoft Group plc.
Howard H. Newman..................... Managing Director of E.M. Warburg, Pincus & Co., 1990 49
L.L.C.; Director, ADVO, Inc., RenaissanceRE
Holdings Ltd., Comcast UK Cable Partners Limited
and Cox Insurance Holdings Plc.
Thomas G. Ricks...................... President and Chief Executive Officer, The 1992 43
University of Texas Investment Management
Company; Director, BDM International, Inc. and
DTM Corporation
C. E. (Chuck) Shultz................. Chairman and Chief Executive Officer of Dauntless 1994 57
Energy Inc.
Dale E. Zand......................... Professor of Management at the Stern Graduate 1995 70
School of Business, New York University, and
management consultant
</TABLE>

Directors of the Company are elected annually and hold office until the
next annual meeting of stockholders and until their successors are duly elected
and qualified. The Company's executive officers serve at the discretion of the
Board of Directors.

Each of the nominees has been engaged in the principal occupation set forth
opposite his name for the past five years except as follows:

Thomas G. Ricks served as Vice Chancellor for Asset Management of the
University of Texas System from 1992 to March 1996. Mr. Ricks was named to his
present position on March 1, 1996. C. E. Shultz served as President, Chief
Executive Officer and a Director of Gulf Canada Resources Limited from 1990 to
January 1995. Mr. Shultz was named to his present position in January 1995.

2
<PAGE> 5

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, unless otherwise
indicated, as of February 28, 1997 regarding beneficial ownership of Common
Stock of the Company by (i) each person known by the Company to own beneficially
five percent or more of its outstanding Common Stock, (ii) the Company's Chief
Executive Officer and each of the Company's other four most highly compensated
executive officers, (iii) each director and director nominee and (iv) all
executive officers, directors and director nominees as a group. The beneficial
ownership of Common Stock described in the table reflects the two-for-one split
of the Company's outstanding Common Stock effected in December 1996.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(2)
-----------------------
NAME OF BENEFICIAL OWNER(1) SHARES PERCENT
--------------------------- ----------- --------
<S> <C> <C>
Warburg, Pincus Investors, L.P.(3).......................... 6,431,028 18.25%
FMR Corp.(4)................................................ 3,433,200 9.74
Merrill Lynch & Co., Inc.(5)................................ 4,007,000 11.37
Joe B. Foster(6)............................................ 1,297,835 3.63
Robert W. Waldrup(7)........................................ 279,740 *
Terry W. Rathert(8)......................................... 286,994 *
William D. Schneider(9)..................................... 121,648 *
David F. Schaible(10)....................................... 216,568 *
Charles W. Duncan, Jr.(11).................................. 602,110 1.71
Jeffrey A. Harris(12)....................................... 6,439,028 18.27
Howard H. Newman(13)........................................ 6,446,628 18.30
Thomas G. Ricks(14)......................................... 1,502,400 4.26
C. E. Shultz(15)............................................ 6,000 *
Dale E. Zand(16)............................................ 78,100 *
Executive officers and directors as a group (consisting of
14 persons)(17)........................................... 10,946,969 30.00
</TABLE>

- ---------------

* Less than 1%

(1) The address of Warburg, Pincus Investors, L.P. ("Warburg") and Messrs.
Harris and Newman is 466 Lexington Ave., 10th Floor, New York, NY 10017.
The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109-3614.
The address of Merrill Lynch & Co., Inc. is World Financial Center, North
Tower, 250 Vesey Street, New York, NY 10281.

(2) Under the regulations of the Securities and Exchange Commission (the
"Commission"), shares are deemed to be "beneficially owned" by a person if
he directly or indirectly has or shares the power to vote or dispose of
such shares, whether or not he has any pecuniary interest in such shares,
or if he has the right to acquire the power to vote or dispose of such
shares within 60 days, including any right to acquire such power through
the exercise of any option, warrant or right. The shares beneficially owned
by Messrs. Foster, Waldrup, Rathert, Schneider and Schaible include
548,500, 155,000, 237,500, 63,500 and 156,500 shares, respectively, that
may be acquired by such persons within 60 days through the exercise of
stock options. The shares owned by the executive officers and directors as
a group include 1,249,280 shares that may be acquired by such persons
within 60 days through the exercise of stock options.

(3) The sole general partner of Warburg is Warburg, Pincus & Co., a New York
general partnership ("WP"). E.M. Warburg, Pincus & Company, LLC, a New York
limited liability company ("EMW LLC"), manages Warburg. The members of EMW
LLC are substantially the same as the partners of WP. Lionel I. Pincus is
the managing partner of WP and the managing member of EMW LLC and may be
deemed to control both WP and EMW LLC. WP, as sole general partner of
Warburg, has a 20% interest in the profits of Warburg. Mr. Jeffrey A.
Harris and Mr. Howard H. Newman are Managing Directors and members of EMW
LLC and general partners of WP. As such, Messrs. Harris and Newman may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) in an indeterminate portion of the shares beneficially owned by
Warburg. See Notes 12 and 13 below.

3
<PAGE> 6

(4) Based solely on the Schedule 13G dated February 14, 1997 filed by FMR Corp.
with the Commission, Fidelity Management & Research Company ("Fidelity"), a
wholly owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is the beneficial
owner of 2,990,800 shares as a result of acting as investment adviser to
various investment companies registered under Section 8 of the Investment
Company Act of 1940 (the "Funds"). Edward C. Johnson 3d, Chairman of FMR
Corp., various Johnson family members and trusts for the benefit of Johnson
family members, through their ownership of FMR Corp. voting common stock
and the execution of a shareholders' voting agreement, may be deemed to
form a controlling group with respect to FMR Corp. Edward C. Johnson 3d,
FMR Corp., through its control of Fidelity, and the Funds each has sole
power to dispose of 442,400 shares owned by the Funds. Neither FMR Corp.
nor Edward C. Johnson 3d has the sole power to vote or direct the voting of
the shares owned directly by the Funds, which power resides with the Funds'
Boards of Trustees. Fidelity carries out the voting of the shares under
written guidelines established by the Funds' Boards of Trustees. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR Corp. and a bank
as defined in Section 3(a)(6) of the Exchange Act, is the beneficial owner
of 442,400 shares as a result of its serving as an investment manager of
institutional account(s). Edward C. Johnson 3d and FMR Corp., through its
control of Fidelity Management Trust Company, have sole dispositive power
over 442,400 shares and sole power to vote or to direct voting of the
441,600 shares, and no power to vote or to direct the voting of 800 shares
owned by the institutional account(s) described above.

(5) Based solely on the Schedule 13G dated February 14, 1997 filed jointly by
Merrill Lynch & Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("ML
Group"), Princeton Services, Inc. ("PSI"), Merrill Lynch Asset Management,
L.P. ("MLAM") and Merrill Lynch Growth Fund for Investment & Retirement
(the "Merrill Fund") with the Commission, the Merrill Fund is the
beneficial owner of 4,000,000 shares of Common Stock. Each of ML&Co., ML
Group, PSI and MLAM may be deemed to share voting and dispositive power
with respect to such 4,000,000 shares with each other and with the Merrill
Fund. PSI is the general partner of MLAM. MLAM, an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, serves
as investment adviser to the Merrill Fund, an investment company registered
under Section 8 of the Investment Company Act of 1940. PSI is a wholly
owned direct subsidiary of ML Group, and ML Group is a wholly owned direct
subsidiary of ML&Co. With its wholly owned direct subsidiary Merrill Lynch
Pierce, Fenner & Smith Incorporated, ML&Co. may also be deemed to share
voting and dispositive power with respect to 7,000 shares.

(6) Includes 25,000 restricted shares of Common Stock granted to Mr. Foster in
1993 that are subject to forfeiture provisions that lapse upon the
achievement of certain performance targets for the year 1997. Also includes
60,000 restricted shares of Common Stock granted to Mr. Foster in February
1996 pursuant to the Company's 1995 Omnibus Stock Plan (the "Omnibus Plan")
that are subject to forfeiture provisions. Each year, the forfeiture
provisions with respect to 15,000 of such shares will lapse if the Company
achieves certain performance targets for that year. Also includes 84,000
shares of Common Stock held by Mr. Foster as trustee for the benefit of a
charitable organization. Mr. Foster disclaims any pecuniary interest with
respect to such shares.

(7) Includes 28,000 restricted shares of Common Stock granted to Mr. Waldrup in
February 1996 pursuant to the Omnibus Plan that are subject to forfeiture
provisions. Each year, the forfeiture provisions with respect to 7,000 of
such shares will lapse if the Company achieves certain performance targets
for that year.

(8) Includes 28,000 restricted shares of Common Stock granted to Mr. Rathert in
February 1996 pursuant to the Omnibus Plan that are subject to forfeiture
provisions. Each year, the forfeiture provisions with respect to 7,000 of
such shares will lapse if the Company achieves certain performance targets
for that year.

(9) Includes 24,000 restricted shares of Common Stock granted to Mr. Schneider
in February 1996 pursuant to the Omnibus Plan that are subject to
forfeiture provisions. Each year, the forfeiture provisions with respect to
6,000 of such shares will lapse if the Company achieves certain performance
targets for that year.

4
<PAGE> 7

(10) Includes 28,000 restricted shares of Common Stock granted to Mr. Schaible
in February 1996 pursuant to the Omnibus Plan that are subject to
forfeiture provisions. Each year, the forfeiture provisions with respect to
7,000 of such shares will lapse if the Company achieves certain performance
targets for that year.

(11) Includes 1,334 restricted shares of Common Stock granted to Mr. Duncan in
May 1995 and 2,000 restricted shares of Common Stock granted to Mr. Duncan
in May 1996, pursuant to the Non-Employee Director Plan (as hereinafter
defined) that are subject to certain forfeiture provisions. See
"-- Compensation of Directors."

(12) Includes 1,334 restricted shares of Common Stock granted to Mr. Harris in
May 1996 pursuant to the NonEmployee Director Plan that are subject to
certain forfeiture provisions. See "-- Compensation of Directors." Warburg
is the owner of 6,431,028 of the shares indicated as beneficially owned by
Mr. Harris and are included because of his affiliation with Warburg. Mr.
Harris disclaims "beneficial ownership" of the Warburg shares within the
meaning of Rule 13d-3 under the Exchange Act. See Note 3 above.

(13) Includes 1,334 restricted shares of Common Stock granted to Mr. Newman in
May 1996 pursuant to the NonEmployee Director Plan that are subject to
certain forfeiture provisions. See "-- Compensation of Directors." Warburg
is the owner of 6,431,028 of the shares indicated as beneficially owned by
Mr. Newman and are included because of his affiliation with Warburg. Mr.
Newman disclaims "beneficial ownership" of the Warburg shares within the
meaning of Rule 13d-3 under the Exchange Act. See Note 3 above.

(14) All of the shares indicated as beneficially owned by Mr. Ricks are owned
directly by The Permanent University Fund of the State of Texas or the
Board of Regents of the University of Texas System (the "UT Endowment
Funds") and are included because Mr. Ricks, as President and Chief
Executive Officer of the University of Texas Investment Management Company,
may be deemed to share the power to vote or dispose of such shares. Mr.
Ricks disclaims "beneficial ownership" of these shares within the meaning
of Rule 13d-3 under the Exchange Act.

(15) Includes 1,334 restricted shares of Common Stock granted to Mr. Shultz in
May 1995 and 2,000 restricted shares of Common Stock granted to Mr. Shultz
in May 1996 pursuant to the Non-Employee Director Plan that are subject to
certain forfeiture provisions. See "-- Compensation of Directors."

(16) Includes 1,334 restricted shares of Common Stock granted to Mr. Zand in May
1995 and 2,000 restricted shares of Common Stock granted to Mr. Zand in May
1996 pursuant to the Non-Employee Director Plan that are subject to certain
forfeiture provisions. See "-- Compensation of Directors."

(17) See Notes 2 and 6 through 16 above.

DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors held five meetings during 1996. During 1996, each
director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors held during the period that such director
served as a director and (ii) the total number of meetings held by each
committee of the Board of Directors on which such director served during the
period that such director so served.

The Board of Directors has the following standing committees:

AUDIT COMMITTEE. The Audit Committee, which currently consists of
Messrs. Duncan, Ricks, Shultz and Zand, met three times during 1996. Its
principal functions are to recommend to the Board of Directors each year
the engagement of a firm of independent auditors, to review the Company's
accounting and internal control systems and principal accounting policies
and to oversee the entire audit function, both independent and internal.

COMPENSATION COMMITTEE. The Compensation Committee, which currently
consists of Messrs. Duncan, Newman, Ricks, Shultz, Harris and Zand, met
three times during 1996. Its principal functions are to review and approve
the compensation of employees of the Company, including bonuses, benefit
plans and stock options, and administer the employee benefit plans of the
Company. Members of

5
<PAGE> 8

the Compensation Committee are not eligible to participate in any of the
plans or programs they administer.

The Board of Directors nominates persons to stand for election as directors
of the Company.

COMPENSATION OF DIRECTORS

Non-employee directors are currently paid $15,000 annually, plus $1,000 for
each board meeting attended and each committee meeting attended that is not held
in conjunction with a board meeting. The Company's non-employee directors were
paid $120,000 in the aggregate in 1996 as compensation for serving as directors.
Non-employee directors are also reimbursed for out-of-pocket expenses incurred
to attend board and committee meetings. Only non-employee directors are
compensated for serving as directors. In February 1997, the Board of Directors
approved an increase, effective May 1, 1997, in the annual payment to non-
employee directors from $15,000 to $20,000. A non-employee director will also
receive $500 for each telephonic board or committee meeting in which he or she
participates. This amount is in lieu of the $1,000 currently paid to
non-employee directors for participation in telephonic board meetings and
committee meetings not held in conjunction with a board meeting.

Pursuant to the Company's 1995 Non-Employee Director Restricted Stock Plan
(the "Non-Employee Director Plan"), which was approved by the stockholders of
the Company at the Company's 1995 Annual Meeting of Stockholders, each
non-employee director who is in office immediately after an annual meeting of
the stockholders of the Company shall receive 1,000 restricted shares of Common
Stock. In addition, each non-employee director who is appointed to the Board by
the Board of Directors of the Company for the first time after the Company's
1995 Annual Meeting of Stockholders (and not in connection with an annual
meeting of stockholders) shall receive 1,000 restricted shares of Common Stock.
The restrictions on shares of Common Stock granted pursuant to the Non-Employee
Director Plan generally lapse over a three year period, with lapsing occurring
as to one-third of such shares on the day before each annual meeting of the
stockholders of the Company during such period. As a result of the two-for-one
split of the Company's outstanding Common Stock effected in December 1996, an
aggregate of 50,000 restricted shares of Common Stock may be issued pursuant to
the Plan. Each of Messrs. Duncan, Shultz, Zand, Harris and Newman were granted
2,000 restricted shares of Common Stock (as a result of the two-for-one split of
the Company's outstanding Common Stock effected in December 1996) on May 2, 1996
pursuant to the Non-Employee Director Plan. In accordance with the terms of the
Non-Employee Director Plan, Mr. Ricks made an irrevocable written election not
to receive grants pursuant to the Plan.

If Item 3 is approved, immediately after the Annual Meeting, each of the
non-employee directors of the Company will be granted a number of restricted
shares of Common Stock determined by dividing $30,000 by the closing sales price
of the Common Stock on the New York Stock Exchange (the "NYSE") on the date of
the Annual Meeting (rounded down to nearest whole number). In addition, each
non-employee director who is appointed to the Board by the Board of Directors of
the Company for the first time after the Annual Meeting (and not in connection
with an annual meeting of stockholders) will be granted, effective on the date
of appointment of such director to the Board of Directors, a number of
restricted shares of Common Stock determined by dividing $30,000 by the closing
sales price of the Common Stock on the NYSE on the date of such appointment
(rounded down to nearest whole number). With respect to all such grants, the
restrictions will lapse on the day before the first annual meeting of
stockholders following the date of grant.

6
<PAGE> 9

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to the
compensation of the Chief Executive Officer of Newfield and each of its four
other most highly compensated executive officers (collectively, the "named
executive officers") for the fiscal years ended December 31, 1996, 1995 and
1994. All information presented in this section reflects the two-for-one split
of the Company's outstanding Common Stock effected in December 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------
----------------------------------- NUMBER OF
BONUS RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------------ STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY CURRENT(1) DEFERRED(2) AWARDS(3) OPTIONS COMPENSATION(4)
------------------ ---- -------- ---------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
JOE B. FOSTER........... 1996 $224,416 $200,000 $239,251 75,000 30,000 $9,500
Chairman of the Board 1995 217,350 150,000 81,075 -- -- 9,240
President and Chief 1994 209,367 120,000 60,000 -- -- 4,620
Executive Officer

ROBERT W. WALDRUP....... 1996 179,416 140,000 165,810 35,000 15,000 9,500
Vice President -- 1995 172,333 100,000 57,759 -- -- 9,240
Operations 1994 164,583 85,000 37,153 -- -- 4,620

TERRY W. RATHERT........ 1996 163,867 120,000 157,860 35,000 15,000 9,500
Vice President, Chief 1995 157,333 100,000 55,468 -- -- 9,240
Financial Officer and 1994 149,583 80,000 35,399 -- -- 4,620
Secretary

DAVID F. SCHAIBLE....... 1996 138,500 140,000 155,967 35,000 15,000 9,500
Vice President -- 1995 121,000 100,000 51,378 -- -- 9,240
Acquisitions and 1994 109,167 72,000 31,891 -- -- 4,367
Development

WILLIAM D. SCHNEIDER.... 1996 134,375 120,000 120,950 30,000 12,500 9,500
Manager -- Exploration 1995 127,291 80,000 39,024 -- -- 9,240
1994 124,583 50,000 22,324 -- -- 4,620
</TABLE>

- ---------------

(1) Reflects current cash incentive compensation awards pursuant to the Newfield
Employee 1993 Incentive Compensation Plan (the "Incentive Compensation
Plan") paid in February 1997, 1996 and 1995, respectively, based upon
performance in 1996, 1995 and 1994, respectively. See "-- Compensation
Committee Report on Executive Compensation -- Executive
Compensation -- Incentive Compensation Plan."

(2) Reflects deferred incentive compensation awards granted in February 1997,
1996 and 1995 pursuant to the Incentive Compensation Plan based upon
performance in 1996, 1995 and 1994, respectively. Deferred awards are paid
in four equal annual installments. A recipient of a deferred award has the
option for 30 days following the date of grant to elect to have such award
paid in the form of Common Stock. See "-- Compensation Committee Report on
Executive Compensation -- Executive Compensation -- Incentive Compensation
Plan."

(3) The indicated grants of restricted shares of Common Stock were made on
February 13, 1996 pursuant to the Omnibus Stock Plan. Such shares are
subject to forfeiture restrictions that, upon the achievement of certain
annual performance targets, lapse with respect to 20% of the shares granted
to a particular executive officer on each of the first five anniversaries of
the date of grant. The performance targets for 1996 were met.

(4) Reflects amounts contributed or accrued by the Company under the Company's
401(k) Profit Sharing Plan.

7
<PAGE> 10

STOCK OPTIONS GRANTED IN 1996.

The following table contains certain information concerning stock options
granted to the named executive officers in 1996.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE OR FOR OPTION TERMS(3)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION -------------------------
GRANTED(1) IN 1996 PER SHARE(2) DATE 0% 5% 10%
---------- ---------------- ------------ ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Joe B. Foster............. 30,000 5.6% $13.94 02/13/06 -- $263,004 $666,503
Robert W. Waldrup......... 15,000 2.8 13.94 02/13/06 -- 131,502 333,252
Terry W. Rathert.......... 15,000 2.8 13.94 02/13/06 -- 131,502 333,252
David F. Schaible......... 15,000 2.8 13.94 02/13/06 -- 131,502 333,252
William D. Schneider...... 12,500 2.3 13.94 02/13/06 -- 109,584 277,709
</TABLE>

- ---------------

(1) The options expire 10 years from the date of grant. Twenty percent of the
options will vest on the first and each succeeding anniversary of the date
of grant. The options were granted pursuant to the 1995 Omnibus Stock Plan.

(2) The exercise price of the options was based upon the average of the high and
low sales price of Common Stock on the NYSE on the date of grant.

(3) Calculated based upon the indicated rates of appreciation, compounded
annually, from the date of grant to the end of each option term. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent upon the future performance of the Common Stock and overall market
conditions. There can be no assurances that the amounts reflected in this
table will be achieved. The calculation does not take into account the
effects, if any, of provisions of the option plans governing termination of
options upon employment termination, transferability or vesting.

STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES.

The following table contains certain information concerning stock options
exercised during 1996 and the value of unexercised options at December 31, 1996.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS
SHARES 1996 AT DECEMBER 31, 1996(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joe B. Foster.......... -- $ -- 505,000 97,500 $11,162,500 $1,850,550
Robert W. Waldrup...... 140,000 2,211,910 123,000 82,000 2,721,000 1,657,400
Terry W. Rathert....... 45,000 844,653 206,000 81,500 4,548,500 1,646,150
David F. Schaible...... -- -- 135,500 59,500 2,993,375 1,161,900
William D. Schneider... 19,000 265,426 43,000 52,500 946,000 1,032,750
</TABLE>

- ---------------

(1) The value realized upon the exercise of a stock option is equal to the
difference between the market price on the date of exercise and the exercise
price of the stock option.

(2) The value of each unexercised in-the-money stock option is equal to the
difference between the closing price of the Common Stock on the NYSE on
December 31, 1996 of $26.00 per share and the exercise price of the stock
option.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors consists of Charles W.
Duncan, Jr., Howard H. Newman, Thomas G. Ricks, C. E. Shultz, Jeffery A. Harris
and Dale E. Zand.

8
<PAGE> 11

In 1996, the Company and two of its stockholders, Yale University and
Warburg, were parties to a voting agreement (the "Voting Agreement"). The Voting
Agreement allowed such stockholders to designate a certain number of director
nominees. Yale University declined to designate a director nominee, but Warburg
designated, and the Board of Directors nominated, Messrs. Newman and Harris for
election as directors at the Company's 1996 Annual Meeting.

On December 31, 1996 the Voting Agreement terminated. Thus, the nomination
by the Board of Directors of Messrs. Newman and Harris for election as directors
at the 1997 Annual Meeting was not pursuant to any contractual arrangement
between the Company and Warburg.

The Company's 401(k) Profit Sharing Plan invests in several mutual funds
(the "Warburg Funds") affiliated with Warburg. The amount invested in the
Warburg Funds at any time depends upon the elections made by the participants in
the 401(k) Profit Sharing Plan. The Company believes that the 401(k) Profit
Sharing Plan invests on the same basis in terms of rates and fees as are offered
generally to similar employee investment vehicles. As of December 31, 1996, an
aggregate of $1.3 million of the 401(k) Profit Sharing Plan's assets were
invested in the Warburg Funds.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee oversees the administration of compensation
programs applicable to all employees of the Company, including its executive
officers. Executive compensation is reviewed and approved annually by the
Committee.

The Compensation Committee seeks to encourage growth in the Company's oil
and gas reserves and cash flow and to enhance stockholder value through the
creation and maintenance of compensation opportunities that attract and retain
committed, highly qualified personnel. To such purpose, the Committee believes
that the compensation of all employees, including executive officers, should
include the following components:

- A base salary that is competitive with compensation offered by other oil
and gas exploration and production enterprises similar to the Company.

- Annual incentive compensation, based upon Company performance and
profitability, to reward achievement of Company objectives, individual
responsibility and productivity, high quality work and impact on Company
results. See "Executive Compensation -- Incentive Compensation Plan."

- The opportunity to purchase Common Stock at a discount of at least 15%
through the Newfield Employee Stock Purchase Plan and other equity
incentives to motivate employees and to better align the interests of
employees and stockholders.

- Case specific compensation arrangements to accommodate individual
circumstances or nonrecurring situations as required.

The Compensation Committee does not currently intend to award compensation
that would result in a limitation on the deductibility of a portion of such
compensation pursuant to Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"); however, the Compensation Committee may in the future
decide to authorize compensation in excess of the limits of Section 162(m) if it
determines that such compensation is in the best interests of the Company.

COMPANY PERFORMANCE. During 1996, and as it did in 1995, the Company
realized its best year of performance since its founding in 1989, both in terms
of financial and operating results. Results for 1996 on a per share basis are
summarized below:

<TABLE>
<CAPTION>
PERCENT
1996 1995 CHANGE
------ ------ -------
<S> <C> <C> <C>
AT YEAR END:
Market price................................................ $26.00 $13.50 + 93%
Book value.................................................. $ 6.45 $ 5.35 + 21%
Estimated proved reserves (Mcfe)(1)(2)...................... 8.69 7.22 + 20%
Present value of estimated proved reserves less long-term
debt(1)(3)................................................ $21.50 $ 9.39 +129%
</TABLE>

9
<PAGE> 12

<TABLE>
<CAPTION>
PERCENT
1996 1995 CHANGE
------ ------ -------
<S> <C> <C> <C>
FOR THE YEAR:
Net income.................................................. $ 1.03 $ 0.45 +129%
Operating cash flow(4)...................................... $ 3.37 $ 2.09 + 61%
Net production (Mcfe)(2).................................... 1.52 1.28 + 19%
</TABLE>

- ---------------

(1) Based upon estimates prepared by the Company. See "Item 1. Business -- Oil
and Gas Reserves" in Part I of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 for certain cautionary statements with
respect to such estimates.

(2) One Mcfe is equal to one thousand cubic feet of natural gas ("Mcf") or its
equivalent, using the ratio of one barrel of crude oil, condensate or
natural gas liquids to six Mcf of natural gas.

(3) The present value of estimated proved reserves is pre-tax and was determined
using constant prices as of the calculation date, with estimated future net
cash flows from such reserves discounted at 10% per annum.

(4) Represents operating cash flow before changes in assets and liabilities.

The Company's production for 1996 was 56.7 billion cubic feet of natural
gas equivalent ("Bcfe"), up 23% from 1995. This generated $125 million of
operating cash flow before changes in assets and liabilities, up 66% from 1995.
Net income increased to $38 million, up 137% over 1995. Estimated proved reserve
additions equaled 209% of production.

The Company drilled 15 exploratory wells in 1996, eight of which were
successful. These exploratory successes, together with development drilling,
resulted in estimated proved reserve additions by the drill bit of approximately
89 Bcfe. In addition, the Company acquired interests in five producing fields
during 1996, resulting in proved reserve additions of approximately 27 Bcfe.

EXECUTIVE COMPENSATION. Before taking the actions described in this report,
the Compensation Committee thoroughly reviewed and discussed the Company's
financial and operating results for 1996. The Compensation Committee also
considered the Company's favorable performance as compared to its peers. This
performance is reflected under the caption "Stockholder Return Performance
Presentation" below and in a September 1996 research report of Donaldson, Lufkin
& Jenrette Securities Corporation ranking the performance of sixteen publicly
held oil and gas companies in a number of categories. The Company's favorable
ranking in this report is described in its 1996 Annual Report to Stockholders.
Specific actions taken by the Compensation Committee regarding executive
compensation are summarized below.

Base Salary. The Compensation Committee evaluated peer group information in
setting base salary levels. Annual salary adjustments for the Company's
executive group are based on general levels of market salary increases,
individual performance and the Company's overall financial and operating
results, without any specific relative weight assigned to any of these factors.

Incentive Compensation Plan. The Incentive Compensation Plan is funded by
amounts equal to the revenues that would be attributable to a 1% overriding
royalty interest on acquired producing properties and a 2% overriding royalty
interest from exploration properties, bearing upon both the interest of the
Company and certain investors that participated in the Company's activities in
such properties and proportionately reduced to the interest of the Company and
such investors. Amounts available for distribution under the Incentive
Compensation Plan attributable to the overriding royalty interests bearing
against the Company are limited to 5% of the Company's Adjusted Net Income (as
defined in the Incentive Compensation Plan). Awards may consist of both a
current and deferred amount. Eligible employees may elect for deferred amounts
to be paid in Common Stock instead of cash. If an eligible employee elects for a
deferred amount to be paid in Common Stock, the number of shares of Common Stock
to be awarded is determined by using the fair market value of the Common Stock
on the date of the award. Deferred Awards are paid in four annual installments,
each installment consisting of 25% of the deferred award, plus interest on
awards paid in cash.

Awards granted to the named executive officers in February 1997 for the
1996 performance period pursuant to the Incentive Plan are presented under
"Bonus" in the Summary Compensation Table. Such

10
<PAGE> 13

awards were based approximately 50% on level of responsibility and the Company's
performance and approximately 50% on individual productivity, quality of work
and impact on the Company's results. The Compensation Committee established
awards for each executive after hearing the recommendations of the Chief
Executive Officer.

Omnibus Plan. Awards of restricted stock and stock options to the named
executive officers in February 1996 pursuant to the Omnibus Plan are presented
under "Long-Term Compensation Awards" in the Summary Compensation Table. Such
awards were granted in order to provide the named executive officers with
further incentive with respect to the Company's future performance, to further
align the interests of such executive officers with those of the Company's
stockholders and to award such executive officers for their contribution to the
Company's performance in 1995. In considering the grants to the named executive
officers, the Compensation Committee noted that no options had been granted to
such officers since the Company's initial public offering in November 1993.

CHIEF EXECUTIVE OFFICER COMPENSATION. As described above, the Company's
executive compensation philosophy, including the compensation of the Chief
Executive Officer, is a competitive base salary and incentive compensation based
upon the Company's performance. Specific actions taken by the Compensation
Committee regarding Mr. Foster's compensation are summarized below.

Base Salary. Mr. Foster's base salary was increased from $217,350 for 1995
to $224,416 for 1996. The increase was based on the factors described above
under "Executive Compensation -- Base Salary."

Incentive Compensation Plan. In February 1997, Mr. Foster received a
$200,000 current award and a $239,251 deferred award for the 1996 performance
period pursuant to the Incentive Compensation Plan. These awards were based
approximately 50% on the Company's performance and Mr. Foster's level of
responsibility and approximately 50% on productivity, perceived quality of work
and impact on the Company's results.

Omnibus Plan. In February 1996, Mr. Foster was granted 75,000 restricted
shares of Common Stock and options to purchase 30,000 shares of Common Stock
pursuant to the Omnibus Plan. These awards were based on the factors described
above under "Executive Compensation -- Omnibus Plan" and in recognition of the
key role that Mr. Foster played in the Company's 1995 performance.

Compensation Committee

Charles W. Duncan, Jr.
Howard H. Newman
Thomas G. Ricks
C. E. Shultz
Jeffery A. Harris
Dale E. Zand

11
<PAGE> 14

STOCKHOLDER RETURN PERFORMANCE PRESENTATION

As required by applicable rules of the Commission, the performance graph
shown below was prepared based upon the following assumptions:

1. $100 was invested in the Company's Common Stock, the S&P 500 and
the Peer Group (as defined below) on November 12, 1993 at the
closing price on such date. The Company's Common Stock began
trading on the NYSE on that date and the last reported sale was at
$9.06 per share. The initial public offering price of the Common
Stock was $8.75 per share. (The November 12, 1993 per share initial
public offering price and last reported sale price indicated in
this paragraph reflect the two-for-one split of the Company's
outstanding Common Stock effected in December 1996.)

2. Peer Group investment is weighted based on the stock market
capitalization of each individual company within the Peer Group at
the beginning of the period.

3. Dividends are reinvested on the ex-dividend dates.

The companies that comprise the Company's Peer Group are as follows: Apache
Corporation, Cross Timbers Oil Company, Devon Energy Corporation, Enron Oil &
Gas Company, The Louisiana Land & Exploration Company, Noble Affiliates, Inc.,
Pogo Producing Company, Seagull Energy Corporation and Vintage Petroleum, Inc.

<TABLE>
<CAPTION>
Newfield Ex-
Measurement Period ploration
(Fiscal Year Covered) Company Peer Group S&P 500
<S> <C> <C> <C>
11/12/93 100.00 100.00 100.00
12/31/93 97.24 93.21 100.58
12/30/94 110.34 89.26 101.90
12/29/95 148.92 114.29 140.16
12/31/96 286.81 149.12 172.31
</TABLE>

SOURCE: Carl Thompson Associates
S&P Calculations from Bloomberg Financial Markets

12
<PAGE> 15

ITEM 2.

AMENDMENT TO SECOND RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED SHARES

The Board of Directors has unanimously approved an amendment to the
Company's Second Restated Certificate of Incorporation (the "Charter") to
increase the authorized number of shares of Common Stock that the Company has
authority to issue from 50,000,000 to 100,000,000 (the "Charter Amendment") and
has directed that the Charter Amendment be submitted to the stockholders of the
Company for approval. To effect such increase, the first paragraph of article
Fourth of the Charter will be amended to read in its entirety as follows:

"FOURTH: The aggregate number of shares that the Corporation shall
have authority to issue is 105,000,000 shares, of which 5,000,000 shall be
shares of preferred stock, par value $.01 per share ("Preferred Stock"),
and 100,000,000 shall be shares of common stock, par value $.01 per share
("Common Stock")."

The Charter Amendment will have no effect on the number of shares of
Preferred Stock authorized for issuance. No shares of Preferred Stock are
currently issued, outstanding or reserved for issuance. If the Charter Amendment
is approved by the required vote of stockholders, it will become effective upon
the filing of a Certificate of Amendment with the Secretary of State of
Delaware.

REASONS FOR THE INCREASE IN NUMBER OF AUTHORIZED SHARES

The Company is presently authorized to issue 50,000,000 shares of Common
Stock, of which 35,235,927 were issued and outstanding at the close of business
on February 28, 1997. An additional 1,597,620 shares of Common Stock were
reserved for issuance at such date pursuant to the Company's stock option and
incentive plans. Accordingly, at February 28, 1997, there were only 13,166,453
unissued and unreserved shares of Common Stock. The Board of Directors and
management of the Company believe that additional shares of Common Stock should
be authorized in order to provide flexibility by having authorized, unissued and
unreserved shares of Common Stock available for proper corporate purposes.

Future purposes for additional shares could include paying stock dividends,
subdividing outstanding shares through stock splits, effecting acquisitions of
other businesses or properties, securing additional financing for working
capital or capital expenditures and providing incentives through stock option or
other incentive plans. The Company has no plan, commitment or understanding at
this time to issue any shares of Common Stock other than those reserved for
issuance as described above. The Board of Directors believes, however, such
additional authorized shares of Common Stock will enable the Company to take
advantage of oil and gas industry conditions and the availability of favorable
opportunities without the delay and expense associated with holding a special
meeting of its stockholders at the time such additional shares are needed.

If the Charter Amendment is approved, the increase in authorized shares
will not, by itself, have any effect on the rights of holders of presently
issued and outstanding shares of Common Stock. However, the issuance of
additional shares of Common Stock may, among other things, have a dilutive
effect on earnings per share and on the equity and voting rights of the present
holders of Common Stock.

The authorized but unissued shares of Common Stock could be used by the
Board of Directors to make a change in control of the Company more difficult,
even if stockholders viewed such change in control as favorable to their
interests. Under certain circumstances, such shares could be used to create
voting impediments or to frustrate persons seeking to effect a takeover or
otherwise gain control of the Company. Such shares could be privately placed
with purchasers who might side with the Board of Directors in opposing a hostile
takeover bid. The Company is not aware of any effort to accumulate Common Stock
or obtain control of the Company by a tender offer, proxy contest or otherwise,
and the Company has no present intention to use the increased shares of
authorized Common Stock for antitakeover purposes.

The additional shares of Common Stock for which authorization is sought
would be identical to the shares of Common Stock now authorized. The holders of
Common Stock do not presently have preemptive

13
<PAGE> 16

rights to subscribe for any of the Company's securities and will not have any
such rights to subscribe for the additional Common Stock proposed to be
authorized.

REQUIRED VOTE AND RECOMMENDATION

Proxies will be voted for the Charter Amendment unless contrary
instructions are set forth on the proxy card. Under applicable Delaware law and
the Company's Charter and By-Laws, as amended, this proposal requires the
affirmative vote of the holders of a majority of all of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting.
Accordingly, abstentions and broker non-votes will have the effect of a vote
against this proposal. Under New York Stock Exchange rules, brokers that do not
receive instructions from their customers may nevertheless vote on this
proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CHARTER AMENDMENT.

ITEM 3.

AMENDMENT TO THE COMPANY'S
1995 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN

The Non-Employee Director Plan currently provides that each non-employee
director who is in office immediately after an annual meeting of stockholders of
the Company will be granted 1,000 restricted shares of Common Stock. In
addition, each non-employee director who is appointed to the Board by the Board
of Directors for the first time after the Company's 1995 Annual Meeting of
Stockholders (and not in connection with an annual meeting of stockholders) will
be granted 1,000 restricted shares of Common Stock at the time of such
appointment. The restrictions on shares of Common Stock granted pursuant to the
Non-Employee Director Plan generally lapse over a three year period, with
lapsing occurring as to one-third of such shares on the day before each annual
meeting of the stockholders of the Company during such period. Pursuant to the
terms of the Plan, the aggregate number of restricted shares of Common Stock
that may be issued was automatically (without the necessity of any change or
amendment to the Plan itself) increased from 25,000 to 50,000 as result of the
two-for-one split of the Common Stock effected in December 1996. The proposed
amendments to the Non-Employee Director Plan described below will have no effect
on the aggregate number of restricted shares of Common Stock that may be issued
pursuant to the Plan.

A non-employee director is a director who is not an employee of the Company
and has not been an employee of the Company during the preceding calendar year.
Six of the eight directors standing for election at the Annual Meeting are
non-employee directors.

The Board of Directors believes that non-employee director compensation
(other than incentive-type compensation based on the Company's performance)
should generally be within a fixed range. As the Non-Employee Director Plan
currently operates, the amount of compensation immediately received by a non-
employee director may vary significantly from year to year depending upon the
market value of the Common Stock and other factors. In addition, the current
formulation of the Plan may cause a non-employee director's personal interests
to be at odds with those of the Company's stockholders. For example, despite the
two-for-one split of the Common Stock effected in December 1996, without
amendment of the Plan, non-employee directors will continue to be granted 1,000
shares of restricted Common Stock, resulting in a significant reduction in the
market value of the restricted shares the non-employee directors will be granted
following the Annual Meeting. Under the current provisions of the Non-Employee
Director Plan, the shares granted to each non-employee director following the
meeting would have a market value of $19,875, based upon the closing sales price
of the Common Stock on the NYSE on February 28, 1997. Each of the non-employee
directors receiving grants currently holds 2,000 shares of restricted Common
Stock (as a result of the two-for-one stock split) granted following the 1996
Annual Meeting of Stockholders. At the time of grant, the shares granted to each
of such non-employee directors had a market value of $35,500 (based upon the
closing sales price of the Common Stock on the NYSE on the date of grant).

In order to address these concerns, the Board of Directors amended, subject
to stockholder approval at the Annual Meeting, the Non-Employee Director Plan in
February 1997 to provide that as of the date of the

14
<PAGE> 17

annual meeting of stockholders of the Company in each year that the Non-Employee
Director Plan is in effect, each non-employee director who is in office
immediately after such meeting shall be granted a number of restricted shares of
Common Stock determined by dividing (y) $30,000 by (z) the closing sales price
of the Common Stock on the NYSE on the date of grant, rounded down to the
nearest whole number. In addition, each non-employee director who is appointed
to the Board by the Board of Directors for the first time after the Annual
Meeting (and not in connection with an annual meeting of stockholders) shall be
granted, effective as of the date of such appointment, a number of restricted
shares of Common Stock determined by dividing (y) $30,000 by (z) the closing
sales price of the Common Stock on the NYSE on the date of grant, rounded down
to the nearest whole number.

The Board of Directors believes that the restricted stock grants described
above, together with the other non-employee director compensation described
under the caption "Compensation of Directors" in Item 1 of this Proxy Statement,
provide a compensation level for non-employee directors that is comparable with
the compensation paid by other similarly situated companies.

In addition to the above described amendments, the Board of Directors
amended the Non-Employee Director Plan, subject to stockholder approval at the
Annual Meeting, to provide that restrictions on grants of restricted shares of
Common Stock will lapse on the day immediately preceding the date of the first
annual meeting of stockholders following the date of such grant instead of
lapsing over a three year period. The Board of Directors believes that the
practice of at least a substantial majority of public companies is to have
compensation of this type vest at the end of a director's term. Accordingly,
this amendment will provide a vesting schedule that is comparable with those
offered by similarly situated companies.

The full text of the Non-Employee Director Plan that indicates the changes
to be effected by the above described amendments is attached hereto as Annex A
and is incorporated herein by reference.

The approval of this proposal to amend the Non-Employee Director Plan as
described above requires the affirmative vote of the holders of a majority of
the Common Stock present or represented by proxy and entitled to vote at the
Annual Meeting. Under Delaware law, an abstention would have the same effect as
a vote against this proposal, but a broker non-vote would not be counted for
purposes of determining whether a majority had been achieved.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENTS TO
THE NON-EMPLOYEE DIRECTOR PLAN.

ITEM 4.

APPOINTMENT OF AUDITORS

Pursuant to the recommendation of the Audit Committee, the Board of
Directors appointed Coopers & Lybrand L.L.P., independent public accountants, to
audit the consolidated financial statements of the Company for the year ending
December 31, 1997. The Company is advised that no member of Coopers & Lybrand
L.L.P. has any direct or material indirect financial interest in the Company or,
during the past three years, has had any connection with the Company in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee.

Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting. Under Delaware
law, an abstention would have the same effect as a vote against this proposal,
but a broker non-vote would not be counted for purposes of determining whether a
majority had been achieved.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THIS APPOINTMENT.

In the event the appointment is not ratified, the Board of Directors will
consider the appointment of other independent auditors. A representative of
Coopers & Lybrand L.L.P. is expected to be present at the Annual Meeting, will
be offered the opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.

15
<PAGE> 18

ITEM 5.

OTHER MATTERS

The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.

STOCKHOLDER PROPOSALS

Any stockholder who wishes to submit a proposal for inclusion in the proxy
material and for presentation at the Company's 1998 Annual Meeting of
Stockholders must forward such proposal to the Secretary of the Company at the
address indicated on the cover page of this proxy statement, so that the
Secretary receives it no later than November [17], 1997.

By Order of the Board of Directors

Terry W. Rathert
Secretary
March [17], 1997

16
<PAGE> 19

ANNEX A

NEWFIELD EXPLORATION COMPANY

1995 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN

(MARKED TO INDICATE PROPOSED AMENDMENTS)

I. PURPOSE OF THE PLAN

THE NEWFIELD EXPLORATION COMPANY 1995 NON-EMPLOYEE DIRECTOR RESTRICTED
STOCK PLAN (the "Plan") is intended to promote the interests of Newfield
Exploration Company, a Delaware corporation (the "Company"), by enhancing the
ability of the Company to attract and retain the services of individuals as
directors of the Company who are essential for the growth and profitability of
the Company.

II. DEFINITIONS

Unless the context otherwise indicates, the following definitions
shall apply to the Plan:

(a) "BOARD" shall mean the Board of Directors of the Company.

(b) "COMMITTEE" shall mean the Committee of the Board appointed
pursuant to Paragraph III of the Plan.

(d) "FAIR MARKET VALUE" SHALL MEAN AS OF ANY SPECIFIED DATE, THE
CLOSING PRICE OF THE STOCK ON THE NEW YORK STOCK EXCHANGE (OR, IF THE STOCK
IS NOT THEN LISTED ON SUCH EXCHANGE, SUCH OTHER NATIONAL SECURITIES
EXCHANGE ON WHICH THE STOCK IS THEN LISTED) ON THAT DATE, OR IF NO PRICES
ARE REPORTED ON THAT DATE, ON THE LAST PRECEDING DATE ON WHICH SUCH PRICES
OF THE STOCK ARE REPORTED.

(e) "FORFEITURE RESTRICTIONS" shall mean the conditions applicable to
shares of Stock granted under the Plan, including the prohibitions against
sale or other disposition of shares of Stock granted under the Plan and the
corresponding obligation of the Non-Employee Director to forfeit his/her
ownership of or right to such shares and to surrender such shares to the
Company in the event the Non-Employee Director fails to satisfy such
conditions.

(f) "NON-EMPLOYEE DIRECTOR" shall mean a director of the Company who
is not otherwise an employee of the Company or any of its Subsidiaries.

(g) "RESTRICTED SHARES" shall mean shares of Stock granted under the
Plan which are subject to Forfeiture Restrictions.

(h) "RULE 16B-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Exchange Act or any successor rule or
regulation thereto as in effect from time to time.

(i) "STOCK" shall mean the Common Stock, par value $.01 per share, of
the Company and may consist of authorized but unissued shares of the
Company or previously issued shares reacquired and held by the Company or
any of its Subsidiaries.

(j) "SUBSIDIARY" shall mean any subsidiary corporation as defined in
section 424(f) of the Internal Revenue Code of 1986, as amended.

(k) "TOTAL AND PERMANENT DISABILITY" shall mean the inability to
perform duties and services as a director of the Company by reason of a
medically determined physical or mental impairment supported by medical
evidence which in the opinion of the Committee can be expected to result in
death or which can be expected to last for a continuous period of not less
than twelve (12) months.

A-1
<PAGE> 20

III. ADMINISTRATION OF THE PLAN

The Plan shall be administered by a Committee which shall be appointed by
and serve at the pleasure of the Board and consist of at least two members.
Members of the Committee shall be "disinterested persons" within the meaning of
Rule 16b-3. The Committee is authorized to interpret the Plan and may from time
to time adopt such rules, regulations, forms and agreements, consistent with the
provisions of the Plan, as it may deem advisable to carry out the Plan.

IV. ELIGIBILITY OF NON-EMPLOYEE DIRECTORS

Shares of Stock shall be issued under Paragraph VI of the Plan only to
individuals who are Non-Employee Directors. Shares of Stock may not be granted
to a Non-Employee Director if such director has been an employee of the Company
or any of its Subsidiaries for any part of the calendar year preceding the
calendar year in which such grant is to be made.

V. SHARES SUBJECT TO THE PLAN

The aggregate number of shares of Stock that may be issued under the Plan
may not exceed 25,000 shares. Any of such shares which remain unissued at the
termination of the Plan shall cease to be subject to the Plan. If shares issued
under Paragraph VI of the Plan are forfeited to the Company, such shares shall
again become available for issuance under the Plan to the extent permissible
under Rule 16b-3. The aggregate number of shares that may be issued under the
Plan shall be adjusted to reflect a change in capitalization of the Company,
such as stock dividends or stock splits. Until termination of the Plan, the
Company shall make available at all times a sufficient number of shares to meet
the requirements of the Plan.

VI. ISSUANCE OF RESTRICTED SHARES AND FORFEITURE RESTRICTIONS

(a) ANNUAL ISSUANCE OF RESTRICTED SHARES. Subject to the limitation of the
number of shares of Stock set forth in Paragraph V, (i) as of the date of the
annual meeting of the stockholders of the Company in each year that the Plan is
in effect as provided in Paragraph VIII hereof, each Non-Employee Director who
is in office immediately after such meeting shall receive, without the exercise
of the discretion of any person or persons, A NUMBER OF RESTRICTED SHARES
DETERMINED BY DIVIDING (Y) $30,000 BY (Z) THE FAIR MARKET VALUE ON THE DATE OF
THE ANNUAL MEETING OF STOCKHOLDERS, ROUNDED DOWN TO THE NEAREST WHOLE NUMBER,
subject to the terms set forth below, and (ii) each Non-Employee Director who is
appointed to the Board by the Board for the first time after the 1997 annual
meeting of stockholders (and not in connection with an annual meeting of
stockholders) shall receive, without the exercise of the discretion of any
persons or person, NUMBER OF RESTRICTED SHARES DETERMINED BY DIVIDING (Y)
$30,000 BY (Z) THE FAIR MARKET VALUE ON THE EFFECTIVE DATE OF HIS/HER
APPOINTMENT AS A DIRECTOR, ROUNDED DOWN TO THE NEAREST WHOLE NUMBER, effective
as of his/her date of appointment as a director, subject to the terms set forth
below. Any nominee Non-Employee Director may make an irrevocable written
election in advance of election or appointment to the Board not to receive a
grant of Restricted Stock pursuant to this Paragraph VI(a).

(b) FORFEITURE RESTRICTIONS AND OTHER TERMS AND CONDITIONS. The following
provisions are applicable to the Restricted Shares issued pursuant to Paragraph
VI(a):

(i) The shares of Stock issued to a Non-Employee Director pursuant to
this Plan shall not be sold, assigned, pledged, or otherwise transferred to
the extent then subject to the Forfeiture Restrictions.

A-2
<PAGE> 21

(ii) The Forfeiture Restrictions shall lapse as to each grant of
shares of Stock issued to a Non-Employee Director pursuant to this Plan
PRIOR TO THE 1997 ANNUAL MEETING OF STOCKHOLDERS in accordance with the
following schedule provided that the lapse conditions described below have
been satisfied:

<TABLE>
<CAPTION>
NUMBER OF SHARES
AS TO WHICH
FORFEITURE
RESTRICTIONS
LAPSE DATE LAPSE
---------- ----------------
<S> <C>
The day before the date of First Annual Meeting of
Stockholders following date of issuance of Restricted
Shares................................................. 333
The day before the date of Second Annual Meeting of
Stockholders following date of issuance of Restricted
Shares................................................. 333
The day before the date of Third Annual Meeting of
Stockholders following date of issuance of Restricted
Shares................................................. 334
</TABLE>

(iii) THE FORFEITURE RESTRICTIONS SHALL LAPSE AS TO EACH GRANT OF SHARES
OF STOCK ISSUED TO A NON-EMPLOYEE DIRECTOR PURSUANT TO THIS PLAN FOLLOWING
THE 1997 ANNUAL MEETING OF STOCKHOLDERS THE DAY BEFORE THE DATE OF THE
FIRST ANNUAL MEETING OF STOCKHOLDERS FOLLOWING THE DATE OF ISSUANCE OF
RESTRICTED SHARES, PROVIDED THAT THE LAPSE CONDITIONS DESCRIBED BELOW HAVE
BEEN SATISFIED.

(iv) The Forfeiture Restrictions shall lapse as of a given date with
respect to the applicable number of shares of Stock only if the
Non-Employee Director has remained a Non-Employee Director of the Company
continuously from the date of issuance of the Restricted Shares through
such lapse date, provided, however, that if a Non-Employee Director
terminates as a director by reason of death or Total and Permanent
Disability, the Forfeiture Restrictions on all Restricted Shares issued
pursuant to this Plan to such Non-Employee Director shall lapse as of the
date of his termination as a director. To the extent that the lapse
conditions are not satisfied as of a given lapse date, the Non-Employee
Director shall for no consideration forfeit and surrender to the Company
all of the shares of Restricted Stock which are then subject to Forfeiture
Restrictions. Unrestricted shares of Stock, evidenced in such manner as the
Committee shall deem appropriate, shall be issued to the holder of
Restricted Stock promptly after the applicable restrictions have lapsed or
otherwise been satisfied.

(v) Any Restricted Stock shall be evidenced by issuance of a stock
certificate which shall be registered in the name of the Non-Employee
Director and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock. The
Non-Employee Director shall not be entitled to delivery of the stock
certificate until the Forfeiture Restrictions have lapsed, and the Company
shall retain custody of the stock certificate until the Forfeiture
Restrictions have lapsed.

(vi) In the event that the number of shares of Stock available for
grants under the Plan is insufficient to make all grants provided for in
this Paragraph VI hereby made on the applicable date, then all Non-Employee
Directors who are entitled to a grant on such date shall share ratably in
the number of shares of Stock then available, if any, for grant under the
Plan, shall have no right to receive a grant with respect to the
deficiencies in the number of available shares of Stock and the grants
under this Paragraph VI shall thereafter terminate.

(vii) It is intended that the Plan meet the requirements of Rule 16b-3
and that any Non-Employee Director who is eligible to receive a grant of
Restricted Stock or to whom a grant of Restricted Stock is made pursuant to
this Paragraph VI will not for such reason cease to be a "disinterested
person" within the meaning of Rule 16b-3 with respect to the Plan and other
stock-related plans of the Company.

A-3
<PAGE> 22

VII. SHARES RECEIVED IN REORGANIZATION OR STOCK SPLIT

The prohibitions of Paragraph VI shall not apply to the transfer of
Restricted Shares pursuant to a plan of reorganization of the Company, but the
stock or securities received in exchange therefor, and any Stock received as a
result of a stock split or stock dividend with respect to Restricted Shares,
shall also become Restricted Shares subject to the Forfeiture Restrictions and
provisions governing the lapsing of such Forfeiture Restrictions applicable to
the original shares granted to the Non-Employee Director for all purposes of the
Plan and the certificates representing such additional shares shall be legended
to show such restrictions. Notwithstanding the foregoing, if (i) the Company
shall not be the surviving entity in any merger or consolidation (or survives
only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company sells, leases or exchanges or
agrees to sell, lease or exchange all or substantially all of its assets to any
other person or entity (other than a wholly-owned subsidiary of the Company), or
(iii) the Company is to be dissolved and liquidated, then effective as of the
effective date of such merger, consolidation, dissolution and liquidation, or
sale, all Forfeiture Restrictions on all Restricted Shares shall lapse.

VIII. TERM OF PLAN

The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is subsequently approved by the stockholders of the Company
within 12 months thereafter. Unless sooner terminated under the provisions of
Paragraph XI, no shares shall be issued under Paragraph VI after the expiration
of ten years from the effective date of the Plan.

IX. RIGHTS AS STOCKHOLDER

Upon issuance of Restricted Shares to a Non-Employee Director, except with
respect to the Forfeiture Restrictions, such Non-Employee Director shall have
all the rights of a stockholder of the Company with respect to such Restricted
Shares, including the right to vote such Restricted Shares and to receive all
dividends or other distributions paid with respect to such Restricted Shares.

X. WITHHOLDING TAX

To the extent the issuance of shares of Stock or the lapse of Forfeiture
Restrictions results in the receipt of compensation by a Non-Employee Director,
the Company (or the employing Subsidiary) is authorized to withhold from any
other cash compensation then or thereafter payable to such Non-Employee Director
any tax required to be withheld by reason of the receipt of compensation
resulting from the issuance of shares or the lapse of Forfeiture Restrictions.

Alternatively, a Non-Employee Director may authorize the Company to retain
or withhold sufficient shares of Stock otherwise receivable by the Non-Employee
Director from the Company with respect to Restricted Shares or may deliver to
the Company sufficient shares of Stock to enable the Company to satisfy any such
withholding requirement.

XI. AMENDMENT OR TERMINATION OF PLAN

The Board in its discretion may terminate the Plan at any time with respect
to any shares of Stock which have not theretofore been issued. The Board shall
have the right to alter or amend the Plan or any part thereof from time to time;
provided that no change may be made which would impair the rights of a
Non-Employee Director to whom Restricted Shares have theretofore been issued
without the consent of such Non-Employee Director; and provided, further that
the Board may not make any alteration or amendment that would materially
increase the benefits accruing to participants under the Plan, increase the
aggregate number of shares of Stock that may be issued under the Plan (other
than an increase reflecting a stock dividend, stock split or similar
recapitalization of the Company), change the class of individuals eligible to
receive Stock under the Plan, extend the maximum period during which Restricted
Shares may be granted under the Plan,

A-4
<PAGE> 23
or decrease any authority granted to the Committee hereunder in contravention of
Rule 16b-3, without the approval of the stockholders of the Company.
Notwithstanding the foregoing, the Plan shall not be amended more than once
every six months other than to comport with changes in the Internal Revenue Code
of 1986, as amended, and the Employee Retirement Income Security Act of 1974, as
amended, or the regulations issued thereunder.

XII. GOVERNMENT REGULATIONS

Notwithstanding any provisions hereof to the contrary, the obligations of
the Company to deliver shares of Stock under the Plan shall be subject to all
applicable laws, rules and regulations and to such approvals by any governmental
agencies or national securities exchanges on which the Stock is traded.

Key

- - New text is DOUBLE UNDERLINED AND IN BOLD FACE TYPE. (NOTE: DOUBLE UNDERLINE
TEXT IS CAPITALIZED ON THE ELECTRONIC FILING OF THIS DOCUMENT)

- - Deleted text is indicated by a strikethrough of such text. (NOTE: STRICKEN
TEXT ENTIRELY DELETED ON THE ELECTRONIC FILING OF THIS DOCUMENT)

A-5
<PAGE> 24
NEWFIELD EXPLORATION COMPANY

PROXY FOR ANNUAL MEETING OF STOCKHOLDERS

MAY 1, 1997

This Proxy is Solicited on Behalf of
the Newfield Exploration Company Board of Directors

The undersigned hereby appoints Joe B. Foster, Terry W. Rathert and C.
William Austin, and each of them, proxies for the undersigned with full power
of substitution, to vote all shares of Newfield Exploration Company Common
Stock which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Newfield Exploration Company to be held in Houston, Texas on
Thursday May 1, 1997 at 11:00 A.M., or at any adjournment thereof, upon the
matters set forth on the reverse side and described in the accompanying Proxy
Statement and upon the matters set forth on the reverse side and described in
the accompanying Proxy Statement and upon such other business as may properly
come before the meeting or any adjournment thereof.

PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE, NO BOXES NEED TO BE CHECKED.

(Continued and to be signed on other side)

COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
<PAGE> 25
Please Mark
your votes as /X/
indicated in
this example

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1,2,3 AND 4
WITHHELD
FOR FOR ALL
------- -------
Item 1-ELECTION OF DIRECTORS / / / /
Joe B. Foster, Robert W. Waldrup, Dale E. Zand, ------- -------
Charles W. Duncan, Jr., Jeffrey A. Harris, Howard H.
Newman, Thomas G. Ricks, and C.E. (Chuck) Shultz

FOR, EXCEPT VOTE WITHHELD FOR THE FOLLOWING NOMINEES(S):

- --------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
Item 2-To amend Article Four of the Company's Second / / / / / /
Restated Certificate of Incorporation to
increase the number of shares of Common Stock
authorized for issuance from 50,000,000 to
100,000,000 shares

Item 3-To amend the Company's 1995 Non-Employee FOR AGAINST ABSTAIN
Director Restricted Stock Plan as described in --- ------- -------
the accompanying Proxy Statement / / / / / /

Item 4-To ratify selection of auditors FOR AGAINST ABSTAIN
--- ------- -------
/ / / / / /

I PLAN TO ATTEND / /
MEETING

COMMENTS/ADDRESS CHANGE / /
Please mark this box if you have written
comments/address change on the
reverse side.

Signature(s) Date
----------------------------------------------- -------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.