SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: December 5, 1994
UNION OIL COMPANY OF CALIFORNIA
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(Exact name of registrant as specified in its charter)
California 1-554 95-1315450
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1201 West Fifth Street, Los Angeles, California 90017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (213) 977-7600
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ITEM 5. OTHER EVENTS
Los Angeles, December 5 -- Union Oil Company of California today
announced a change in the company's accounting policy for recognizing the
reduction in value of certain oil and gas producing properties.
Under the new policy, the company will evaluate properties for impairment
on a field-by-field basis, compared with the country-by-country basis
previously in use. As a result of this change, Union Oil anticipates taking a
charge of approximately $445 million pretax ($275 million aftertax) to earnings
in the fourth quarter 1994. The charge reflects the write-down of certain
oil and gas producing properties in the U.S. from which the estimated
undiscounted future cash flows are less than the current net book value of
the properties.
The company also said it anticipates a write-down of $35 million
pretax ($22 million aftertax) for certain other properties.
The company said that the effect of the write-downs will be to reduce
its domestic depreciation expense by 13 percent, or about 55 cents per
barrel of oil equivalent (BOE), assuming current production levels. On a
worldwide basis, the company's depreciation expense will be reduced by
about nine percent, or 33 cents per BOE.
The company also said that it is reviewing its provisions for
environmental clean-up costs and anticipates taking additional charges in
the fourth quarter. Subject to this review, the company said that it
expects to add between $150 million and $250 million pretax ($93 million to
$155 million aftertax) to its provisions for environmental clean-up costs.
In addition, the company expects to record a $35 million pretax ($22
million aftertax) provision for pending litigation expenses, as well as a
previously announced $25 million pretax ($15 million aftertax) for costs
related to reductions in corporate staff.
The provisions announced today have been reviewed with Coopers &
Lybrand, the company's independent auditors. However, the final provisions
are subject to further review by the company and the auditors.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNION OIL COMPANY OF CALIFORNIA
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(Registrant)
Dated: December 5, 1994 By: CHARLES S. MCDOWELL
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Charles S. McDowell,
Vice President and Comptroller
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