1993
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
(Amendment No. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
or
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________.
Commission file number 1-554
UNION OIL COMPANY OF CALIFORNIA
---------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1315450
-------------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 West 5th Street, Los Angeles, California 90017
---------------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (213) 977-7600
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
Shares of Common Stock outstanding as of March 15, 1994: 1,000
Registrant meets the conditions set forth in General Instruction J(1)(a)
and (b) of Form 10-K and is, therefore, filing this form with the reduced
disclosure format.
<PAGE>
PART I
ITEMS 1 AND 2 - BUSINESS AND PROPERTIES
Union Oil Company of California (Union Oil) was incorporated in
California on October 17, 1890, and is a wholly owned subsidiary of Unocal
Corporation (Unocal or the Parent). Virtually all operations of Unocal are
conducted by Union Oil which does business as Unocal. The terms "Union
Oil" and "the company" as used in this report mean Union Oil Company of
California and its consolidated subsidiaries except where the context
indicates otherwise.
Union Oil is a fully integrated, high-technology energy resources
company whose worldwide operations comprise many aspects of energy
production. The company is principally engaged in the exploration for, and
the production, transportation and sale of, crude oil and natural gas in
the United States and foreign countries; and the manufacture, purchase,
transportation and marketing of petroleum and selected chemical products.
The company is also engaged in the exploration for, and the production and
sale of, geothermal resources. Other operations include the production and
marketing of specialty minerals, and real estate development and sales. In
addition, the company conducts research programs in support of the above
businesses.
Union Oil competes in a challenging business environment of global
competition, political instability, rapid technological developments,
volatile oil and gas prices, and rising costs of environmental
regulations. In order to meet these challenges, the company has gone
through many changes in recent years. The company has sold or shut down
most businesses that were marginally related to its core activities or
that were not a good strategic fit for Union Oil.
In 1993, management developed and implemented a ten-year plan for
growth with a strategy firmly focused on Union Oil's basic business and
core competitive strengths. The plan focuses on improving cash flow from
operations and strengthening profitability. Union Oil expects to
accomplish this plan primarily by increasing energy resource production and
continuing to emphasize cost control and improvement in all areas of
operations. During 1993, the company launched a three-year development
program to accelerate the production of proved undeveloped reserves in the
United States, primarily in the Gulf of Mexico. Union Oil's long-term
growth strategy is to expand its extensive oil, gas and geothermal
operations in Southeast Asia. Union Oil also expects to help develop the
energy resources potential in the greater Middle East, including the
Caspian Sea.
The company initiated the above plan as a result of significant
progress made toward meeting the three goals management established in
early 1992. These goals were: reducing total debt by $1.5 billion by May
1997; generating $700 million in after-tax proceeds from sales of
nonstrategic assets by May 1994; and increasing annual after-tax
contributions to cash flow by $200 million, also by May 1994. Since then,
Union Oil has reduced its total debt by $1.2 billion, about 80 percent of
the way toward the goal. The company is also 80 percent of the way toward
meeting its two-year asset sales goal. At year-end 1993, $560 million in
after-tax proceeds were generated from asset sales. The third goal has
been accomplished by streamlining business organization and continuing to
cut costs, reducing staff, consolidating offices and eliminating
nonessential activities.
During 1993, the company sold its geothermal operations in the Imperial
Valley of California, its national auto/truckstop system and its retail
agricultural products business. Planned asset sales in 1994 primarily
include oil and gas properties.
Union Oil's operations are principally divided into two divisions: the
Energy Resources Division and the Petroleum Products and Chemicals
Division.
The Energy Resources Division produces crude oil and natural gas, and
its largest operations are located in Thailand and the Louisiana/Gulf of
Mexico region. Other foreign producing locations include Indonesia, Canada
and the Netherlands. Union Oil also produces geothermal fluids and steam
to generate power in The Geysers in northern California, the Philippines,
and soon on the island of Java in Indonesia. The company's current
business developments include a gas development project offshore Myanmar
and geothermal projects
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on the islands of Java and Sumatra in Indonesia. Union Oil is also
pursuing an interest in a Caspian Sea oil development project offshore
Azerbaijan.
The Petroleum Products and Chemicals Division principally converts
basic energy resources into higher-value products. Union Oil operates
three refineries in California and markets petroleum products in the
western United States, Alaska and Hawaii. Union Oil holds a 50 percent
interest in The UNO-VEN Company (UNO-VEN), a Midwestern refining and
marketing company. Using natural gas as feedstock, the company
manufactures nitrogen-based fertilizers in southern Alaska to supply
markets in the western United States and Pacific Rim countries. Union Oil
also produces and markets petroleum coke, lanthanides (rare earths), and
specialty graphites.
Union Oil's net earnings, excluding the effects of accounting changes,
were $344 million in 1993, up significantly from $197 million in 1992. The
earnings increase was primarily due to higher domestic natural gas prices
and production, improved margins for refining and marketing operations,
lower exploration expenses, continued cost reductions, and lower interest
expense. These gains were partially offset by lower crude oil prices. For
a more detailed analysis of the company's financial results and information
on capital expenditures, see Management's Discussion and Analysis under
Item 7 of this report. Financial information relating to the company's
business segments, geographic areas of operations, and sales revenues by
classes of products is presented under Item 8 of this report.
PETROLEUM OPERATIONS
OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
UNITED STATES
The company holds approximately 1.1 million net acres of proven lands
in 21 states. Most of these lands are located in Texas, Louisiana,
California, Alaska, Oklahoma, New Mexico, and Montana. The company also
holds approximately 1.8 million net acres of unproved lands in 26 states.
Most of these lands are located in Alaska, Texas, Louisiana, California,
Colorado, Michigan, Florida and Wyoming. Proved and unproved acreage in
federal offshore exploration and production areas are included in the
contiguous states.
Union Oil's domestic crude oil production comes principally from fields
in Alaska (27%), California (25%), Texas (19%) and Louisiana (18%).
Approximately 42% of domestic natural gas production is from offshore and
onshore fields in Louisiana, with most of the balance coming from Texas
(22%), Alaska (13%), California (8%), and Oklahoma (4%).
Union Oil has varying ownership interests in 26 natural gas processing
plants located near major gas fields in the United States. The company
operates 12 of these plants and has full ownership in four. At December
31, 1993, one plant operated by Union Oil and two plants operated by other
companies were idle.
Most of the company's crude oil produced in the United States is either
delivered to or exchanged for crude oil that is processed in the company's
refineries. A substantial portion of the natural gas produced domestically
is sold to third parties under contracts having a term of at least one
year. Another large portion of the domestic gas production is sold to
third parties in the spot market. The remainder is primarily used in the
company's chemicals operations or as fuel in its refineries.
The following are highlights of Union Oil's domestic exploration and
development activities in 1993:
EXPLORATION ACTIVITIES. Union Oil's exploration success rate in the
Gulf of Mexico was 74 percent in 1993, with commercial hydrocarbons found
in 20 of the 27 wells drilled in either unproved areas or untested
formation within proved areas. The company has been active in the Gulf of
Mexico for more than 50 years. In recent years, improved exploration
techniques have revealed new oil and gas resources. In 1993, Union Oil
completed extensive 3-D seismic coverage of its oil and gas fields along
the Gulf Coast, yielding new finds in new fault blocks and deeper zones.
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Offshore Texas, Union Oil development in the Brazos A-105 Block has
brought new life to a field that, after 20 years on production, was nearing
depletion. Development in a new, deeper zone is expected to increase field
production to 150 million cubic feet of gas per day by April 1994. Union
Oil is the operator with a 56.25 percent working interest.
Onshore, Union Oil logged new gas reserves in Fresh Water Bayou in
Louisiana in January 1994. The discovery well, Louisiana Furs C-16, tested
at a daily rate of 30.3 million cubic feet of gas and 192 barrels of
condensate. The well was drilled to a total depth of 19,260 feet and was
completed in a producing horizon below 17,500 feet. Production is expected
to begin in mid-April once natural gas handling facilities are completed.
Union Oil is the operator and holds a 50 percent working interest in the
well.
Union Oil discovered gas at Felicia Creek in Liberty County, Texas, in
January 1993 and brought a second well on production in December. The
field's daily production averaged 8.8 million cubic feet of gas and 660
barrels of condensate in February 1994. Union Oil, the operator, holds a 50
percent interest in the 2,800-acre Area of Mutual Interest in which the
field is located.
DEVELOPMENT ACTIVITIES. In 1993, the company launched a three-year
accelerated drilling program to increase production of its extensive
inventory of proven undeveloped oil and gas resources, primarily in North
America. In the fourth quarter 1993, the drilling program began to pay
off, with U.S. gas volumes up 10 percent compared with the fourth quarter
1992. Increased gas production in the Gulf of Mexico helped push Union
Oil's U.S. production above 1 billion cubic feet per day in the fourth
quarter 1993. Gulf operations account for more than a third of the
company's worldwide gas production. In February, daily Gulf production of
more than 664 million cubic feet of gas was the highest in 12 years.
In December 1993, Union Oil started production from a well on Mobile
Block 904 offshore Mississippi. This is the company's first production from
the Norphlet trend, a prolific deep gas play. At 22,400 feet, the well is
one of the deepest Union Oil has drilled in the Gulf of Mexico. Daily
production averaged 23 million cubic feet of natural gas in January 1994
and is expected to increase above 30 million cubic feet. Union Oil's
interest is 100 percent. Nearby Mobile Block 861, brought on stream in
February 1994, could add 30 million cubic feet per day. The company holds a
25 percent interest. Vermilion block 328 (50 percent interest), also
brought on stream in February, is expected to produce 24 million cubic feet
per day by June 1994.
Offshore Louisiana, Union Oil has a 50 percent interest in Garden Banks
191, on stream since November 1993. This field is expected to produce 160
million cubic feet of gas per day by October 1994. Union Oil also holds a
50 percent interest in Garden Banks 189, which achieved peak gas production
of 69 million cubic feet per day in January 1994.
Development drilling will continue in the Chakachatna area of the Cook
Inlet (Alaska). In 1994, four wells are planned to be drilled.
In central California, three 1992 natural gas discovery wells were
placed on production after the completion of a pipeline. Union Oil's two
100 percent-owned wells produced at a combined rate of 10.7 million cubic
feet per day after production began during December 1993. The other well,
a farmout, produced at a rate of 3.2 million cubic feet per day. Union
Oil's interest in the farmout well will be 34 percent after payout.
FOREIGN
Union Oil conducts production operations in six foreign countries:
Thailand, Indonesia, Netherlands, United Kingdom, Canada and Zaire. The
company sells most of the natural gas it produces overseas to third parties
under long-term contracts. The crude oil and condensate produced overseas
are primarily sold at spot market prices.
THAILAND. Union Oil began natural gas production in Thailand in 1981
which has become a major operation of the company. In February 1994, Union
Oil's cumulative gas sales from the Gulf of Thailand topped two trillion
cubic feet.
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The company's fields in the Gulf achieved record production -- above
800 million cubic feet per day -- in the first half of 1993. However, that
level was reduced in July when another company began production from the
Bongkot gas field, which also feeds into the main pipeline that carries gas
from the offshore gas fields to Rayong on the country's eastern seaboard.
The Petroleum Authority of Thailand owns and operates the pipeline. The
decrease in Union Oil production has been offset somewhat by the smaller
Khanom pipeline, which started regular deliveries of gas to southern
Thailand in February 1994. The reduced delivery levels will be eliminated
after a second major pipeline to Rayong begins operation. The new pipeline
is scheduled for completion in 1996.
The company's gross production averaged 747 million cubic feet of gas
per day and 27,000 barrels of condensate per day in December 1993, and that
rate is expected to increase slightly in 1994. Union Oil's working
interests in the three contract areas in the Gulf of Thailand average 75
percent. The company's operations in Thailand currently have more than
1,100 employees and an average of 1,500 employees of contractors in its
natural gas operation. Union Oil and its partners have spent more than
$3.6 billion developing the offshore gas fields. Spending estimates for
1994 are approximately $280 million.
Union Oil will continue to develop its natural gas fields in the Gulf
of Thailand to sustain production and prepare for future increases. The
Jakrawan field came on production in December 1993, bringing to eight the
number of gas fields Union Oil operates in the Gulf. Initial tests from
the first production platform indicate that Jakrawan's daily production
could peak at 60 million cubic feet of gas and 1,500 barrels of condensate.
Development of a second platform should begin in late 1994 when the
construction of a pipeline is underway.
New drilling platforms have been installed in the Erawan and Platong
fields. Appraisal drilling in the Pailin field in the Gulf and exploration
onshore in northeast Thailand continue.
Gas demand in Thailand is expected to continue its active growth over
the next 10 to 15 years, providing a market for increased production from
the Gulf and new supplies from neighboring countries. Union Oil and Total,
the operator, have completed successful appraisal drilling in the Yadana
gas field offshore Myanmar. Negotiations are under way to construct a
pipeline and sell the gas to markets in both Myanmar and Thailand.
INDONESIA. Union Oil began oil production in Indonesia in 1972 after
the discovery of the Attaka field. The field's cumulative oil production
reached 500 million barrels in May 1993. Through field extensions and new
discoveries, Union Oil continues to increase the field's oil and gas
production. In August 1993, a new platform was set in the Attaka field.
Daily production from the platform averaged 12,000 barrels of oil and 8
million cubic feet of gas by January 1994, boosting Attaka's total daily
production by more than 30 percent. The company's interest in Attaka is 50
percent.
The new Serang field, 12 miles from Attaka, began production in
December 1993. The platform was set in 328 feet of water, a record depth
for Indonesia. Production is expected to reach 16,000 barrels of oil per
day and 30 million cubic feet of gas per day in 1994. Union Oil's interest
in Serang is 100 percent.
Exploratory drilling is planned in the southeastern end of the
Indonesian archipelago during 1994.
CANADA. Net crude oil production averaged 16,500 barrels per day in
1993, down from 17,900 barrels per day in 1992. Daily production of
natural gas was 42 million cubic feet, a 36 percent decrease from the 1992
level. The decreases were primarily the result of property sales.
Expansion of the gas storage facility at Aitken Creek in Northern
British Columbia continued in 1993. The facility, the largest producer-
owned gas storage in Canada, stores gas for delivery when needed to British
Columbia, the Pacific Northwest and California. The facility can now
deliver 250 million cubic feet of gas per day, up from 150 million cubic
feet per day in 1992. Aitken Creek handled 36 billion cubic feet of gas in
1993, and the company's share was 16 billion cubic feet.
NETHERLANDS. Offshore the Netherlands, the new Horizon oil field is
now producing a total of 12,700 barrels (gross) daily from three wells.
Daily production is expected to exceed 20,000 barrels in 1994 once three
additional wells are drilled. Located in the Dutch North Sea's Block P/9,
the Horizon platform began production
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in August 1993. The field was discovered in 1982. Union Oil's advances in
horizontal drilling technology made field development economically
possible. Horizontal wells are more productive than conventional wells
because they can access more of the oil-bearing zones.
Gross production from the other four fields averaged 8,800 barrels per
day in 1993, down from 10,600 barrels per day in 1992. The decrease
reflects continued natural decline of the fields.
Union Oil holds an 80 percent working interest in all five fields.
UNITED KINGDOM. Gross production from the Heather field averaged 8,100
barrels of oil per day in 1993, a 16 percent decrease from a year ago. The
field is in natural decline and is expected to cease production in 1995.
Union Oil holds a 31.25 percent interest in this field.
ZAIRE. Gross production from five fields averaged 16,200 barrels of
oil per day in 1993, compared with 18,900 barrels per day in 1992. The
decrease was mainly due to natural decline. Union Oil holds a 17.7 percent
interest in these fields.
FOREIGN EXPLORATION AND OTHER
Union Oil pursues exploration opportunities and business development
projects to sustain the long-term growth of the company. The company's
exploration activity in high-risk, high-potential wildcat areas is limited
to projects that pass rigorous geo-technical and economic review. Union Oil
has focused its exploration activities on about 15 trends worldwide. This
assures concentration of technical talent and resources on the most
promising trends with the highest potential value to the company.
Union Oil's business development group has focused on other
opportunities where commercially attractive resources are known to exist
and the challenge is to develop them effectively. Current activities to
market confirmed gas resources offshore Myanmar and to seek a role in the
development of significant oil and gas resources in the Caspian Sea reflect
this strategy.
Negotiations are ongoing between the Republic of Azerbaijan and an
international consortium of oil companies of which Union Oil is a member.
These negotiations, if successfully concluded, represent major resource
potential late in the decade. Although the geologic risk of the project is
minimal and the technical challenges of development seem manageable, the
political situation in the Caucasus region has not yet completely
stabilized. Nevertheless, the region has clear interests in developing its
major energy resources and offers many opportunities for Western expertise
and capital to share the risks and economic rewards. Union Oil is prepared
to join its partners in the preliminary stages of development once a firm,
commercially attractive agreement with the government is reached.
In early 1993, Union Oil signed a petroleum exploration agreement with
the Republic of Trinidad and Tobago for a frontier block 45 miles off the
east coast of Trinidad. Later the company completed an extensive 3-D
seismic survey. The company expects to spend at least $12 million in 1994
to explore the block. Union Oil currently holds a 100 percent interest in
the block, which covers 486 square miles, with an average water depth of
300 feet. Under the terms of the agreement, the company will drill three
wells. The company is currently seeking a partner to jointly explore the
block.
In Syria the company plans to spend $9 million to drill two exploratory
wells in 1994.
In light of the changing political climates and relationships between
international oil companies and host governments in the foregoing and other
parts of the world, including changes by producing countries in posted or
tax-reference prices for crude oil, increases in tax rates (sometimes
retroactively) and demands for increased participation in the ownership of
operations, it is recognized that there could be changes in the status of
Union Oil's activities in these and other foreign countries during the
coming years.
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OPERATING AND RESERVE STATISTICS
Set forth below are consolidated oil and gas reserve and operating data:
<TABLE>
<CAPTION>
1993 1992 1991
----- ----- -----
<S> <C> <C> <C>
Net proved reserves at year end: /(a)/
Crude oil and condensate - million
barrels
United States 483 506 529
Foreign 281 288 270
----- ----- -----
Total 764 794 799
Natural gas - billion cubic feet
United States 3,727 3,831 4,043
Foreign 2,905 2,906 2,815
----- ----- -----
Total 6,632 6,737 6,858
Net daily production: /(a)/
Crude oil and condensate - thousand
barrels
United States 148 151 156
Foreign 98 100 101
----- ----- -----
Total 246 251 257
Natural gas - million cubic feet
United States 952 933 899
Foreign 647 647 624
----- ----- -----
Total 1,599 1,580 1,523
Natural gas liquids - thousand barrels
Plant 4 5 5
Leasehold (b) 16 13 12
----- ----- -----
Total 20 18 17
Natural gas sales to public - million
cubic feet daily
United States 752 766 761
Foreign 670 661 629
----- ----- -----
Total 1,422 1,427 1,390
</TABLE>
For additional information regarding oil and gas financial data, and
oil and gas reserve data and its related present value of future net cash
flow, see pages 48 through 53 of this report.
During 1993, certain estimates of underground oil and gas reserves were
filed with the Department of Energy under the name of Union Oil. Such
estimates were consistent with reserve data filed with the Securities and
Exchange Commission.
- - ------------------
(a) Includes net profit type agreements on a gross basis. Natural gas is
reported on a wet gas basis; production excludes gas consumed on lease.
(b) Net of plant retention.
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OIL AND GAS ACREAGE
<TABLE>
<CAPTION>
As of December 31, 1993
(thousands of acres)
-----------------------------------------
Proven Acerage Prospective Acerage
----------------- ---------------------
Gross Net Gross Net
------ ------ ------- ------
<S> <C> <C> <C> <C>
United States 1,563 1,145 2,636 1,804
Far East 276 200 32,856 15,243
Other Foreign 270 148 7,663 4,572
----- ----- ------ ------
Total 2,109 1,493 43,155 21,619
====== ====== ====== ======
</TABLE>
PRODUCIBLE OIL AND GAS WELLS
<TABLE>
<CAPTION>
As of December 31, 1993
------------------------------------------
Oil Gas
------------------ ------------------
Gross Net Gross Net
------ ----- ------ -----
<S> <C> <C> <C> <C>
United States 8,994 4,985 1,466 850
Far East 171 121 322 238
Other Foreign 1,528 636 450 311
------ ------ ----- ------
Total 10,693 5,742 2,238 1,399
====== ===== ===== =====
</TABLE>
The company had 343 gross and 220 net wells with multiple completions.
DRILLING IN PROGRESS
<TABLE>
<CAPTION>
As of December 31, 1993
-----------------------
Oil and Gas Wells
-----------------------
Gross Net
-------- ---------
<S> <C> <C>
United States 44 30
Far East 41 30
Other Foreign 12 6
--- ---
Total 97 66
=== ===
</TABLE>
The company had ten secondary recovery projects in process of
installation at December 31, 1993.
NET OIL AND GAS WELLS COMPLETED AND DRY HOLES
<TABLE>
<CAPTION>
Productive Dry
---------------- ----------------
1993 1992 1991 1993 1992 1991
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Exploratory
United States 9 5 7 11 11 15
Far East 4 - - 3 4 8
Other Foreign 1 - - 4 4 9
--- --- --- --- --- ---
Total 14 5 7 18 19 32
=== === === === === ===
Development
United States 164 155 140 7 8 6
Far East 60 68 44 4 4 1
Other Foreign 17 17 19 2 4 2
--- --- --- --- --- ---
Total 241 240 203 13 16 9
=== === === === === ===
</TABLE>
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REFINING, MARKETING AND TRANSPORTATION ACTIVITIES
REFINING
Union Oil owns and operates three refineries in California. The
company also has a 50 percent interest in the Chicago Refinery (Illinois),
which is operated by UNO-VEN.
The refineries manufacture a complete line of high-quality petroleum
products and certain basic chemicals, including automotive and aviation
gasolines, liquefied petroleum gases, naphthas and solvents, jet and
turbine fuels, kerosine, diesel oils, automotive and industrial lubricating
oils, waxes, asphalts, residual fuel oils and petroleum coke. Rated
capacities of crude oil processing units for the four refineries are
summarized below.
<TABLE>
<CAPTION>
Refinery Barrels Per Day
- - --------- ---------------
<S> <C>
California
Los Angeles-Wilmington and Carson plants 125,000
San Francisco 77,000
Santa Maria* 44,000
Illinois
Chicago (equity share) 73,500
</TABLE>
The Carson plant was purchased in 1991 and was fully integrated into
Union Oil's refining system in 1992. During 1993, additional pipelines
were completed to interconnect the Wilmington and Carson plants to increase
the reliability and flexibility of refinery operations. Also, the company
moved the main components of a gas-oil hydrotreater from its closed shale-
oil facility in Colorado to the Carson plant. The company plans to install
the hydrotreater during 1994. The new unit will increase hydrotreating
capacity at Carson by nearly 30 percent, thereby boosting its gasoline
production.
Union Oil's California refining system operates in a difficult business
climate, primarily because of increasingly stringent environmental
regulations. Reformulated gasoline, manufactured to Environmental
Protection Agency (EPA) standards, must be available for sale by January
1995 in compliance with the Federal Clean Air Act Amendments of 1990. By
March 1996, the more stringent California Air Resources Board (CARB)
standards take effect in California. Union Oil will complete EPA gasoline
manufacturing facilities at its Los Angeles refinery in the fourth quarter
of 1994. Construction of facilities to produce CARB gasoline is scheduled
for completion at the Los Angeles and San Francisco refineries in late
1995.
Union Oil expects to spend approximately $210 million in 1994 and $175
million in 1995 to modify its refineries in order to produce these
reformulated fuels. The goal is to maximize production of reformulated
fuels while controlling costs.
In the third quarter of 1993, Union Oil began producing diesel fuel to
meet CARB requirements. Through an innovative approach, the company was
able to start production of the CARB formulation with relatively modest
capital expenditures.
Union Oil's Los Angeles Refinery only suffered minor damage when a
major earthquake hit Southern California on January 17, 1994.
_________________________
* Produces unfinished products for further processing at the company's San
Francisco and Los Angeles refineries.
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The company's input to crude oil processing units and refinery production
data, including its equity portion of UNO-VEN, are shown below.
<TABLE>
<CAPTION>
1993 1992 1991
------------------------
Thousand Barrels per day
<S> <C> <C> <C>
Input to crude oil processing units
Crude oil 273 269 247
Other materials 15 17 16
---- ---- ----
Total 288 286 263
==== ==== ====
Refinery production
Gasoline 158 152 152
Kerosine, heating oil and diesel fuel 72 72 69
Fuel oil 19 24 31
Other products 68 64 45
---- ---- ----
Total 317 312 297
==== ==== ====
</TABLE>
MARKETING
Union Oil markets gasoline and other refined petroleum products in the
United States under the "Unocal 76" trade name. Gasoline is marketed,
directly or through jobbers and marketers, to consumers at retail service
stations. Substantially all retail outlets, including locations owned and
leased by the company, are operated by independent dealers. The retail
outlets also sell branded tires, batteries and other automobile
accessories.
In addition, jet fuels, diesel fuel, lube oil, and heavy fuel oil are
marketed to commercial users. The company's crude supply and
transportation group also markets crude oil produced by Union Oil or
purchased from others.
WEST COAST. Union Oil's retail marketing on the West Coast covers
seven states: California, Arizona, Nevada, Hawaii, Washington, Oregon and
Alaska. The company has about a 13.5 percent market share in the greater
Los Angeles metropolitan area which represents one of the world's largest
regional gasoline markets. The West Coast marketing network includes 236
wholesale marketing stations and terminals, and approximately 1,500 service
stations.
Over several years, Union Oil has worked to strengthen its retail
marketing effort. In October 1993, the company introduced co-branded, no-
fee Visa and Mastercard credit cards. Card users earn a one percent rebate
on all purchases, credited monthly against purchases from Unocal 76
stations. By March 1994, Associated National Bank of Delaware had opened
more than half a million co-branded accounts. Union Oil continues to offer
its private label card, with 1.4 million active accounts. Union Oil plans
to outsource the data processing of its private label credit card program.
Union Oil signed an agreement with First Data Resources to handle the
processing at its center in Tulsa, Oklahoma. The move is expected to occur
during the second quarter of 1994.
The company is also investing in improved technology at its service
stations. A satellite-based electronic point-of-sale system installed at
900 stations will speed credit card transactions and reduce their cost. By
the end of 1994, nearly 330 service stations are scheduled to have card
readers in the gasoline dispensers.
The company continues its low-cost programs to help its independent
dealers increase station volumes. These include improving service station
appearance and lighting, and surveying customers to identify ways to
improve the quality of service.
SOUTHEAST MARKETING AND AUTO/TRUCKSTOPS. At the end of 1993, Union Oil
has substantially completed the phase-out of its marketing operations in
the southeastern United States. Union Oil has lube oil terminals and
blending operations in Savannah, Georgia, which have been integrated into
the company's system.
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In early 1993, the company completed the sale of its national
auto/truckstop system to National Auto/Truckstops, Inc. (National) for
approximately $180 million. The sale included the transfer of 140 branded
facilities of which 97 were Union Oil-owned locations. National markets
its products under the "76" trade name.
The company's sales volumes of refined products, crude oil and natural
gas liquids, including its equity portion of UNO-VEN, are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------------------------
Thousand Barrels Per Day
--------------------------
<S> <C> <C> <C>
Petroleum Products
Gasoline 194 235 266
Kerosine, heating oil and diesel fuel 93 121 126
Fuel Oil 13 17 28
Other products 45 44 16
---- ---- ----
Total 345 417 436
==== ==== ====
Crude Oil
Sales 375 414 434
Purchases 371 421 478
Natural gas liquids 22 24 21
</TABLE>
The decline in sales volume from 1991 was principally due to the phase-
out of the company's marketing operations in the southeastern United States.
TRANSPORTATION
Union Oil's petroleum supply and transportation operations provide
important support functions, keeping refineries supplied with feed stocks
and transporting products to market. A substantial part of Union Oil's
crude oil production and purchases is transported to the company's
refineries or to selling locations by approximately 8,700 miles of raw
material pipelines which Union Oil owns, wholly or partially, or leases.
Union Oil also has interests in approximately 7,400 miles of refined
product pipelines, either owned or through 17 joint venture pipelines. The
company has a 20.75 percent interest in the Colonial Pipeline Company. The
Colonial system runs from Texas to New Jersey, and transports a significant
portion of all liquefied petroleum products consumed in its 13-state market
area.
Unocal Pipeline Company, a wholly owned subsidiary, has a 1.36 percent
participation interest in the Trans-Alaska Pipeline System (TAPS), which
transports crude oil from the North Slope of Alaska to the port of Valdez
in Alaska. In 1993, TAPS oil throughput averaged 1.7 million barrels per
day, of which Union Oil's share was approximately 23,000 barrels per day.
Union Oil's marine fleet at year-end 1993 consisted of one crude oil
tanker, two refined product tankers and one chemical product tanker. The
company also has an extensive fleet of product tank trucks.
THE UNO-VEN COMPANY (UNO-VEN)
UNO-VEN, a refining and marketing partnership in the Midwest, owns the
Chicago Refinery, 12 product terminals, 4 lubricant terminals and a lube
oil blending and packaging plant. UNO-VEN has a long-term crude oil supply
agreement with a subsidiary of Petroleos de Venezuela, S.A. (PDVSA) which
provides 135,000 barrels per day of Venezuelan crude as feedstock for the
refinery through the year 2009. All products produced from its refinery
operations are marketed under the "76" trade name. UNO-VEN supplies,
directly or through jobbers and marketers, approximately 2,670 service
stations and 51 truckstops. UNO-VEN's wholesale marketing and bulk
distribution network consists of 250 stations.
UNO-VEN is an Illinois general partnership. The managing general partners,
each with a 50 percent interest, are Midwest 76, Inc., a subsidiary of
Union Oil, and VPHI Midwest, Inc., a Venezuela Petroleum Holdings, Inc.
(VPHI) subsidiary. VPHI is a subsidiary of PDVSA.
10
<PAGE>
CHEMICALS & MINERALS OPERATIONS
Union Oil is involved in the production and marketing of agricultural,
carbon and mineral products. These businesses are divided into two groups
described below.
AGRICULTURAL PRODUCTS. This group principally manufactures and markets
nitrogen-based fertilizers for wholesale markets. Union Oil is a major
fertilizer supplier for U.S. farmers west of the Rockies and to the Pacific
Rim markets.
In February 1993, the company's wholly owned subsidiary, the PureGro
Company, sold its remaining 33 agricultural retail outlets, primarily in
the western United States.
Union Oil's primary fertilizer manufacturing plants, located in Kenai,
Alaska, produce ammonia and urea for agricultural applications using
natural gas as feedstock. The natural gas comes primarily from nearby
Union Oil-operated fields. This operation is supported by a system of West
Coast terminals, and product upgrading plants in Kennewick, Washington, and
West Sacramento, California.
Union Oil's agricultural products operations faced major challenges
with China's reduction in urea imports and increased exports of ammonia and
urea from former Soviet republics. However, by year-end 1993, production
in the former Soviet republics was diminishing and markets began to return
to the pre-1993 balance. While domestic markets were impacted by the
international market, Union Oil serves a stable, mature market for nitrogen
fertilizers in the western United States.
In May 1993, Union Oil completed its first shipment since 1974 to
Vietnam. The Kenai plant shipped 18,000 tons of urea, primarily for rice
cultivation. This market is expected to grow as a result of the
normalization of U.S.-Vietnam trade relations announced in February 1994.
CARBON AND MINERAL PRODUCTS. Green petroleum coke, a by-product of
refining operations, is calcined for use in aluminum production and other
industrial applications. Green sponge coke is also sold in the United
States and overseas as fuel. Calcining plants are located adjacent to
Union Oil's Santa Maria and San Francisco refineries and UNO-VEN's Chicago
Refinery.
Petroleum coke sales were reduced in 1993 because of the recession in
the aluminum industry. Increased coke sales for chemical reduction
processes and fuel partially offset the decline.
The Needle Coker Company, a joint venture equally owned by Union Oil
and UNO-VEN, produces calcined needle coke at facilities adjacent to UNO-
VEN's Chicago Refinery. Needle coke is a high quality petroleum coke used
to make graphite electrodes for the production of steel in electric arc
furnaces.
Through its wholly owned subsidiary, Poco Graphite, Inc., the company
manufactures premium graphite materials for use in electrodes,
semiconductors, biomedical products and other advanced technologies. The
subsidiary experienced its seventh consecutive year of sales growth.
Construction is under way to expand the company's manufacturing capacity in
Decatur, Texas.
Union Oil's mineral operations are carried out by Molycorp, Inc., a
wholly owned subsidiary, which mines, processes and markets lanthanides.
It operates a lanthanide mine and mill, and a chemical plant at Mountain
Pass, California. Lanthanide elements have a variety of applications in
industrial and electronic products, including high-strength magnets,
television phosphors, and auto and refining catalysts. Lanthanide markets
have become highly competitive over the past 10 years with the entry of
suppliers from China, Japan and Eastern Europe. Molycorp continued to
focus its production on high-quality cerium of which demand is growing for
use in automobile catalytic converters and glass to help filter ultraviolet
radiation.
Molycorp also owns an approximate 45 percent interest in CBMM, a
Brazilian company which is the world's largest niobium producer. Niobium
is used as a hardening agent in steel.
11
<PAGE>
Operations have been suspended at Molycorp's molybdenum mine and mill
at Questa (New Mexico), its molybdenum roasting facility in Washington
(Pennsylvania), and its lanthanide processing facilities at Washington and
York (Pennsylvania) and Louviers (Colorado).
The company's production of ammonia, processed sponge coke and
lanthanides are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------------------------
<S> <C> <C> <C>
Ammonia - tons daily 3,510 3,452 3,082
Processed sponge coke - tons daily 1,398 1,727 1,595
Lanthanide concentrates - million pounds 39 47 41
</TABLE>
GEOTHERMAL OPERATIONS
Union Oil is the world's largest supplier of geothermal energy for
power generation, with major operations in California and the Philippines
and a new development project in Indonesia. The production of geothermal
resources for power generation has been a core business for Union Oil for
more than 20 years. Union Oil's reserves of 125 million megawatt-hours
represents the energy equivalent of 188 million barrels of oil. In 1993,
net geothermal electricity production from worldwide operations was 7.3
million megawatt-hours, the energy equivalent of 10.9 million barrels of
oil.
In 1993, Union Oil sold its geothermal operations in the Imperial
Valley of California. The underlying geothermal reserves sold only
represented about nine percent of the company's worldwide geothermal
reserves.
Union Oil expects to begin supplying steam for power generation at the
company's first geothermal development in Indonesia in the second quarter
of 1994. Demand for electricity is rapidly increasing in this nation of
nearly 200 million people. Union Oil currently has proven geothermal
reserves on the island of Java that represent about 35 million barrels of
crude oil equivalent. The company will begin exploration of very
encouraging resource prospects on the island of Sumatra in 1994.
In December 1993, Union Oil tested steam production in the Gunung Salak
geothermal field, located near Jakarta. Union Oil will supply steam to two
generating plants with a combined 110-megawatt capacity under a contract
with PERTAMINA, the Indonesian state oil company. The plants are scheduled
to begin operation in the second quarter of 1994. The contract also calls
for Union Oil to develop steam to supply an additional 220 megawatts of
generating capacity at Salak as development proceeds. Union Oil is now
negotiating to expand its role and accelerate development.
On northern Sumatra, Union Oil will begin exploration drilling in the
Sarulla block in mid-1994. The company signed a contract with PERTAMINA in
February 1993 to appraise and develop geothermal resources of up to 1,000
megawatts in the 240,000-acre tract south of Medan. If this resource is
proven, Union Oil will build and operate the power plants at Sarulla under
an energy sales contract with PLN, the Indonesian State Electric Company.
The contract calls for the transfer of the power plants to PLN after an
agreed period of operation. Following the transfer, Union Oil would
continue to sell geothermal energy to PLN for the remaining project life.
Below are geothermal reserves and operating data:
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Net proved geothermal reserves at year
end:
- billion kilowatt-hours 125 128 131
- million equivalent oil barrels 188 192 197
Net daily production:
- million kilowatt-hours 20 23 23
- thousand equivalent oil barrels 30 34 35
Net geothermal lands in acres
- proven 20,249 34,931 34,134
- prospective 457,943 359,016 362,573
Net producible geothermal wells 266 268 270
</TABLE>
12
<PAGE>
OTHER OPERATIONS
REAL ESTATE
The Real Estate Division is responsible for managing and disposing of
surplus company-owned properties. The Division manages office facilities
and also handles the office leasing and sub-leasing operations for the
company. Unocal Land & Development Company, a wholly owned subsidiary, is
responsible for the development and sale of certain real estate assets for
industrial, commercial and residential purposes.
RESEARCH
Union Oil has approximately 560 company research scientists, engineers
and support personnel working at a research center located in Brea,
California. Their primary functions are to provide the operating
divisions with technical services which improve the overall performance of
their operations and to develop new and improved products, processes and
techniques for use in every phase of the petroleum business and in
pertinent areas of the chemical and geothermal industries. A majority of
the research group reports to the operating divisions.
Union Oil owns over 1,223 active patents in the United States and
abroad which are generally available to others under revenue producing
licensing agreements. In 1993, Union Oil sold 19 such licenses.
The company's total research and development expenditures were $29
million in 1993, $50 million in 1992 and $63 million in 1991. Expenditures
for technical services were $57 million, $44 million and $41 million for
the years 1993, 1992 and 1991, respectively.
COMPETITION
The petroleum industry is highly competitive. Union Oil competes with
numerous companies in all phases of its petroleum operations. The company
is also in competition with other producers and marketers of non-petroleum
energy.
Competition for finding, developing and producing oil and gas resources
occurs in bidding for domestic prospective leases or foreign exploration
rights, acquisition of geological, geophysical and engineering knowledge,
and the cost-efficient development and production of proved oil and gas
reserves. The future availability of prospective domestic leases is
subject to competing land uses and federal, state and local statutes and
policies. The company's geothermal operations are in competition with
producers of other energy resources.
Competition also exists in the manufacture, distribution and marketing
of petroleum products. In the refining segment, the ability to produce
high-value products at a competitive cost, while meeting regulatory
standards, is of primary importance. On the marketing side, price,
customer service, advertising and new product development are the major
factors affecting competition. In the chemical businesses, the key
competitive factors for the company's fertilizer products are prices, cost
and availability of gas supplies; and for petroleum coke, product quality
and prices.
EMPLOYEES
As of December 31, 1993, Union Oil had 13,607 employees compared with
14,674 a year ago. The decrease principally reflects the impact of
business divestments. Of the total employees, 2,248 were represented by
various labor unions. Salaries, wages and employee benefits totaled $744
million in 1993, $816 million in 1992 and $842 million in 1991.
Collective bargaining agreements covering represented employees at
Union Oil's refineries and various other facilities were entered into
during February of 1993. Most of these new labor agreements are for three-
year terms.
13
<PAGE>
GOVERNMENT REGULATION
Certain interstate crude oil pipeline subsidiaries of Union Oil are
regulated (as common carriers) by the Federal Energy Regulatory Commission.
As lessee from the United States government, Union Oil is subject to
Department of the Interior regulations covering activities on the Outer
Continental Shelf (OCS), and on onshore lands. In addition, state
regulations impose strict controls on both state-owned and privately-owned
lands.
Some federal and state bills would, if enacted, significantly and
adversely affect Union Oil and the petroleum industry. These include the
imposition of additional taxes, divestiture of certain operations, land use
controls and restrictions on development of the OCS.
Regulations promulgated by the Environmental Protection Agency (EPA),
the Department of the Interior, the Department of Energy, the State
Department, the Department of Commerce and other government agencies are
complex and subject to change. New regulations may be adopted. The
company cannot predict how existing regulations may be interpreted by
enforcement agencies or court rulings, nor whether amendments or additional
regulations will be adopted, nor what effect such changes may have on its
business or financial condition.
ENVIRONMENTAL REGULATION
Federal, state and local laws and provisions regulating the discharge
of materials into the environment or otherwise relating to environmental
protection have a continuing impact on the company's operations.
Significant federal legislation applicable to the company's operations
includes the following: the Clean Water Act, as amended in 1977; the Clean
Air Act, as amended in 1977 and 1990; the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976, as amended
in 1984; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended in 1986 (CERCLA); the Toxic Substances
Control Act of 1976, as amended in 1986; and the Oil Pollution Act of 1990.
Various state and local governments have adopted or are considering the
adoption of similar laws and regulations.
The California Air Resources Board and the federal government have both
adopted new standards for gasoline. The Federal Clean Air Act Amendments
of 1990 require the manufacture and sale of reformulated gasolines in areas
not meeting specified air quality standards by January 1, 1995. These
requirements apply to the nine areas which have the worst ozone pollution,
including Los Angeles and San Diego. The California Air Resources Board
has established stricter standards than those imposed by the federal rules.
These standards for reformulated gasoline are to become effective March 1,
1996. The company expects to spend $450 million over the three years
ending in early 1996 to modify its refineries to meet these regulatory
standards.
The Air Quality Management Plan for the Los Angeles Basin, as adopted,
and the Clean Air Act Amendments could, by the year 2000, significantly and
adversely affect all of the company's petroleum operations in the Los
Angeles area, including its refining operations located near the Los
Angeles harbor and in Carson. The company believes it can continue to meet
the requirements of existing laws and regulations, although changes in
operating procedures and the acquisition of additional pollution control
facilities may be necessary to meet future regulatory standards.
The company has been a party to a number of administrative and judicial
proceedings under federal, state and local provisions relating to
environmental protection. These proceedings include actions for civil
penalties or fines for alleged environmental violations, permit proceedings
including hearing requests into the issuance or modification of National
Pollution Discharge Elimination System (NPDES) permits, requests for
temporary variance from air pollution regulations for refinery operations,
and similar matters. The company has also joined or intervened with the
American Petroleum Institute, the Western States Petroleum Association and
with other oil companies in actions relating to guidelines and proposed and
final regulations of the EPA, the Department of the Interior and other
agencies.
In 1993, the company spent approximately $133 million in capital
expenditures in order to comply with and, in some cases, exceed the
requirements of applicable federal and state environmental regulations.
14
<PAGE>
The company also incurred approximately $235 million of environment-related
expense. This includes expenditures to remediate past contamination and
Union Oil's operating, maintenance, and administrative costs to maintain
environmental compliance. Estimated 1994 environmental expenditures are
$296 million in capital and $242 million in expense.
For information on the company's environmental exposure, see Legal
Proceedings below and the Environmental Matters section of Management's
Discussion and Analysis on page 22 and Note 16 of the notes to consolidated
financial statements on page 43 of this report.
OTHER MATTERS
In the first quarter of 1994, the company plans to write down its
remaining investment of $24.6 million in the Guadalupe Oil Field. On
March 4, 1994, Union Oil announced that if negotiations with the landowner
permit the company to do so, it will permanently cease production at the
field which currently produces 170 barrels of low gravity oil per day. The
net cost to abandon the field is approximately $8 million.
On March 15, 1994, the company pleaded no contest to three misdemeanor
counts and paid penalties of $1.5 million. The remaining misdemeanor
counts against the company and six employees were dropped by the San Luis
Obispo County District Attorney. On March 23, 1994, a lawsuit seeking
civil penalties was filed by the California Attorney General. See Legal
Proceedings on page 16, Item 4, for additional information.
The company will continue to concentrate on the cleanup of the diesel-
like additive formerly used to help produce the heavy crude oil. To date
the company has spent about $1.5 million in cleanup costs. Additional
immediate remedial cleanup is estimated at another $2 million. A longer
term remediation plan is being formulated. Although the cleanup cost has
not been determined it is not expected to have a material effect on the
company's operating results or financial condition.
15
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to amendment to report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNION OIL COMPANY OF CALIFORNIA
--------------------------------
(Registrant)
by:/s/ CHARLES S. MCDOWELL
----------------------
(Charles S. McDowell,
Vice President and Comptroller)
Dated: June 28, 1994
- - ---------------------
16
<PAGE>
UNION OIL COMPANY OF CALIFORNIA
EXHIBIT INDEX
Exhibit 3.1/*/ Restated Articles of Incorporation of Union Oil, as amended
through December 5, 1988.
Exhibit 3.2 Bylaws of Union Oil (incorporated by reference to
Exhibit 3 to Union Oil's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1992, File No. 1-554.
Amendments to bylaws to be effective on and after April
25, 1994 are incorporated by reference to Union Oil's
Current Report on Form 8-K, dated March 2, 1994, File
No. 1-554).
Exhibit 4 Instruments Defining the Rights of Security Holders,
Including Indentures.
The following Exhibits 10.1 through 10.7 are compensatory plans or
agreements required to be filed by Item 601 (b) (10) (iii) (A) of
Regulation S-K.
Exhibit 10.1 The Management Incentive Program (incorporated by
reference to Unocal Corporation's Registration Statement
on Form S-8, File No. 33-43231, filed October 8, 1991).
Exhibit 10.2 The Long-Term Incentive Plan of 1985 (incorporated by
reference to Unocal Corporation's Registration Statement
on Form S-8, File No. 2-93452, filed September 28,
1984).
Exhibit 10.3 Supplemental Retirement Plan for Key Management
Personnel, as amended and effective January 1, 1989
(incorporated by reference to Exhibit 10.3 to Union
Oil's Annual Report on Form 10-K for the year ended
December 31, 1990, File No. 1-554).
Exhibit 10.4 Other Compensatory Arrangements (incorporated by
reference to Exhibit 10.4 to Union Oil's Annual Report
on Form 10-K for the year ended December 31, 1990, File
No. 1-554).
Exhibit 10.5 Directors' Restricted Stock Plan of 1991 (incorporated
by reference to Exhibit B to Unocal's Proxy Statement
for its 1991 Annual Meeting of Shareholders, File No. 1-
8483).
Exhibit 10.6 Form of Indemnity Agreement between Union Oil and each
of its directors (incorporated by reference to Exhibit A
to Unocal's Proxy Statement for its 1987 Annual Meeting
of Shareholders, File No. 1-8483).
Exhibit 10.7 Consulting Agreement, dated April 26, 1993, between
Union Oil Company of California, dba Unocal, and Claude
S. Brinegar.
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges
Exhibit 23 Consent of Coopers & Lybrand
- - -----------------------------
* Filed with this amendment.
<PAGE>
EXHIBIT 3.1
FILED MAY 18, 1978
OFFICERS' CERTIFICATE
RESTATED ARTICLES OF INCORPORATION
OF
UNION OIL COMPANY OF CALIFORNIA
a California Corporation
George C. Bond and R. O. Hedley certify that:
1. They are a duly elected and acting Vice President and the
duly elected and acting Secretary respectively, of said
corporation.
2. The Articles of Incorporation of said corporation shall be
amended and restated to read in full as follows:
One: The name of the corporation is: UNION OIL COMPANY OF
CALIFORNIA.
Two: The purpose of the corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of California other than the
banking business, the trust company business, or the practice of a
profession permitted to be incorporated by the California
Corporations Code.
Three: The corporation shall have the power to offer, issue
and to sell pro rata to the holders of its Common Shares, shares of
its capital stock other than shares of stock issued and sold under
and pursuant to the provisions of (1) and (2) of the second
paragraph of this Article Three, and to sell to others any shares
of stock so offered to the holders of the Common Shares and not
taken by them for such price or consideration as the Board of
Directors may determine.
Notwithstanding the foregoing provisions of this Article
Three, (1) the Corporation may issue shares of its capital stock,
and of any future increase thereof, in such amounts as may be
determined by the affirmative vote of two-thirds of the entire
Board of Directors, in exchange for or in payment for property to
be acquired by the Corporation for carrying out any of the
foregoing purposes, without first offering such stock to its
<PAGE>
stockholders; also, upon affirmative vote of two-thirds of the
entire Board of Directors of this Corporation, and without any
prior offering to stockholders of this Corporation, the Corporation
may grant to the purchasers or the holders of any bonds or
debentures or evidences of indebtedness of this Corporation,
optional rights to convert any of such securities, in whole or in
part, into shares of the capital stock of this Corporation, and of
any future increase thereof, and also of any subsequent offering
thereof, or the optional rights to purchase any of such shares, all
on such terms and conditions and at such price or prices, and in
such manner, at such times and in such amounts as may be determined
by such vote of directors, and on any such optional rights being
exercised by the holder thereof, may issue the capital stock called
for by the exercise of such rights; and (2) the Corporation may
offer, issue and sell, and grant options to purchase Common Shares
to such employees of the Corporation and its subsidiaries, in such
amounts, upon such terms and conditions and for such consideration
as the Board of Directors may from time to time determine, but not
to exceed in the aggregate 500,000 Common Shares; provided however,
that such maximum amount shall be subject to adjustment (in the
same manner as the Corporation's outstanding Common Shares) in the
event a dividend is declared upon the Common Shares of the
Corporation payable in Common Shares or in the event the
outstanding Common Shares of the Corporation shall be changed into
or exchanged for a different number or class of shares of stock or
other securities of the Corporation or of another corporation,
whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, and that the
provisions of this section shall be applicable to the number or
class of shares of stock or other securities, which in accordance
herewith, may be substituted for such 500,000 Common Shares; and
provided further that in the case of any sale of such shares the
price shall not be less than the fair market value thereof at the
time of sale as determined by the Board of Directors, and that in
the case of any option to purchase such shares, the price shall not
be less than the fair market value thereof at the time of granting
such option, as so determined. For the purposes and within the
aggregate limit above mentioned, such Common Shares (subject to
adjustment as above provided) may be issued without any prior
offering to stockholders of this Corporation.
Four: The number of directors of this Corporation shall be
not less than twelve nor more than fifteen. The exact number of
directors shall be fixed, within the limits specified herein, by a
by-law or amendment thereof duly adopted by the shareholders or by
the Board of Directors of this Corporation.
Five: The Corporation is authorized to issue one class of
shares of capital stock to be designated Common Shares. The
aggregate par value of all shares that are to have a par value is
$541,666,666.66-2/3. The number of shares that are to have a par
-2-
<PAGE>
value is 65,000,000, all of which shall be Common Shares, and the
par value of each of such shares is $8-1/3.
Six: The Corporation elects to be governed by all of the
provisions of the General Corporation Law of California (as enacted
by Chapter 682 of the 1975 California Statutes and as subsequently
amended) not otherwise applicable to it under Chapter 23 thereof.
3. The foregoing amendment and restatement has been approved by
the Board of Directors of said Corporation.
4. The foregoing amendments may be adopted with approval of the
Board of Directors alone, because such amendments (i) conform the
statement of purposes and powers to subdivision (b) of Section 202
of the General Corporation Law and may be adopted pursuant to
Section 2302 of the General Corporation Law; (ii) delete references
to the location of the principal office and may be adopted pursuant
to Section 2302 of the General Corporation Law; (iii) delete the
names and addresses of the persons appointed to act as initial
directors and omit the name and address of the initial agent and
may be adopted pursuant to Section 902(d) of the General
Corporation Law; and (iv) delete references to the Preferred Shares
which were redeemed by the Corporation, and may be adopted pursuant
to Section 510(b) of the General Corporation Law. All 10,275,397
Preferred Shares authorized to be issued were issued in exchange
for shares of the Pure Oil Company when said corporation was merged
into Union Oil Company of California. All of said authorized
Preferred Shares were converted or redeemed by the Corporation.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on April 24, 1978.
s/George C. Bond
----------------
George C. Bond
s/R. O. Hedley
--------------
R.O.Hedley
The undersigned, George C. Bond and R. O. Hedley, a Vice
President and the Secretary, respectively, of Union Oil Company of
California, each declares under penalty of perjury that the matters
set out in the foregoing Certificate are true of his own knowledge.
Executed at Los Angeles, California on April 24, 1978.
s/George C. Bond
-----------------
s/R. O. Hedley
--------------
-3-
<PAGE>
FILED APR 30, 1979
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
UNION OIL COMPANY OF CALIFORNIA
a California Corporation
George C. Bond and R. O. Hedley certify that:
1. They are a duly elected and acting Vice President and the
duly elected and acting Secretary respectively, of said
corporation.
2. The Articles of Incorporation of said corporation shall
be amended by revising Article Five to read as follows:
Five: The Corporation is authorized to issue one class
of shares of capital stock to be designated Common Shares. The
aggregate par value of all shares that are to have a par value is
$541,666,666.66-2/3. The number of shares that are to have a par
value is 130,000,000, all of which shall be Common Shares, and the
par value of each of such shares is $4-1/6.
Upon the effective date hereof, each outstanding share of
Common Stock, par value $8-1/3 per share, is hereby split up and
converted into two shares of Common Stock, par value $4-1/6 per
share.
3. The foregoing amendment has been approved by the Board of
Directors of said corporation.
4. The foregoing amendment was approved by the required vote
of the shareholders of said corporation in accordance with Section
902 of the California General Corporation Law; the total number of
outstanding shares of Common Stock, the only class outstanding,
entitled to vote with respect to the foregoing amendment was
43,299,798; and the number of shares voting in favor of the
foregoing amendment equalled or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common
Stock.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on April 30, 1979.
s/George C. Bond s/R. O. Hedley
- - ----------------- ---------------
George C. Bond R. O. Hedley
Vice President Secretary
The undersigned George C. Bond and R. O. Hedley the Vice
President and the Secretary, respectively of Union Oil Company of
California, each declares under penalty of perjury that the matters
set out in the foregoing Certificate are true of his own knowledge.
Executed at Los Angeles, California, on April 30, 1979.
s/George C. Bond s/R. O. Hedley
- - ---------------- ---------------
George C. Bond R. O. Hedley
-2-
<PAGE>
FILED JUN 10, 1980
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
UNION OIL COMPANY OF CALIFORNIA
a California Corporation
M. S. Thomson and R.O. Hedley certify that:
1. They are a duly elected and acting Vice President and the
duly elected and acting Secretary respectively, of said
corporation.
2. The Articles of Incorporation of said corporation shall
be amended by revising Article Five to read as follows:
Five: The Corporation is authorized to issue one class of
shares of capital stock to be designated Common Shares. The
aggregate par value of all shares that are to have a par value is
$541,666,666.66-2/3. The number of shares that are to have a par
value is 260,000,000, all of which shall be Common Shares, and the
par value of each of such shares is $2-1/12.
Upon the effective date hereof, each outstanding share of Common
Stock, par value $4-1/6 per share, is hereby split up and converted
into two shares of Common Stock, par value $2-1/12 per share.
3. The foregoing amendment has been approved by the Board of
Directors and is one which may be adopted by the Board alone in
that the corporation has only one class of shares outstanding and
the amendment effects only a stock split and an increase in
authorized shares in proportion thereto.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on July 10, 1980.
s/M.S. Thomson s/R.O. Hedley
- - --------------------------- -----------------------
M. S. Thomson, Vice President R. O. Hedley, Secretary
<PAGE>
The undersigned M. S. Thomson and R. O. Hedley the Vice President
and the Secretary, respectively of Union Oil Company of California,
each declares under penalty of perjury that the matters set out in
the foregoing Certificate are true of his own knowledge.
Executed at Los Angeles, California, on July 10, 1980.
s/M.S. Thomson s/R.O. Hedley
- - --------------- ---------------
M. S. Thomson R. O. Hedley
-2-
<PAGE>
FILED MAY 5, 1986
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
UNION OIL COMPANY OF CALIFORNIA
a California Corporation
Sam A. Snyder and R.O. Hedley certify that:
1. They are a duly elected and acting Vice President and the
duly elected and acting Secretary, respectively, of said
Corporation.
2. The Articles of Incorporation of said Corporation shall be
amended by revising Article Four to read as follows:
Four: The number of directors of this Corporation shall be not
less than eight nor more than fifteen. The exact number of
directors shall be fixed, within the limits specified herein, by a
bylaw or amendment thereof duly adopted by the shareholders or by
the Board of Directors of this Corporation.
3. The foregoing amendment has been approved by the Board of
Directors of said Corporation.
4. The foregoing amendment has been approved by the required
vote of the shareholders of said Corporation in accordance with
Section 902 of the California General Corporation Law; the total
number of outstanding shares of common stock, the only class
outstanding, entitled to vote with respect to the foregoing
amendment was 1,000; and the number of shares voting in favor of
the foregoing amendment equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of common
stock.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate on April 28, 1986.
s/Sam A. Snyder s/R.O. Hedley
- - --------------- --------------
Sam A. Snyder R. O. Hedley
Vice President Secretary
<PAGE>
The undersigned Sam A. Snyder and R.O. Hedley the Vice President
and the Secretary, respectively, of Union Oil Company of
California, each declares under penalty of perjury that the
matters set out in the foregoing Certificate are true of his own
knowledge.
Executed on April 30, 1986 at Los Angeles, California.
s/Sam A. Snyder s/R.O. Hedley
- - --------------- --------------
Sam A. Snyder R.O. Hedley
-2-
<PAGE>
FILED DEC 5, 1988
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
UNION OIL COMPANY OF CALIFORNIA
a California Corporation
Claude S. Brinegar and R.O. Hedley certify that:
1. They are the duly elected and acting Executive Vice President
and Chief Financial Officer and the duly elected and acting
Secretary, respectively, of said Corporation.
2. The Articles of Incorporation of said Corporation shall be
amended by adding Article Seven to read as follows:
Seven: The liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent
permissible under California law. If the California General
Corporation Law is amended after approval by the shareholders of
this article to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of
a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the California General Corporation Law,
as so amended.
Any repeal or modification by the shareholders of the foregoing
paragraph shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
3. The foregoing amendment has been approved by the Board of
Directors of said Corporation.
4. The foregoing amendment has been approved by the required
vote of the shareholders of said Corporation in accordance with
Section 902 of the California General Corporation Law; the total
number of outstanding shares of common stock, the only class
outstanding, entitled to vote with respect to the foregoing
amendment was 1,000; and the number of shares voting in favor of
the foregoing amendment equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of common
stock.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Certificate
on November 28, 1988.
s/Claude S. Brinegar s/R. O. Hedley
- - ----------------------- --------------
Claude S. Brinegar R. O. Hedley
Executive Vice President and Secretary
Chief Financial Officer
The undersigned Claude S. Brinegar and R.O. Hedley, the Executive
Vice President and Chief Financial Officer and the Secretary,
respectively, of Union Oil Company of California, each declares
under penalty of perjury that the matters set out in the foregoing
Certificate are true of his own knowledge.
Executed on November 28, 1988 at Los Angeles, California.
s/Claude S. Brinegar s/R. O. Hedley
- - --------------------- ---------------
Claude S. Brinegar R. O. Hedley
Executive Vice President and Secretary
Chief Financial Officer
-2-
<PAGE>
