SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the month of January, 1999
PETROFINA
(Translation of registrant's name into English)
52 Rue de l'Industrie
B-1040 Brussels
Belgium
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing
the information contained in this Form is also furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "yes" is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b); 82-
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PETROFINA
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PetroFina S.A. January 27, 1999
Public Relations and Communication
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PRESS RELEASE
PetroFina 1998 year results
Highlights:
. increase in recurrent results
. growing cash flow
. record throughput by refineries
. 6,4% growth in sales in the Fina Network
. good resistance of petrochemicals
PetroFina's share of unaudited recurrent (*) Group income for 1998 was 572.6
million euros (BEF 23.1 billion), compared to 567.7 million euros (BEF 22.9
billion) in 1997. The unaudited Group income was 471.1 million euros (BEF 19.0
billion) compared to 547.8 million euros (BEF 22.1 billion) in 1997. The results
were negatively affected by inventory write downs of BEF 8.3 billion after tax
and by accelerated depreciation of BEF 2.4 billion, partly offset by gains on
asset sales of BEF 3.3 billion, as well as other non recurrent income.
PetroFina's share of cash flow amounted to 1,403 million euros (BEF 56.6
billion) as opposed to 1,365.9 million euros (BEF 55.1 billion) in 1997.
During the year, in Europe, refinery throughput increased by 6.6%, exceeding the
previous record, and sales in the Fina network grew by 6.4%. These operating
performances were achieved in a macro-economic climate marked by a collapse of
crude oil prices by some 33%, by a reduction of almost 20% in the price of
American natural gas, by a stabilisation in the dollar exchange rate, and by
contrasting developments in refining margins, a modest rise in Europe and a
sharp fall in the US.
Upstream profits declined markedly following the decline in crude oil and
natural gas prices and as a result of production difficulties at the start-up of
Ekofisk II, in the Norwegian sector of the North Sea.
Downstream profits were stable compared to 1997, the 27% increase recorded in
Europe being offset by the effect of lower refining margins in the US.
Chemical results were down slightly, resisting well against the general
reduction of margins, due to a 7% increase in volume of monomers produced and to
the quality of the products and services of its polymers activity.
The merger of PetroFina and Fina, Inc., its American subsidiary, became
effective on 5 August 1998. This simplifies the Group structure and enables
growth to be achieved in a transatlantic context.
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On 1 December 1998, five shareholders in PetroFina announced their intention to
sell all their PetroFina shares to Total (41% of the share capital) in order to
create the Total Fina group, which wich will become the third largest petroleum
concern in Europe and the fifth largest in the world. On 14 January 1999, the
general meeting of Total shareholders approved this transaction as well as the
principle of a public offer to exchange PetroFina shares on the basis of nine
Total shares for two PetroFina shares. This project was submitted for approval
to the European and American competition authorities, and should be completed in
the second quarter of 1999.
UPSTREAM
In 1998, production of oil and gas amounted to 82.3 million barrels of oil
equivalent compared to 88.7 million barrels of oil equivalent in 1997, a
decrease of 7.2%. Production of oil was 51.1 million barrels compared to 53.9
million barrels in 1997 and sales of natural gas were 187.3 billion cubic feet
compared to 208.9 billion cubic feet in 1997.
The decrease in production is due to the non-operation of Ekofisk for 13 days in
August while the wells and pipelines were connected to the new platforms, and
also to certain technical problems related to the start-up of Ekofisk II. These
problems will be resolved in the first half-year of 1999.
In the British sector of the North Sea, the Delilah gas field, where the Group
holds 18.57%, became operational following its connection to the existing Hewett
field infrastructure.
In Angola, in deep offshore waters, a third and fourth discovery were made in
block 17, where the Group holds 5%. In the same block, the development of the
Girassol field started, following approval by the Angolan authorities.
PetroFina was designated as operator with a 30% interest of block 19, also in
deep offshore waters. The production-sharing contract with the Angolan
authorities was signed in December 1998.
In Vietnam, where PetroFina has sold 30% of its licenses to a Thai partner, a
seventh discovery was made in block 46 in the Gulf of Thailand. Unitisation of
the Bunga Kekwa field, accepted by the Vietnamese and Malaysian authorities,
will enable PetroFina to obtain an interest in this field and to participate in
its production.
In Italy, the interests of PetroFina and its three partners in the three
concessions covering the Tempa Rossa field were brought to 25% each, following
the departure of a previous partner.
In the US, the Group made three commercial discoveries of gas. In Alaska,
production from the Badami field, where PetroFina holds 30%, started in the
month of August.
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DOWNSTREAM
Throughput of Group refineries (excluding Angola) reached 695,500 barrels per
day, which is a 4% increase over the record level of 1997.
The sale of petrol by the Fina network in Europe increased by 6.4%, following
expansion and modernisation of the network and thanks to improved service
quality.
In order to further concentrate its marketing activities around its refineries,
PetroFina entered into an agreement in principle with Shell in September
covering the exchange of Fina's marketing operations in Norway for Shell petrol
stations in the Netherlands. This agreement should enable Fina to significantly
strengthen its commercial impact in the heart of Benelux.
During the summer, as part of the repositioning of its presence in Africa, the
Group sold all of its downstream oil operations in Gabon, Rwanda and Burundi as
well as 49% of its marketing operations in the Congo.
CHEMICALS
In May, the Boards of Directors of PetroFina and BASF approved the construction
of the world's biggest steam cracker on the site of the Group's refinery in Port
Arthur, Texas. This plant, in which PetroFina will hold 40% will produce
ethylene and propylene and will strengthen the Group's industrial integration in
the US with effect from the end of the year 2000.
In the US, two expansion investments have been completed, with the successful
start-up of two new units in the fourth quarter: a production line for high
density polyethylene at Bayport, which doubles the site capacity to 385,000
tonnes per year, and a nineth polypropylene production line in the La Porte
factory, which will increase its annual production capacity to one million
tonnes.
The engineering work for a third production unit for polypropylene on the Feluy
site, with an annual capacity of 380,000 tonnes, has been realized with start-up
forecast for 2001.
During the year, debottleneckings and improvements to the plants in Belgium have
led to additional production capacities for ethylene, polyethylene and
polypropylene of 100,000, 50,000 and 20,000 tonnes each, increasing their annual
production capacities to 1,200,000, 500,000 and 420,000 tonnes respectively.
<PAGE>
PetroFina concluded two agreements with the Solvay group covering industrial and
technical cooperation in the area of high density polyethylene (HDPE): the two
groups will share the production of factories which will be built in Belgium,
one by Solvay and the other by PetroFina, in 2002 and 2005 respectively. The
technical agreement provides access for PetroFina to a worldwide license to
produce HDPE using chrome catalysts, and for Solvay, access to a user license
and PetroFina's technical know-how in the area of metallocenes. Both companies
will combine their research and development into metallocene and other catalysts
to be used in HDPE.
PAINTS
In a general context marked, in the second half year, by the effects of the
Asian crisis on the marine and anti-corrosion paints, the Sigma group achieved a
12% profit increase. In the decorative paints sector, the closure of old
factories in Germany and Denmark, and higher production in France and the
Netherlands, considerably improved productivity and efficiency. Sigma's sales of
paints to industry reached record levels, particularly in coil coatings and
industrial paints.
(*) In order to provide a better measure of the operational performance of the
Group in the present market condition, PetroFina decided to present the
recurrent results in 1998, and to restate the recurrent results for 1997, on the
basis of replacement cost, instead of the LIFO method previously applied. The
accounting profits are not affected by this restatement.
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<TABLE>
<CAPTION>
Financial highlights as at 31th December (*) (in billion BEF)
A. Recurrent income per segment
(Current cost accounting)
North America Europe and rest of the Consolidated
world
<S> <C> <C> <C> <C> <C> <C>
1997 1998 1997 1998 1997 1998
Upstream 1,6 0,2 23,9 12,8 25,5 13,0
Downstream 3,9 1,5 9,5 12,1 13,4 13,6
Chemicals 4,3 4,3 6,2 5,3 10,5 9,6
Paints 1,7 1,8 1,7 1,8
Other activities -0,8 -0,9 -0,8 -0,4 -1,6 -1,3
Operating income 9,0 5,1 40,5 31,6 49,5 36,7
Net financial charges -4,6 -3,1
Taxes -21,3 -10,3
Recurrent consolidated net income 23,6 23,3
PetroFina net income (recurrent) 22,9 23,1
Non recurrent charges and revenues -0,9 -4,1
Consolidated results 22,7 19,2
PetroFina consolidated results 22,1 19,0
Minority interest 0,6 0,2
B. Non recurrent elements
Capital gains on assets sold
Upstream 0,3 1,7 0,8 0,3 2,5
Downstream -0,1 1,7 1,6
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Inventory write down and LIFO effects
Downstream -1,1 -2,1 -0,1 -6,3 -1,2 -8,4
Chemicals -0,2 -1,7 -0,5 -0,2 -2,2
Impairment test SFAS 121 -2,6 -2,6
Accelerated D D & A -0,6 -0,9 -0,6 -0,9
Other non recurrent elements -0,2 -0,9 1,2 -0,9 1,0
Non recurrent taxes 0,3 3,2 1,4 1,7 1,7 4,9
Total non recurrent elements -0,7 0,8 -0,2 -4,9 -0,9 -4,1
C. Cash flow (Group share) 55,1 56,6
D. Data per share (BEF per share)
Net earnings 946 811
Cash flow 2,360 2,415
Average number of share outstanding 23.350.612 23.440.102
F. Operating data
Dollar average rate (BEF/USD) 35,76 36,29
Brent price (USD/barrel) 19,10 12,70
US gas price (USD per thousand cubic 2,60 2,10
feet)
Crude oil production (million barrels) 53,90 51,10
Natural gas production (Billion cubic 208,90 187,30
feet)
Crude processed in refineries 669.100 695.500
(barrels per day)
Crude oil refinery margin in Europe 2,40 2,45
(USD/ barrel)
Polymer production (tons) 2.170.000 2.213.000
(*) Recurrent data related to 97 are restated in current cost accounting
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial highlights as at 31th December (*) (in million USD)
A. Recurrent income per segment
(Current cost accounting)
North America Europe and rest of the Consolidated
world
<S> <C> <C> <C> <C> <C> <C>
1997 1998 1997 1998 1997 1998
Upstream 44,7 5,5 668,0 352,7 712,7 358,2
Downstream 109,0 41,3 265,5 333,5 374,5 374,8
Chemicals 120,2 118,5 173,3 146,0 293,5 264,5
Paints 47,5 49,6 47,5 49,6
Other activities -22,4 -24,8 -22,3 -11,0 -44,7 -35,8
Operating income 251,5 140,5 1.132,0 870,8 1.383,5 1.011,3
Net financial charges -128,6 -85,4
Taxes -595,3 -283,8
Recurrent consolidated net income 659,6 642,1
PetroFina net income (recurrent) 640,0 636,5
Non recurrent charges and revenues -25,1 -113,0
Consolidated results 634,5 529,1
PetroFina consolidated results 617,7 523,6
Minority interest 16,8 5,5
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
B. Non recurrent elements
Capital gains on assets sold
Upstream 8,4 46,8 22,0 8,4 68,8
Downstream -2,8 46,9 44,1
Inventory write down and LIFO effects
Downstream -30,7 -57,9 -2,8 -173,6 -33,5 -231,5
Chemicals -5,6 -46,8 -13,8 -5,6 -60,6
Impairment test SFAS 121 -71,6 -71,6
Accelerated D D & A -16,8 -24,8 -16,8 -24,8
Other non recurrent elements -5,5 -25,2 33,1 -25,2 27,6
Non recurrent taxes 8,4 88,2 39,2 46,8 47,6 135,0
Total non recurrent elements -19,5 22,0 -5,6 -135,0 -25,1 -113,0
C. Cash flow (Group share) 1.540,0 1.559,7
D. Data per share (USD per share)
Net earnings 26,5 22,3
Cash flow 66,0 66,5
Average number of share outstanding 23.350.612 23.440.102
F. Operating data
Dollar average rate (BEF/USD) 35,78 36,29
Brent price (USD/barrel) 19,10 12,70
US gas price (USD per thousand cubic 2,60 2,10
feet)
Crude oil production (million barrels) 53,90 51,10
Natural gas production (Billion cubic 208,90 187,30
feet)
Crude processed in refineries 669.100 695.500
(barrels per day)
Crude oil refinery margin in Europe 2,40 2,45
(USD/ barrel)
Polymer production (tons) 2.170.000 2.213.000
(*) Recurrent data related to 97 are restated in current cost accounting
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial highlights as at 31th December (*) (in million EURO)
A. Recurrent income per segment
(Current cost accounting)
North America Europe and rest of the Consolidated
world
<S> <C> <C> <C> <C> <C> <C>
1997 1998 1997 1998 1997 1998
Upstream 39,7 5,0 592,5 317,3 632,2 322,3
Downstream 96,7 37,2 235,5 300,0 332,2 337,2
Chemicals 106,6 106,6 153,7 131,4 260,3 238,0
Paints 42,1 44,6 42,1 44,6
Other activities -19,8 -22,3 -19,8 -9,9 -39,6 -32,2
Operating income 223,2 126,5 1.004,0 783,4 1.227,2 909,9
Net financial charges -114,0 -76,8
Taxes -528,1 -255,4
Recurrent consolidated net income 585,1 577,7
PetroFina net income (recurrent) 567,7 572,6
Non recurrent charges and revenues -22,4 -101,6
Consolidated results 562,7 476,0
PetroFina consolidated results 547,8 471,1
Minority interest 14,9 5,0
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
B. Non recurrent elements
Capital gains on assets sold
Upstream 7,4 42,2 19,8 7,4 62,0
Downstream -2,5 42,1 39,6
Inventory write down and LIFO effects
Downstream -27,2 -52,1 -2,5 -156,1 -29,7 -208,2
Chemicals -5,0 -42,1 -12,4 -5,0 -54,5
Impairment test SFAS 121 -64,5 -64,5
Accelerated D D & A -14,9 -22,3 -14,9 -22,3
Other non recurrent elements -5,0 -22,3 29,8 -22,3 24,8
Non recurrent taxes 7,4 79,3 34,7 42,2 42,1 121,5
Total non recurrent elements -17,4 19,8 -5,0 -121,4 -22,4 -101,6
C. Cash flow (Group share) 1.365,9 1.403,1
D. Data per share (EURO per share)
Net earnings 23,5 20,1
Cash flow 58,5 59,9
Average number of share outstanding 23.350.612 23.440.102
F. Operating data
Dollar average rate (BEF/USD) 35,76 36,29
Brent price (USD/barrel) 19,10 12,70
US gas price (USD per thousand cubic 2,60 2,10
feet)
Crude oil production (million barrels) 53,90 51,10
Natural gas production (Billion cubic 208,90 187,30
feet)
Crude processed in refineries 669.100 695.500
(barrels per day)
Crude oil refinery margin in Europe 2,40 2,45
(USD/ barrel)
Polymer production (tons) 2.170.000 2.213.000
(*) Recurrent data related to 97 are restated in current cost accounting
This press release is also available in French
This press release is also available in Flemish
</TABLE>
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SIGNATURES
Pursuant to the requirements 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.
PETROFINA
Date: January 28, 1999 By: /s/ Francois Vincke
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Name: Francois Vincke
Title: Secretary General
