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: September 9, 1994
UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-8483 95-3825062
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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
<PAGE>
ITEM 5. OTHER EVENTS
Unocal Corporation announced that its Unocal Myanmar Offshore Co.
Ltd. subsidiary has signed a memorandum of understanding for an agreement
to sell natural gas from the Yadana field in the Gulf of Martaban offshore
Myanmar.
The memorandum of understanding contemplates a 30-year agreement
with the Petroleum Authority of Thailand (PTT), Myanmar Oil & Gas
Enterprise (MOGE) and Unocal's co-venturer, Total of France (Total), that
would provide for the delivery of 525 million cubic feet per day (mmcfd) of
natural gas to the border of neighboring Thailand. Under the terms of the
proposed agreement, Unocal and Total would begin supplying 130 mmcfd of
natural gas in mid-1998 and increase production to more than 525 mmcfd
within 15 months. Gas production could eventually reach a sustained rate
650 mmcfd for approximately 20 years, including volumes for domestic
consumption in Myanmar.
Unocal and Total plan to develop the Yadana field under their
production sharing contract with MOGE, the Myanmar national oil company.
Unocal and Total plan to form a company by the end of 1994 to
build and operate a pipeline from the Yadana field to the eastern border of
the Myanmar peninsula. The 260-mile pipeline will include about 220 miles
offshore, stretching from the field to the western coast of Myanmar. The
remaining 40-mile onshore segment will cross southern Myanmar to the
Thailand border. Construction of the pipeline is expected to begin in 1995
after a full evaluation of the onshore route options to minimize
environmental impact.
The memorandum of understanding provides that the gas sales
agreement will not be executed and become effective until such time as the
pipeline company has been formed and Unocal, Total and MOGE have agreed to
the terms of a definitive agreement relating to the transportation of gas
through the pipeline. The memorandum of understanding also requires
certain other agreements to be entered into and certain conditions to be
satisfied.
Unocal holds 47.5 percent of the foreign companies' working
interest in the project; Total, the operator, holds the remaining 52.5
percent. MOGE has the option to participate in up to 15 percent of the
project. The Petroleum Authority of Thailand Exploration and Production
Co. (PTTEP) has a 25.5 percent participation option. If both MOGE and
PTTEP elect to participate fully, this would reduce Unocal's interest to
28.26 percent and Total's interest to 31.24 percent, before a 10 percent
royalty.
Delineation drilling in 1993 yielded positive results that
indicate that the Yadana field could contain proved natural gas reserves of
approximately 5 trillion cubic feet. Unocal expects to commence booking
its share of the proved reserves following the execution and effectiveness
of the definitive gas sales and transportation agreements.
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<PAGE>
Unocal announced the following estimated capital expenditures
with respect to its shares of the development costs of the Yadana project,
the Jakrawan and Pailin gas and condensate fields in the Gulf of Thailand,
and the Salak geothermal power project in Indonesia. These major Asian
projects are expected to require a total capital investment from Unocal of
roughly $500 million through 1996 and about $1 billion over the total time
span.
<TABLE>
<CAPTION>
UNOCAL'S ESTIMATED COSTS
Unocal Total
percent project Capital costs
interest costs thru 1996
-------- -------- -------------
<S> <C> <C> <C>
Yadana (requires 28% * $337 MM $140 MM
gas sales contract)
Pailin (requires 35% 216 MM 46 MM
gas sales contract)
Jakrawan (funds 71% 302 MM 170 MM
fully committed)
Salak (requires 100% 172 MM 150 MM
contract revision)
TOTAL $1,027 MM $506 MM
* Reflects the reduction of Unocal's interest from 47.5%, assuming that
the national oil companies of Myanmar and Thailand exercise their
full participation rights.
</TABLE>
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The company announced that Unocal Thailand has agreed to
amendments to its gas sales contracts with PTT that will increase minimum
gross deliveries by nearly 50 percent over two years. Under the
amendments, minimum deliveries will increase from 500 to 740 mmcfd by late
1996. Typically, Unocal's deliveries average well above the contract
level. In 1993, deliveries averaged 747 mmcfd.
An uplift provision in the contract amendments could increase
gross deliveries of gas by another 15 percent to 850 mmcfd in late 1996.
By then, development in the Jakrawan field is expected to result in
production of about 150 mmcfd, giving Unocal the ability to reach
production of 900 mmcfd.
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<PAGE>
The company continues to explore for new natural gas reserves in
the Gulf of Thailand. Unocal has drilled eight successful delineation
wells so far in the Pailin field in Block 12/27, with six additional wells
planned for 1995. Initial discussions with PTT are under way. Gas sales
contract negotiations are slated to begin shortly. Pailin production could
start by late 1998. Unocal is the operator with a 35 percent interest in
the block.
The following table lists Unocal's net share of the 1998
projected production.
<TABLE>
<CAPTION>
Unocal Year Potential 1998
percent of first Production
Contract Area / Block interest production Gas/Liquids (net)*
---------------------- -------- ----------- ---------------
<S> <C> <C> <C>
I. Erawan 80% 1981 174 mmcfd/5 mbd
II. Satun, Platong, 70% 1983 107 mmcfd/4 mbd
Kaphong, Baanpot, Pladang
III. Surat, Jakrawan, Funan, 71% 1992 246 mmcfd/7 mbd
Gomin, Trat, Pakarang
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Total Contract Areas 527 mmcfd/16 mbd
Block 12/27 Pailin 35% To start up late 1998
* Net working interests after royalties.
</TABLE>
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Unocal announced that, for the first half of 1994, its average
production costs per barrel of oil equivalent were $2.84 in worldwide
operations. Average U.S. costs were $3.41. Average Far East costs were
$1.45 and average other foreign costs were $4.23.
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<PAGE>
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.
UNOCAL CORPORATION
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(Registrant)
Dated: September 19, 1994 By: CHARLES S. MCDOWELL
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Charles S. McDowell,
Vice President and Comptroller
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