SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 25, 1998
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
On February 25, 1998 the following news release was issued:
Unocal replaces 101% of 1997 oil,
gas production through the drill bit
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El Segundo, Calif., Feb. 25, 1998 - Unocal Corporation today said it
replaced 101 percent of its 1997 worldwide oil and gas production "through the
drill bit" with new proved reserves from the company's aggressive exploration
and development program in Central and Southeast Asia.
Unocal's drilling program replaced 160 percent of its international
production on a barrel-of-oil equivalent (BOE) basis in 1997, bringing the
company's international reserves to 1.06 billion BOE. This represents 65 percent
of the company's 1.6 billion BOE in reserves at year-end 1997.
The company's worldwide replacement rate excludes revisions, purchases
and sales that reduced reserves by more than 23 million BOE (MMBOE). With these
categories included, the worldwide reserve replacement rate in 1997 totaled 89
percent.
"Our reserve replacement through the drill bit, including discoveries,
extensions and improved recovery, added more than 194 MMBOE in reserves," said
Roger C. Beach, Unocal chairman and chief executive officer. "More than 80
percent of these new reserves were outside the U.S., including major oil and gas
additions in Azerbaijan, Thailand, Indonesia, and Myanmar. About 117 MMBOE, or
60 percent of these new reserves from drilling, were crude oil."
Not included in the reserve additions were the recent oil and gas
discoveries on the Merah Besar prospect in the deepwater area offshore
Indonesia, gas discoveries in the Moragot field in the Gulf of Thailand, and a
gas discovery on Block B offshore Vietnam. The reserves also do not include a
net additional 27 MMBOE that are expected to accrue to the company from the
proposed exchange of certain oil and gas
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assets in Canada for common stock and debt of Tarragon Oil and Gas Limited.
"We are hopeful that additional delineation drilling in Indonesia and
Thailand, as well as our deepwater exploration efforts in the Gulf of Mexico,
will add significant additional reserves over the next few years," Beach said.
"In the Gulf of Mexico deepwater alone, we have stated a goal of adding 400
MMBOE by 2002."
Unocal's net reserve additions in 1997 gave the company total reserves
of 1.63 billion BOE at year-end.
INTERNATIONAL RESERVES GROWTH
Unocal's drilling program added 160 MMBOE to its international reserves
during 1997. International reserves account for more than 65 percent of total
reserves, compared with 60 percent a year ago. The company replaced through the
drill bit 107 percent of its international natural gas production and 231
percent of its international oil production.
Beach noted that the international additions reflect the anticipated Phase
1 production from AIOC in Azerbaijan, development of the Pailin field and
additional delineation work in Thailand, and the addition of the Badamyar field
to the Yadana field development in Myanmar. The company also added reserves
through a farm-in to the Jalalabad gas field in Bangladesh, which is expected to
begin production later this year.
"We have a significant potential resource base, particularly in
Thailand and Indonesia, to draw upon for future reserve growth," Beach said. He
noted that successful drilling so far in the deepwater areas offshore Indonesia
indicate that the company's blocks there could have significant resource
potential.
U.S. OPERATIONS
Spirit Energy 76, Unocal's Lower 48 U.S. exploration and production
unit, recorded a reserve replacement rate of 44 percent in 1997 through the
drill bit. In total, Spirit Energy added 29 MMBOE from discoveries and
extensions.
"The reserve replacement rate for Spirit Energy in 1997 was
disappointing, but not unexpected given our past emphasis on promoting existing
proved, undeveloped reserves," Beach said. "We have now shifted our strategy to
aggressive exploration."
Beach said that Spirit Energy's new management team conducted an
extensive assessment of its properties and prospects that resulted in downward
revisions in reserves. This assessment established solid reserve baseline that
Spirit Energy can use to measure its future exploration progress.
Beach added that a review of Spirit Energy's new exploration team's
efforts over the past four months shows the business unit is on track with its
growth plan. "We expect to be able to replace 100 percent of our 1998 production
with new reserves from the shelf and onshore areas in the Gulf of Mexico at
significantly lower finding costs,"
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Beach said.
Unocal is a leading global energy resource and project development
company, with major oil and gas exploration and production activities in Asia,
the U.S. Gulf of Mexico and Latin America. The company maintains twin
headquarters in California and Malaysia, and has major offices in Singapore,
Jakarta, Bangkok, Sugar Land, Texas, and Lafayette, Louisiana.
Forward-looking statements, including estimates of future production,
reserve additions and resource potential in this news release involve risks and
uncertainties and are based on assumptions concerning market, competitive,
regulatory, environmental, operational and other considerations. Actual results
could differ materially.
For more information about Unocal and its activities, visit Unocal's
website at www.unocal.com.
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UNOCAL CORPORATION
CRUDE OIL AND NATURAL GAS RESERVE DATA
ESTIMATED PROVED RESERVES OF CRUDE OIL, CONDENSATE AND NATURAL GAS
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Oil
Crude Oil Natural Gas equivalent
(MMbbls) (bcf) (MMBOE)
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1997 beginning reserves ................. 513 6,795 1,646
Discoveries/extensions .............. 113 459 189
Improved recovery ................... 4 5 5
Revisions ........................... (26) (57) (35)
Purchases ........................... 2 121 22
Sales ............................... (1) (52) (10)
Production .............................. (72) (721) (192)
1998 beginning reserves* ................ 533 6,550 1,625
*INCLUDES HOST COUNTRY SHARE FOR
INDONESIA, YEMEN AND DEMOCRATIC
REPUBLIC OF CONGO OF: ................... 58 444 132
ESTIMATED PROVED RESERVES BY GEOGRAPHIC AREA (MILLIONS OF BOE)
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<TABLE>
<CAPTION>
Spirit Energy Other Far Other
76 U.S. East International Total
--------------- --------------- -------------- ----------------- --------
<S> <C> <C> <C> <C> <C>
1997 beginning reserves ............................ 484 181 842 139 1,646
Discoveries/extensions ......................... 29 1 88 71 189
Improved recovery .............................. 2 2 1 -- 5
Revisions ...................................... (35) (6) 12 (6) (35)
Purchases ...................................... 5 -- -- 17 22
Sales .......................................... (9) -- -- (1) (10)
Production ......................................... (70) (22) (87) (13) (192)
1998 beginning reserves* ........................... 406 156 856 207 1,625
*INCLUDES HOST COUNTRY SHARE FOR
INDONESIA, YEMEN AND DEMOCRATIC
REPUBLIC OF CONGO OF: .............................. -- -- 126 6 132
<FN>
NOTE: FAR EAST INCLUDES THAILAND, INDONESIA AND MYANMAR. OTHER INTERNATIONAL
INCLUDES AZERBAIJAN, BANGLADESH, CANADA, DEMOCRATIC REPUBLIC OF CONGO,
NETHERLANDS AND YEMEN.
</FN>
</TABLE>
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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.
UNOCAL CORPORATION
(Registrant)
Date: March 3, 1998 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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