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) October 27, 1998
------------------------
UNOCAL CORPORATION
- --------------------------------------------------------------------------------
(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)
<PAGE>
Item 5. Other Events.
Unocal Corporation announced that lower worldwide oil and gas prices, coupled
with increased costs for the company's expanded exploration program, led to
lower third quarter earnings of $36 million, or 15 cents per share (basic and
diluted). This compares with net earnings of $177 million, or 70 cents per share
(diluted) in the third quarter of 1997.
Earnings from continuing operations, excluding special items (detailed in
attached tables), were $4 million, or 2 cents per share (basic and diluted),
compared with $94 million, or 38 cents per share (basic and diluted) in the
third quarter 1997.
In late October, three Spirit Energy 76 exploration wells were determined to be
dry holes. These included the Calypso deepwater well. Accounting rules require
that $18 million in costs associated with these wells accrued through Sept. 30,
1998, be recorded in the third quarter. These October dry holes lowered Unocal's
earnings by 5 cents per share.
Unocal's total oil and gas exploration expenses in the third quarter, including
dry hole costs, were $118 million, more than double the level for the comparable
period in 1997. This reflects the company's increased focus on growth through
the drill bit.
The company continues to record significant successes in the deepwater Kutei
Basin area offshore Indonesia. To date, Unocal has discovered two important
deepwater fields and has a number of additional promising prospects on its
2.1-million acre deepwater holdings there.
Unocal's third quarter 1998 net worldwide oil and gas production was off 3
percent from last year's third quarter. The production reflected the effect of
storms in the Gulf of Mexico that reduced Spirit Energy 76's average daily
production by 2,000 barrels of oil and 25 million cubic feet of gas. Despite
these storm curtailments, Spirit Energy's third quarter production was still
higher than the second quarter.
The lower third quarter 1998 production also reflected the sale of Canadian
producing properties earlier this year, and lower oil production from Indonesia.
Total revenues for the third quarter were $1.4 billion, about the same as a year
ago. Capital expenditures were $482 million, up from $308 million in the same
period of 1997, including almost $100 million for the August 1998 Gulf of Mexico
lease sale.
Nine-months results
For the first nine months of 1998, Unocal recorded net earnings of $159 million,
or 66 cents per common share (basic and diluted).
Year-to-date earnings from continuing operations, excluding special items
(detailed in attached tables) were $138 million, or 57 cents per share.
<PAGE>
Total revenues for the first nine months were $4 billion.
Capital expenditures for the year-to-date total $1.25 billion, up from $953
million for the first nine months of 1997.
Unocal is a leading global oil and gas exploration and production company with
significant pipeline and power plant project developments worldwide.
Forward-looking statements and estimates regarding drilling activity,
production, and business results set forth above are based on assumptions
concerning market, competitive, regulatory, environmental, operational and other
considerations. Actual results could differ materially.
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
CONDENSED CONSOLIDATED EARNINGS STATEMENT
(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
---------------------- ----------------------
Millions of dollars except per share amounts 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues ................................................................. $ 1,394 $ 1,397 $ 3,998 $ 4,507
Costs and other deductions ..................................................... 1,319 1,394 3,662 3,918
-------------------------------------------------
Earnings from continuing operations before income taxes ........................ 75 3 336 589
Income taxes / (benefit) ....................................................... 39 (174) 177 68
-------------------------------------------------
Earnings from continuing operations ............................................ 36 177 159 521
Loss from discontinued operations (net of tax) ................................ -- -- -- (44)
Extraordinary charge - extinguishment of debt (net of tax) ..................... -- -- -- (38)
-------------------------------------------------
Net earnings ................................................................... $ 36 $ 177 $ 159 $ 439
Basic earnings/(loss) per common share (a)
Continuing operations .................................................... $ 0.15 $ 0.71 $ 0.66 $ 2.09
Discontinued operations .................................................. -- -- -- (0.18)
Extraordinary item - extinguishment of debt (net of tax) ................. -- -- -- (0.15)
-------------------------------------------------
Basic net earnings per share ................................................... $ 0.15 $ 0.71 $ 0.66 $ 1.76
Diluted earnings/(loss) per common share (b) (c)
Continuing operations .................................................... $ 0.15 $ 0.70 $ 0.66 $ 2.04
Discontinued operations .................................................. -- -- -- (0.17)
Extraordinary item - extinguishment of debt (net of tax) ................. -- -- -- (0.14)
-------------------------------------------------
Diluted net earnings per share ................................................. $ 0.15 $ 0.70 $ 0.66 $ 1.73
<FN>
(a) Weighted average shares - basic (millions)................................ 241 247 242 249
(b) Weighted average shares - diluted (millions).............................. 243 261 243 263
(c) Distributions on preferred securities (net of taxes) excluded in numerator. $ -- $ 6 $ -- $ 18
In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive.
</FN>
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CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Sep. 30 Dec. 31
Millions of dollars 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Cash and cash equivalents ...................................................... $ 183 $ 338
Other current assets ........................................................... 1,029 1,163
Investments and long-term receivables .......................................... 1,171 1,113
Properties - net ............................................................... 5,190 4,816
Other assets ................................................................... 214 100
---------------------
Total assets ........................................................... $ 7,787 $ 7,530
Liabilities and Equity
Current liabilities ............................................................ $ 1,212 $ 1,160
Long-term debt ................................................................. 2,423 2,169
Deferred income taxes .......................................................... 154 137
Other deferred credits and liabilities ......................................... 1,189 1,228
Convertible preferred securities ............................................... 522 522
Stockholders' equity ........................................................... 2,287 2,314
---------------------
Total liabilities and equity ........................................... $ 7,787 $ 7,530
</TABLE>
Table 1
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED) For the Three Months For the Nine Months
Ended September 30 Ended September 30
-------------------------------------------------
Millions of dollars 1998 1997(a) 1998 1997(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net earnings ................................................... $ 36 $ 177 $ 159 $ 439
Adjustments to reconcile net earnings to
net cash provided by operating activities
Loss on disposal of discontinued operations (before-tax) -- -- -- 71
Depreciation, depletion and amortization ................. 186 300 566 755
Dry hole costs ........................................... 58 8 150 51
Deferred income taxes .................................... (64) (255) (34) (226)
(Gain) loss on sales of assets (before-tax) .............. (74) 2 (166) (59)
Other .................................................... (9) 75 18 (83)
Working capital and other changes related to operations ........ 181 (8) 18 (212)
-------------------------------------------------
Net cash provided by operating activities ................ 314 299 711 736
Cash flows from investing activities
Capital expenditures (includes dry hole costs) ................ (482) (308) (1,248) (953)
Proceeds from sale of discontinued operations .................. -- 3 -- 1,789
Proceeds from asset sales ...................................... 265 7 299 55
-------------------------------------------------
Net cash (used in)/provided by investing activities ...... (217) (298) (949) 891
Cash flows from financing activities
Net increase/(decrease) in long-term debt ...................... (56) (241) 285 (959)
Dividends paid ................................................. (48) (50) (145) (150)
Repurchase of common stock ..................................... -- (81) (48) (173)
Other .......................................................... (3) 3 (9) (46)
-------------------------------------------------
Net cash (used in)/ provided by financing activities...... (107) (369) 83 (1,328)
Increase/(decrease) in cash and cash equivalents ............................... (10) (368) (155) 299
Cash and cash equivalents at beginning of period ............................... 193 884 338 217
-------------------------------------------------
Cash and cash equivalents at end of period ..................................... $ 183 $ 516 $ 183 $ 516
<FN>
(a) Cash flows related to discontinued operations have not been segregated
</FN>
- ------------------------------------------------------------------------------------------------------------------------------------
CONDENSED CAPITAL EXPENDITURES
(UNAUDITED)
Millions of dollars
- ------------------------------------------------------------------------------------------------------------------------------------
United States Exploration & Production ......................................... $ 237 $ 88 $ 589 $ 200
International Exploration & Production ......................................... 212 171 576 574
Geothermal and Power Operations ................................................ 12 29 22 76
Diversified Business Group ..................................................... 18 18 46 40
New Ventures (Non-E & P) ...................................................... -- 2 1 5
Corporate & Unallocated ........................................................ 3 -- 14 9
Discontinued Operations ........................................................ -- -- -- 49
-------------------------------------------------
Total (b) ...................................................... $ 482 $ 308 $ 1,248 $ 953
<FN>
(b) Includes capitalized interest of: ......................................... $ 6 $ 10 $ 22 $ 26
</FN>
</TABLE>
Table 2
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
RESULTS OF OPERATIONS FOR
EXPLORATION AND PRODUCTION ACTIVITIES
(UNAUDITED)
For the Three Months
Ended September 30, 1998
------------------------------------------------------------
Spirit Other
Millions of dollars Energy 76 Alaska Far East International Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales (includes intercompany sales)
Crude oil and condensate ................................ $ 45 $ 25 $ 86 $ 26 $ 182
Natural gas ............................................. 140 13 156 3 312
Natural gas liquids ..................................... 8 1 3 -- 12
Other ................................................... 1 -- -- -- 1
------------------------------------------------------------
Total ............................................. 194 39 245 29 507
Other revenue/(loss) ............................................ 2 2 (5) 6 5
Gain on asset sales ............................................. 1 -- -- 73 74
------------------------------------------------------------
Total revenues .................................... 197 41 240 108 586
Production costs ................................................ 48 18 32 19 117
Exploration expenses ............................................ 21 1 11 18 51
Dry hole costs .................................................. 34 -- 20 13 67
Depreciation, depletion & amortization .......................... 91 15 54 8 168
Other operating expenses ........................................ 17 4 15 12 48
------------------------------------------------------------
Results of operations before income tax ................. $ (14) $ 3 $ 108 $ 38 $ 135
- ------------------------------------------------------------------------------------------------------------------------------------
For the Three Months
Ended September 30, 1997
------------------------------------------------------------
Spirit Other
Energy 76 Alaska Far East International Total
------------------------------------------------------------
Sales (includes intercompany sales)
Crude oil and condensate .............................. $ 67 $ 40 $ 112 $ 34 $ 253
Natural gas ........................................... 171 15 168 11 365
Natural gas liquids ................................... 12 -- 4 1 17
Other ................................................. 1 -- -- -- 1
------------------------------------------------------------
Total ....................................... 251 55 284 46 636
Other revenue ................................................. 1 3 (4) 3 3
Gain/(loss) on asset sales .................................... (2) -- -- -- (2)
------------------------------------------------------------
Total revenues .................................. 250 58 280 49 637
Production costs .............................................. 41 27 30 17 115
Exploration expenses .......................................... 13 -- 22 13 48
Dry hole costs ................................................ 3 -- 4 -- 7
Depreciation, depletion & amortization ........................ 169 13 81 17 280
Other operating expenses ...................................... 18 2 12 21 53
------------------------------------------------------------
Results of operations before income tax ............... $ 6 $ 16 $ 131 $ (19) $ 134
</TABLE>
Table 3
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
RESULTS OF OPERATIONS FOR
EXPLORATION AND PRODUCTION ACTIVITIES
(UNAUDITED)
For the Nine Months
Ended September 30, 1998
------------------------------------------------------------
Spirit Other
Millions of dollars Energy 76 Alaska Far East International Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales (includes intercompany sales)
Crude oil and condensate ............................ $ 151 $ 77 $ 262 $ 79 $ 569
Natural gas ......................................... 431 47 446 19 943
Natural gas liquids ................................. 33 2 9 1 45
Other ............................................... 3 -- -- -- 3
------------------------------------------------------------
Total ......................................... 618 126 717 99 1,560
Other revenue/(loss) ........................................ 6 6 (17) 14 9
Gain on asset sales ......................................... 1 -- 3 160 164
------------------------------------------------------------
Total revenues ................................ 625 132 703 273 1,733
Production costs ............................................ 131 60 88 55 334
Exploration expenses ........................................ 47 2 45 38 132
Dry hole costs .............................................. 100 -- 35 21 156
Depreciation, depletion & amortization ...................... 267 36 167 43 513
Other operating expenses .................................... 54 10 42 38 144
------------------------------------------------------------
Results of operations before income tax ............. $ 26 $ 24 $ 326 $ 78 $ 454
- ------------------------------------------------------------------------------------------------------------------------------------
For the Nine Months
Ended September 30, 1997
------------------------------------------------------------
Spirit Other
Energy 76 Alaska Far East International Total
------------------------------------------------------------
Sales (includes intercompany sales)
Crude oil and condensate ........................... $ 233 $ 136 $ 342 $ 119 $ 830
Natural gas ........................................ 541 47 485 35 1,108
Natural gas liquids ................................ 41 3 18 3 65
Other .............................................. 2 -- -- -- 2
------------------------------------------------------------
Total ........................................ 817 186 845 157 2,005
Other revenue .............................................. 7 4 -- 16 27
Gain/(loss) on asset sales ................................. 2 -- -- (16) (14)
------------------------------------------------------------
Total revenues ............................... 826 190 845 157 2,018
Production costs ........................................... 139 73 93 53 358
Exploration expenses ....................................... 37 -- 40 31 108
Dry hole costs ............................................. 10 -- 39 1 50
Depreciation, depletion & amortization ..................... 374 42 235 53 704
Other operating expenses ................................... 56 8 34 45 143
------------------------------------------------------------
Results of operations before income tax ............ $ 210 $ 67 $ 404 $ (26) $ 655
</TABLE>
Table 4
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
OPERATING HIGHLIGHTS
(UNAUDITED) For the Three Months For the Nine Months
Ended September 30 Ended September 30
-------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net daily production
Crude oil and condensate (thousand barrels daily):
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ........................................... 44 41 44 45
Alaska ..................................................... 27 30 29 32
-------------------------------------------------
Total United States .................................. 71 71 73 77
International
Far East (a) .............................................. 81 96 83 95
Other ...................................................... 31 25 31 26
-------------------------------------------------
Total International .................................. 112 121 114 121
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide ...................................... 183 192 187 197
Natural gas (million cubic feet daily):
United States
Spirit Energy 76 ........................................... 808 845 795 876
Alaska ..................................................... 118 110 126 131
-------------------------------------------------
Total United States .................................. 926 954 921 1,007
International
Far East (a) .............................................. 794 790 816 790
Other ...................................................... 37 55 53 62
-------------------------------------------------
Total International .................................. 831 845 869 851
- ------------------------------------------------------------------------------------------------------------------------------------
Total Worldwide ...................................... 1,757 1,799 1,790 1,858
Natural gas liquids (thousand barrels daily) .............................. 19 18 19 19
Geothermal (million kilowatt-hours daily) ................................. 22 19 21 17
Average sales prices (b) Crude oil and condensate (per barrel):
United States
Spirit Energy 76 ........................................... $ 12.20 $ 17.13 $ 12.80 $ 18.61
Alaska ..................................................... 9.35 13.37 9.69 15.39
Total United States .................................. $ 11.11 $ 15.50 $ 11.56 $ 17.28
International
Far East ................................................... $ 12.28 $ 17.45 $ 13.02 $ 18.72
Other ...................................................... 10.58 16.58 11.07 17.58
Total International .................................. $ 11.82 $ 17.23 $ 12.48 $ 18.41
Total Worldwide ...................................... $ 11.54 $ 16.44 $ 12.09 $ 17.89
Natural gas (per mcf):
United States
Spirit Energy 76 ........................................... $ 1.97 $ 2.38 $ 2.08 $ 2.39
Alaska ..................................................... 1.20 1.47 1.38 1.39
Total United States .................................. $ 1.87 $ 2.28 $ 1.98 $ 2.26
International
Far East ................................................... $ 2.23 $ 2.39 $ 2.10 $ 2.35
Other ...................................................... 2.38 2.40 2.26 2.23
Total International .................................. $ 2.23 $ 2.39 $ 2.10 $ 2.34
Total Worldwide ...................................... $ 2.04 $ 2.33 $ 2.04 $ 2.29
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Includes host country share of:
Crude oil and condensate ................................................ 6 28 11 29
Natural gas ............................................................. 27 22 27 27
(b) Excludes Global Trade margins and Canada equity affiliate sales </FN>
</TABLE>
Table 5
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
OPERATING HIGHLIGHTS (continued)
(UNAUDITED)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
-------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Agricultural products production volumes (thousand tons)
<S> <C> <C> <C> <C>
Ammonia ............................................................... 365 314 1,129 1,072
Urea .................................................................. 234 188 739 696
Agricultural products sales volumes (thousand tons)
Ammonia ............................................................... 186 187 649 590
Urea .................................................................. 259 191 854 690
</TABLE>
Table 6
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
(Unaudited)
3rd Quarter of 1998 3rd Quarter of 1997
-----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C> <C>
Spirit Energy 76 ........................................ $ (14) $ (8) $ 6 $ 4
Alaska .................................................. 3 2 16 10
International
Far East ................................................ 108 44 131 147
Other ................................................... 38 23 (19) (19)
Global Trade ................................................... 5 3 3 2
Geothermal and Power Operations ................................ 22 16 7 6
Diversified Business Group
Agricultural Products .................................... 9 12 5 4
Carbon and Minerals ...................................... (1) -- 13 10
Pipelines ................................................ 16 14 19 16
Other .................................................... -- -- (1) --
Corporate and Unallocated
Administrative and general expense ....................... (30) (20) (20) (13)
Net interest expense ..................................... (40) (33) (26) (19)
Environmental and litigation expense ..................... (19) (12) (104) (65)
New Ventures (non E&P) ................................... (7) (4) (3) (1)
Other .................................................... (15) (1) (24) 95
- --------------------------------------------------------------------------------------------------------------------------
Total .............................................. $ 75 $ 36 $ 3 $ 177
==========================================================================================================================
</TABLE>
Exploration and Production - involves the exploration for, and the production of
crude oil and natural gas.
Global Trade - handles the company's worldwide crude oil, condensate and natural
gas trading and marketing activities. Global Trade also purchases crude
oil, condensate and natural gas from the company's joint venture partners,
royalty owners and other unaffiliated oil and gas producers for resale.
Geothermal and Power Operations - involves the exploration for, and the
production and sale of geothermal resources, and the construction and
operation of electrical power plants.
Diversified Business Group:
Agricultural Products - involves the manufacture, transportation and
marketing of nitrogen-based products for agricultural and industrial use.
Carbon and Minerals - involves the production and marketing of petroleum
coke, graphites and specialty minerals.
Pipelines - principally includes the company's equity interests in affiliated
pipeline companies.
Other - principally included the company's equity interest in The UNO-VEN
Company, prior to its restructuring in May 1997.
Table 7
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
SPECIAL ADJUSTMENTS
(Unaudited)
3rd Quarter of 1998 3rd Quarter of 1997
-----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported earnings .................................................. $ 75 $ 36 $ 3 $ 177
Less: Special items
Exploration and Production
United States
Spirit Energy
Asset sales .......................................... -- -- (1) --
Impairment ........................................... -- -- (62) (39)
International
Asset sales - Other .................................. 73 49 (1) (1)
Deferred tax adjustment - Far East ................... -- (7) -- 68
Geothermal and Power Operations
Deferred tax adjustment - Sarulla .................... -- -- -- 3
Diversified Business Group
Carbon and Minerals
Environmental ........................................ (2) (2) -- --
Corporate and Unallocated
Asset sales - Other .................................. -- -- -- (1)
Environmental and litigation ......................... (12) (8) (97) (61)
Deferred tax adjustment - Other ...................... -- -- -- 114
- --------------------------------------------------------------------------------------------------------------------------
Total special items ........................................... 59 32 (161) 83
- --------------------------------------------------------------------------------------------------------------------------
Adjusted earnings ......................................... $ 16 $ 4 $ 164 $ 94
==========================================================================================================================
</TABLE>
Table 8
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
EXCLUDING SPECIAL ADJUSTMENTS
(Unaudited)
3rd Quarter of 1998 3rd Quarter of 1997
----------------------------------------------------
Millions of dollars except share amounts Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 .......................................... $ (14) $ (8) $ 69 $ 43
Alaska .................................................... 3 2 16 10
International
Far East .................................................. 108 51 131 79
Other ..................................................... (35) (26) (18) (18)
Global Trade ..................................................... 5 3 3 2
Geothermal and Power Operations .................................. 22 16 7 3
Diversified Business Group
Agricultural Products ...................................... 9 12 5 4
Carbon and Minerals ........................................ 1 2 13 10
Pipelines .................................................. 16 14 19 16
Other ...................................................... -- -- (1) --
Corporate and Unallocated
Administrative and general expense ......................... (30) (20) (20) (13)
Net interest expense ....................................... (40) (33) (26) (19)
Environmental and litigation expense ....................... (7) (4) (7) (4)
New Ventures (non E&P) ..................................... (7) (4) (3) (1)
Other ...................................................... (15) (1) (24) (18)
- --------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations .............................. $ 16 $ 4 $ 164 $ 94
==========================================================================================================================
Basic earnings from continuing operations
per share of common stock ..................................... $ 0.02 $ 0.38
Diluted earnings from continuing operations
per share of common stock (a) ................................. $ 0.02 $ 0.38
Distributions on preferred securities (net of tax) excluded
in numerator for diluted earnings per share (a) ............... $ -- $ 6
Basic weighted average shares .................................... 241 247
Diluted weighted average shares .................................. 243 261
<FN>
(a) In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive.
</FN>
</TABLE>
Table 9
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
(Unaudited)
Nine Months Ended Nine Months Ended
September 30, 1998 September 30, 1997
-----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 .......................................... $ 26 $ 17 $ 210 $ 132
Alaska .................................................... 24 15 67 42
International
Far East .................................................. 326 130 404 290
Other ..................................................... 78 53 (26) (32)
Global Trade ..................................................... 21 13 22 13
Geothermal and Power Operations .................................. 66 44 28 25
Diversified Business Group
Agricultural Products ...................................... 40 33 75 50
Carbon and Minerals ........................................ 26 24 110 76
Pipelines .................................................. 53 44 54 46
Other ...................................................... -- -- 43 37
Corporate and Unallocated
Administrative and general expense ......................... (62) (43) (62) (40)
Net interest expense ....................................... (106) (83) (109) (84)
Environmental and litigation expense ....................... (119) (75) (138) (86)
New Ventures (non E&P) ..................................... (26) (16) (34) (23)
Other ...................................................... (11) 3 (55) 75
- --------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations
before discontinued operations
and extraordinary item ........................................ 336 159 589 521
Loss from discontinued operations ................................ -- -- (71) (44)
Extraordinary item ............................................... -- -- (52) (38)
- --------------------------------------------------------------------------------------------------------------------------
Total ................................................ $ 336 $ 159 $ 466 $ 439
==========================================================================================================================
</TABLE>
Table 10
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
SPECIAL ADJUSTMENTS
(Unaudited)
Nine Months Ended Nine Months Ended
September 30, 1998 September 30, 1997
-----------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported earnings ................................................. $ 336 $ 159 $ 466 $ 439
Less: Special items
Exploration and Production
United States
Spirit Energy
Asset sales ......................................... -- -- 2 2
Impairment .......................................... -- -- (62) (39)
International
Asset sales - Other ................................. 158 102 (17) (17)
Bangladesh well blowout - Other ..................... -- -- (10) (7)
Deferred tax adjustment - Far East .................. -- (21) -- 68
Geothermal and Power Operations
Deferred tax adjustment - Sarulla ................... -- -- -- 10
Diversified Business Group
Carbon and Minerals
Asset sales ......................................... -- -- 67 41
Environmental and litigation ........................ (6) (4) -- --
Other
UNO-VEN restructuring ............................... -- -- 46 39
Corporate and Unallocated
Asset sales - Other ................................. -- -- 7 4
Environmental and litigation ........................ (106) (67) (120) (75)
Insurance settlement - Other ....................... 17 11 -- --
Deferred tax adjustment - Other ..................... -- -- -- 114
Discontinued Operations
Net loss on disposal ................................ -- -- (71) (44)
Extraordinary item
Extinguishment of debt .............................. -- -- (52) (38)
- --------------------------------------------------------------------------------------------------------------------------
Total special items .......................................... 63 21 (210) 58
- --------------------------------------------------------------------------------------------------------------------------
Adjusted earnings ........................................ $ 273 $ 138 $ 676 $ 381
==========================================================================================================================
</TABLE>
Table 11
<PAGE>
<TABLE>
<CAPTION>
UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
EXCLUDING SPECIAL ADJUSTMENTS
(Unaudited)
Nine Months Ended Nine Months Ended
September 30, 1998 September 30, 1997
-----------------------------------------------------
Millions of dollars except share amounts Before-tax After-tax Before-tax After-tax
- --------------------------------------------------------------------------------------------------------------------------
Exploration and Production
United States
<S> <C> <C> <C> <C>
Spirit Energy 76 ........................................... $ 26 $ 17 $ 270 $ 169
Alaska ..................................................... 24 15 67 42
International
Far East ................................................... 326 151 404 222
Other ...................................................... (80) (49) 1 (8)
Global Trade ...................................................... 21 13 22 13
Geothermal and Power Operations ................................... 66 44 28 15
Diversified Business Group
Agricultural Products ....................................... 40 33 75 50
Carbon and Minerals ......................................... 32 28 43 35
Pipelines ................................................... 53 44 54 46
Other ....................................................... -- -- (3) (2)
Corporate and Unallocated
Administrative and general expense .......................... (62) (43) (62) (40)
Net interest expense ........................................ (106) (83) (109) (84)
Environmental and litigation expense ........................ (13) (8) (18) (11)
New Ventures (non E&P) ...................................... (26) (16) (34) (23)
Other ....................................................... (28) (8) (62) (43)
- --------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations ............................... $ 273 $ 138 $ 676 $ 381
==========================================================================================================================
Basic earnings from continuing operations
per share of common stock ...................................... $ 0.57 $ 1.53
Diluted earnings from continuing operations
per share of common stock (a) .................................. $ 0.57 $ 1.52
Distributions on preferred securities (net of tax) excluded
in numerator for diluted earnings per share (a) ................ $ -- $ 18
Basic weighted average shares ..................................... 242 249
Diluted weighted average shares ................................... 243 263
<FN>
(a) In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive.
</FN>
</TABLE>
Table 12
<PAGE>
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: October 29, 1998 By: /s/ JOE D. CECIL
- ----------------------- ------------------------------------
Joe D. Cecil
Vice President and Comptroller
