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) April 28, 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)
<PAGE>
Item 5. Other Events.
On April 28, 1998 the following new release was issued:
Unocal reports 1Q 1998 earnings;
higher oil and gas production levels forecast
---------------------------------------------
El Segundo, Calif., April 28, 1998 - Unocal Corporation today reported
first quarter 1998 earnings from continuing operations, excluding special items
(detailed in attached tables), of $72 million, or 30 cents per share (basic and
diluted). This compares with first quarter 1997 earnings from continuing
operations, excluding special items, of $190 million, or 76 cents per basic
share (74 cents diluted).
"In this quarter, the company's worldwide oil and gas operations were
impacted significantly by lower crude oil and natural gas prices, lower U.S.
natural gas production, and higher dry hole costs and exploration expenses,"
said Roger C. Beach, Unocal chairman and chief executive officer.
"At the end of the quarter we saw natural gas prices start to rise
again," Beach said. "In addition, net production of our Spirit Energy 76 unit
averaged 182,000 barrels-of-oil-equivalent (BOE) per day in March. This compares
with an average of 173,000 BOE per day in January and February when we had
production curtailments arising from pipeline and mechanical well problems." For
the full-year 1998, Spirit Energy 76 net production should average about 178,000
BOE per day.
"We are well on our way toward meeting our goal of replacing production
with new reserves in the U.S. Lower 48," Beach said. He noted that Spirit
Energy's capital expenditures totaled $120 million in the first quarter, up from
only $30 million last year. "The higher capital expenditures reflect our
increased exploration program in the Gulf Coast region that has already begun to
yield success," he said.
In the second quarter 1998 and beyond Unocal expects to begin new
international production. The AIOC consortium has started crude oil sales from
the
<PAGE>
Caspian Sea (Unocal, 10% working interest), and Unocal expects to begin new gas
production from Myanmar and Bangladesh beginning in the third quarter.
In Thailand, the company's gross natural gas production is currently
running at a record level of more than 1.1 billion cubic feet per day (Unocal,
65% average net working interest) as the government there moves ahead with its
plan to increase use of indigenous natural gas while reducing imports of fuel
oil for electrical generation.
Beach noted that Unocal had higher earnings from geothermal operations,
which reflected the new power plants that came on line in Indonesia in 1997. In
addition, the company had lower corporate and unallocated expenses.
Unocal's reported net earnings for the first quarter, including special
items (see attached tables) and discontinued operations, were $18 million, down
from $144 million a year ago. Reported basic earnings per share were 7 cents,
compared with 57 cents in the first quarter 1997. Reported diluted earnings per
share were also 7 cents, compared with 56 cents last year.
Net cash provided from operating activities, excluding working capital
changes, was $282 million, off from $415 million in 1997. The lower cash flow
was primarily the result of lower commodity prices and reduced domestic
production levels.
Unocal is a leading global oil and gas exploration and production
company with significant pipeline and power plant project developments
worldwide. Forward-looking statements, including estimates of future exploration
and production activities other business plans and forecasts in this news
release are based on assumptions concerning market, competitive, regulatory,
environmental, operational and other considerations. Actual results could differ
materially.
Unocal will hold a conference call on first quarter earnings at 1 p.m.
PDT today. To hear a broadcast of the conference call, or read a transcript of
the prepared remarks, visit Unocal's web site, www.unocal.com. Replays of the
audio broadcast will be available on the web site through May 3.
2
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
CONDENSED CONSOLIDATED EARNINGS STATEMENT
(UNAUDITED)
For the Three Months
Ended March 31
---------------------
Millions of dollars except per share amounts 1998 1997
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<S> <C> <C>
Total revenues ........................................... $ 1,207 $ 1,456
Costs and other deductions ............................... 1,110 1,119
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Earnings from continuing operations before income taxes .. 97 337
Income taxes ............................................. 79 149
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Earnings from continuing operations ...................... 18 188
Earnings/(loss) from discontinued operations (net of tax) -- (44)
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Net earnings ............................................. $ 18 $ 144
Basic earnings/(loss) per common share (a)
Continuing operations ............................. $ 0.07 $ 0.75
Discontinued operations ........................... -- (0.18)
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Basic net earnings per share ............................. $ 0.07 $ 0.57
Diluted earnings/(loss) per common share (b) (c)
Continuing operations ............................. $ 0.07 $ 0.73
Discontinued operations ........................... -- (0.17)
-------------------
Diluted net earnings per share ........................... $ 0.07 $ 0.56
<FN>
(a) Weighted average shares - basic (millions) 241 251
(b) Weighted average shares - diluted (millions) 243 265
(c) Distribution on preferred securities (net of taxes) -- $ 6
excluded in numerator. In 1988, the effect of assumed
conversion of preferred securities on earnings per share
is antidilutive
</FN>
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CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Dec. 31 Dec. 31
Millions of dollars 1998 1997
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Assets
Cash and cash equivalents ................................ $ 275 $ 338
Other current assets ..................................... 1,098 1,163
Investments and long-term receivables .................... 1,128 1,113
Properties - net ......................................... 4,882 4,816
Other assets ............................................. 195 100
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Total assets .................................... $ 7,578 $ 7,530
Liabilities and Equity
Current liabilities ...................................... $ 982 $ 1,160
Long-term debt ........................................... 2,427 2,169
Deferred income taxes .................................... 132 137
Other deferred credits and liabilities ................... 1,269 1,228
Convertible preferred securities ......................... 522 522
Stockholders' equity ..................................... 2,246 2,314
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Total liabilities and equity .................... $ 7,578 $ 7,530
</TABLE>
Table 1
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
CONDENSED CONSOLIDATED CASH FLOWS
(UNAUDITED) For the Three Months
Ended March 31 (a)
---------------------
Millions of dollars 1998 1997
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Cash flows from operating activities
<S> <C> <C>
Net earnings ............................................... $ 18 $ 144
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 ............. 181 211
Dry hole costs ....................................... 50 16
Deferred income taxes ................................ 13 10
Gain on sales of assets (before-tax) ................. -- (10)
Other ................................................ 20 (27)
Working capital and other changes related to operations .... (188) (81)
---------------------
Net cash provided by operating activities ............ 94 334
Cash flows from investing activities
Capital expenditures (includes dry hole costs) ............ (326) (286)
Proceeds from sale of discontinued operations .............. -- 1,390
Proceeds from asset sales .................................. 4 16
---------------------
Net cash (used in)/provided by investing activities .. (322) 1,120
Cash flows from financing activities
Net increase in long-term debt ............................. 262 175
Dividends paid ............................................. (48) (50)
Repurchase of common stock ................................. (48) (46)
Other ...................................................... (1) (1)
---------------------
Net cash provided by financing activities ............ 165 78
Increase/(decrease) in cash and cash equivalents .......................... (63) 1,532
Cash and cash equivalents at beginning of period .......................... 338 217
---------------------
Cash and cash equivalents at end of period ................................ $ 275 $ 1,749
<FN>
(a) Cash flows related to discontinued operations have not been segregated
</FN>
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CONDENSED CAPITAL EXPENDITURES
(UNAUDITED)
Millions of dollars
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United States Exploration & Production .................................... $ 136 $ 33
International Exploration & Production .................................... 168 163
Geothermal Operations ..................................................... 6 20
Diversified Business Group ................................................ 10 9
New Ventures (Non-E & P) ................................................. -- 5
Corporate & Unallocated ................................................... 6 7
Discontinued Operations ................................................... -- 49
---------------------
Total (b) .................................................. $ 326 $ 286
<FN>
(b) Includes capitalized interest of: .................................... $ 8 $ 5
</FN>
</TABLE>
Table 2
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
DISCRETIONARY CASH FLOW
(UNAUDITED) For the Three Months
Ended March 31 (a)
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Millions of dollars 1998 1997
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<S> <C> <C>
Net earnings ........................................... $ 18 $ 144
Adjustments to net earnings
Depletion, depreciation & amortization .... 181 211
Dry hole costs ............................ 50 16
Deferred income taxes ..................... 13 10
(Gain) on sales of assets ................. -- (10)
Exploration expenses ...................... 47 28
Proceeds from asset sales ................. 4 1,406
Environmental and litigation provision .... 52 18
Environmental and litigation payments ..... (20) (18)
Loss on disposal of discontinued operations -- 71
Other ..................................... (12) (27)
--------------------
Total discretionary cash flow ....... $ 333 $ 1,849
<FN>
(a) Cash flows related to discontinued operations have not been segregated
The preceding table of discretionary cash flow is provided for analysts and
others in the investment community as a supplement to conventional financial
data prepared in accordance with generally accepted accounting principles.
Discretionary cash flow does not give effect to significant uses of cash,
including those for capital projects, debt reduction and regular dividends,
some of which result from previous commitments, and should only be considered
in conjunction with the full presentation of condensed consolidated cash flows
on the preceding page.
</FN>
</TABLE>
Table 2a
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
RESULTS OF OPERATIONS FOR
EXPLORATION AND PRODUCTION ACTIVITIES
(UNAUDITED)
For the Three Months
Ended March 31, 1998
--------------------------------------------------
Spirit Other Other
Millions of dollars Energy 76 U.S. Far East International Total
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Sales (includes intercompany sales)
<S> <C> <C> <C> <C> <C>
Crude oil and condensate .......................................... $ 55 $ 28 $ 93 $ 30 $ 206
Natural gas ....................................................... 143 18 141 9 311
Natural gas liquids ............................................... 11 1 3 1 16
Other ............................................................. 1 -- -- -- 1
--------------------------------------------------
Total ....................................................... 210 47 237 40 534
Other revenue ............................................................. 3 2 (8) 5 2
--------------------------------------------------
Total revenues .............................................. 213 49 229 45 536
Production costs .......................................................... 44 19 26 21 110
Exploration expenses ...................................................... 14 -- 20 11 45
Dry hole costs ............................................................ 39 -- 3 5 47
Depreciation, depletion & amortization .................................... 84 8 54 18 164
Other operating expenses .................................................. 16 3 13 9 41
--------------------------------------------------
Results of operations before income tax ........................... $ 16 $ 19 $ 113 $ (19) $ 129
- --------------------------------------------------------------------------------------------------------------------------------
For the Three Months
Ended March 31, 1997
--------------------------------------------------
Spirit Other Other
Energy 76 U.S. Far East International Total
--------------------------------------------------
Sales (includes intercompany sales)
Crude oil and condensate .......................................... $ 91 $ 56 $ 117 $ 45 $ 309
Natural gas ....................................................... 224 18 165 14 421
Natural gas liquids ............................................... 16 1 9 1 27
--------------------------------------------------
Total ....................................................... 331 75 291 60 757
Other revenue ............................................................. 3 -- 1 10 14
Gain on asset sales ....................................................... 3 -- -- 1 4
--------------------------------------------------
Total revenues .............................................. 337 75 292 71 775
Production costs .......................................................... 48 24 30 19 121
Exploration expenses ...................................................... 10 -- 8 9 27
Dry hole costs ............................................................ 6 -- 9 1 16
Depreciation, depletion & amortization .................................... 102 15 61 17 195
Other operating expenses .................................................. 19 2 11 8 40
--------------------------------------------------
Results of operations before income tax ........................... $ 152 $ 34 $ 173 $ 17 $ 376
</TABLE>
Table 3
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
OPERATING HIGHLIGHTS
(UNAUDITED) For the Three Months
Ended March 31
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1998 1997
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Net daily production
Crude oil and condensate (thousand barrels daily):
United States
<S> <C> <C>
Spirit Energy 76 ..................... 44 48
Alaska ............................... 30 34
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Total United States ............ 74 82
International
Far East (a) ........................ 89 93
Other ................................ 31 27
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Total International ............ 120 120
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Total Worldwide ................ 194 202
Natural gas (million cubic feet daily):
United States
Spirit Energy 76 ..................... 788 910
Alaska ............................... 138 156
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Total United States ............ 926 1,066
International
Far East (a) ........................ 826 805
Other ................................ 52 67
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Total International ............ 878 872
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Total Worldwide ................ 1,804 1,938
Natural gas liquids (thousand barrels daily) ........ 18 20
Geothermal (million kilowatt-hours daily) ........... 21 16
Average sales prices (b) Crude oil and condensate (per barrel):
United States
Spirit Energy 76 ..................... $13.94 $20.79
Alaska ............................... 10.84 18.51
Total United States ............ 12.66 19.85
International
Far East ............................. $13.97 $21.03
Other ................................ 12.30 20.07
Total International ............ 13.50 20.75
Total Worldwide ................ $13.15 $20.32
Natural gas (per mcf):
United States
Spirit Energy 76 ..................... $2.14 $2.78
Alaska ............................... 1.47 1.35
Total United States ............ 2.03 2.57
International
Far East ............................. $2.03 $2.40
Other ................................ 2.09 2.22
Total International ............ 2.04 2.38
Total Worldwide ................ $2.04 $2.49
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<FN>
(a) Includes host country share in Indonesia of:
Crude oil and condensate .......................... 18 30
Natural gas ....................................... 33 33
(b) Excludes Global Trade margins
</FN>
Table 4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
OPERATING HIGHLIGHTS (continued)
(UNAUDITED)
For the Three Months
Ended March 31
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1998 1997
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<S> <C> <C>
Agricultural products production volumes (thousand tons)
Ammonia ................................................ 374 391
Urea ................................................... 260 275
Other products ......................................... 175 207
Agricultural products sales volumes (thousand tons)
Ammonia ................................................ 220 156
Urea ................................................... 325 210
Other products ......................................... 174 252
</TABLE>
Table 5
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
(UNAUDITED)
1st Quarter of 1998 1st Quarter of 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 ........................................ $ 16 $ 10 $ 152 $ 95
Alaska .................................................. 19 12 34 21
International .............................................. 94 13 190 102
Global Trade ................................................... 9 6 11 6
Geothermal and Power Operations ................................ 22 14 10 6
Diversified Business Group
Agricultural Products .................................... 13 9 30 20
Carbon and Minerals ...................................... 18 15 12 10
Pipelines ................................................ 18 15 17 14
Other .................................................... -- -- 2 1
Corporate and Unallocated
Administrative and general expense ....................... (16) (11) (20) (13)
Net interest expense ..................................... (33) (26) (54) (42)
Environmental and litigation expense ..................... (52) (33) (18) (11)
New Ventures ............................................. (11) (7) (11) (7)
Other .................................................... -- 1 (18) (14)
-----------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations ............................ 97 18 337 188
Loss from discontinued Operations .............................. -- -- (71) (44)
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Total .............................................. $ 97 $ 18 $ 266 $ 144
====================================================================================================================================
<FN>
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.
</FN>
</TABLE>
Table 6
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
SPECIAL ADJUSTMENTS
(UNAUDITED)
1st Quarter of 1998 1st Quarter of 1997
-----------------------------------------------------------
Millions of dollars Before-tax After-tax Before-tax After-tax
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Reported earnings .............................................. $ 97 $ 18 $ 266 $ 144
Less: Special items
Exploration and Production
United States
Spirit Energy
Asset sales ...................................... -- -- 3 2
International
Asset sales ...................................... -- -- 1 1
Deferred tax adjustment .......................... -- (21) -- --
Diversified Business Group
Carbon and Minerals
Environmental and litigation ..................... (1) (1) -- --
Corporate and Unallocated
Asset sales ...................................... -- -- 6 4
Environmental and litigation ..................... (51) (32) (14) (9)
Discontinued Operations
Net loss on disposal ............................. -- -- (71) (44)
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Total special items ....................................... (52) (54) (75) (46)
- ------------------------------------------------------------------------------------------------------------------------------------
Adjusted earnings from continuing operations ................... $ 149 $ 72 $ 341 $ 190
====================================================================================================================================
</TABLE>
Table 7
<PAGE>
<TABLE>
<CAPTION>
NEWS RELEASE UNOCAL CORPORATION
EARNINGS BY BUSINESS SEGMENT
EXCLUDING SPECIAL ADJUSTMENTS
(UNAUDITED)
1st Quarter of 1998 1st 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 ........................................ $ 16 $ 10 $ 149 $ 93
Alaska .................................................. 19 12 34 21
International .............................................. 94 34 189 101
Global Trade ................................................... 9 6 11 6
Geothermal and Power Operations ................................ 22 14 10 6
Diversified Business Group
Agricultural Products .................................... 13 9 30 20
Carbon and Minerals ...................................... 19 16 12 10
Pipelines ................................................ 18 15 17 14
Other .................................................... -- -- 2 1
Corporate and Unallocated
Administrative and general expense ....................... (16) (11) (20) (13)
Net interest expense ..................................... (33) (26) (54) (42)
Environmental and litigation expense ..................... (1) (1) (4) (2)
New Ventures ............................................. (11) (7) (11) (7)
Other .................................................... -- 1 (24) (18)
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations ............................ 149 72 341 190
====================================================================================================================================
<FN>
Basic adjusted earnings from continuing operations
per share of common stock $0.30 $0.76
Diluted adjusted earnings from continuing operations
per share of common stock (a) $0.30 $0.74
Distributions on preferred securities (net of tax) excluded
in numerator for diluted earnings per share (a) $ - $ 6
Basic weighted average shares 241 251
Diluted weighted average shares 243 265
(a) In 1998, the effect of assumed conversion of preferred securities on
earnings per share is antidilutive.
</FN>
</TABLE>
Table 8
<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: April 28, 1998 By: /s/ JOE D. CECIL
- --------------------- --------------------------
Joe D. Cecil
Vice President and Comptroller
