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 8, 1999
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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.
1998 YEAR-END RESERVES AND RELATED COSTS
Unocal Corporation announced that it replaced 101 percent of its worldwide crude
oil and natural gas production (excluding sales and price-related revisions)
during 1998 with new proved reserves. Including sales and all revisions, the
company replaced 60 percent of its production.
The company added more than 50 million barrels of proved oil reserves from two
new deepwater fields, Merah Besar and West Seno, in the Kutei Basin, offshore
East Kalimantan, in Indonesia. In the U.S., the company's lower 48 exploration
and production business unit, Spirit Energy 76, recorded more than 30
discoveries in the Gulf of Mexico (GOM) shelf and onshore area and added 65
million barrels of oil equivalent (BOE) in proved reserves through discoveries
and extensions, improved recovery and purchases.
International Operations
Unocal's international operations replaced 114 percent of production in 1998
(excluding sales and price-related revisions), primarily through exploration
drilling. Including sales and all revisions, 81 percent of the international
production was replaced. This included net proved reserve additions of 55
million BOE in Indonesia, 30 million BOE in Thailand, and 15 million BOE in
Bangladesh.
For the year, the preliminary finding, development and acquisition (FD&A) costs
for new proved reserves in Unocal's international operations in total (excluding
price-related revisions) were $8.03 per BOE. Including price-related revisions,
the preliminary FD&A costs were $8.29 per BOE.
International FD&A costs rose in 1998 due to several timing factors, including
spending on the pipeline in Myanmar, initial exploration costs in Gabon, India,
Bangladesh and Brazil, and the impact of the company's scheduled "just in time"
exploration program in Thailand.
Spirit Energy 76
Spirit Energy 76 replaced 108 percent of its production in 1998 with new proved
reserves (excluding sales and price-related revisions), particularly as a result
of a 64-percent exploration success rate on the GOM shelf during the year.
Including sales and all revisions, 65 percent of Spirit's production was
replaced.
Spirit Energy's preliminary FD&A costs (excluding price-related revisions) for
new proved reserves in 1998 on the GOM shelf and onshore were $7.26 per BOE.
Including price-related revisions, Spirit's preliminary FD&A costs for the GOM
shelf and onshore were $8.16 per BOE. Overall for Spirit, after taking into
account price-related revisions and deepwater expenditures, which included $202
million in land acquisitions, preliminary FD&A costs were $13.27 per BOE.
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 reserves in this report are
based on assumptions concerning market, competitive, regulatory, geological,
pricing, environmental, operational and other considerations. Actual results
could differ materially.
The following tables provide details on the company's reserves and FD&A costs.
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<TABLE>
<CAPTION>
UNOCAL CORPORATION
CRUDE OIL AND NATURAL GAS RESERVE DATA
ESTIMATED PROVED RESERVES OF CRUDE OIL, CONDENSATE AND NATURAL GAS
CRUDE OIL (1) NATURAL GAS (2) OIL EQUIVALENT(3)
(MMBBLS) (BCF) (MMBOE)
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<S> <C> <C> <C>
1998 beginning reserves .......................................... 533 6,550 1,625
Discoveries/extensions ....................................... 81 437 154
Improved recovery ............................................ 6 20 9
Revisions
- Price-related ............................................. (23) (15) (26)
- Other ..................................................... 14 (51) 6
Purchases .................................................... 7 52 15
Sales ........................................................ (19) (181) (49)
Production ....................................................... (67) (690) (182)
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1999 beginning reserves* ......................................... 532 6,122 1,552
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*Includes host country shares for Indonesia,
Yemen and Democratic Republic of Congo of: ...................... 44 389 109
(1) Includes condensate.
(2) Reported on a wet gas basis, which include natural gas liquids.
(3) 6,000 cubic feet of natural gas = one barrel of oil.
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED PROVED RESERVES BY GEOGRAPHIC AREA (MILLIONS OF BOE)
Spirit Other Far Other
Energy 76 U.S. East International Total
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<S> <C> <C> <C> <C> <C>
1998 beginning reserves ................................. 406 156 856 207 1,625
Discoveries/extensions .............................. 45 6 87 16 154
Improved recovery ................................... 5 2 1 1 9
Revisions
- Price-related .................................... (8) (15) -- (3) (26)
- Other ............................................ 6 (3) (12) 15 6
Purchases ........................................... 15 -- -- -- 15
Sales ............................................... (21) -- -- (28) (49)
Production .............................................. (66) (21) (83) (12) (182)
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1999 beginning reserves* ................................ 382 125 849 196 1,552
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*Includes host country shares for Indonesia,
Yemen and Democratic Republic of Congo of: .............. -- -- 104 5 109
Note: Other U.S. is principally Alaska. Far East includes Thailand, Indonesia and Myanmar. Other International
includes Azerbaijan, Bangladesh, Canada, Democratic Republic of Congo, Netherlands and Yemen.
</TABLE>
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<TABLE>
<CAPTION>
PRELIMINARY 1998 FINDING, DEVELOPMENT AND ACQUISITION COSTS PER BOE
Spirit Energy
--------------------------------- Other Far Other Total
Deepwater Other Total U.S. East International International Total
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Costs Incurred (millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Exploration .................. $ 319 $ 262 $ 581 $ 3 $ 209 $ 167 $ 376 $ 960
Development .................. 5 202 207 42 378 116 494 743
Proved property acquisitions -- 53 53 -- -- 10 10 63
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Total Costs Incurred .............. $ 324 $ 517 $ 841 $ 45 $ 587 $ 293 $ 880 $ 1,766
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Reserve Data (millions of BOE))
Discoveries/extensions ....... 45 45 6 87 16 103 154
Improved recovery ............ 5 5 2 1 1 2 9
Purchases .................... 15 15 -- -- -- -- 15
Subtotal .......................... 65 65 8 88 17 105 178
Revisions - price related .... (8) (8) (15) -- (3) (3) (26)
Revisions - other ............ 6 6 (3) (12) 15 3 6
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Total Changes ..................... 63 63 (10) 76 29 105 158
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Finding & Development
Costs Per BOE*
Excluding price revisions .... $ 8.36 $14.20 $11.08 $ 7.70 $ 8.49 $ 7.94 $ 10.07
Excluding all revisions ...... $ 9.32 $15.83 $ 6.52 $ 6.65 $ 15.62 $ 8.18 $ 10.44
Including revisions .......... $ 9.73 $16.53 $ -- $ 7.70 $ 9.46 $ 8.19 $ 11.90
Finding, Development & Acquisition
Costs Per BOE
Excluding price revisions .... $ 7.26 $11.81 $11.08 $ 7.70 $ 8.80 $ 8.03 $ 9.56
Excluding all revisions ...... $ 7.89 $12.84 $ 6.52 $ 6.65 $ 16.19 $ 8.28 $ 9.88
Including revisions .......... $ 8.16 $13.27 $ -- $ 7.70 $ 9.81 $ 8.29 $ 11.12
* Excludes proved property acquisition costs and purchases volumes
</TABLE>
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DESIGNATION OF EXECUTIVE OFFICER
William T. Wilson, the company's Vice President, Commodity Trading and Risk
Management, and President of its Unocal Global Trade business unit, has been
designated an executive officer of the company in accordance with Item 401(b) of
Regulation S-K and other rules of the Securities and Exchange Commission.
Mr. Wilson was named Vice President, Commodity Trading and Risk Managment, in
September 1995, heading the newly formed Unocal Global Trade unit. In January
1999, the responsibility for pipelines and related midstram operations was
consolidated into that unit. Mr. Wilson joined the company in March 1995 as
General Manager of Risk Management. From 1990 to 1995, he was employed by
British Petroleum, where he held various management positions in exploration and
production. His last assignment with British Petroleum was Manager of North
American Gas Marketing. Mr. Wilson is 44.
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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: February 10, 1999 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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