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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
---------------
Date of Report (Date of Earliest Event Reported): February 7, 1995
UNION TEXAS PETROLEUM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9019 76-0040040
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1330 Post Oak Boulevard, Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 623-6544
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Item 5. Other Events.
------------
The information set forth in the press releases of the
Registrant dated January 25, 1995, February 2, 1995 and February 6, 1995,
which are filed as exhibits hereto, is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits:
Exhibit
Number Description
- ------ -----------
99.1 Press release dated January 25, 1995
99.2 Press release dated February 2, 1995
99.3 Press release dated February 6, 1995
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Signature
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.
UNION TEXAS PETROLEUM
HOLDINGS, INC.
By: /s/ NEWTON W. WILSON, III
--------------------------
NEWTON W. WILSON, III
General Counsel,
Vice President-Administration
and Secretary
Date: February 7, 1995
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INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
99.1 Press Release dated January 25, 1995
99.2 Press Release dated February 2, 1995
99.3 Press Release dated February 6, 1995
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
[UNION TEXAS PETROLEUM LETTERHEAD]
Contact: Carol L. Cox
(713) 968-2714
FOURTH QUARTER AND FULL YEAR 1994 EARNINGS
SUBSTANTIALLY HIGHER AT UNION TEXAS PETROLEUM
Higher Sales Volumes in U.K. North Sea and Indonesia and Improved Ethylene
Margins Contribute to Increased Net Income in 1994
Houston, January 25, 1995 -- Union Texas Petroleum Holdings, Inc.
today reported 1994 earnings of 76 cents per share, up from 31 cents per share
in 1993. Net income was $67 million, compared to $27 million in 1993.
"Union Texas turned in a very good performance in 1994, even though
low oil prices continued to affect our industry," said Chairman and CEO Clark
Johnson. "In 1994, our company set a production record for our international
operations, increased year-end reserves, reduced our unit operating costs and
benefitted from sharply higher ethylene margins. We also developed an expanded
and exciting exploration program for 1995. Union Texas is well positioned to
continue to grow in 1995 and beyond."
Union Texas' comparative results for 1993 were affected by three
non-recurring items and also reflect a non-cash $4 million charge for the
cumulative effect of adopting a new accounting standard for postemployment
benefits, effective January 1, 1993. Excluding these four items, the company's
earnings for 1993 were 61 cents per share or $54 million.
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For the fourth quarter of 1994, Union Texas reported net income of $17
million or 20 cents per share, compared to $5 million or 6 cents per share for
the same period in 1993. The company said its 1994 fourth quarter results were
favorably affected by increased ethylene margins and higher oil prices. During
the fourth quarter of 1994, Union Texas' ethylene margins from its
petrochemical operations averaged over 11 cents per pound, up from 2 cents per
pound a year earlier. The strengthening ethylene margins were attributed to
tight supplies of ethylene coupled with improving demand for various consumer
products that utilize ethylene in their manufacturing process. Union Texas
also noted that its average sales price for U.K. North Sea crude oil was 18%
higher during the fourth quarter of 1994 than the average price a year ago.
Increased Revenues
Sales and operating revenues for the fourth quarter and full-year 1994
totaled $214 million and $748 million, respectively, versus $189 million and
$682 million, respectively, for the corresponding periods in 1993. The
increase in revenues for the full-year 1994 was due largely to higher sales
volumes in the U.K. North Sea and Indonesia and improved ethylene sales prices,
partially offset by lower oil and liquefied natural gas (LNG) prices. The
company's average worldwide oil and gas sales prices in 1994 were $14.94 per
barrel and $2.48 per thousand cubic feet, respectively. "All of Union Texas'
oil and gas producing operations are located overseas. The vast majority of
our gas production is sold to international gas markets in the Pacific Rim and
U.K. North
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Sea, which accounts for the higher gas prices that Union Texas receives as
compared to the currently weak U.S. domestic gas markets," Johnson noted.
Operations Highlights
In a review of the company's performance in 1994, Mr. Johnson pointed
out that Union Texas made significant progress toward its goals of boosting
production, increasing reserves and expanding its exploration portfolio.
"During 1994, our worldwide annual production rose 16% from 1993
levels to approximately 45 million barrels of oil equivalent. Our fields in
the U.K. North Sea recorded significantly higher sales volumes of both oil and
gas. In Indonesia, where our joint venture supplies natural gas to the world's
largest LNG facility, a record 247 gross cargoes of LNG (108 billion cubic feet
of gas net to Union Texas) were sold in 1994, up from 217 gross cargoes (96
billion cubic feet net to Union Texas) in 1993, benefitting from increased
production capacity at the LNG plant," Johnson said.
A significant portion of Union Texas' worldwide natural gas output is
produced from its Indonesian operations where the gas is liquefied and sold
into the growing Pacific Rim markets. Indonesian LNG prices, which are based
on world oil prices, averaged $2.85 per thousand cubic feet in 1994, off from
$3.17 in the previous year. The company's average sales price for oil was
$14.94 per barrel in 1994, compared to $15.43 per barrel in 1993. About 90% of
Union Texas' oil and gas revenues are indexed to world oil prices.
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Strategic Acquisition
"Our 1994 acquisition of an interest in the U.K. North Sea's Britannia
field helped us to accomplish one of our key objectives: to increase our
reserve base through strategic purchases. With Union Texas' financial
strength, our company is in an excellent position to continue to increase value
for our shareholders by pursuing an aggressive exploration program and quality
acquisition opportunities," Johnson said.
As previously reported, Union Texas increased its proved worldwide
reserves at year-end 1994 to 411 million barrels of oil equivalent, up from 381
million barrels at the end of 1993. The company's reserve increase in 1994
included 38 million barrels of oil equivalent in proved reserves attributable
to Union Texas' acquisition of a 9.42% unit interest in the Britannia field,
the U.K. North Sea's largest undeveloped gas field. Over time, Union Texas
anticipates recording additional proved reserves from the Britannia field,
supported by the field's development results and its production history.
Through reserve acquisitions, revisions and additions, the company replaced
approximately 170% of its 1994 production at a cost of about $4.50 per barrel
of oil equivalent.
Higher Ethylene Margins
Discussing the upturn in the petrochemical industry, Johnson pointed
out that Union Texas' 1995 performance would likely continue to benefit from
higher ethylene margins. By December 1994, the company's ethylene margins had
risen to approximately 12 cents per pound, up from about 1 cent at the
beginning of 1994. The company's
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average ethylene margin for the full-year 1994 was approximately 6 cents per
pound. "With an expected 1995 net production of approximately 500 million
pounds of ethylene at our petrochemical plant, Union Texas could benefit
significantly from continued high margin levels," Johnson said.
Lower Unit Operating Expenses
Johnson also noted that the company reduced its unit operating
expenses by approximately 30% during 1992 to 1994, from about $5.50 per barrel
of oil equivalent in 1992 to approximately $4.00 per barrel in 1994, primarily
as a result of increased volumes in the U.K. North Sea, lower LNG plant costs
in Indonesia and the benefits of a company-wide cost containment program.
Expanded Exploration Portfolio
In the company's exploration programs, Johnson commented that Union
Texas further expanded its new ventures portfolio in 1994 by entering into
exploration concessions in Vietnam, Tunisia, Alaska's Kenai Peninsula, Pakistan
and Ireland. "The work that our new venture exploration team accomplished over
the past several years has set the stage for a very exciting year in 1995,"
Johnson said. "In 1995, we plan to participate in at least nine exploration
wells in our new ventures areas in addition to as many as 20 exploration wells
in ongoing programs in our core producing areas in the U.K. North Sea,
Indonesia and Pakistan."
One of the largest independent producers located in the U.S.,
Houston-based Union Texas Petroleum Holdings, Inc. (NYSE: UTH) explores for and
produces oil and gas overseas primarily in the U.K.
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North Sea, Indonesia and other strategic areas. The company also has
petrochemicals interests in the U.S.
Comparative financial highlights follow (amounts in millions, except per share
data):
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1994 1993
---- ----
<S> <C> <C>
Net income............................... $ 17 $ 5
Earnings per share....................... $ .20 $ .06
Sales and operating revenues............. $ 214 $ 189
Average common shares outstanding........ 87.6 87.6
</TABLE>
<TABLE>
<CAPTION>
Full Year Ended December 31,
----------------------------
1994 1993
---- ----
<S> <C> <C>
Net income............................... $ 67 $ 27(a)
Net income excluding non-recurring
items and cumulative effect of change
in accounting principle............... $ 67 $ 54
Earnings per share:
Before cumulative effect of change
in accounting principle............. $ .76 $ .35
Cumulative change in accounting
principle........................... - $(0.04)
Net income............................ $ .76 $ .31
Sales and operating revenues............. $ 748 $ 682
Average common shares outstanding........ 87.6 87.2
</TABLE>
See footnotes on page 9.
Additional financial and operating information appears on the attached pages.
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UNION TEXAS PETROLEUM
FINANCIAL SUMMARY
(amounts in millions, except per share data)
<TABLE>
<CAPTION>
FOURTH QUARTER FULL YEAR
----------------------- ------------------------
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Sales and operating revenues $ 214 $ 189 $ 748 $ 682
Net income $ 17 $ 5 $ 67 $ 27(a)
Major operations(b)
Indonesia $ 26 $ 23 $ 94 $ 89
U.K. North Sea $ 7 $ 1 $ 27 $ 23
Pakistan $ 1 $ 4 $ 10 $ 16
Petrochemicals $ 9 $ 3 $ 15 $ 5
Earnings per share of
common stock
Before cumulative effect
of change in accounting
principle - - - $ .35
Cumulative effect of
change in accounting
principle - - - $(0.04)
Net income $ .20 $ .06 $ .76 $ .31
Discretionary cash flow(c) $ 76 $ 83 $ 295 $ 292
Major operations (b)
Indonesia $ 40 $ 46 $ 154 $ 168
U.K. North Sea $ 39 $ 41 $ 142 $ 125
Pakistan $ 3 $ 3 $ 22 $ 24
Petrochemicals $ 15 $ 6 $ 28 $ 12
Average common shares 87.6 87.6 87.6 87.2
</TABLE>
See footnotes on page 9.
DISCRETIONARY CASH FLOW SUMMARY
(amounts in millions)
<TABLE>
<CAPTION>
FOURTH QUARTER FULL YEAR
----------------------- ------------------------
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net income $ 17 $ 5 $ 67 $ 27(a)
Less: Equity partnership
income $ (5) $ (1) $ (20) $ (9)
Add: DD&A $ 45 $ 50 $ 168 $ 243
Deferred taxes $ (5) $ (2) $ (12) $(107)
Exploration expenses $ 14 $ 20 $ 54 $ 93
Unimar equity DCF(d) $ 10 $ 11 $ 38 $ 41
Cumulative effect of
change in accounting
principle - - - 4
Discretionary cash flow $ 76 $ 83 $ 295 $ 292
</TABLE>
See footnotes on page 9.
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OPERATING SUMMARY (e)
<TABLE>
<CAPTION>
FOURTH QUARTER FULL YEAR
-------------- --------------
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net crude oil sales (MBBLS/D)
U.K. North Sea 37 41 34 27
Indonesia 5 6 6 6
Pakistan 4 6 5 5
Average crude oil prices (per BBL)
U.K. North Sea $16.18 $13.74 $14.99 $15.10
Indonesia $16.00 $14.12 $15.78 $17.26
Pakistan $12.98 $14.03 $13.43 $15.04
Net natural gas sales (MMCF/D)
Indonesian LNG 205 217 222 198
U.K. North Sea 36 13 24 8
Pakistan 40 41 43 43
Average natural gas prices (per MCF)
Indonesian LNG $ 2.92 $ 2.96 $ 2.85 $ 3.17
U.K. North Sea(f) $ 2.91 $ 2.48 $ 2.57 $ 2.49
Pakistan $ 1.03 $ 1.14 $ 1.07 $ 1.26
</TABLE>
See footnotes on page 9.
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FOOTNOTES
(a) Includes a one-time favorable benefit of approximately $50 million due
principally to the reduction in U.K. Petroleum Revenue Tax. Includes
a non-cash charge of $25 million due to the write-off of the Kuvlum
prospect in Alaska. Also includes a non-cash charge of approximately
$48 million, net of tax, related to the write-down of the Piper field
in the U.K. North Sea and a non-cash charge of $4 million for the
cumulative effect of a change in accounting principle as a result of
the company adopting a new accounting standard for future long-term
disability benefits.
(b) Excludes corporate items and other worldwide ventures.
(c) Discretionary cash flow (DCF) is net income (less equity partnership
income) excluding depreciation, deferred taxes, and exploration
expenses, plus the company's estimated share of discretionary cash
flow from its equity interest in its Unimar partnership's Indonesian
operations.
(d) Unimar equity DCF reflects the company's estimated share of
discretionary cash flow from its equity interest in its Unimar
partnership's Indonesian operations.
(e) Excludes the Unimar equity partnership.
(f) Excludes capacity charge of $32 million and $31 million in 1994 and
1993, respectively, from the North and South Sean gas fields in the
U.K. North Sea.
# # #
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EXHIBIT 99.2
NEWS RELEASE
[UNION TEXAS PETROLEUM LETTERHEAD]
Contact: Carol L. Cox
(713) 968-2714
UNION TEXAS PETROLEUM ANNOUNCES $212 MILLION CAPITAL BUDGET FOR 1995,
PLANS TO INCREASE EXPLORATION SPENDING BY 85% OVER 1994
Houston, February 2, 1995 -- The board of directors of Union Texas
Petroleum Holdings, Inc. has approved a 1995 capital spending budget of
approximately $212 million, up from $131 million spent in 1994. The
exploration portion of the 1995 capital plan calls for an 85% increase over
1994 levels.
"A major thrust for Union Texas' capital spending in 1995 will be a
substantially expanded exploration program," said Chairman and CEO Clark
Johnson. "During 1995, we expect to spend about $74 million on exploration
activities, including at least nine exploratory wells in new venture areas in
Argentina, Alaska, Tunisia, Vietnam and Eastern Indonesia in addition to as
many as 20 wells in ongoing exploration programs in our producing areas in the
U.K. North Sea, Indonesia and Pakistan."
"Our exploration plan represents the highest level of international
exploration activity for Union Texas in our recent history. The 1995 program
provides exciting opportunities for Union Texas. We are committed to enhancing
value for our shareholders."
DEVELOPMENT PLANS
Union Texas has allocated approximately $132 million for oil and gas
development programs in the U.K. North Sea, Indonesia and Pakistan, up from $83
million spent in 1994.
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A key focus for Union Texas' 1995 development program is the company's
participation in the development of the Britannia gas field in the U.K. North
Sea. Union Texas acquired a 9.42% unit interest in Britannia, the U.K. North
Sea's largest undeveloped gas field, during 1994. Of the $132 million
development budget for 1995, the company plans to spend about $47 million at
Britannia, which will include drilling activities and platform and facilities
construction. Overall, Union Texas' total share of development costs for
Britannia from 1994 through start-up of production in late 1998 is estimated at
approximately $200 million.
EXPLORATION PLANS
As part of its $74 million exploration budget in 1995, Union Texas has
earmarked approximately $41 million for exploration activities in offshore
Argentina, Alaska, Tunisia, Vietnam, Eastern Indonesia and other new venture
areas. A total of approximately $33 million is budgeted for the company's
ongoing exploration programs in the U.K. North Sea, Indonesia and Pakistan.
The exploration portion of Union Texas' 1994 capital spending was $40
million. The company's increased capital spending in 1995 will enable Union
Texas to participate in at least nine wells in new venture areas (compared to
four in 1994) and up to 20 wells in its producing areas (versus 11 wells in
1994). "We believe that our expanded exploration program for 1995 will enhance
our company's chance of finding significant reserves over time," said Mr.
Johnson.
PETROCHEMICAL OPERATIONS
For its petrochemical interests in Louisiana, Union Texas has
allocated approximately $5 million in 1995, primarily for the completion
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of the additional 12th furnace at the company's jointly-owned ethylene plant
and for other projects to increase volumes and enhance productivity. The
company spent $6 million on its petrochemical operations in 1994.
ACQUISITIONS
The company also stated that it would continue to seek attractive
acquisition opportunities during 1995. Union Texas said its acquisition
strategy in 1995 would include the evaluation of both developed and undeveloped
reserves. The company's capital spending budget does not include any amounts
for acquisitions, but the company believes that its financial strength and
available credit give it the financial resources to make acquisitions. Union
Texas' 1994 capital spending of $131 million does not include $159 million for
the acquisition of the interest in the Britannia field.
One of the largest independent producers located in the U.S.,
Houston-based Union Texas Petroleum Holdings, Inc. (NYSE: UTH) explores for and
produces oil and gas overseas primarily in the U.K. North Sea, Indonesia and
other strategic areas. The company also has petrochemical interests in the
U.S.
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UNION TEXAS PETROLEUM HOLDINGS, INC.
CAPITAL SPENDING*
(Dollars in Millions)
<TABLE>
<CAPTION>
PLANNED 1995 1994
------------ --------
<S> <C> <C>
United Kingdom
Exploration $ 13 $ 8
Development 35 34
Britannia 47 3
Indonesia
Exploration $ 9 $ 5
Development 41 40
Pakistan
Exploration $ 11 $ 4
Development 9 6
New Exploration
Ventures ** $ 41 $ 23
Petrochemicals $ 5 $ 6
Corporate $ 1 $ 2
---- ----
Total $212 $131 ***
</TABLE>
* Includes the company's equity interests in the Unimar partnership and
excludes capitalized interest.
** Primarily includes Argentina, Alaska, Tunisia, Vietnam and Eastern
Indonesia.
*** Does not include $159 million for the acquisition of a 9.42% unit
interest in the Britannia field in the U.K. North Sea.
# # #
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EXHIBIT 99.3
NEWS RELEASE
[UNION TEXAS PETROLEUM LETTERHEAD]
Contact: Carol L. Cox
(713) 968-2714
UNION TEXAS PETROLEUM TO ACQUIRE 25% STAKE IN OFFSHORE
IRELAND BLOCKS IN ST. GEORGE'S CHANNEL
Houston, February 6, 1995 -- Union Texas Petroleum Holdings, Inc.
today announced that Union Texas Petroleum Limited, its wholly-owned
London-based subsidiary, has entered into an agreement to acquire a 25% working
interest in five and a half offshore blocks located in St. George's Channel
between Ireland and Great Britain.
The blocks are situated offshore Ireland, about 15 miles east of the
town of Wexford. Water depths in the area range from 200 to 300 feet. The
blocks, the nearest of which is located about five miles northwest of a gas
discovery by Marathon Oil U.K., Limited, encompass a total of about 345,000
acres.
Union Texas Petroleum Limited has agreed to acquire its interest in
the blocks from Marathon Petroleum Ireland, Ltd. and Marathon Petroleum
Hibernia, Ltd., both wholly-owned subsidiaries of Marathon Oil Company
(NYSE:MRO). Marathon is operator of the blocks and retains the remaining 75%
interest. The blocks involved are 41/25, 41/29, 41/30, 42/21, 50/4 and part of
41/28. To date, Marathon has acquired approximately 2,100 kilometers of
seismic data on the blocks. The initial exploratory well is expected to begin
drilling in the second quarter of 1995.
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Terms of Union Texas Petroleum Limited's acquisition were not
disclosed. Union Texas Petroleum Limited said the transfer of interest was
subject to the approval of the Irish Minister for Transport, Energy and
Communications.
One of the largest independent producers located in the U.S.,
Houston-based Union Texas Petroleum Holdings, Inc. (NYSE: UTH) explores for and
produces oil and gas overseas primarily in the U.K. North Sea, Indonesia and
other strategic areas. The company also has petrochemical interests in the
U.S.
# # #
Note to editors and reporters: A map of the offshore Ireland blocks is
available by contacting Carol Cox at 713-968-2714.
