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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): July 23, 1997
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.
Press Release. The information set forth in the press release
of the registrant dated July 23, 1997, which is filed as an exhibit hereto, is
incorporated herein by reference.
The press release contains forward-looking statements within
the meaning of and in reliance upon the "safe harbor" provisions of the Private
Securities Litigation Reform Act, as set forth in Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, that involve risks and uncertainties, including price volatility,
exploration, development, operational, marketing, reserve estimates,
implementation and opportunity risks, and other factors described from time to
time in the registrant's publicly available SEC reports, which could cause
actual results to differ materially.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
Exhibit
Number Description
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99.1 Press release dated July 23, 1997
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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/ ALAN R. CRAIN, JR.
----------------------------------
Alan R. Crain, Jr.
Vice President and General Counsel
Date: July 23, 1997
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INDEX TO EXHIBITS
Exhibit
Number Description
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99.1 Press release dated July 23, 1997
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Exhibit 99.1
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NEWS RELEASE
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[Graphic Omitted]
UNION TEXAS PETROLEUM 1330 Post Oak Blvd.
P.O. Box 2120
Houston, Texas 77252-2120
(713) 623-6544
UNION TEXAS PETROLEUM REPORTS SECOND QUARTER RESULTS
UNION TEXAS CEO COMMENTS ON MID-YEAR RESERVE REPLACEMENT
Houston, July 23, 1997 -- Union Texas Petroleum Holdings, Inc. (NYSE:
UTH) today reported earnings of 30 cents per share for the second quarter of
1997, compared to 35 cents per share for the same period in 1996. Net income for
1997's second quarter totaled $25 million, versus $31 million in the
corresponding period a year ago.
For the first half of 1997, Union Texas recorded higher results from a
year ago, with earnings of $1.05 per share in the first six months of 1997, up
from 90 cents per share in 1996's same period. Net income for 1997's first half
was $89 million, compared to $78 million in 1996's first six months.
During the second quarter of 1997, Union Texas' earnings were
negatively affected by an anticipated decline in liquefied natural gas (LNG)
sales volumes in Indonesia, lower oil prices in the U.K. and higher geological
and geophysical expenses for new exploration ventures. Partially offsetting
these impacts were a 12% increase in worldwide crude oil sales volumes, a
doubling of ethylene margins from the company's U.S. petrochemicals operations
and lower interest expense in 1997's second quarter compared to the same period
in 1996. Union Texas also benefited from a $6 million net gain from the sale of
a small interest in a U.K. North Sea field in the second quarter of 1997. Sales
and operating revenues for 1997's second quarter totaled $212 million, versus
$223 million in 1996's same period.
The independent energy company said its average sales price for oil
fell from $18.14 barrel in the second quarter in 1996 to $16.48 per barrel in
1997's second quarter. At its petrochemicals operations in Louisiana, Union
Texas' ethylene margins averaged nearly 12 cents per pound in 1997's second
quarter, about double its 6 cents margin in 1996's same period. The higher
ethylene margins were attributed to lower feedstock costs and higher ethylene
prices which were supported by improved demand. Union Texas said its ethylene
sales volumes were down 25% in the second quarter of 1997 from year-ago levels
primarily due to the timing of spot sales.
HIGHER FIRST HALF EARNINGS
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Union Texas said its increased earnings for 1997's first half were
driven by higher LNG prices in Indonesia, improved ethylene margins, lower
interest expense and higher oil sales volumes in Pakistan and the U.K. North
Sea, partially offset by an anticipated decrease in LNG sales volumes in
Indonesia. In 1997's first half, Union Texas' sales and operating revenues
amounted to $494 million, up from $481 million for the same period of 1996.
Union Texas benefited from lower financing costs in the first half of
1997 compared to year- ago levels due to its reduced net debt level, which
declined about 25% to $474 million at the end of 1997's first six months from
$632 million at the end of 1996's first half.
IMPACT OF COMPLETION OF STOCK BUYBACK PROGRAM
In the first quarter of 1997, Union Texas repurchased 1,821,264 shares
of its common stock, completing the company's 2 million share buyback program.
Since 1994, Union Texas has repurchased 4 million shares for a total of $76.9
million, decreasing its number of outstanding shares to 84,687,098 shares as of
June 30, 1997.
1997 FIRST HALF ACCOMPLISHMENTS
Commenting on the company's performance, Chairman and CEO John Whitmire
said, "In the first six months of 1997, we have announced several exciting
growth initiatives that are setting the stage for significant expansion of our
global operations. Our accomplishments include adding a new core operated
producing area with the successful bid on the Boqueron area during Venezuela's
Third Operating Agreement Round. Union Texas is the named operator with a 66.67%
working interest and is working with our partner, Preussag Energie GmbH of
Germany, to further develop this currently-producing field. Under the 20-year
contract, the Union Texas group will produce oil from Boqueron and will receive
a service fee for the production and recovery of costs. Boqueron will provide
near-term production growth from our first company-operated enhanced oil
recovery project. With additional development spending, we expect to increase
current production at Boqueron from 10,000 gross barrels of oil a day to
50,000-60,000 barrels within three to five years.
"Based on an estimate of barrels remaining to be recovered at Boqueron,
we anticipate recording approximately 40 million net barrels in proved reserves
from Boqueron during 1997 with additional reserves expected to be recorded in
the future as we further develop the field. Our successful bid on Boqueron gives
us an excellent start to more than replacing this year's production," said
Whitmire.
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"Looking to the future, we are encouraged by the continued upside to
the estimates of proved and potential reserves at the new Alpine oil field
currently under development on Alaska's North Slope," Whitmire commented. In May
1997, ARCO Alaska, Inc., as operator, increased its estimates of proved and
potential reserves at Alpine based upon full development of the field including
its peripheral areas. Union Texas has a 22% working interest in Alpine.
"In the first half of 1997, we also expanded our portfolio of new
exploration ventures, adding 10 concessions to our worldwide program," said
Whitmire. "I am particularly excited about our new ventures in China, Algeria
and the Caspian Sea area. In May 1997, we boosted our capital budget for this
year with a majority of the increase earmarked for our worldwide exploration
programs. We have budgeted about $95 million on exploration capital in 1997, an
increase of over 160% from the amount spent in 1996.
"The first half of 1997 has seen a number of accomplishments," said
Whitmire. "Our growth plans are beginning to deliver results as we focus all of
our efforts on building value for Union Texas' shareholders. We look forward to
a very dynamic second half in 1997."
One of the largest independent producers located in the U.S.,
Houston-based Union Texas explores for and produces oil and gas overseas
primarily in the U.K. North Sea, Indonesia and other strategic international
areas. The company has petrochemical interests in the U.S.
This news release contains forward-looking statements within the
meaning of the Securities Litigation Reform Act that involve risks and
uncertainties, including price volatility, exploration, development,
operational, marketing, reserve estimates, implementation and opportunity risks,
and other factors described from time to time in the company's publicly
available SEC reports, which could cause actual results to differ materially.
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Comparative financial highlights follow (amounts in millions, except per share
data):
THREE MONTHS ENDED JUNE 30,
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1997 1996
---- ----
Earnings per share $ .30 $ .35
Net income $ 25 $ 31
Sales and operating revenues $ 212 $ 223
Average common shares outstanding 84.7 87.5
SIX MONTHS ENDED JUNE 30,
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1997 1996
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Earnings per share $ 1.05 $ .90
Net income $ 89 $ 78
Sales and operating revenues $ 494 $ 481
Average common shares outstanding 85.3 87.6
Additional financial and operating information appears on the
attached pages.
For additional information, contact:
Carol Cox, media John Zimmerman, analysts and investors
713-968-2714 713-968-2740
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UNION TEXAS PETROLEUM
FINANCIAL SUMMARY
(amounts in millions, except per share data)
SECOND QUARTER FIRST HALF
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1997 1996 1997 1996
---- ---- ---- ----
Sales and operating revenues $ 212 $ 223 $ 494 $ 481
Net income $ 25 $ 31 $ 89 $ 78
Major operations (a)
Indonesia $ 23 $ 28 $ 59 $ 65
U.K. North Sea $ 16 $ 12 $ 54 $ 41
Pakistan $ 5 $ 3 $ 14 $ 9
Petrochemicals $ 7 $ 5 $ 8 $ 8
Earnings per share of common stock $ .30 $ .35 $1.05 $ .90
Discretionary cash flow (b) $ 92 $ 103 $ 223 $ 215
Major operations (a)
Indonesia $ 39 $ 41 $ 89 $ 92
U.K. North Sea $ 49 $ 59 $ 125 $ 123
Pakistan $ 9 $ 8 $ 23 $ 16
Petrochemicals $ 13 $ 9 $ 16 $ 14
Average common shares
outstanding 84.7 87.5 85.3 87.6
See footnotes on page 8.
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UNION TEXAS PETROLEUM
DISCRETIONARY CASH FLOW SUMMARY (b)
(amounts in millions)
SECOND QUARTER FIRST HALF
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1997 1996 1997 1996
---- ---- ---- ----
Net income $ 25 $ 31 $ 89 $ 78
Less: Equity partnership income $ (4) $ (5) $ (12) $ (15)
Add: DD&A $ 47 $ 49 $ 106 $ 104
Deferred taxes $ (7) $ 8 $ (13) $ 1
Exploration expenses $ 22 $ 10 $ 32 $ 24
Unimar equity DCF(c) $ 9 $ 10 $ 21 $ 23
Discretionary cash flow $ 92 $ 103 $ 223 $ 215
See footnotes on page 8
OPERATING SUMMARY(d)
SECOND QUARTER FIRST HALF
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1997 1996 1997 1996
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Net crude oil sales (MBBLS/D)
U.K. North Sea 43 41 45 43
Indonesia 6 4 6 6
Pakistan 7 5 7 6
Average crude oil prices (per BBL)
U.K. North Sea $ 16.11 $ 18.27 $ 17.71 $ 18.18
Indonesia $ 18.97 $ 19.07 $ 20.44 $ 18.56
Pakistan $ 16.65 $ 16.24 $ 17.84 $ 16.20
Net natural gas sales (MMCF/D)
Indonesian LNG 178 214 186 227
U.K. North Sea 6 22 42 40
Pakistan 37 42 38 43
Average natural gas prices (per
MCF)
Indonesian LNG $ 3.39 $ 3.41 $ 3.72 $ 3.36
U.K. North Sea(e) $ 2.44 $ 2.25 $ 2.96 $ 2.43
Pakistan $ 1.67 $ 1.29 $ 1.68 $ 1.29
Ethylene (per LB)
Sales price $ .24 $ .21 $ .25 $ .20
Margins $ .12 $ .06 $ .10 $ .05
Sales volumes (MLBS/D)(f) 1,189 1,577 1,178 1,379
See footnotes on page 8
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UNION TEXAS PETROLEUM
CONSOLIDATED STATEMENT OF OPERATIONS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
SECOND QUARTER FIRST HALF
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1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Sales and operating revenues $212 $223 $494 $481
Interest income and other
revenues 1 1 3 1
Net earnings of equity investee 4 6 12 15
Total revenues $217 $230 $509 $497
Costs and other deductions:
Product costs and operating
expenses 81 81 162 161
Exploration expenses 21 10 31 24
Depreciations, depletion and
amortization 47 49 106 104
Selling, general and
administrative expenses 7 7 12 12
Interest expense(g) 2 7 6 15
Income before income taxes 59 76 192 181
Income taxes 34 45 103 103
Net income $ 25 $ 31 $ 89 $ 78
Earnings per share of common stock $.30 $.35 $1.05 $.90
Dividends per share of common stock $.05 $.05 $.10 $.10
Weighted average number of shares
outstanding 84.7 87.5 85.3 87.6
See footnotes on page 8
SELECTED BALANCE SHEET DATA
(AMOUNTS IN MILLIONS)
JUNE 30, 1997 December 31, 1996
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TOTAL ASSETS $ 1,889 $ 1,942
LONG-TERM DEBT $ 519 $ 558
SHAREHOLDERS' EQUITY $ 623 $ 586
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FOOTNOTES
(a) Excludes corporate items and other worldwide exploration ventures.
(b) Discretionary cash flow (DCF) is net income (less Unimar 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.
(c) Unimar equity DCF reflects the company's estimated share of discretionary
cash flow from its equity interest in its Unimar partnership.
(d) Excludes the Unimar equity partnership.
(e) Excludes capacity charge of $6 million and $6 million in the second quarter
of 1997 and 1996, respectively, and $25 million and $23 million in the
first half of 1997 and 1996, respectively, from the North and South Sean
gas fields in the U.K. North Sea.
(f) Represents Union Texas' 41.67% net interest in the jointly-owned Geismar
ethylene plant in Louisiana.
(g) Interest expense is net of amounts capitalized of $9 million and $6 million
in the second quarter of 1997 and 1996, respectively, and $17 million and
$12 million in the first half of 1997 and 1996, respectively.
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