<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 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 20, 1998
UNION PACIFIC RESOURCES GROUP INC.
----------------------------------------------------
(Exact name of registrant as specified in charter)
Utah 1-13916 13-2647483
- -------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
801 Cherry Street, Fort Worth, Texas 76102
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 817-877-6000
------------
(Former name or former address, if changed since last report)
Not applicable
1
<PAGE> 2
Item 5. Other Events.
First Quarter Earnings Release
Attached as Exhibit 99.1 to this Report is the Press Release issued by
the Registrant on April 27, 1998 announcing its results for the first quarter of
1998.
Deleveraging Program
Attached as Exhibits 99.2 and 99.3 to this Report are press releases
issued by the Registrant on April 27, 1998 and April 20, 1998, respectively,
regarding the Registrant's deleveraging program.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION PACIFIC RESOURCES GROUP INC.
/s/ Joseph A. LaSala, Jr.
-----------------------------------------
By: Joseph A. LaSala, Jr.
Vice President and General Counsel
DATED: May 6, 1998
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
99.1 Press Release dated April 27, 1998.
99.2 Press Release dated April 27, 1998.
99.3 Press Release dated April 20, 1998.
</TABLE>
4
<PAGE> 1
FOR IMMEDIATE RELEASE EXHIBIT 99.1
MONDAY, APRIL 27, 1998
UNION PACIFIC RESOURCES GROUP INC.
ANNOUNCES RECORD FIRST QUARTER VOLUMES
FORT WORTH, Texas -- Union Pacific Resources Group Inc. (NYSE - UPR) today
announced this year's first quarter average daily volumes from producing
properties increased 27 percent over the first quarter of 1997 to 2.05 billion
cubic feet equivalent per day (Bcfed). Volumes were especially strong because
production associated with the acquisition of Norcen Energy Resources, Ltd.
(Norcen) was included for the month of March. Also contributing to the volume
growth was the Company's Austin Chalk business unit, which had a record quarter,
producing 594 MMcfed, a 2.5 percent increase over the first quarter of 1997.
"Despite a tremendous amount of uncertainty related to commodity prices and
costs of services, we were still able to profitably grow the Company's volumes
in the first quarter," said Jack L. Messman, UPR's Chairman and CEO. "UPR's
success in the first quarter is directly related to the ability of our people to
adapt to the changing conditions in our industry."
UPR continued its growth through the drill bit by operating, on average, 49
drilling rigs per day. Norcen operated, on average, 23 rigs in March.
In addition to the 2.5 percent production increase in the Austin Chalk, several
other business units experienced significant production increases. The Gulf
Onshore/Offshore volumes were up 28 percent year over year on volumes of 150
million cubic feet equivalent per day (MMcfed) of natural gas, while East Texas
volumes were up 20 percent to 203 MMcfed year over year. South
Texas/Plains/Canada volumes increased 14 percent year over year with volumes
equaling 216 MMcfed.
Compared to the first quarter of 1997, discretionary cash flow decreased 17
percent to $265 million ($1.07 per share), while total revenues decreased 7
percent to $499 million. Discretionary cash flow contributed by Norcen was $20
million in March. Net income decreased to $31 million ($0.13 per share). Lower
commodity prices combined with purchase accounting and interest on the debt from
the Norcen acquisition were the primary reasons for the lower earnings. Price
realizations averaged $1.96 per thousand cubic feet equivalent (Mcfe) of natural
gas in the quarter, representing a 23 percent decrease from first quarter of
1997 prices, which equaled $2.55 per Mcfe. Purchase accounting for the Norcen
acquisition caused an increase in depreciation, depletion and amortization
(DD&A) expense of $20 million. Interest expense for the quarter rose to $39
million from $11 million for the same period last year.
The Austin Chalk business unit experienced volume growth due to the completion
of several new significant wells in the Deep Giddings area. The Cobb #1 well in
Washington County, Texas, was completed in February
5
<PAGE> 2
and is producing at a sustained rate of approximately 50 MMcfd. Additionally,
the Goldberg #1 in Austin County, Texas, was completed in March and is producing
at a rate of 23 MMcfd. UPR has a 93 percent working interest in the Cobb well
and a 100 percent working interest in the Goldberg well. Currently, in the Deep
Giddings area, UPR is producing 170 MMcfd on a net basis and the Masters Creek
area of the Chalk is producing 130 MMcfed net. For the first quarter, the
Masters Creek volumes represent an increase of nearly 400 percent over first
quarter 1997.
In the Land Grant business unit, the Phosphoria 42-H well was completed in the
Brady field. It is currently producing 1,500 barrels of oil per day (BOPD) and
10.5 million cubic feet per day (MMcfd) of natural gas without stimulation. The
gas is flowing to the newly constructed Brady Sweetening Plant, which began
service in the first quarter. This plant will allow the Brady field, which has
recycled gas for the past 25 years to stimulate oil production, to begin
producing natural gas for sale.
OUTLOOK
The primary focus for the second quarter will be the implementation of a
deleveraging program, which is being initiated to strengthen the Company's
balance sheet.
"Our plan is to work quickly to reduce our debt level in order to achieve a
strong investment grade credit rating by the end of the year," Messman noted.
"We currently plan to accomplish this through a combination of reduced spending
and asset sales. We have reduced the combined 1998 capital budget of UPR and
Norcen by approximately $800 million to $1.3 billion. Spending for the combined
companies last year was approximately $2.5 billion, which includes approximately
$700 million for producing property and asset purchases. The revised spending
plans will reduce our rig count and our volumes from drilling, however, UPR
still anticipates increasing its volumes by 6 percent to 8 percent after
contemplated asset sales on a combined company, pro forma basis.
Union Pacific Resources is one of the nation's largest independent oil and gas
exploration and production companies. Based in Fort Worth, Texas, UPR has been
the #1 domestic driller for the past 6 years and is the #1 gas producer in the
state of Texas.
This press release, other than historical financial information, contains
forward looking statements that involve risks and uncertainties including
planned deleveraging and drilling activities, expected production efforts and
volumes and budgeted capital expenditures and other risks and uncertainties
detailed in the Company's SEC reports, including the report on Form 10-K for the
year ended December 31, 1997. Actual results may vary materially.
6
<PAGE> 3
Union Pacific Resources Group Inc.
Statements of Income
For the Period Ended March 31
(Dollars in Millions, Except Per Share Figures)
<TABLE>
<CAPTION>
1998 (A) 1997
<S> <C> <C>
Operating revenues:
Oil and gas operations:
Producing properties $362.0 $370.0
Gathering, processing and
marketing 96.2 124.7
Other oil and gas revenues 0.7 4.6
Total oil and gas operations 458.9 499.3
Minerals 40.1 32.4
Total operating revenues 499.0 531.7 (7%)
Operating expenses:
Production 93.3 73.1
Exploration 56.1 42.8
Gathering, processing
and marketing 59.9 76.6
Minerals 0.7 1.3
Depreciation, depletion
and amortization 191.1 133.0
General and administrative 20.6 18.5
Total operating expenses 421.7 345.3 22%
Operating income 77.3 186.4 (59%)
Other income (expense)-net 1.4 (3.0)
Interest expense (39.2) (10.7)
Income before income taxes 39.5 172.7
Income taxes (8.3) (55.5)
Net income $31.2 $117.2 (73%)
Discretionary cash flow $265.1 $321.1
Basic earnings per share $0.13 $0.47
Diluted earnings per share $0.13 $0.47
Discretionary cash flow
per share(B) $1.07 $1.28
Average shares outstanding
(millions) basic 247.6 250.1
Average shares outstanding
(millions) diluted 248.2 251.0
</TABLE>
(A) The quarterly results only include Norcen's results for the month
of March.
(B) Discretionary cash flow for any period means the sum of net income;
depreciation, depletion and amortization; exploration expenses; and
deferred taxes.
7
<PAGE> 4
Union Pacific Resources Group Inc.
Operating Statistics
<TABLE>
<CAPTION>
Norcen
For the Period Ended March
1998 1997 1998 (A)
<S> <C> <C> <C>
Producing properties
average daily production:
Natural Gas:
United States (MMcfd) 1,133.4 1,102.3 108.5
Canada (MMcfd) 134.1 15.9 326.1
Other International (MMcfd) 3.7 --- 10.8
Total (MMcfd) 1,271.2 1,118.2 14% 445.4
Natural Gas Liquids:
United State(MBbld) 28.4 29.0 ---
Canada (MBbld) 3.0 1.8 3.2
Total (MBbld) 31.4 30.8 3.2
Crude Oil:
United State(MBbld) 61.8 47.6 5.4
Canada (MBbld) 17.8 1.7 46.6
Other International (MBbld) 19.0 2.1 52.2
Total (MBbld) 98.6 51.4 92% 104.2
Total production (MMcfed) 2,051.6 1,611.9 27% 1,089.1
Producing Properties average
sales prices:
Natural Gas:
United States (per Mcf) $2.04 $2.41 $2.31
Canada (per Mcf) 1.42 2.86 1.46
Other International (per Mcf) 1.12 --- 1.12
Total (per Mcf) 1.97 2.41 (18%) 1.66
Natural Gas Liquids:
United State(per Bbl) $9.76 $13.47 ---
Canada (per Bbl) 5.01 9.03 $7.22
Total (per Bbl) 9.30 13.20 (30%) 7.22
Crude Oil:
United State(per Bbl) $14.58 $19.51 $13.98
Canada (per Bbl) 9.26 21.41 8.64
Other International (per Bbl) 7.83 18.00 7.44
Total (per Bbl) 12.32 19.51 (37%) 8.32
Total sales price (MMcfed) $1.96 $2.55 (23%) $1.50
Total Company average costs:
Production costs (per Mcfe) $0.51 $0.50 $0.39
DD&A (per Mcfe) 0.93 0.80 1.32
General and administrative
cost (per Mcfe) 0.10 0.11 ---
Debt as a percent of total
capitalization 74.1% 33.0% ---
</TABLE>
(A) Represents Norcen production and prices for the month of March, 1998.
8
<PAGE> 5
Union Pacific Resources Group Inc.
Statements of Cash Flows
For the Period Ended March 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 (A) 1997
<S> <C> <C>
Cash provided by operations:
Net income $31.2 $117.2
Depreciation, depletion and amortization 191.1 133
Exploration expenses 56.1 42.8
Deferred taxes (13.3) 28.1
Discretionary cash flow 265.1 321.1 (17%)
Working capital changes and other 30.3 101.1
Cash provided by operations 295.4 422.2 (30%)
Cash used by investing activities:
Capital expenditures and
exploratory expenditures (487.1) (284) 72%
Acquisition of companies (2623.2) ---
Proceeds from sales of assets 6 1.3
Other investing activities-net 6.4 (0.9)
Cash used by investing activities (3097.9) (283.6)
Financing activities:
Dividends paid (12.4) (12.5)
Debt financing 2816.1 ---
Debt repaid --- (99.6)
Purchase of treasury stock (21.6) (0.8)
Other financings - net (4.4) 55.6
Cash provided (used) by financing activities 2777.7 (57.3)
Net change in cash ($24.8) $81.3
</TABLE>
(A) The quarterly results only include Norcen's results for the month of
March.
9
<PAGE> 6
Union Pacific Resources Group Inc.
Statements of Financial Position
As of March 31
(Dollars in Millions)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Assets:
Current assets $ 788.7 $ 537.7
Properties - net 8,881.2 3,072.8
Other assets 400.0 84.8
Total $10,069.9 $3,695.3
Liabilities and shareholders' equity:
Other current liabilities $ 708.8 $ 621.5
Debt due within one year 350.0 ---
Debt due after one year 4,708.7 571.3
Deferred income taxes 2,063.4 462.8
Other liabilities 474.0 415.7
Shareholders' equity 1,765.0 1,624.0
Total $10,069.9 $3,695.3
</TABLE>
10
<PAGE> 1
FOR IMMEDIATE RELEASE EXHIBIT 99.2
Monday, April 27, 1998
UNION PACIFIC RESOURCES GROUP INC.
ANNOUNCES DETAILS OF DELEVERAGING PROGRAM
FORT WORTH, Texas, April 27 -- Union Pacific Resources Group Inc. (NYSE - UPR)
today announced additional details regarding the producing properties the
Company will sell in accordance with its previously announced deleveraging
program. The goal of the plan is to raise at least $600 million from producing
property sales by the end of the year. The properties are located in Canada, the
United States and international locations outside of North America. A table
detailing the properties included in the deleveraging program is attached.
The United States and international properties are organized into nine bid
packages and will be made available in two phases. The first phase will include
properties located in the Gulf of Mexico, South Louisiana, South Texas and East
Texas. The executive summaries for these packages will be available to
prospective buyers by June 1, 1998 with closings anticipated by October 1, 1998.
The second phase of the program will include properties located in the Rocky
Mountains, Argentina, Egypt and Australia. Executive summaries will be made
available to prospective buyers by July 1, 1998 with closings anticipated by
October 30, 1998.
The sale of the international properties (non-Canadian) as well as those in the
United States will be managed internally by UPR. A complete list of these
properties, along with additional information and maps, is available at UPR's
internet deal room at Petroleum Exchange's website at www.petroleumx.com.
Prospective buyers who visit the website will have the opportunity to
electronically provide contact information and areas of interest to the UPR
mailing list. For interested parties without internet access, please send
expressions of interest to UPR via fax at 817-877-6093. Prospective buyers who
would like additional information concerning the United States and international
properties should contact Marty Searcy at 817-877-6710 or Joe Carroll at
817-877-7718.
The sale of Canadian properties, which will be offered as several discrete
property packages, will be handled by Waterous Securities, Inc. located in
Calgary, Alberta, Canada. Specific details about the Canadian properties may be
obtained from Adam Waterous or Doug De Filippi at 403-265-8077 or by visiting
Waterous' website at www.waterous.com. Explanatory letters and introductory
materials will be sent to prospective buyers of the Canadian properties on May
6, 1998 and data rooms will be available beginning in mid-May. Initial bids
will be expected around June 15 and closing is anticipated by early September.
UPR also announced on April 20, 1998 that it will consider the monetization of
its gathering, processing and marketing business (GPM) as part of the
deleveraging program. For information regarding this project, please contact
Dick Eales at 817-877-7588 or Don Niemiec at 817-255-6932. An informational
memorandum on the GPM business will be available in early June 1998.
11
<PAGE> 2
Union Pacific Resources is one of the nation's largest independent oil and gas
exploration and production companies. Based in Fort Worth, Texas, UPR has been
the #1 domestic driller for the past 6 years and is the #1 gas producer in the
state of Texas.
UNITED STATES AND INTERNATIONAL PROPERTIES
PHASE 1
<TABLE>
<CAPTION>
Major
Package 1 - Offshore Product Comments
Field
<S> <C> <C>
Eugene Island Blk 297 Gas Non-operated
Eugene Island Blk 74 Gas Non-operated
High Island A-340 Gas Non-operated
High Island A-355 Gas Non-operated
High Island A-545 Gas Non-operated
High Island A-441 Gas Operated
S. Marsh Island Blk 17 Gas Operated
Galveston Blk 333 Gas Non-operated
Matagorda Island Blk 587 Gas Non-operated
Package 2 - South Louisiana
Field
Bastian Bay Gas Operated
Four League Bay Gas Operated
King's Bayou Gas Operated and non-operated
East Atchafalaya Field Gas Operated
Delta Duck Club Gas Operated
Coquille Bay Gas Operated
West Lake Verret Gas Operated and non-operated
West Black Bay Gas Operated
Gillis English Bayou Field Gas Non-operated
Package 3 - South Texas
Field Stratton Field Gas Operated
Agua Dulce Field Gas Operated
Moca Field Gas Operated
McFaddin Field Gas Operated
Wadsworth Field Gas Operated
Hostetter Deep Gas Non-operated
Borosa Field Gas Non-operated
Hugh Fitzsimons Field Gas Operated
Package 4 - East Texas
Field
Deadwood Field Gas Non-operated
(SE Panola County)
Package 9 - East Texas
Field
Certain Cotton Valley
Pinnacle Reef Properties Gas Operated and Non-operated
</TABLE>
12
<PAGE> 3
PHASE 2
<TABLE>
<S> <C> <C>
Package 5 -Egypt
Field
Warda Oil Non-operated
Package 6 - Australia
Field
Jabiru Oil Non-operated
Challis Oil Non-operated
Package 7 - Argentina
Field
El Santiagueno Oil Operated
Lindero de Piedra Oil Operated
Agua Salada Oil Non-operated
Faro Virgenes Gas Non-operated
Palmar Largo Oil Non-operated
CAA-35 Oil Non-operated
Package 8 - Rockies
Field
Desert Springs (Wyoming) Gas Operated
Rock Springs Uplift Area (Wyoming) Gas Non-operated
Dripping Rock/Mulligan Draw (WY) Gas Non-operated
Pineview Area (Utah) Oil Operated
Yellow Creek Shallow (Wyoming) Gas Operated
Williston Basin (N. Dakota, Mont.) Oil Non-operated
Silo Field (Wyoming) Oil Operated
</TABLE>
CANADIAN PROPERTIES
Major divestiture packages include properties located in the following areas
of Alberta:
<TABLE>
<CAPTION>
Major
Field Product Comments
<S> <C> <C>
1. Chinchaga Gas Non-operated
2. Harmattan Gas Non-operated
3. Majorville Gas Non-operated
4. Turner Valley Oil Non-operated
5. Ansell Gas Non-operated
6. Pembina Oil Operated and Non-operated
7. Ferrybank Oil Operated
8. North Taber Oil Operated
</TABLE>
Minor packages are also located in Alberta with two smaller areas in
northeast British Columbia.
<TABLE>
<CAPTION>
Field
<S> <C> <C>
1. Carson Creek Gas Operated
2. Sylvan Lake Gas Operated
3. Med. R. Unit #4/Raven Ostracod Gas Non-operated
4. Clear Prairie* Gas Operated
5. Pedigree* Gas Operated
6. Rainbow Gas Operated
7. Spirit River Triassic Unit Oil Operated
</TABLE>
*Partially located in British Columbia
13
<PAGE> 1
FOR IMMEDIATE RELEASE EXHIBIT 99.3
Monday, April 20, 1998
UNION PACIFIC RESOURCES GROUP INC.
BOARD APPROVES POTENTIAL SALE OF
ASSETS FOR DELEVERAGING PROGRAM
FORT WORTH, Texas, April 20 -- Union Pacific Resources Group Inc. (NYSE - UPR)
today announced that the Company's Board of Directors has authorized management
to proceed with a deleveraging program designed to obtain a strong investment
grade credit rating within 18 months. UPR's plan to reduce the debt incurred by
the acquisition of Norcen Energy Resources, Ltd. (Norcen) includes the sale of
certain oil and gas producing properties and monetization of the Company's gas
gathering, processing and marketing business (GPM).
"We are committed to this program and it is our objective to accomplish this
deleveraging without issuing common stock," said Jack L. Messman, UPR's chairman
and CEO. "We intend to have our balance sheet and credit statistics in order
well within our outside target of 18 months. The Board's action demonstrates our
focus on achieving this objective as well as showing our resolve to maximize
long term shareholder value."
Messman noted that UPR is offering producing properties which the Company has
determined are non-strategic following the Norcen acquisition. He said UPR
intends to have data rooms for both the producing properties and GPM operations
set up by June 15.
The Company also announced that it has reduced its 1998 capital budget from $1.6
billion to $1.3 billion. This reduction aligns capital expenditures with
anticipated cash flow and includes anticipated capital spending associated with
the Norcen acquisition.
Union Pacific Resources is one of the nation's largest domestic independent oil
and gas exploration and production companies. Based in Fort Worth, Texas, UPR
has been the #1 domestic driller for the past six years and is the state of
Texas' #1 gas producer.
This press release, other than historical financial information, contains
forward looking statements that involve risks and uncertainties including
planned construction and drilling activity, expected production efforts and
volumes and budgeted capital expenditures and other risks and uncertainties
detailed in the Company's SEC reports, including the report on Form 10-Q for the
year ended December 31, 1997. Actual results may vary materially.
14
