<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) January 25, 2000
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)
777 Main Street, Fort Worth, Texas 76102
-------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 817-321-6000
(Former name or former address, if changed since last report)
None
<PAGE> 2
Item 5. Other Events.
Earnings Release for 1999
On January 25, 2000, Union Pacific Resources Group Inc. (the "Company")
issued a press release with respect to its financial results for 1999, including
operating revenues, net income, and certain other financial information. A copy
of such press release is attached as Exhibit 99.1 to this Current Report on Form
8-K, which is incorporated herein by reference.
Forward Looking Statements
This report contains forward looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A
of the Securities Act of 1933, as amended. Such forward looking statements
concern, among other things, discretionary cash flow, future earnings, capital
expenditures, development activity, drilling activity, acquisitions, and the
Company's cost and debt reduction plans. Such forward looking information is
based upon management's current plans, expectations, estimates, and assumptions
the Company believes are reasonable, but are subject to a number of
uncertainties and risks that could significantly affect (i) current plans, (ii)
anticipated actions, (iii) the timing of such actions and (iv) the Company's
financial condition and results of operations. As a consequence, actual results
may differ materially from expectations, estimates or assumptions expressed in
any forward looking statements made by or on behalf of the Company. The risks
and uncertainties include generally (i) the volatility and uncertainty of oil
and gas prices, (ii) economic, political, judicial, and regulatory issues and
developments, (iii) competition in the industry, (iv) demand for properties
being divested, (v) the economics of producing certain reserves, (vi) demand for
the supply of oil and gas, (vii) the ability to find or acquire and develop
reserves of natural gas and crude oil, and (viii) changes in the market price of
the Common Stock, which can be impacted by the foregoing as well as other
factors. Other risks and uncertainties are detailed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 and the Form 10-Q for
the quarter ended September 30, 1999.
2
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
99.1 Press Release dated January 25, 2000.
3
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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, General Counsel
and Secretary
DATED: January 27, 2000
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
99.1 Press Release dated January 25, 2000.
</TABLE>
5
<PAGE> 1
FOR IMMEDIATE RELEASE EXHIBIT 99.1
TUESDAY, JANUARY 25, 2000
UNION PACIFIC RESOURCES GROUP INC. POSTS SOLID FOURTH QUARTER; SLASHES DEBT,
ACHIEVES RECORD HIGH CASH FLOW, HEALTHY EARNINGS IN 1999
FORT WORTH, Texas -- Union Pacific Resources Group Inc. (NYSE: UPR)
today announced income from continuing operations of $10.9 million for the
fourth quarter of 1999, or $.04 per share, and $89.2 million, or $.36 per share,
for the entire year. Net income from continuing operations would have been over
$30 million, or $.12 per share in the fourth quarter, had it not been for
significant items (detailed on page 8) that reduced net income by over $19
million.
The Company reported 1999 total income of $225.8 million, which
included $133.2 million from discontinued operations and a $3.4 million
extraordinary gain from the early extinguishing of debt. Spurred by commodity
price increases and cost reductions, the quarterly and annual results were a
notable improvement over UPR's financial performance in 1998, when the Company
posted significant losses for the fourth quarter and the year.
UPR also recorded its highest level of discretionary cash flow ever in
1999, reaching over $387 million in the fourth quarter, compared to $181 million
in the same period last year, and total cash flow for 1999 of almost $1.2
billion, 29 percent more than 1998's total. Through aggressive debt reduction,
UPR ended 1999 with total debt of approximately $2.8 billion, down 39 percent,
or $1.8 billion, from a total of $4.6 billion at year-end 1998.
The dramatic reduction in debt was funded by the proceeds from asset
sales plus discretionary cash flow. The debt reduction program left $428 million
for capital expenditures in 1999. Reduced capital spending and a slow ramp-up of
drilling operations when commodity prices rebounded in the second half of the
year resulted in an average daily production decline of about 13 percent.
Adjusting for asset sales, volumes were down 9.2 percent. The Company recorded a
63 percent reserves replacement rate for the year. Reserves at year-end totaled
5.7 trillion cubic feet of gas equivalent (Tcfe), compared to 6.1 Tcfe at
year-end 1998.
A company-wide cost-reduction program in 1999 drove cash costs,
including lease operating expense, overhead and interest, down by about $130
million or $.04 per thousand feet of gas equivalent (Mcfe), a 17 percent
improvement over the previous year. UPR's commitment to rigorous capital
discipline brought finding and development costs in 1999 down to $.91 per Mcfe,
compared to the previous year's $1.26 per Mcfe and a previous five-year average
of $1.10 per Mcfe. Excluding reserve revisions, finding and development costs
were $.70 per Mcfe, confirming the Company's commitment to capital efficiency.
"Nineteen ninety-nine was a repositioning year for us," George Lindahl
III, UPR's CEO said. "Our focus on debt reduction, cost control and capital
efficiency resulted in increased value for our shareholders. In 2000, cash flow
for capital investments should be sufficient to reverse 1999's production
decline and replace 100 percent of reserves. We plan to further strengthen our
balance sheet through debt reduction. These efforts should increase earnings and
position UPR for growth."
Assuming price levels for 2000 of $21 per barrel of oil and $2.40 per
Mcf of natural gas, UPR projects discretionary cash flow for the year of more
than $1 billion, $650 million of which is earmarked
6
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for the Company's capital spending program. Up to $100 million of remaining cash
flow may be applied to possible property purchases in our core areas, with the
balance devoted to debt reduction and dividend payments.
Union Pacific Resources, based in Fort Worth, Texas, is one of the
nation's largest independent oil and gas exploration and production companies.
THIS PRESS RELEASE, OTHER THAN HISTORICAL FINANCIAL
INFORMATION, CONTAINS FORWARD LOOKING STATEMENTS THAT ARE
BASED ON ASSUMPTIONS AND ESTIMATES WE BELIEVE REASONABLE BUT
THAT ARE SUBJECT TO A WIDE RANGE OF RISKS AND UNCERTAINTIES.
ANY NUMBER OF FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS,
INCLUDING CHANGES IN OIL AND GAS PRICES, THE TIMING AND
RESULTS OF OIL AND GAS DRILLING AND ACQUISITION PROGRAMS, THE
SUCCESS OF MANAGEMENT'S COST REDUCTION AND IMPLEMENTATION
ACTIVITIES, EXPECTED PRODUCTION EFFORTS AND VOLUMES, BUDGETED
CAPITAL EXPENDITURES AND OTHER RISKS AND UNCERTAINTIES
DETAILED IN THE COMPANY'S SEC REPORTS, INCLUDING THE REPORTS
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND FORM
10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999.
Media Contact: Investor Contact:
Daniel J. Sullivan Patrick Mooney
Director, Public Affairs VP, Investor Relations
817-321-6527 817-321-7169
David Larson
817-321-7294
Internet:www.upr.com
7
<PAGE> 3
UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF INCOME
FOR THE PERIOD ENDED DECEMBER 31
(DOLLARS IN MILLIONS, EXCEPT WHERE NOTED)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
-------------------- --------------------
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Operating revenues:
Producing properties $ 408.1 $ 347.1 $1,473.3 $ 1,537.4
Other oil and gas revenues 29.7 0.2 133.7 162.5
Minerals 24.8 25.6 120.5 141.1
------- --------- -------- ---------
Total operating revenues 462.6 372.9 1,727.5 1,841.0
------- --------- -------- ---------
Operating expenses:
Production 111.8 107.0 400.6 444.3
Exploration 115.5 109.4 267.9 339.0
Minerals (3.8) 1.8 (2.8) 3.5
Depreciation, depletion and amortization 206.3 1,423.3 827.7 2,125.6
General and administrative 21.8 36.8 86.9 104.8
Restructuring charge (3.1) 17.0 11.4 17.0
------- --------- -------- ---------
Total operating expenses 448.5 1,695.3 1,591.7 3,034.2
Operating income (loss) 14.1 (1,322.4) 135.8 (1,193.2)
Other income (loss) - net (9.7) (12.4) 31.7 (45.3)
Interest expense (51.1) (70.3) (218.7) (249.8)
------- --------- -------- ---------
Income (loss) before income taxes (46.7) (1,405.1) (51.2) (1,488.3)
Income tax (expense) benefit 57.6 544.2 140.4 605.2
------- --------- -------- ---------
Income (loss) from continuing operations 10.9 (860.9) 89.2 (883.1)
Income (loss) from discontinued operations - net of tax -- (34.5) (23.8) (15.6)
Gain on sale of discontinued operations - net of tax -- -- 157.0 --
Extraordinary gain from extinguishment of debt - net of tax 3.4 -- 3.4 --
------- --------- -------- ---------
Net income (loss) $ 14.3 $ (895.4) $ 225.8 $ (898.7)
------- --------- -------- ---------
Per Share:
Income (loss) from continuing operations-basic and diluted $ 0.04 $ (3.48) $ 0.36 $ (3.57)
Net Income (loss) - basic and diluted $ 0.06 $ (3.61) $ 0.91 $ (3.63)
Average shares outstanding (millions) basic 249.1 247.7 249.0 247.7
Average shares outstanding (millions) diluted 249.3 247.7 249.2 247.7
</TABLE>
8
<PAGE> 4
UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF FINANCIAL POSITION
(DOLLARS IN MILLIONS)
ASSETS
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31 DECEMBER 31
1999 1998
---------- ----------
<S> <C> <C>
Current assets:
Cash and temporary investments $ 123.7 $ 8.8
Accounts receivable 304.4 261.0
Inventories 54.7 64.6
Other current assets 13.1 107.0
---------- ---------
Total current assets 495.9 441.4
========== =========
Properties - net: 5,471.0 6,093.3
Intangible and other assets 180.0 180.8
Net assets of discontinued operations -- 926.9
---------- ---------
Total assets $ 6,146.9 $ 7,642.4
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 285.0 $ 270.5
Accrued taxes payable 68.6 64.9
Other current liabilities 185.8 157.5
Short-term debt 3.1 853.8
---------- ----------
Total current liabilities 542.5 1,346.7
========== ==========
Long-term debt 2,799.3 3,744.9
Deferred income taxes 1,366.8 1,291.6
Other long-term liabilities 541.1 531.0
Common shareholders' equity 897.2 728.2
---------- ----------
Total liabilities and shareholders' equity $ 6,146.9 $ 7,642.4
========== ==========
</TABLE>
9
<PAGE> 5
UNION PACIFIC RESOURCES GROUP INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED DECEMBER 31
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
-------------------- --------------------
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Cash provided by operations:
Net income (loss) $ 14.3 $ (895.4) $ 225.8 $ (898.7)
Loss from discontinued operations -- 34.5 23.8 15.6
Gain on sale of discontinued business - net -- -- (157.0) --
Extraordinary gain on debt extinguishment - net (3.4) -- (3.4) --
-------- ---------- ---------- ----------
Net income (loss) from continuing operations 10.9 (860.9) 89.2 (883.1)
Depreciation, depletion and amortization 206.3 1,423.3 827.7 2,125.6
Exploration expenses 115.5 109.4 267.9 339.0
Deferred taxes 54.4 (490.8) 1.4 (659.3)
-------- ---------- ---------- ----------
Discretionary cash flow 387.1 181.0 1,186.2 922.2
Working capital and other changes (91.6) (168.1) (193.5) 108.9
-------- ---------- ---------- ----------
Cash provided by operations 295.5 12.9 992.7 1,031.1
-------- ---------- ---------- ----------
Cash provided (used) by investing activities:
Capital and exploratory expenditures (136.6) (76.5) (428.2) (1,194.5)
Acquisition of Norcen -- -- -- (2,634.3)
Proceeds from sales of assets 36.8 174.5 281.3 436.6
Proceeds from sales of discontinued operations -- -- 1,359.1 --
Cash provided (used) by discontinued operations (1.2) (126.3) (203.6) 50.4
Proceeds from sale of investments -- -- -- 48.4
-------- ---------- ---------- ----------
Cash provided (used) by investing activities (101.0) (28.3) 1,008.6 (3,293.4)
-------- ---------- ---------- ----------
Cash provided (used) by financing activities:
Dividends paid (12.4) (12.4) (49.7) (49.6)
Proceeds from issuance of long-term debt -- -- 500.0 1,025.0
Repayment of long-term debt (170.2) -- (2,292.7) --
Other long-term debt financing -- net -- (3.7) -- 1,294.5
Reissuance of common stock 3.3 -- 3.3 --
Repurchase of common stock (1.5) (4.6) (12.6) (26.7)
Other financings -- net (27.3) 6.0 (34.7) (39.2)
-------- ---------- ---------- ----------
Cash provided (used) by financing activities (208.1) (14.7) (1,886.4) 2,204.0
-------- ---------- ---------- ----------
Net change in cash and temporary investments $ (13.6) $ (30.1) $ 114.9 $ (58.3)
======== ========== ========== ==========
</TABLE>
10
<PAGE> 6
UNION PACIFIC RESOURCES GROUP INC
VOLUME AND PRICE STATISTICS
FOR THE PERIOD ENDED DECEMBER 31
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1999 1998 1999 1998
-------- --------- -------- ---------
<S> <C> <C> <C> <C
Average daily production:
Natural gas: (MMcfd)
United States 926.9 1,101.1 993.1 1,152.8
Canada 274.1 299.5 277.8 281.2
Other International 6.7 6.2 7.9 7.1
-------- -------- --------- ----------
Total 1,207.7 1,406.8 1,278.8 1,441.1
Natural gas liquids: (MBbld)
United States 28.0 23.7 26.4 28.8
Canada 1.8 4.5 2.0 4.3
-------- -------- --------- ---------
Total 29.8 28.2 28.4 33.1
Crude oil: (MBbld)
United States 39.3 53.7 43.5 61.0
Canada 27.2 36.7 28.8 35.4
Heavy oil 12.6 15.0 12.4 14.0
Light oil 14.6 21.7 16.4 21.4
Guatemala 19.0 22.2 21.4 20.8
Venezuela 18.3 21.1 19.1 16.8
Other International 4.7 3.5 4.3 3.9
-------- -------- --------- ---------
Total 108.5 137.2 117.1 137.9
Total production (Mmcfed) 2,037.3 2,399.4 2,151.6 2,467.0
Average sales prices:
Natural gas: (per Mcf)
United States $ 2.32 $ 1.63 $ 1.90 $ 1.84
Canada 1.84 1.49 1.62 1.35
Other International 1.03 1.16 1.09 1.39
Total 2.21 1.60 1.83 1.74
Natural gas liquids: (per Bbl)
United States 13.81 7.10 11.02 8.14
Canada 14.56 7.03 10.07 6.12
Total 13.85 7.09 10.95 7.88
Crude oil: (per Bbl)
United States 12.55 13.23 12.56 13.23
Canada 9.43 7.31 9.21 8.55
Heavy oil 7.01 6.82 7.44 5.82
Light oil 11.52 7.65 10.55 10.33
Guatemala 14.95 6.14 13.26 6.95
Venezuela 13.13 8.55 11.62 8.75
Other International 17.70 8.76 15.34 11.37
Total 12.51 9.66 11.81 10.48
Total sales price per Mcfe $ 2.18 $ 1.57 $ 1.88 $ 1.71
</TABLE>
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<PAGE> 7
UNION PACIFIC RESOURCES GROUP INC.
OTHER INFORMATION
AS OF DECEMBER 31
(DOLLARS IN MILLIONS, EXCEPT WHERE NOTED)
<TABLE>
<CAPTION>
FOURTH QUARTER TWELVE MONTHS
1999 1998 1999 1998
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Production expenses:
Lease operating expense and other $ 73.9 $ 88.5 $ 296.4 $ 363.9
Severance and property taxes 37.9 18.5 104.2 80.4
--------- --------- --------- ---------
Total production expenses $ 111.8 $ 107.0 $ 400.6 $ 444.3
Exploration Expenses
Dry Hole $ 28.2 $ 4.5 $ 49.5 $ 66.7
Seismic 3.8 9.3 19.5 50.0
Undeveloped leasehold 78.4 86.0 172.5 185.9
Overhead and other 5.1 9.6 26.4 36.4
--------- --------- --------- ---------
Total exploration expenses $ 115.5 $ 109.4 $ 267.9 $ 339.0
========= ========= ========= =========
Unit costs: (per Mcfe)
Production costs (including lease operating expense) $ 0.60 $ 0.48 $ 0.51 $ 0.49
Lease operating expense and other 0.39 0.40 0.38 0.40
DD&A - exploration & production 1.06 1.13 1.04 1.06
General and administrative (excluding restructuring charge) 0.12 0.17 0.11 0.12
</TABLE>
<TABLE>
<CAPTION>
1999 1999 DISCRETIONARY
PRE TAX AFTER TAX CASH FLOW
--------- --------- ---------------
<S> <C> <C> <C>
Significant continuing operations items for the fourth quarter:
Marketing sales/settlements (other oil & gas revenue) $ 28.5 $ 17.7 $ 28.5
Production tax audit adjustments (production exp.) (8.2) (5.2) (5.2)
Lease impairment (exploration exp.) (58.0) (38.3) --
Dry hole - Mississippi Canyon 667 (exploration exp.) (24.0) (15.2) 8.8
Asset impairment (DD&A) (9.5) (6.0) --
Restructure charge adjustment (restructuring charge) 3.1 2.0 2.0
Firm transportation costs (other income) (30.4) (19.2) (30.4)
Foreign currency gain (other income) 14.2 14.2 14.2
True up for prior years tax (income tax) -- 26.0 (4.5)
Reclass tax from current to deferred (income tax) -- -- 62.4
Foreign currency gain tax adjustment (income tax) -- 4.5 --
</TABLE>
<TABLE>
<CAPTION>
HEDGING ACTIVITY (AS OF 01/13/2000) FIXED COLLARS
---------------------- ---------------------------
NYMEX NYMEX
NATURAL GAS (MMCFD) VOLUME PRICE VOLUME PRICE
--------- --------- ---------- ------------
<S> <C> <C> <C> <C>
1Q 2000 400 $ 2.53 300 $2.56 - 3.16
2Q 2000 390 2.38 400 2.34 - 2.76
3Q 2000 260 2.40 470 2.33 - 2.73
4Q 2000 190 2.43 80 2.40 - 2.79
CRUDE OIL (MBBLD)
1Q 2000 32 $21.08 35 $17.29 - 21.77
2Q 2000 35 20.37 35 17.29 - 21.77
3Q 2000 33 20.34 35 17.29 - 21.77
4Q 2000 30 20.41 35 17.29 - 21.77
</TABLE>
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<PAGE> 8
UNION PACIFIC RESOURCES GROUP INC.
PROVED RESERVES & COSTS INCURRED**
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
WORLDWIDE
---------
<S> <C>
RESERVES EQUIVALENT (BCFE)
Beginning of year 6,124.0
PROVED Revisions of previous estimates (144.7)
Extensions, discoveries and other additions 609.3
Purchases of reserves-in-place 28.5
Sales of reserves-in-place (128.2)
Production (785.3)
---------
Total proved, end of year 5,703.6
---------
Production replacement % 63%
WORLDWIDE
---------
COST INCURRED IN E&P (DOLLARS IN MILLIONS)
Proved acreage $ 15.3
Unproved acreage 21.1
Exploration costs 83.2
Development costs 329.8
---------
Total costs incurred $ 449.4
=========
Finding and development costs ($/Mcfe) $ 0.91
Finding and development costs without revisions ($/Mcfe) 0.70
</TABLE>
** PROVED RESERVES AND FINDING AND DEVELOPMENT COST PER UNIT ARE PRELIMINARY
DISCLOSURES AND SUBJECT TO CHANGE. FOR MORE DETAIL AND FINAL NUMBERS AND
CALCULATIONS, REFER TO OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999 WHEN FILED.
14
