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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
Date of Report (Date of earliest event reported):
April 25, 2000
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TEXACO INC.
(Exact name of registrant as specified in its charter)
Delaware 1-27 74-1383447
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation) Number) Identification Number)
2000 Westchester Avenue, 10650
White Plains, New York (Zip Code)
(Address of principal executive offices)
(914) 253-4000
(Registrant's telephone number, including area code)
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<PAGE>
Item 5. Other Events
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On April 25, 2000, the Registrant issued an Earnings Press Release entitled
"Texaco Reports First Quarter 2000 Results," a copy of which is attached hereto
as Exhibit 99.1 and made a part hereof.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ---------------------------------------------------------------------------
(c) Exhibits
99.1 Press Release issued by Texaco Inc. dated April 25, 2000,
entitled "Texaco Reports First Quarter 2000 Results."
<PAGE>
SIGNATURES
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 hereunto duly authorized.
TEXACO INC.
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(Registrant)
By: /s/ MICHAEL H. RUDY
----------------------
(Secretary)
Date: April 25, 2000
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EXHIBIT 99.1
TEXACO REPORTS FIRST QUARTER 2000 RESULTS
-----------------------------------------
FOR IMMEDIATE RELEASE: TUESDAY, APRIL 25, 2000.
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WHITE PLAINS, N.Y.--April 25, 2000--Texaco
reported today first quarter 2000 income before special items of $602
million ($1.10 per share). Net income for the period was $574 million
($1.05 per share).
EARNINGS SUMMARY
First Quarter
-------------
<TABLE>
<CAPTION>
2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Income before
special items (millions) $ 602 $ 105
Per share $ 1.10 $ .18
Net income (millions) $ 574 $ 199
Per share $ 1.05 $ .35
- ----------------------------------------------------------------------
</TABLE>
Texaco Chairman and Chief Executive Officer Peter I. Bijur
commented, "We have begun the new millennium on a strong, positive
note with outstanding first quarter earnings. Our strategy changes,
dramatic cost cuttings and synergy captures implemented over the past
two years positioned us well to fully realize the sharply higher crude
oil and natural gas prices experienced throughout the quarter.
Reacting to OPEC production cuts, lower inventory levels and increased
demand, crude oil prices more than doubled from a year ago. Increased
demand and lower inventory levels pushed U.S. natural gas prices 44
percent higher than last year. Both of these factors significantly
increased upstream earnings. Natural gas prices remained strong into
the second quarter, while recent OPEC actions to increase production
caused crude oil prices to fall, leveling off in the mid $20 per
barrel range.
"While the higher crude oil prices benefited our upstream
operations, for the downstream they meant higher costs which were not
fully recovered in the marketplace. As a result, downstream earnings
this year were 62 percent below last year's levels. However, with the
recent leveling off of crude oil prices and lower product inventory
levels, downstream margins began to improve in the latter part of the
quarter, and this trend is expected to continue in the upcoming
months."
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<PAGE>
- 2 -
Bijur added, "We continue to effectively execute our strategies
designed to deliver solid growth in earnings, cash flows and return on
capital employed. In the upstream we are upgrading our portfolio by
divesting non-strategic assets while focusing investment on high
return, high impact opportunities like our Agbami project in offshore
Nigeria, the Malampaya gas project in the Philippines and our
Karachaganak project in Kazakhstan. During the first quarter we
received $263 million from the sale of non-core U.S. producing
properties and we will have additional upstream property sales in the
second quarter. These proceeds will help fund our capital spending
program.
"Further, we are moving to capture the potential of the "new
economy" by investing in a number of e-business ventures including
TradeCapture.com, Petrocosm and OceanConnect.com. Coupled with our
recently announced technology partnership with Dell Computer, Texaco
is well positioned to harness the Internet to capture cost reductions,
enhance our existing business and develop new revenue streams. The
future execution of these strategies combined with our continued cost
discipline and operational focus should signal strong results
throughout the year and in the new century."
<TABLE>
<CAPTION>
First Quarter
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Texaco Inc. (Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Income before special items $ 602 $ 105
----- -----
Gains (losses) on major asset sales (67) -
Tax issue 46 -
Inventory valuation adjustments - 83
Employee benefits revision 18 -
Employee separation costs (12) -
Litigation issue (13) -
Production tax refund - 11
----- -----
Special items (28) 94
----- -----
Net income $ 574 $ 199
===== =====
</TABLE>
Details on special items are included in the following segment
information.
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<PAGE>
-3-
OPERATING RESULTS
<TABLE>
<CAPTION>
EXPLORATION AND PRODUCTION First Quarter
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United States (Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Operating income before special items $ 361 $ 27
Special items (67) 11
----- -----
Total operating income $ 294 $ 38
===== =====
</TABLE>
U.S. Exploration and Production earnings for the first quarter of
2000 were significantly greater than last year due to higher crude oil
and natural gas prices. Texaco's average realized crude oil price more
than doubled to $24.46 per barrel. Our average natural gas price was
$2.45 per MCF, 37 percent higher than last year. Natural gas prices
strengthened due to increased demand and lower than normal inventory
levels.
Daily production for the first quarter of 2000 was 604,000 barrels
of oil equivalent per day, eight percent lower than last year. Natural
field declines and asset sales caused this expected reduction.
Operating expenses were eight percent higher for the first quarter
due to higher utilities and production taxes, both related to higher
crude oil and natural gas prices. Exploratory expenses for the first
quarter were $19 million before tax, $35 million lower than last year
due to a strategy shift to high impact international opportunities.
Results for the first quarter of 2000 included a special charge of
$67 million for net losses on the sales of low margin producing
assets. The special benefit for 1999 of $11 million was for a
production tax refund.
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<PAGE>
- 4 -
<TABLE>
<CAPTION>
First Quarter
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International (Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Operating income (loss) before special items $ 293 $ (18)
Special items - -
----- -----
Total operating income (loss) $ 293 $ (18)
===== =====
</TABLE>
International Exploration and Production operating results for the
first quarter of 2000 were significantly higher than last year due
mostly to higher crude oil prices. Crude oil prices rose throughout
most of the first quarter, more than doubling versus last year. Our
average realized crude oil price this year was $23.32 per barrel, 136
percent higher than last year. Our average natural gas price was $1.48
per MCF, two percent lower than 1999.
Daily production for the first quarter of 2000 was 581,000 barrels
of oil equivalent per day, slightly lower than last year. The slight
decrease was due to lower lifting entitlements for cost recovery in
Indonesia as a result of higher crude oil prices. Excluding Indonesia,
production increased in the first quarter. Areas of increase included
the Partitioned Neutral Zone and the Karachaganak field in the
Republic of Kazakhstan. Additionally, production increased in the U.K.
North Sea at the Captain field, which experienced operational problems
last year.
Operating expenses were seven percent lower for the first quarter
of 2000. Exploratory expenses for the first quarter were $34 million
before taxes, $42 million lower than last year which included an
unsuccessful exploratory well in a new offshore area of Trinidad.
REFINING, MARKETING AND DISTRIBUTION
<TABLE>
<CAPTION>
First Quarter
-------------
United States (Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Operating income before special items $ 13 $ 54
Special items 5 8
----- -----
Total operating income $ 18 $ 62
===== =====
</TABLE>
U.S. Refining, Marketing and Distribution earnings were lower than
last year. U.S. downstream activities are primarily conducted through
Equilon Enterprises LLC, Texaco's western alliance with Shell Oil
Company, and Motiva Enterprises LLC, Texaco's eastern alliance with
Shell Oil Company and Saudi Refining, Inc.
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<PAGE>
- 5 -
Equilon's earnings were lower for the quarter due to increased
refinery maintenance and weak marketing margins. During this year's
first quarter Equilon had maintenance activity at the Wood River,
Martinez and Puget Sound refineries. Marketing margins were depressed
because pump prices lagged increases in supply costs, lubricant
margins were weak and trading results were lower.
Motiva's results for the quarter benefited from improved East and
Gulf Coast refining margins. Lower gasoline and distillate inventory
levels, combined with a high level of industry refinery maintenance
and unscheduled downtime helped product prices. While marketing
margins were negatively impacted by higher spot prices and competitive
market conditions, they began to improve during March.
Results for the first quarter of 2000 included net special
benefits of $5 million comprised of a benefit of $18 million for an
employee benefits revision and a charge of $13 million for a patent
litigation issue. Special benefits of $8 million in 1999 were for
inventory valuation adjustments.
<TABLE>
<CAPTION>
First Quarter
-------------
International (Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Operating income before special items $ 63 $ 145
Special items (12) 75
----- -----
Total operating income $ 51 $ 220
===== =====
</TABLE>
International Refining and Marketing earnings for the first
quarter 2000 declined from 1999 levels. The decline was due to
operating losses experienced by our Caltex affiliate. Marketing
margins suffered in Korea and the Southeast Asian region as a result
of high product inventories and aggressive competitor pricing.
Refining margins were also weak throughout most of the period.
Operating results for the first quarter 2000 in Europe improved
over last year due to higher refining margins and more efficient
refinery operations in the U.K. and the Netherlands. However, lower
marketing margins in Europe negatively impacted earnings. In contrast
to European results, Latin America experienced lower refining margins,
while marketing operations in Latin America improved over last year,
as a result of the ongoing economic recovery and currency
stabilization in Brazil.
Results for the first quarter 2000 included special charges of $12
million for employee separation costs. First quarter 1999 included a
special benefit of $75 million for inventory valuation adjustments.
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<PAGE>
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GLOBAL GAS AND POWER
<TABLE>
<CAPTION>
First Quarter
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(Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Operating income before special items $ 20 $ 6
Special items - -
----- -----
Total operating income $ 20 $ 6
===== =====
</TABLE>
Operating results for the first quarter of 2000 benefited from the
recovery of natural gas liquids prices. Results for 1999 included
gains from several asset sales, including a gas gathering pipeline in
the U.S. and our 50 percent interest in a U.K. retail gas marketing
venture.
CORPORATE/NON-OPERATING RESULTS
<TABLE>
<CAPTION>
First Quarter
-------------
(Millions of dollars): 2000 1999
- ----------------------------------------------------------------------
<S> <C> <C>
Results before special items $(148) $(108)
Special items 46 -
----- -----
Total corporate/non-operating $(102) $(108)
===== =====
</TABLE>
Corporate and non-operating results for the first quarter 2000
included expenses for our Olympic sponsorship program and higher other
corporate expenses. Results in 1999 benefited from a $21 million gain
on the sale of marketable securities.
Results for the first quarter 2000 included special benefits of
$46 million for favorable income tax settlements.
CAPITAL AND EXPLORATORY EXPENDITURES
Capital and exploratory expenditures were $724 million for the
first quarter of 2000, compared with $669 million for 1999.
Led by a 60 percent increase in our international segment, total
upstream expenditures increased 11 percent as a result of our strategy
shift to high margin, high impact projects. This shift includes our
continued investment in the Malampaya natural gas project in the
Philippines, the Venezuelan Hamaca project and the Karachaganak field
in Kazakhstan. In addition to spending on these high impact projects,
expenditures for development work continued on the Captain B project
in the U.K. North Sea.
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<PAGE>
- 7 -
In the United States, upstream spending decreased by 32 percent due
to prior year project completions in the Deepwater Gulf of Mexico.
In the United States downstream, refinery expenditures declined
due to the sale of the El Dorado refinery in November of 1999 and the
planned sale of the Wood River refinery. This decline is consistent
with our strategy of reducing our exposure to the refining business.
Internationally, marketing expenditures increased due to the
rebranding of service stations recently acquired in the Poland/U.K.
asset swap with Shell and additional service station investments in
Central America.
Global Gas and Power continues to invest in cogeneration projects
in California and in Indonesia, while spending on natural gas
transportation is down due to pipeline project completions in 1999.
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CONTACTS: Kelly McAndrew 914-253-6295
Andy Norman 914-253-4068
INVESTOR RELATIONS: Elizabeth Smith 914-253-4478
Listen in live to Texaco's first quarter 2000 earnings discussion with
financial analysts on Tuesday, April 25th at 11:30 am EDT at:
http://www.webevents.broadcast.com/texaco/q100earnings
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For technical assistance, call Sheila Lujan at 800-366-9831
Note: This press release contains forward-looking statements about our
expectations for (i) upstream earnings, (ii) downstream margins,
(iii) non-strategic asset sales and (iv) investments in
e-business ventures. Our actual results may be different than we
currently expect if business conditions, such as energy prices,
world economic conditions, demand growth, and inventory levels,
etc change, or if anticipated upstream property sales or the
benefits to be realized from investments in e-business ventures
are not as projected. For a further discussion of additional
factors that could cause actual results to materially differ
from those in the forward-looking statement, please refer to the
section entitled "Forward-Looking Statements and Factors That
May Affect Our Business" in Texaco's 1999 Annual Report on Form
10-K.
<PAGE>
- 8 -
<TABLE>
<CAPTION>
Income (loss) First Quarter (a)
(Millions of dollars) ----------------
2000 1999
---- ----
<S> <C> <C>
Exploration and
production
United States $ 294 $ 38
International 293 (18)
----- -----
Total 587 20
Refining, marketing and distribution
United States 18 62
International 51 220
----- -----
Total 69 282
Global gas and power 20 6
----- -----
Total operating segments 676 308
----- -----
Other business units - (1)
Corporate/Non-operating (102) (108)
----- -----
Net income $ 574 $ 199
===== =====
Net income per common share (dollars) - diluted $1.05 $ .35
Average number of common shares outstanding
for computation of earnings per share
(millions) - diluted 545.5 526.9
Provision for (benefit from) income taxes
included in net income $ 363 $ (15)
<FN>
(a) Includes special items indicated in
this release.
</FN>
</TABLE>
<PAGE>
- 9 -
<TABLE>
<CAPTION>
Other Financial Data First Quarter
(Millions of dollars) ----------------
2000 1999
---- ----
<S> <C> <C>
Revenues $11,271 $ 7,190
Total assets as of March 31 (b)$29,300 $28,079
Stockholders' equity as of March 31 (b)$12,370 $11,776
Total debt as of March 31 (b)$ 7,400 $ 7,484
Capital and exploratory expenditures
Exploration and production
United States $ 175 $ 256
International 353 221
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Total 528 477
Refining, marketing and distribution
United States 65 73
International 100 77
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Total 165 150
Global gas and power 28 35
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Total operating segments 721 662
Other business units 3 7
------- -------
Total $ 724 $ 669
======= =======
Exploratory expenses
United States $ 19 $ 54
International 34 76
------- -------
Total $ 53 $ 130
======= =======
Dividends paid to common stockholders $ 245 $ 237
Dividends per common share (dollars) $ .45 $ .45
Dividend requirements for preferred stockholders $ 3 $ 13
<FN>
(b) Preliminary
</FN>
</TABLE>
<PAGE>
- 10 -
<TABLE>
<CAPTION>
Operating Data
First Quarter
----------------
2000 1999
---- ----
<S> <C> <C>
Exploration and production
United States
Net production of crude oil and
natural gas liquids (MBPD) 377 406
Net production of natural gas available
for sale (MMCFPD) 1,361 1,487
------- -------
Total net production (MBOEPD) 604 654
Natural gas sales (MMCFPD) 3,394 3,579
Average U.S. crude (per bbl.) $ 24.46 $ 9.11
Average U.S. natural gas (per mcf) $ 2.45 $ 1.79
Average WTI (Spot) (per bbl.) $ 28.91 $ 13.15
Average Kern (Spot) (per bbl.) $ 22.84 $ 7.65
International
Net production of crude oil and
natural gas liquids (MBPD)
Europe 144 130
Indonesia 124 180
Partitioned Neutral Zone 135 116
Other 70 67
------- -------
Total 473 493
Net production of natural gas available
for sale (MMCFPD)
Europe 289 286
Colombia 208 153
Other 152 111
------- -------
Total 649 550
------- -------
Total net production (MBOEPD) 581 585
Natural gas sales (MMCFPD) 685 565
Average International crude (per bbl.) $ 23.32 $ 9.88
Average International natural gas (per mcf) $ 1.48 $ 1.51
Average U.K. natural gas (per mcf) $ 2.63 $ 2.64
Average Colombia natural gas (per mcf) $ .94 $ .65
Total worldwide net production (MBOEPD) 1,185 1,239
</TABLE>
<PAGE>
- 11 -
<TABLE>
<CAPTION>
Operating Data First Quarter
----------------
2000 1999
---- ----
<S> <C> <C>
Refining, marketing and distribution
United States
Refinery input (MBPD)
Equilon area 277 365
Motiva area 265 302
----- -----
Total 542 667
Refined product sales (MBPD)
Equilon area 690 572
Motiva area 341 379
Other 292 307
----- -----
Total 1,323 1,258
International
Refinery input (MBPD)
Europe 364 368
Caltex area 346 438
Latin America/West Africa 52 71
----- -----
Total 762 877
Refined product sales (MBPD)
Europe 635 638
Caltex area 613 672
Latin America/West Africa 448 479
Other 95 103
----- -----
Total 1,791 1,892
</TABLE>
