press release

Unocal first quarter earnings rise on higher Gulf of Mexico natural gas prices, production

El Segundo, Calif., April 24, 1996 -- Unocal Corporation today reported first quarter 1996 net earnings of $124 million, or 47 cents per common share, reflecting increased natural gas prices and higher gas production from its Louisiana/Gulf of Mexico operations.

The 1996 results compare with $74 million, or 27 cents per common share, in the first quarter 1995. Unocal's total revenues for the quarter were $2.28 billion, up from $1.91 billion a year ago.

Earnings from operations for the first quarter, excluding special items (detailed in the attached tables), were $120 million, or 45 cents per common share. This compares with adjusted earnings from operations of $54 million, or 19 cents per common share, in the same period a year ago.

"Our improved first quarter earnings reflect significantly stronger natural gas prices in the Louisiana/Gulf of Mexico region, which accounts for more than 60 percent of our domestic gas production," said Roger C. Beach, Unocal chairman and chief executive officer. The company's production from the Louisiana/Gulf of Mexico region averaged nearly 700 million cubic feet per day (mmcfd), a three percent increase over the same period a year ago.

"The average natural gas sales price for our Louisiana/Gulf of Mexico production was $2.81 per thousand cubic feet (mcf) in the quarter, up 87 percent from a year ago," Beach said. Unocal's overall average domestic natural gas sales price was $2.35 per mcf, 62 percent above $1.45 per mcf a year ago.

Unocal's foreign natural gas production increased nearly five percent, due principally to new production in The Netherlands and Canada. The company's average sales price for foreign natural gas rose 11 percent to $2.13 per mcf.

Production from the company's natural gas operations offshore Thailand continued to be constrained as construction proceeded on a second Thai-operated pipeline to shore.

"This new pipeline will allow us to increase our net production in Thailand to 575 to 600 mmcfd, " Beach said. First quarter 1996 production in Thailand averaged 438 mmcfd.

Earlier this month, the company sold its California oil and gas production assets for $492 million. In the first quarter 1996, those properties contributed about $1 million in net earnings. Net daily production averaged 30,200 barrels of oil and 52 mmcf of gas. The company expects to record a gain from the sale in the second quarter 1996.

The company's 76 Products Company business unit posted a loss of $7 million for the quarter as a result of low margins for refined products.

"We had higher refinery production of light oil products (gasoline, jet and diesel fuel) and increased petroleum product sales in the quarter," Beach said. "However, we were unable to recover all of the increased crude oil costs and the additional expenses to manufacture the new California reformulated gasolines."

Beach went on to say, "Late last week, for the first time this year, we were able to increase the wholesale price of our gasolines to a level where we are recovering those increased costs. Whether this situation will continue depends upon future gasoline market conditions and crude oil prices."

Unocal Corporation
Condensed Consolidated Earnings Statement
(Unaudited)

      For the Three Months Ended March 31
Dollars in millions except per share amount      1996       1995

Total revenues (a)                            $ 2,278    $ 1,906
Costs and other deductions (a)                  2,064      1,775
Earnings before income taxes                      214        131
Income taxes                                       90         57
Net earnings                                      124         74
Dividends on preferred stock                        9          9
Net earnings applicable to common shares       $  115        $65
   
   
Earnings per common share:                  (b)$  .47    $  0.27
 
(a)Includes consumer excise taxes of           $  235    $   210
(b)Based on weighted average common shares 
     outstanding (in millions)                    247        245

Condensed Consolidated Balance Sheet
(Unaudited)

      For the Three Months Ended March 31
Millions of dollars                            1996       1995
Assets
Cash and cash equivalents                   $   286    $    94
Other current assets                          1,529      1,482
Investments and long-term receivables         1,044      1,101
Properties - net                              7,082      7,109
Other assets                                    150        105
Total assets                                 10,091      9,891 Liabilities
Current liabilities                         $ 1,615    $ 1,316
Long-term debt and capital lease obligations  3,504      3,698
Deferred income taxes                           711        722
Other deferred credits and liabilities        1,247      1,225
Total liabilities                           $ 7,077    $ 6,961
Stockholders' Equity                          3,014      2,930
Total liabilities and 
stockholders' equity                        $10,091    $ 9,891

Condensed Consolidated Cash Flows
(Unaudited)

      For the Three Months Ended March 31
Millions of dollars                                           1996       1995

Cash flows from operating activities
  Cash flow from operations                                 $  386     $ 236
  Working capital and other changes related to operations     (118)     (122)
    Net cash provided by operating activities               $  268     $ 114

Cash flows from investing activities
  Capital expenditures  (includes dry hole costs)             (222)     (267)
  Proceeds from asset sales                                     51        94
    Net cash used in investing activities                   $ (171)    $(173)

Cash flows from financing activities
  Long-term borrowings                                         154       266
  Reduction of long-term debt and capital lease obligations    (13)     (200)
  Dividends paid                                               (59)      (58)
  Other                                                         13        16
    Net cash provided by (used in) financing activities     $   95     $  24
 
Increase (decrease) in cash and cash equivalents               192       (35)
Cash and cash equivalents at beginning of year                  94       148
Cash and cash equivalents at end of period                  $  286     $ 113

Earnings by Business Segment
(Unaudited)

 
                                  For the First           For the First
                                   Three Months            Three Months
                                 Ended March 31, 1996    Ended March 31, 1995
Millions of dollars            Before-tax  After-tax   Before-tax  After-tax

Petroleum
  Exploration and Production
    United States                  $  155     $   96       $   89     $   55
    Foreign                           123         68          103         52

  Refining, Marketing and
   Transportation
    76 Products Company               (11)        (7)         (35)       (18)

Geothermal and Power Operations         9          5            9          4

Diversified Businesses
    Agricultural Products              25         16           26         16
    Carbon and Minerals                26         18           24         17
    Pipelines                          30         23           22         18
    Other                              (1)         -            2          1

Corporate and Unallocated
    Administrative and
      General expense                 (29)       (18)         (29)       (18)
    Net interest expense              (72)       (50)         (64)       (43)
    Environmental and  
      Litigation expense              (23)       (14)         (28)       (17)
    Other                             (18)       (13)          12          7
      Total                        $  214     $  124       $  131     $   74

Exploration & Production - this segment is engaged in the exploration for, and the production and marketing of, crude oil, condensate, natural gas and natural gas liquids.

Refining, Marketing and Transportation 76 Products Company - this segment is principally responsible for the company's West Coast petroleum refining operations, marketing and transportation of refined petroleum products and the manufacturing and marketing of petroleum coke.

Geothermal & Power Operations - this segment is involved in the exploration for, and the production and sale of geothermal resources for the generation of electricity.

Diversified Businesses:

  • Agricultural Products - manufactures and markets nitrogen-based fertilizers for wholesale markets to the western United States and to the Pacific Rim.
  • Carbon and Minerals - produces and markets petroleum coke (other than on the West Coast), graphites, solvents and specialty minerals.
  • Pipelines - principally includes the company's equity interests in affiliated pipeline companies.
  • Other - includes the development and sale of real estate assets and the company's equity interest in The UNO-VEN Company, a refining and marketing partnership in the midwestern United States.

Eearnings by Business Segment
Excluding Special Adjustments
(Unaudited)

      For the Three Months Ended March 31
Dollars in millions except per share amount      1996       1995

Total revenues (a)                            $ 2,278    $ 1,906
Costs and other deductions (a)                  2,064      1,775
Earnings before income taxes                      214        131
Income taxes                                       90         57
Net earnings                                      124         74
Dividends on preferred stock                        9          9
Net earnings applicable to common shares        $ 115        $65


Earnings per common share:                  (b)$  .47    $  0.27

(a)Includes consumer excise taxes of           $  235    $   210
(b)Based on weighted average common shares
     outstanding (in millions)                    247        245

Special Adjustments
Unaudited

 
                                   For the First          For the First 
                                   Three Months            Three Months
                                Ended March 31, 1996    Ended March 31, 1995 
Dollars in millions except per  Before-tax  After-tax   Before-tax  After-tax 
  share amounts     
Reported earnings                  $  214      $  124       $  131     $   74
Less: Special items
  Exploration and Production
    United States
      Asset Sales                       4           2           13          8
    Foreign
      Asset Sales                       6           4            4          3
  Diversified Businesses
    Pipelines
    Asset Sales                        12           7            -          -
  Corporate and Unallocated
    Asset Sales                         1           1           29         18
    Environmental provision           (10)         (6)          (7)        (4)
    Litigation provision               (6)         (4)          (6)        (4)
    Asset write-downs                               -           (2)        (1)
 Total special items                    7           4           31         20 
Adjusted earnings                  $  207      $  120       $  100      $  54
Less: Dividends on preferred stock                  9                       9
Adjusted net earnings applicable
to common shares                                  111                      45
Adjusted net earnings per common share         $ 0.45                  $ 0.19

Operating Highlights
(Unaudited)

                             For the Three Months
                                 Ended March 31 
                                 1996      1995 
 
Net daily production (a)
  Crude oil and condensate
  (thousand barrels daily): 
    United States (b)            121.3     131.2
    Foreign: 
      Far East                    80.9      87.5
      Other                       28.4      31.1
    Total Foreign                109.3     118.6
    Worldwide                    230.6     249.8


  Natural gas
 (million cubic feet daily):
    United States (b)            1,110     1,120
    Foreign:
      Far East                     597       615
      Other                         82        33
    Total Foreign                  679       648
    Worldwide                    1,789     1,768
 
  Natural gas liquids
  (thousand barrels daily)       19.7       22.0
 
  Geothermal
  (million kilowatt-hours daily) 13.8       15.6

Average sales prices
  Crude oil and condensate
  (per barrel):
    United States              $16.55     $14.74
    Foreign:
      Far East                 $17.86     $16.19
      Other                    $16.93     $15.62
    Total Foreign              $17.52     $15.98
    Worldwide                  $16.93     $15.22
 
 
  Natural gas (per mcf):
    United States              $ 2.35     $ 1.45
    Foreign:
      Far East                 $ 2.18     $ 1.96
      Other                    $ 1.76     $ 1.22
        Total Foreign          $ 2.13     $ 1.92
    Worldwide                  $ 2.27     $ 1.62
 
(a) Includes production sharing agreements on a gross basis.
(b) Includes California production.
 

Updated: April 1996