press release

Unocal 3Q 2003 net earnings up 54% from year earlier; 9-months up 97% over 2002

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El Segundo, Calif. Oct. 30, 2003 - Unocal Corporation (NYSE: UCL) today reported net earnings in the third quarter of $152 million, or 58 cents per share (diluted). This compares with net earnings of $99 million, or 41 cents per share (diluted), in the same period a year ago and $177 million, or 68 cents per share (diluted), in the second quarter 2003.

Unocal's adjusted after-tax earnings for the third quarter 2003 were $190 million, or 72 cents per share (diluted). This compares with the Thomson/First Call consensus (published Oct. 26, 2003) of 68 cents per share. Unocal's adjusted after-tax earnings were $126 million, or 52 cents per share (diluted), in the third quarter 2002, and $191 million, or 73 cents per share (diluted), in the second quarter 2003. Adjusted after-tax earnings are net earnings excluding special items, earnings from discontinued operations and cumulative effects of accounting changes.


CONSOLIDATED RESULTS (UNAUDITED)             3Q          2Q          3Q
     Millions of dollars except                  2003        2003        2002
      per share amounts

     Earnings from continuing operations         $152        $169         $99
     Earnings from discontinued operations         --           8          --
     Cumulative effects of accounting
      changes                                      --          --          --
     Net earnings                                 152         177          99
        Less:  Earnings from discontinued
         operations                                --           8          --
        Less:  Cumulative effects of
         accounting changes                        --          --          --
        Less:  Special items                      (38)        (22)        (27)
     Adjusted after-tax earnings                 $190        $191        $126
     DILUTED EARNINGS PER SHARE DATA
      (UNAUDITED)
     Net earnings per share:
        Continuing operations                   $0.58       $0.65       $0.41
        Discontinued operations                    --        0.03          --
        Cumulative effects of accounting
         changes                                   --          --          --
     Total net earnings per share               $0.58       $0.68       $0.41
     Adjusted after-tax earnings per share      $0.72       $0.73       $0.52
     REVENUES FROM CONTINUING OPERATIONS
      (UNAUDITED)                              $1,541      $1,620      $1,297

In the third quarter 2003, special items included $23 million in net after-tax gains on asset sales (due to the sale of Tom Brown, Inc., common stock), a net after-tax charge of $32 million for impairments on assets held for sale and an additional $6 million after-tax charge associated with the company's 2003 restructuring plan. In addition, the current quarter included $23 million in net after-tax provisions for environmental and litigation matters related primarily to formerly operated sites or sites previously sold with retained liabilities. All of the special items are detailed in the Adjusted After-tax Earnings table.

Unocal's third quarter 2003 earnings (compared with 3Q 2002) reflected higher natural gas and liquids prices, increased earnings from geothermal and power operations, and lower exploration expenses (including dry hole costs).

The positive factors were offset partially by lower North America natural gas and liquids production, reduced earnings from the company's minerals operations, increased administrative and general expense due principally to higher pension-related costs, and higher outside litigation support costs. The lower North America production in the third quarter was due principally to natural reservoir declines and the impact of asset dispositions during the first nine months of 2003.

Third-quarter total revenues were $1.54 billion, up from $1.30 billion in the third quarter 2002, primarily due to higher commodity prices for natural gas and liquids.

Unocal's EBITDAX for the third quarter 2003 was $711 million, or $2.61 per share (diluted). This compares with $602 million, or $2.46 per share (diluted), for the same period in 2002. EBITDAX is net earnings before interest, taxes, depreciation, depletion and amortization, asset impairments, exploration expenses, dry hole costs, special items, earnings from discontinued operations and cumulative effects of accounting changes. EBITDAX is commonly used by investors and analysts to facilitate comparison of companies like Unocal that use the "successful efforts" accounting method with other exploration and production companies that use the "full-cost" method.

Worldwide, Unocal's consolidated net daily production in the third quarter 2003 averaged 441,000 barrels of oil equivalent (BOE) per day, compared with 466,000 BOE per day a year ago. The decline in North America production was partially offset by increases in International natural gas and liquids production.

Unocal's worldwide average liquids price, including hedging, was $27.28 per barrel, up from $24.81 in the third quarter 2002. The company's average worldwide realized price for natural gas, including hedging, was $3.60 per thousand cubic feet (mcf), compared with $2.79 per mcf a year ago. Hedging activities in the third quarter lowered worldwide liquids realizations by 6 cents per barrel, while hedging activities had no impact on natural gas realizations.

Nine-months results

Net earnings for the first nine months of 2003 were $463 million, or $1.78 per share (diluted). This compares with $235 million, or 96 cents per share (diluted) for the same period a year ago.

Unocal's adjusted after-tax earnings for the first nine months were $610 million, or $2.32 per share (diluted). This compares with $303 million, or $1.24 per share (diluted), for the first nine months of 2002. The special items are detailed in the Adjusted After-tax Earnings table included with this news release.

Total revenues for the year-to-date were $4.95 billion, up from $3.71 billion last year.


CONSOLIDATED RESULTS (UNAUDITED)                   For the Nine Months
                                                        Ended September 30,
     Millions of dollars except per share amounts     2003              2002
     Earnings from continuing operations               $538              $234
     Earnings from discontinued operations                8                 1
     Cumulative effects of accounting changes           (83)               --
     Net earnings                                       463               235
        Less:  Earnings from discontinued operations      8                 1
        Less:  Cumulative effects of
         accounting changes                             (83)               --
        Less:  Special items                            (72)              (69)
     Adjusted after-tax earnings                       $610              $303
     DILUTED EARNINGS PER SHARE DATA
      (UNAUDITED)
     Net earnings per share:
        Continuing operations                         $2.05             $0.96
        Discontinued operations                        0.03                --
        Cumulative effects of accounting changes      (0.30)               --
     Total net earnings per share                     $1.78             $0.96
     Adjusted after-tax earnings per share            $2.32             $1.24
     REVENUES FROM CONTINUING OPERATIONS
      (UNAUDITED)                                    $4,950            $3,714

Unocal's EBITDAX for the nine months of 2003 was $2.26 billion, or $8.30 per share (diluted), compared with $1.69 billion, or $6.90 per share (diluted), for the same period in 2002.

Financial condition

Cash flow from operating activities for the nine months ended Sept. 30, 2003, was $1.65 billion, compared with $1.23 billion for the comparable period of 2002.

Capital spending was $1.30 billion for the nine months 2003, versus $1.25 billion in the same period a year ago.

Pretax proceeds from asset sales were $152 million in the third quarter, bringing the total for the year to date to $343 million. Third quarter dispositions included the sale of the majority of the company's common stock holding in Tom Brown, Inc. Proceeds from the sale of assets in 2003 will be used mainly to reduce debt and other financings.

The company's total consolidated long-term debt (including current maturities) was $3.12 billion at Sept. 30, 2003, compared with $3.0 billion at year-end 2002. Cash and cash-equivalents were $485 million at Sept. 30, 2003, compared with $168 million at December 31, 2002. During the third quarter, as a result of the Financial Accounting Standards Board's Interpretation No. 46 dealing with "Variable Interest Entities," the company consolidated $78 million in long-term debt of an affiliate that operates geothermal steam-fired power plants in Indonesia.

In the first nine months of 2003, the company retired more than $400 million in debt and other long-term financings. In addition, the company purchased more than $280 million of its outstanding debt securities through a tender offer and open market purchases in October.

Fourth quarter 2003 outlook

For the fourth quarter 2003, Unocal is forecasting adjusted after-tax earnings of 55 to 65 cents per share (diluted). This forecast compares with the Thomson/First Call consensus (published Oct. 26, 2003) of 58 cents per share for the quarter. The fourth quarter forecast assumes average NYMEX benchmark prices of $30.00 per barrel of crude oil and $5.00 per million British thermal units (mmBtu) for North America natural gas for the period.

Unocal's fourth quarter adjusted after-tax earnings are expected to change $8 million for every $1 change in its average worldwide realized price for crude oil and $3.5 million for every 10-cent change in its average realized North America natural gas price, excluding the effect of hedging activities. The forecast also assumes pretax dry hole costs in the fourth quarter of $50 to $65 million. The company's current estimate for fourth quarter 2003 production is between 430,000 and 440,000 BOE per day.

Unocal's total actual production could also be impacted by cost recovery volume fluctuations under its various foreign production-sharing contracts due to changes in commodity prices, the rate of ramp-up of production at the West Seno field offshore Indonesia, changes in demand for gas in Thailand, and production and exploration performance in the Gulf of Mexico.

The fourth-quarter adjusted after-tax earnings forecast excludes special items. Because of the inherent uncertainty related to special items, determining whether or when they will occur and quantifying their dollar impact, Unocal does not forecast net earnings.

About Unocal Corporation

Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal oil and gas activities are in North America and Asia.

Conference call/financial database

Unocal will webcast its quarterly earnings conference call today at 1 p.m. PST (4 p.m. EST) over the Internet. To listen to the live webcast, go to the Investor Presentations section of the Unocal web site. Replays of the conference call, including questions and answers, will be available. Complete detailed financial tables for the third quarter 2003 and the comparable prior periods are available in the "Quarterly Fact Book," which is posted in the Data Warehouse in the Investor Information section of the company's web site. The Quarterly Fact Book is also available upon request from Unocal Investor Relations.

This news release contains certain forward-looking statements about expected adjusted after-tax earnings, production rates, commodity prices, and dry hole costs. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results could differ materially as a result of changes in commodity prices; the levels of the company's oil and gas production; the extent of the company's operating cash flow and other capital resources available to fund its capital expenditures; regulatory, geological, operating and economic considerations; and other factors discussed in Unocal's 2002 Annual Report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release.

Investors are urged to consider closely the disclosure in Unocal's 2002 Annual Report on Form 10-K and other reports filed with the SEC (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site.

                                            For the Three      For the Nine
    CONSOLIDATED EARNINGS (UNAUDITED)       Months Ended       Months Ended
                                            September 30,      September 30,
    Millions of dollars except
     per share amounts                       2003     2002     2003     2002
    Revenues
    Sales and operating revenues            $1,478   $1,299   $4,817   $3,695
    Interest, dividends and miscellaneous
     income (loss)                              (2)      (3)      18       17
    Gain on sales of assets                     65        1      115        2
          Total revenues                     1,541    1,297    4,950    3,714
    Costs and other deductions
    Crude oil, natural gas and
     product purchases                         447      401    1,629    1,124
    Operating expense                          346      326      965      949
    Administrative and general expense          61       34      199      114
    Depreciation, depletion and
     amortization                              231      245      746      724
    Asset impairments                           83        6       86       27
    Dry hole costs                              14       40       95       81
    Exploration expense                         39       60      182      180
    Interest expense                            45       40      119      134
    Property and other operating taxes          18        7       61       41
    Distributions on convertible preferred
     securities of subsidiary trust              8        8       24       24
          Total costs and other deductions   1,292    1,167    4,106    3,398
    Earnings from equity investments            54       35      150      123
    Earnings from continuing operations
     before income taxes and
     minority  interests                       303      165      994      439
    Income taxes                               147       68      448      203
    Minority interests                           4       (2)       8        2
    Earnings from continuing operations        152       99      538      234
    Earnings from discontinued operations       --       --        8        1
    Cumulative effects of
     accounting changes (a)                     --       --      (83)      --
          Net earnings                        $152      $99     $463     $235
    Basic earnings per share of
     common stock (b)
          Continuing operations              $0.59    $0.41    $2.08    $0.96
          Net earnings                       $0.59    $0.41    $1.79    $0.96
    Diluted earnings per share of
     common stock (c)
          Continuing operations              $0.58    $0.41    $2.05    $0.96
          Net earnings                       $0.58    $0.41    $1.78    $0.96
    Cash dividends declared per share of
     common stock                            $0.20    $0.20    $0.60    $0.60
    (a)  Net of tax (benefit)                   $-       $-     $(48)      $-
    (b)  Basic weighted average shares
          outstanding (in thousands)       258,525  244,664  258,244  244,503
    (c)  Diluted weighted average shares
          outstanding (in thousands)       272,691  245,226  272,172  245,378

    CONDENSED CONSOLIDATED BALANCE SHEET
    (UNAUDITED)                            At September 30,  At December  31,
    Millions of dollars                               2003              2002
    Assets
    Cash and cash equivalents                         $485              $168
    Other current assets - net                       1,252             1,207
    Investments and long-term receivables - net        903             1,044
    Properties - net                                 8,492             7,879
    Goodwill                                           129               122
    Other assets                                       407               340
       Total assets                                $11,668           $10,760
    Liabilities and Stockholders' Equity
    Current liabilities (a)                         $1,900            $1,632
    Long-term debt and capital leases                2,868             3,002
    Deferred income taxes                              709               593
    Accrued abandonment, restoration and
     environmental liabilities                         912               622
    Other deferred credits and liabilities             915               816
    Minority interests                                  28               275
    Convertible preferred securities of a
     subsidiary trust                                  522               522
    Stockholders' equity                             3,814             3,298
       Total liabilities and
        stockholders' equity                       $11,668           $10,760
    (a)  Includes current portion of LTD of:           249                 6


    CONSOLIDATED CASH FLOWS (UNAUDITED)                For the Nine Months
                                                        Ended September 30,
    Millions of dollars                               2003              2002
    Cash Flows from Operating Activities
    Net earnings                                      $463              $235
    Adjustments to reconcile net earnings
     to net cash provided by operating
         activities
          Depreciation, depletion and
           amortization                                746               724
          Asset impairments                             86                27
          Dry hole costs                                95                81
          Amortization of exploratory
           leasehold costs                              88                74
          Deferred income taxes                        102                25
          Gain on sales of assets                     (115)               (2)
          Gain on disposal of
           discontinued operations                     (13)               (2)
          Pension expense                               65                17
          Restructuring provisions net of payments      22                14
          Cumulative effect of accounting changes       83                --
          Other                                          5               (85)
    Working capital and other changes
     related to operations                              20               124
                Net cash provided by
                 operating activities                1,647             1,232
    Cash Flows from Investing Activities
       Capital expenditures (includes dry
        hole costs)                                 (1,296)           (1,248)
       Proceeds from sales of assets                   343                61
       Proceeds from sale of discontinued
        operations                                      11                 3
                Net cash used in
                 investing activities                 (942)           (1,184)
    Cash Flows from Financing Activities
       Long-term borrowings                            154               437
       Reduction of long-term debt and
        capital lease obligations                     (156)             (267)
       Minority interests                             (257)               (6)
       Proceeds from issuance of common stock           21                19
       Dividends paid on common stock                 (155)             (147)
       Other                                             5                 1
             Net cash provided by (used in)
              financing activities                    (388)               37
    Net increase (decrease) in cash and
     cash equivalents                                  317                85
    Cash and cash equivalents at
     beginning of year                                 168               190
    Cash and cash equivalents at end of period        $485              $275


    NET EARNINGS AND ADJUSTED
     AFTER-TAX EARNINGS               3Q 2003                 2Q 2003
    BY BUSINESS SEGMENT                    Adjusted               Adjusted
    (UNAUDITED)                   Net      After-Tax      Net     After-Tax
                                Earnings   Earnings(a)  Earnings  Earnings(a)
    Millions of dollars
    Exploration & Production
       North America
              U.S. Lower 48 (b)     $77            $85      $89         $70
              Alaska                 12             12       14          14
              Canada                 15             15        8           6
       International
              Far East              115            115      116         116
              Other                  21             21       29          29
    Trade                             3              3        4           4
    Midstream                        16             17       18          18
    Geothermal and Power
     Operations                      19             19        7           7
    Corporate and Other
        Administrative and General  (21)           (21)     (22)        (22)
        Interest Expense - Net      (32)           (32)     (28)        (28)
        Environmental and
         Litigation                 (33)           (15)     (28)         (2)
              Other (a)             (40)           (29)     (38)        (21)
    After-tax earnings (loss)
     from continuing operations     152            190      169         191
    After-tax earnings from
     discontinued operations         --             --        8          --
    Cumulative effects of
     accounting changes              --             --       --          --
    After-tax earnings (loss)      $152           $190     $177        $191
    (a)  For a reconciliation to net earnings, see the Adjusted After-Tax
         Earnings table.
    (b)  Includes earnings
          (loss) from:
              Onshore / Shelf        85             93      118          99
              Deep water             (8)            (8)     (29)        (29)


    NET EARNINGS AND ADJUSTED
     AFTER-TAX EARNINGS               3Q 2003                 3Q 2002
    BY BUSINESS SEGMENT                    Adjusted               Adjusted
    (UNAUDITED)                   Net      After-Tax      Net     After-Tax
                                Earnings   Earnings(a)  Earnings  Earnings(a)
    Millions of dollars
    Exploration & Production
       North America
              U.S. Lower 48 (b)     $77            $85      $13         $13
              Alaska                 12             12       10          10
              Canada                 15             15       (2)          3
       International
              Far East              115            115      120         120
              Other                  21             21       16          16
    Trade                             3              3       (1)         (1)
    Midstream                        16             17       17          17
    Geothermal and Power
     Operations                      19             19        5           5
    Corporate and Other
      Administrative and General    (21)           (21)     (21)        (21)
      Interest Expense - Net        (32)           (32)     (28)        (28)
      Environmental and
       Litigation                   (33)           (15)     (14)         (3)
      Other (a)                     (40)           (29)     (16)         (5)
    After-tax earnings (loss)
     from continuing operations     152            190       99         126
    After-tax earnings from
     discontinued operations         --             --       --          --
    Cumulative effects of
     accounting changes              --             --       --          --
    After-tax earnings (loss)      $152           $190      $99        $126
    (a)  For a reconciliation to net earnings, see the Adjusted After-Tax
         Earnings table.
    (b)  Includes earnings
          (loss) from:
              Onshore / Shelf        85             93       23          23
              Deep water             (8)            (8)     (10)        (10)


    NET EARNINGS AND ADJUSTED     For the Nine Months Ended September 30
     AFTER-TAX EARNINGS           2003      2003         2002        2002
    BY BUSINESS SEGMENT                   Adjusted                 Adjusted
     (UNAUDITED)                  Net     After-Tax       Net      After-Tax
    Millions of dollars         Earnings  Earnings(a)   Earnings   Earnings(a)

    Exploration & Production
       North America
              U.S. Lower 48 (b)    $277     $266          $37          $46
              Alaska                 41       41           (1)          (1)
              Canada                 47       43           (5)          --
       International
              Far East              352      352          323          323
              Other                  71       71           40           40
    Trade                            (2)      (2)           1            1
    Midstream                        52       53           59           59
    Geothermal and
     Power Operations                38       38           25           25
    Corporate and Other
        Administrative and General  (66)     (66)         (64)         (64)
        Interest Expense - Net      (91)     (91)         (93)         (93)
        Environmental and
         Litigation                 (78)     (20)         (50)          (6)
        Other (a)                  (103)     (75)         (38)         (27)
    After-tax earnings (loss) from
     continuing operations          538      610          234          303
    After-tax earnings from
     discontinued operations          8       --            1           --
    Cumulative effects of
     accounting changes             (83)      --           --           --
    After-tax earnings (loss)      $463     $610         $235         $303
    (a)  For a reconciliation to net earnings, see the Adjusted After-Tax
         Earnings table.
    (b)  Includes earnings
          (loss) from:
              Onshore / Shelf       345      334           65           74
              Deep water            (68)     (68)         (28)         (28)


                                  For the Three Months   For the Nine Months
    OPERATING HIGHLIGHTS           Ended September 30,    Ended September 30,
                                      2003     2002         2003     2002

    North America Net Daily Production
      Liquids (thousand barrels)
         U.S. Lower 48 (a) (b)             42       52          45       54
         Alaska                            21       24          22       25
         Canada                            17       16          17       17
              Total liquids                80       92          84       96
      Natural gas - dry basis
       (million cubic feet)
         U.S. Lower 48 (a) (b)            595      716         650      740
         Alaska                            49       61          59       79
         Canada                            90       90          91       91
              Total natural gas           734      867         800      910
    North America Average Prices
     (excluding hedging activities) (c)
      Liquids (per barrel)
         U. S. Lower 48                $27.92   $24.85      $28.04   $22.24
         Alaska                        $29.39   $26.10      $29.87   $23.36
         Canada                        $24.02   $22.70      $25.37   $20.29
              Average                  $27.47   $24.79      $27.96   $22.18
      Natural gas (per mcf)
         U. S. Lower 48                 $4.78    $2.95       $5.39    $2.78
         Alaska                         $1.46    $1.20       $1.27    $1.48
         Canada                         $4.96    $2.08       $5.24    $2.38
              Average                   $4.57    $2.73       $5.05    $2.62
    North America Average Prices
     (including hedging activities) (c)
      Liquids (per barrel)
         U. S. Lower 48                $27.71   $24.84      $27.37   $22.28
         Alaska                        $29.39   $26.10      $29.87   $23.36
         Canada                        $24.02   $22.70      $25.37   $20.29
              Average                  $27.36   $24.78      $27.59   $22.20
      Natural gas (per mcf)
         U. S. Lower 48                 $4.82    $2.97       $5.11     $2.87
         Alaska                         $1.46    $1.20       $1.27     $1.48
         Canada                         $4.64    $2.10       $4.93     $2.44
              Average                   $4.57    $2.75       $4.79     $2.69
    (a)  Includes proportional interests in production of equity investees.
    (b)  Includes minority interests of :
                               Liquids     --        8           1         8
                           Natural gas     --       94           7        96
                Barrels oil equivalent     --       24           2        24
    (c)  Excludes gains/losses on derivative positions not accounted for as
         hedges and ineffective portions of hedges.


                                  For the Three Months   For the Nine Months
    OPERATING HIGHLIGHTS           Ended September 30,    Ended September 30,
     (CONTINUED)                     2003     2002          2003     2002

    International Net Daily
     Production (d)
      Liquids  (thousand barrels)
         Far East                       59        52          58        53
         Other (a)                      20        20          20        20
              Total liquids             79        72          78        73
      Natural gas - dry basis
       (million cubic feet)
         Far East                      883       859         888       855
         Other (a)                      74        83          91        79
              Total natural gas        957       942         979       934
    International Average
     Prices (d) (e)
      Liquids (per barrel)
         Far East                   $26.65    $23.99      $26.92    $21.95
         Other                      $29.19    $26.94      $27.74    $24.62
              Average               $27.20    $24.84      $27.11    $22.62
      Natural gas (per mcf)
         Far East                    $2.86     $2.84       $2.79     $2.74
         Other                       $2.93     $2.80       $2.88     $2.70
              Average                $2.87     $2.83       $2.80     $2.74
    Worldwide Net Daily
     Production (a) (b) (d)
      Liquids  (thousand barrels)      159       164         162       169
    Natural gas - dry basis
     (million cubic feet)            1,691     1,809       1,779     1,844
    Barrels oil equivalent
     (thousands)                       441       466         458       476
    Worldwide Average Prices
     (excluding hedging
       activities) (c)
      Liquids (per barrel)          $27.34    $24.82      $27.55    $22.37
      Natural gas (per mcf)          $3.60     $2.78       $3.79     $2.68
    Worldwide Average Prices
     (including hedging
     activities) (c) (e)
      Liquids (per barrel)          $27.28    $24.81      $27.36    $22.38
      Natural gas (per mcf)          $3.60     $2.79       $3.68     $2.72
    (a)  Includes proportional interests in production of equity investees.
    (b)  Includes minority interests of :
                               Liquids  --         8           1         8
                           Natural gas  --        94           7        96
                Barrels oil equivalent  --        24           2        24
    (c)  Excludes gains/losses on derivative positions not accounted for as
         hedges and ineffective portions of hedges.
    (d)  International production is presented utilizing the economic interest
         method.
    (e)  International did not have any hedging activities.



    ADJUSTED AFTER-TAX EARNINGS     For the Three Months  For the Nine Months
    (UNAUDITED)                      Ended September 30,  Ended September 30,
    Millions of dollars except          2003     2002       2003     2002
     per share amounts
    Net earnings                          $152      $99       $463     $235
    Less:
       Earnings from discontinued
        operations                          --       --          8        1
       Cumulative effects of accounting
        changes                             --       --        (83)      --
    Earnings from continuing operations    152       99        538      234
    Less: Special items
       E&P - North America -
       U.S. Lower 48
            Asset sales                     23       --         43        2
            Assets held for sale -
             impairments                   (31)      --        (31)      --
            Environmental and litigation
             provisions                     --       --         (1)       1
            Restructuring                   --       --         --      (12)
       E&P - North America - Canada
            Trading derivatives --
             non-hedging                    --      (5)         4        (5)
       Midstream
            Assets held for sale -
             impairments                    (1)      --        (1)       --
       Corporate & Other
            Environmental and litigation
             provisions                    (23)     (22)      (63)      (57)
            Insurance settlements           --       --        --         2
            Restructuring                   (6)      --       (23)       --
    Total special items                    (38)     (27)      (72)      (69)
         Adjusted after-tax earnings      $190     $126      $610      $303
         Adjusted after-tax diluted
          earnings per share             $0.72    $0.52     $2.32     $1.24


     The preceding table reconciles adjusted after-tax earnings to net
     earnings.  Special items represent certain significant matters which
     positively or negatively impact net earnings that management determines
     to be not representative of the company's ongoing operations.  Examples
     of such items which have generally been excluded in determining adjusted
     after-tax earnings include: gain/loss from major asset sales;
     environmental remediation costs primarily related to inactive, closed or
     previously owned company facilities and third party sites; costs or
     settlements associated with major restructuring plans; litigation
     settlement costs primarily associated with former company operations or
     closed/inactive facilities; significant asset impairments due to changes
     in commodity prices; material damage to company facilities or operations
     due to fire, explosion, earthquakes, storms or other 'acts of god' not
     covered by insurance; certain costs associated with major acquisitions
     including litigation and significant trading derivatives; insurance
     recoveries associated with former company operations or for costs
     incurred in prior years.  Other companies may define special items
     differently; hence, we cannot assure that adjusted after-tax earnings are
     comparable with similarly titled amounts reported by other companies.


                                For the Three Months     For the Nine Months
    EBITDAX (UNAUDITED)          Ended September 30,      Ended September 30,
    Millions of dollars              2003     2002          2003       2002
    Net Earnings                     $152      $99          $463       $235
    Less:
       Earnings from discontinued
        operations                     --       --             8          1
       Cumulative effects of
        accounting changes             --       --           (83)        --
       Special items                  (38)     (27)          (72)       (69)
    Adjusted after-tax earnings       190      126           610        303
    Add-backs to adjusted after-tax
     earnings:
          Depreciation, depletion and
           amortization               231     245            746        724
          Asset impairments            31       6             34         27
          Dry hole costs               14      40             95         81
          Exploration expenses
           (including amortization of
           undeveloped leasehold
            costs)                     39      60            182        180
          Current income taxes         64      27            302        179
          Deferred income taxes        97      58            171         65
          Interest expense (a)         45      40            119        134
             EBITDAX                 $711    $602         $2,259     $1,693
    EBITDAX per share (diluted)     $2.61   $2.46          $8.30      $6.90
    (a)  Net of capitalized
          interest of:                 11      14             46         33

Updated: October 2003