Unocal capital spending forecast shows $150-$200 million reduction from original plan
El Segundo, Calif., April 20, 1998 - Unocal Corporation today said it expects that capital spending in 1998 will total $1.30-$1.35 billion, about 10-13 percent below the original forecast. The company said it was also reducing its expectations for 1998 oil and gas production levels from the U.S. Lower 48 by about 5 percent.
"The revised capital spending forecast reflects the current crude price outlook and will impact short-term investment projects such as well workovers and some development drilling in current fields," said Roger C. Beach, Unocal chairman and chief executive officer. "We will continue with our long-term, high-value growth projects in Indonesia, Bangladesh, Argentina and the Caspian Sea, as well as our exploration of high-potential prospects in the Gulf of Mexico shelf and deepwater areas."
Beach added that the cutback in short-term capital projects, coupled with first quarter production curtailments, would lower expectations for 1998 production from the U.S. Lower 48 to 178,000 barrels of oil equivalent (BOE) per day. This compares with an earlier forecast of about 188,000 BOE per day.
"Our efforts in 1998 in the U.S. will focus on reserve replacement from our high-potential prospects, rather than short-term projects to boost production," Beach said. "Longer term, we can expect to see strong rates of growth in our annual production and reserve base."
Beginning in 1999, the company sees U.S. Lower 48 production growing at an annual rate of 4-6 percent from 1998 levels as various new developments come on line and higher in-field work resumes.
The capital spending program will continue to be reviewed throughout the year, and may change depending upon the level of drilling success, continued higher natural gas prices and timing of drilling rig availability.
Unocal is one of the world's largest independent oil and gas exploration and production companies, with major resource development, power plant and pipeline projects in Central and Southeast Asia, Latin America and the U.S. Gulf of Mexico region.
Forward-looking statements about capital expenditure and production forecasts in this news release are based on assumptions concerning market conditions, pipeline operations, drilling success, well performance, competition, regulations, and other factors. Actual results could differ materially.
Updated: April 1998