press release

Unocal completes sale of West Coast downstream assets; to pursue high-potential new ventures in Asia, U.S. Gulf Coast

El Segundo, Calif., April 1 -- Unocal Corporation today said it had completed the sale of its West Coast refining, marketing and transportation assets to Connecticut-based Tosco Corporation. The sale is valued at approximately $2 billion.

"The completion of this sale puts Unocal on the threshold of a new era," said Roger C. Beach, Unocal chairman and chief executive officer. "We are no longer a mid-sized, integrated oil company. We are now the world's largest independent exploration and production company -- first in reserves and production -- with a strong focus on integrated project development."

Beach went on to say that Unocal's activities will be concentrated in areas where the company is a proven high performer -- primarily exploration and production operations in Asia and the U. S. Gulf of Mexico.

"We can now redeploy resources from slow-growth, low-return downstream businesses, which averaged 5 percent a year return on assets, to high-return operations and growth opportunities that offer potential returns of 15 to 20 percent a year," he said. Beach noted that about two-thirds of Unocal's $1.34 billion capital spending plan in 1997 is targeted to high-return overseas projects.

The assets sold to Tosco were operated by Unocal's 76 Products Company business unit. These assets include Unocal's San Francisco, Santa Maria and Los Angeles refineries in California, which have a combined capacity of 251,000-barrels per day; various terminals, bulk plants and pipelines; worldwide lubricants business; retail marketing business, including 1,100 controlled sites and 250 branded, non-controlled sites in six Western states; commercial and industrial petroleum products business; three oceangoing tankers; inventories of hydrocarbon products; credit card systems; and other various assets.

Unocal will receive approximately $1.4 billion in cash (includes nearly $400 million for inventories of crude oil and petroleum products) and shares of Tosco common stock valued at approximately $400 million. Unocal expects to sell the Tosco shares as soon as practicable.

The sale agreement also includes provisions for up to $250 million in possible participation payments to Unocal should gasoline margins increase in the next seven years.

The proceeds from the sale will be used to invest in new, high-growth projects, reduce debt by about $800 million and buy back up to $400 million of Unocal's common stock.

"With the proceeds from the sale, we will be able to strengthen our balance sheet, add value for our stockholders, shift significant financial resources to potentially high-return opportunities in the fast-growing economies of Asia, and strengthen our resource base in the Louisiana/Gulf of Mexico region," Beach said.

Terms of Sale
Sales value
  • Approximately $2 billion:
  • $1 billion cash
  • $400 million in Tosco common stock (14 million shares)
  • Nearly $400 million in cash for inventories
  • Participation payment: $250 million cap; 7-year term; payment computed and paid semi-annually; portion of increase in gasoline margins above base average
Asset Information
Refineries
  • San Francisco Refinery (Rodeo, Calif.) -- 77,000 b/d
  • Santa Maria Refinery (Arroyo Grande, Calif.) -- 44,000 b/d
  • Los Angeles Refinery (Carson and Wilmington, Calif.) -- 130,000 b/d
Retail marketing business Approximately 1,100 controlled sites and 250 non-controlled sites in California, Arizona, Nevada, Oregon, Washington and Hawaii
Ships Three oceangoing vessels (Sierra Madre, Blue Ridge and Coast Range)
Other assets and businesses
  • Various terminals, bulk plants and pipelines
  • Worldwide lubricants business
  • Commercial and industrial petroleum products business
  • Credit card systems (including co-branded card)

Updated: April 1997