Unocal Reports 1Q 1999 Earnings
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El Segundo, Calif., April 28, 1999 - Unocal Corporation today said that lower worldwide crude oil and natural gas prices and production in the first quarter 1999 were major factors in the company's reporting earnings of $7 million, or 3 cents per share (diluted). This compares with reported earnings of $18 million, or 7 cents per share (diluted), in the first quarter 1998.
Adjusted earnings for the quarter, excluding special items, were 8 cents per share, or $20 million, compared with 30 cents per share, or $72 million, a year ago. For the first quarter 1999, adjusted discretionary cash flow was $271 million, or $1.12 per share, compared with $353 million, or $1.45 per share, a year ago.
Consolidated Results 1st 4th 1st Quarter Quarter Quarter Millions of dollars except per share amounts 1999 1998 1998 Reported after-tax earnings $ 7 $ (29) $ 18 Special items (13) (57) (54) Adjusted after-tax earnings $ 20 $ 28 $ 72 Diluted reported earnings per share $ 0.03 $(0.12) $ 0.07 Diluted adjusted earnings per share $ 0.08 $ 0.11 $ 0.30 Adjusted discretionary cash flow $ 271 $ 347 $ 353 Adjusted discretionary cash flow per share $ 1.12 $ 1.43 $ 1.45 Total revenues $1,231 $ 1,481 $ 1,207
"Our adjusted earnings were higher than the Wall Street consensus estimates for the company," said Roger C. Beach, Unocal chairman and chief executive officer. "This was due partly to improving oil and gas prices toward the end of the quarter and higher than expected non-E&P segment results. We're also seeing some impact from the cost-reduction initiatives we launched last year."
Beach noted that in the first quarter lower crude oil and natural gas prices reduced after-tax earnings by about $45 million, or 19 cents per share, compared with the same period a year ago. Oil and gas prices, as evidenced by NYMEX futures, indicate a significant increase for the second quarter over the first. The impact on the company's quarterly after-tax earnings is approximately $8.5 million for each one-dollar change in worldwide oil prices, and approximately $4.5 million for each ten-cent change in Spirit Energy natural gas prices.
Looking forward, Beach said that capital expenditures are still expected to total approximately $1 billion for 1999. First quarter 1999 capital expenditures totaled $225 million. The company said it may adjust its capital-spending estimate later depending on the timing of acquisitions and changes in commodity prices.
"Our capital plan focuses on continuing our high-potential deepwater exploration programs in Indonesia and the Gulf of Mexico," Beach said. Earlier this month, Unocal spudded its first deepwater Gulf of Mexico well with its Spirit Energy 76 business unit as the operator on the South Sierra prospect in Garden Banks 551. In total, the company expects to be drilling four deepwater wells in the Gulf over the next several months.
In the past 45 days, Unocal has announced significant discoveries on the Mirage prospect on Mississippi Canyon 941 and the Mad Dog prospect on Green Canyon 826. These followed the announcement of two deepwater discoveries in the Kutei Basin offshore East Kalimantan, Indonesia, in 1997-98.
In the first quarter, Unocal recorded after-tax losses of $10 million from the sale of the company's interest in a geothermal production venture at The Geysers in Northern California, and $3 million for various litigation matters.
Unocal is a leading independent oil and gas exploration and production company with pipeline and power plant development projects worldwide.
Detailed financial tables for the first quarter 1999 are available for download in the Investor Data Warehouse on the company's web site. They can be found in the "Quarterly Fact Book." A hard copy is also available by contacting Investor Relations, 310-726-7667, or via e-mail.
Forward looking statements and estimates regarding exploration and production activities, oil and gas prices and their related earnings effects, and capital expenditures in this news release are based on assumptions about market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially as a result of factors discussed in Unocal's 1998 Form 10-K report filed with the Securities and Exchange Commission.
Unocal Corporation EARNINGS BY BUSINESS SEGMENT EXCLUDING SPECIAL ITEMS (Unaudited) 1st 4th 1st Quarter Quarter Quarter Millions of dollars 1999 1998 1998 Exploration & Production United States Spirit Energy 76 (a) $ 2 $ (11) $ 9 Alaska 1 3 12 International Far East 48 68 42 Other (12) (2) (8) Global Trade & Transport Global Trade 2 8 6 Pipelines 17 18 15 Geothermal and Power Operations 11 8 14 Diversified Business Group Agricultural Products 3 4 9 Carbon & Minerals (a) 9 2 14 Corporate and Unallocated New Ventures (1) (6) (7) Administrative & General (21) (21) (18) Interest Expense - Net (34) (30) (26) Environmental & Litigation (2) (3) (1) Other (3) (10) 11 Total $ 20 $ 28 $ 72 (a) includes minority interest expense of: Spirit Energy 76 $ 1 $ -- $ (1) Carbon & Minerals (1) -- (2) Unocal Corporation ADJUSTED DISCRETIONARY CASH FLOW (Unaudited) 1st 4th 1st Quarter Quarter Quarter Millions except per share amounts 1999 1998 1998 Earnings excluding special items $ 20 $ 8 $ 72 Adjustment to earnings excluding special items: Depreciation, depletion and amortization 200 206 181 Dry hole costs 27 34 50 Deferred income taxes (9) 19 11 Exploration expenses 38 64 47 Capitalized interest (5) (4) (8) Total adjusted discretionary cash flow $ 271 $ 347 $ 353 Diluted weighted average shares 242 242 243 Adjusted discretionary cash flow per share $ 1.12 $ 1.43 $ 1.45
The preceding table of adjusted discretionary cash flow is provided for analysts and others in the investment community as a supplement to conventional financial data prepared in accordance with generally accepted accounting principles. Discretionary cash flow includes assumptions about deferred taxes and does not give effect to significant uses of cash, including those for capital projects, debt reduction and regular dividends, some of which result from previous commitments, and should only be considered in conjunction with the full presentation of condensed consolidated cash flows which is contained in the company's Quarterly Fact Book. To access the Quarterly Fact Book, visit the Investor Data Warehouse or contact Investor Relations at Unocal.
Unocal Corporation OPERATING HIGHLIGHTS (Unaudited) 1st 4th 1st Quarter Quarter Quarter 1999 1998 1998 United States Net Daily Production Crude oil (thousand barrels daily) Spirit Energy 76 39 42 44 Alaska 27 29 30 Natural gas - wet basis (million cubic feet daily) Spirit Energy 76 775 798 788 Alaska 153 147 138 United States Average Sales Prices (a) Crude oil (per barrel) Spirit Energy 76 $ 11.85 $ 11.00 $ 13.94 Alaska $ 7.86 $ 8.78 $ 10.84 Natural gas (per mcf) Spirit Energy 76 $ 1.92 $ 2.05 $ 2.14 Alaska $ 1.20 $ 1.20 $ 1.47 International Net Daily Production (b) Crude oil (thousand barrels daily) Far East 70 72 89 Other 31 27 31 Natural gas (million cubic feet daily) Far East 848 857 861 Other 39 26 52 International Average Sales Prices (a) Crude oil (per barrel) Far East $ 10.65 $ 11.00 $ 13.97 Other $ 10.22 $ 9.66 $ 12.30 Natural gas (per mcf) Far East $ 1.88 $ 1.95 $ 2.03 Other $ 1.76 $ 2.40 $ 2.09 Worldwide Net Daily Production (b) Crude oil (thousand barrels daily) 167 170 194 Natural gas (per mcf) 1,815 1,828 1,839 Worldwide Average Sales Prices (a) Crude oil (per barrel) $ 10.34 $ 10.37 $ 13.15 Natural gas (per mcf) $ 1.83 $ 1.96 $ 2.04 (a) prices exclude Global Trade margins. (b) production includes certain host countries' shares of: Crude oil 12 9 19 Natural gas 73 67 50
Updated: April 1999