press release

Unocal Reports 1Q 1999 Earnings

Download the Quarterly Fact Book (MS Excel 5.0 workbook in .zip format)

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.

Special items

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.

Additional information

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