press release

Unocal reports 2Q 1998 earnings; cost controls, financial strength help company to weather low oil prices

Download the quarterly financial tables (MS Excel 5.0 workbook in .zip format - 42KB)

El Segundo, Calif., July 28, 1998 - Unocal Corporation today said that lower crude oil prices led to lower second quarter 1998 net earnings of $105 million, or 43 cents per share (diluted). In the second quarter 1997, Unocal had net earnings of $118 million, or 47 cents per share (diluted).

Earnings from continuing operations, excluding special items (detailed in the attached tables), were $62 million, or 26 cents per common share (diluted). This compares with $97 million, or 39 cents per common share (diluted), in the second quarter last year.

Net earnings for the first six months of 1998 were $123 million, or 50 cents per share (diluted). This compares with $262 million, or $1.04 per share (diluted) in the same period of 1997.

Year-to-date earnings from continuing operations, excluding special items (detailed in the attached tables) were $134 million (55 cents per share diluted), down from $287 million ($1.13 per share diluted) last year.

Discretionary cash flow (see attached table) was $339 million for the second quarter 1998 and $664 million for the first six months of the year. This compares with $679 million in the second quarter 1997 and $2.52 billion for the first six months of last year. The 1997 discretionary cash flow amounts reflect the proceeds from the sale of the company's West Coast refining and marketing assets.

Commodity price impacts

"This year has been particularly challenging as lower worldwide commodity prices continue to impact earnings," said Roger C. Beach, Unocal chairman and chief executive officer. "If you compare our results with 1997, lower oil prices reduced earnings by nearly 20 cents per share in the second quarter, while lower oil and natural gas prices reduced earnings by about 65 cents per share for first six months of the year."

Beach also noted that lower prices for agricultural products reduced earnings by more than 5 cents per share in the second quarter and about 15 cents per share in the year-to-date results, when compared with the comparable periods a year ago.

"Our balance sheet remains strong, however," Beach said, "giving us the strength to weather this period of lower prices and the flexibility to take advantage of new opportunities if they present themselves."

Cost controls

Beach said the company continues to focus on reducing costs to help offset the impact of lower prices.

"We have cut production costs for Spirit Energy 76, our domestic E&P unit," Beach said. "Spirit Energy aims to reduce production costs for the full year 1998 by 10 to 15 cents per BOE, compared with last year."

Oil and gas exploration and production

"We are particularly encouraged by our operations in Thailand where we recorded our best quarter ever for natural gas production," Beach said. "Gross natural gas production averaged 1.02 billion cubic feet (bcf) per day (Unocal, 65% working interest) as Thailand has increased use of indigenous gas supplies for power generation. For the full-year 1998, we expect that gross natural gas production from Thailand will average above 1 bcf per day."

The company is continuing its aggressive worldwide exploration program. Unocal's Spirit Energy 76 unit participated in a natural gas discovery on the Cotton Valley Reef trend in East Texas. The well was placed on production within 30 days of the discovery. Since stepping up its exploration program in October 1997, Spirit Energy 76 has recorded 28 oil and gas discoveries (success rate of more than 50%) both onshore and in the continental shelf area of the Gulf of Mexico.

Spirit Energy's net production increased in the second quarter, compared with the first three months of the year, reversing declines recorded during 1997. The company expects Spirit Energy's full-year 1998 production to average about 178,000 BOE per day.

By the end of this week, Unocal expects to have three new deepwater exploration wells under way. In the Gulf of Mexico, we expect to spud a well on the Mirage prospect (gross resource potential of 200 to 600 million BOE; Unocal, 25% working interest) and the Calypso prospect (gross resource potential of 30 to 110 million BOE; Unocal, 50% working interest). The Calypso well is an offset to a successful exploration well on the adjacent Leo prospect.

In the Makassar Strait production sharing contract area offshore East Kalimantan in Indonesia, Unocal last week spudded an exploration well on the deepwater Seno prospect (estimated gross resource potential of 210 to 720 million BOE; Unocal, 50% working interest).

Other financial results

Total revenues for the second quarter were $1.4 billion, down from $1.65 billion a year ago. Total revenues for the six months were $2.6 billion, compared with $3.11 billion for the first half of 1997.

Unocal is a leading global oil and gas exploration and production company with significant pipeline and power plant project developments worldwide.

Forward-looking statements and estimates regarding drilling activity, production, resource potential and business results in this news release are based on assumptions concerning market, competitive, regulatory, environmental, operational and other considerations. Actual results could differ materially.

    CONDENSED CONSOLIDATED EARNINGS STATEMENT
    (UNAUDITED)
                                   For the Three Months   For the Six Months
                                       Ended June 30          Ended June 30

    Millions of dollars
      except per share amounts       1998        1997       1998       1997

    Total revenues                  $1,397     $1,654      $2,604     $3,110
    Costs and other deductions       1,233      1,405       2,343      2,524
    Earnings from continuing operations
      before income taxes              164        249         261        586
    Income taxes                        59         93         138        242
    Earnings from continuing operations 105       156         123        344
    Loss from discontinued operations
      (net of tax)                      --         --          --        (44)
    Extraordinary charge - extinguishment
      of debt (net of tax)              --        (38)         --        (38)
    Net earnings                      $105       $118        $123       $262

    Basic earnings/(loss)
      per common share (a)
       Continuing operations         $0.43      $0.62       $0.51      $1.38
       Discontinued operations          --         --          --     (0.18)
       Extraordinary item - extinguishment
        of debt (net of tax)            --      (0.15)         --     (0.15)
    Basic net earnings per share     $0.43      $0.47       $0.51      $1.05

    Diluted earnings/(loss)
      per common share (b) (c)
       Continuing operations         $0.43      $0.61       $0.50      $1.35
       Discontinued operations          --         --          --     (0.17)
       Extraordinary item - extinguishment
        of debt (net of tax)            --      (0.14)         --     (0.14)
    Diluted net earnings per share   $0.43      $0.47       $0.50      $1.04

    (a) Weighted average shares -
         basic (millions).             241        250         241        250
    (b) Weighted average shares -
         diluted (millions).           243        264         243        264
    (c) Distributions on preferred
         securities (net of taxes)
         excluded in numerator.        $--         $6         $--        $12
         In 1998, the effect of assumed conversion of preferred securities on
         earnings per share is antidilutive.

    CONDENSED CONSOLIDATED BALANCE SHEET
    (UNAUDITED)
                                                Jun. 30        Dec. 31
    Millions of dollars                            1998           1997
    Assets
    Cash and cash equivalents                      $193           $338
    Other current assets                          1,067          1,163
    Investments and long-term receivables         1,340          1,113
    Properties - net                              4,952          4,816
    Other assets                                    198            100
       Total assets                              $7,750         $7,530

    Liabilities and Equity
    Current liabilities                            $974         $1,160
    Long-term debt                                2,480          2,169
    Deferred income taxes                           172            137
    Other deferred credits and liabilities        1,302          1,228

    Convertible preferred securities                522            522

    Stockholders' equity                          2,300          2,314
       Total liabilities and equity              $7,750         $7,530


    CONDENSED CONSOLIDATED CASH FLOWS
    (UNAUDITED)                                 For the          For the
                                              Three Months      Six Months
                                             Ended June 30   Ended June 30(a)
    Millions of dollars                       1998   1997(a)   1998     1997
    Cash flows from operating activities
      Net earnings                            $105    $118     $123     $262
      Adjustments to reconcile net earnings to
       net cash provided by operating activities
         Loss on disposal of discontinued
          operations (before-tax)               --      --       --       71
         Depreciation, depletion and
          amortization                         199     244      380      455
         Dry hole costs                         42      27       92       43
         Deferred income taxes                  17      19       30       29
         Gain on sales of assets (before-tax)  (92)    (51)     (92)     (61)
         Other                                   7    (131)      27     (158)
      Working capital and other changes
       related to operations                    25    (123)    (163)    (204)
         Net cash provided by operating
          activities                           303     103      397      437

    Cash flows from investing activities
      Capital expenditures
       (includes dry hole costs)              (440)   (359)    (766)    (645)
      Proceeds from sale of discontinued
       operations                               --     396       --    1,786
      Proceeds from asset sales                 30      32       34       48
        Net cash (used in)/provided by
         investing activities                 (410)     69     (732)   1,189

    Cash flows from financing activities
      Net increase/(decrease) in long-term debt 79    (893)     341     (718)
      Dividends paid                           (49)    (50)     (97)    (100)
      Repurchase of common stock                --     (46)     (48)     (92)
      Other                                     (5)    (48)      (6)     (49)
        Net cash provided by/(used in)
         financing activities                   25  (1,037)     190     (959)

    Increase/(decrease) in cash and cash
     equivalents                               (82)   (865)    (145)     667
    Cash and cash equivalents at beginning
     of period                                 275   1,749      338      217
    Cash and cash equivalents at end of period$193    $884     $193     $884

    (a)Cash flows related to discontinued operations have not been segregated

    CONDENSED CAPITAL EXPENDITURES
    (UNAUDITED)
    Millions of dollars

    United States Exploration & Production  $216      $79     $352      $112
    International Exploration & Production   196      240      364       403
    Geothermal and Power Operations            4       27       10        47
    Diversified Business Group                18       13       28        22
    New Ventures (Non-E & P)                   1       (2)       1         3
    Corporate & Unallocated                    5        2       11         9
    Discontinued Operations                   --       --       --        49
       Total (b)                            $440     $359     $766      $645

    (b) Includes capitalized interest of:     $8      $11      $16       $16


    DISCRETIONARY CASH FLOW
    (UNAUDITED)                       For the Three Months For the Six Months
                                          Ended June 30     Ended June 30(a)
    Millions of dollars                   1998      1997      1998      1997

    Net earnings                          $105      $118      $123      $262

    Adjustments to net earnings
      Depletion, depreciation &
       amortization                        199       244       380       455
      Dry hole costs                        42        27        92        43
      Deferred income taxes                 17        19        30        29
      Gain on sales of assets              (92)      (51)      (92)      (61)
      Exploration expenses                  39        36        86        64
      Proceeds from asset sales             30       428        34     1,834
      Capitalized interest                  (8)      (11)      (16)      (16)
      Environmental and
       litigation provision                 46        10        98        28
      Environmental and
       litigation payments                 (26)      (94)      (46)     (112)
      Loss on disposal of discontinued
       operations                           --        --        --        71
      Other                                (13)      (47)      (25)      (74)
        Total discretionary cash flow     $339      $679      $664    $2,523

    (a) Cash flows related to discontinued operations have not been segregated

The preceding table of 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 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 on the preceding page.

RESULTS OF OPERATIONS FOR EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED)

                                              For the Three Months
                                              Ended June 30, 1998
                              Spirit                         Other
    Millions of dollars      Energy 76    Alaska Far East InternationalTotal

    Sales (includes
     intercompany sales)
       Crude oil and condensate  $51       $24       $83       $23      $181
       Natural gas               148        16       149         7       320
       Natural gas liquids        14        --         3        --        17
       Other                       1        --        --        --         1
         Total                   214        40       235        30       519
    Other revenue/(loss)           1         2        (4)        3         2
    Gain on asset sales           --        --         3        87        90
        Total revenues           215        42       234       120       611

    Production costs              39        23        30        15       107
    Exploration expenses          12         1        19         4        36
    Dry hole costs                27        --        12         3        42
    Depreciation, depletion &
     amortization                 92        13        59        17       181
    Other operating expenses      21         3        15        16        55
    Results of operations before
      income tax                 $24        $2       $99       $65      $190

                                          For the Three Months
                                          Ended June 30, 1997
                              Spirit                         Other
                             Energy 76  Alaska   Far East InternationalTotal
    Sales (includes
     intercompany sales)
      Crude oil and condensate   $75       $40      $113       $40      $268
      Natural gas                146        14       152        10       322
      Natural gas liquids         13         2         5         1        21
      Other                        1        --        --        --         1
        Total                    235        56       270        51       612
    Other revenue                  3         1         3         3        10
    Gain/(loss) on asset sales     1        --        --       (17)      (16)
    Total revenues               239        57       273        37       606

    Production costs              50        22        33        17       122
    Exploration expenses          14        --        10         9        33
    Dry hole costs                 1        --        26        --        27
    Depreciation, depletion &
     amortization                103        14        93        19       229
    Other operating expenses      19         4        11        16        50
       Results of operations
        before income tax        $52       $17      $100      $(24)     $145


    RESULTS OF OPERATIONS FOR
    EXPLORATION AND PRODUCTION ACTIVITIES
    (UNAUDITED)

                                            For the Six Months
                                            Ended June 30, 1998
                              Spirit                         Other
    Millions of dollars      Energy 76   Alaska  Far EastInternational Total

    Sales (includes
     intercompany sales)
      Crude oil and condensate  $106       $52      $176       $53      $387
      Natural gas                291        34       290        16       631
      Natural gas liquids         25         1         6         1        33
      Other                        2        --        --        --         2
        Total                    424        87       472        70     1,053
    Other revenue/(loss)           4         4       (12)        8         4
    Gain on asset sales           --        --         3        87        90
        Total revenues           428        91       463       165     1,147

    Production costs              83        42        56        36       217
    Exploration expenses          26         1        39        15        81
    Dry hole costs                66        --        15         8        89
    Depreciation, depletion &
      amortization               176        21       113        35       345
    Other operating expenses      37         6        28        25        96
        Results of operations
         before income tax       $40       $21      $212       $46      $319

                                            For the Six Months
                                            Ended June 30, 1997
                               Spirit                        Other
                             Energy 76   Alaska  Far East InternationalTotal
    Sales (includes
     intercompany sales)
      Crude oil and condensate  $166       $96      $230       $85      $577
      Natural gas                370        32       317        24       743
      Natural gas liquids         29         3        14         2        48
      Other                        1        --        --        --         1
        Total                    566       131       561       111     1,369
    Other revenue                  6         1         4        13        24
    Gain/(loss) on asset sales     4        --        --       (16)      (12)
        Total revenues           576       132       565       108     1,381

    Production costs              98        46        63        36       243
    Exploration expenses          24        --        18        18        60
    Dry hole costs                 7        --        35         1        43
    Depreciation, depletion &
     amortization                205        29       154        36       424
    Other operating expenses      38         6        22        24        90
        Results of operations
         before income tax      $204       $51      $273       $(7)     $521


    OPERATING HIGHLIGHTS
    (UNAUDITED)                      For the Three Months  For the Six Months
                                          Ended June 30       Ended June 30
                                          1998      1997      1998      1997
    Net daily production
      Crude oil and condensate
       (thousand barrels daily):
         United States
          Spirit Energy 76                  44        46        44        47
          Alaska                            29        31        30        32
            Total United States             73        77        74        79
         International
          Far East(a)                       80        95        84        94
          Other                             32        27        32        27
            Total International            112       122       116       121

            Total Worldwide                185       199       190       200

      Natural gas (million cubic feet daily):
         United States
          Spirit Energy 76                 795       874       784       892
          Alaska                           121       127       130       141
            Total United States            916     1,001       914     1,033
         International
          Far East(a)                      830       774       828       789
          Other                             67        63        60        66
            Total International            897       837       888       855

            Total Worldwide              1,813     1,838     1,802     1,888

      Natural gas liquids
       (thousand barrels daily)             20        19        19        19

      Geothermal (million
        kilowatt-hours daily)               18        17        20        17

    Average sales prices(b)
      Crude oil and condensate (per barrel):
        United States
         Spirit Energy 76               $13.04    $17.77    $13.50    $19.30
         Alaska                           8.83     14.23      9.84     16.45
           Total United States          $11.35    $16.36    $12.01    $18.15
        International
         Far East                       $12.85    $17.97    $13.42    $19.41
         Other                           10.31     16.11     11.34     18.01
           Total International          $12.14    $17.44    $12.84    $19.01

           Total Worldwide              $11.80    $16.96    $12.49    $18.61

      Natural gas (per mcf):
        United States
         Spirit Energy 76                $2.15     $1.98     $2.15     $2.39
         Alaska                           1.48      1.35      1.47      1.35
           Total United States           $2.06     $1.89     $2.05     $2.25
        International
         Far East                        $2.04     $2.25     $2.03     $2.33
         Other                            2.46      2.08      2.24      2.16
           Total International           $2.05     $2.24     $2.04     $2.31

           Total Worldwide               $2.05     $2.05     $2.05     $2.28

    (a) Includes host country share of:
         Crude oil and condensate            8        30        13        30
         Natural gas                        22        25        27        29

    (b) Excludes Global Trade margins and Canada equity affiliate sales
    OPERATING HIGHLIGHTS (continued)
    (UNAUDITED)
                                      For the Three Months For the Six Months
                                          Ended June 30       Ended June 30
                                          1998      1997      1998      1997
    Agricultural products production
     volumes (thousand tons)
       Ammonia                             390       367       764       758
       Urea                                245       233       505       508

    Agricultural products sales
     volumes (thousand tons)
       Ammonia                             243       247       463       403
       Urea                                270       289       595       499

    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)

                                     2nd Quarter of 1998  2nd Quarter of 1997
    Millions of dollars              Before-tax After-tax Before-taxAfter-tax

    Exploration and Production
      United States
       Spirit Energy 76                   $24       $15       $52       $33
       Alaska                               2         1        17        11
      International                       164       103        76        28

    Global Trade                            7         4         8         5

    Geothermal and Power Operations        22        14        11        13

    Diversified Business Group
      Agricultural Products                18        12        40        26
      Carbon and Minerals                   9         9        85        56
      Pipelines                            19        15        18        16
      Other                                --        --        42        36

    Corporate and Unallocated
      Administrative and general expense  (16)      (12)      (22)      (14)
      Net interest expense                (33)      (24)      (29)      (23)
      Environmental and litigation expense(48)      (30)      (16)      (10)
      New Ventures (non E&P)               (8)       (5)      (20)      (15)
      Other                                 4         3       (13)       (6)
    Earnings from continuing operations
     before discontinued operations
     and extraordinary item               164       105       249       156
    Extraordinary item                     --        --       (52)      (38)
        Total                            $164      $105      $197      $118

Exploration and Production - involves the exploration for, and the production of crude oil and natural gas.

Global Trade - handles the company's worldwide crude oil, condensate and natural gas trading and marketing activities. Global Trade also purchases crude oil, condensate and natural gas from the company's joint venture partners, royalty owners and other unaffiliated oil and gas producers for resale.

Geothermal and Power Operations - involves the exploration for, and the production and sale of, geothermal resources, and the construction and operation of electrical power plants.

Diversified Business Group:

Agricultural Products - involves the manufacture, transportation and marketing of nitrogen-based products for agricultural and industrial use.

Carbon and Minerals - involves the production and marketing of petroleum coke, graphites and specialty minerals.

Pipelines - principally includes the company's equity interests in affiliated pipeline companies.

Other - principally included the company's equity interest in The UNO-VEN Company, prior to its restructuring in May 1997.

    SPECIAL ADJUSTMENTS
    (Unaudited)

                                     2nd Quarter of 1998 2nd Quarter of 1997
    Millions of dollars              Before-taxAfter-tax Before-tax After-tax

    Reported earnings                    $164      $105      $197      $118
    Less: Special items
      Exploration and Production
       International
         Asset sales                       85        53       (17)      (17)
         Bangladesh well blowout           --        --       (10)       (7)
         Deferred tax adjustment           --         7        --        --
      Geothermal and Power Operations
         Deferred tax adjustment - Sarulla --        --        --         7
      Diversified Business Group
       Carbon and Minerals
         Asset sales                       --        --        67        41
         Environmental and litigation      (3)       (1)       --        --
       Other
         UNO-VEN restructuring             --        --        46        39
      Corporate and Unallocated
         Asset sales                       --        --         1         1
         Environmental and litigation     (43)      (27)       (9)       (5)
         Insurance settlement              17        11        --        --
      Extraordinary item
         Extinguishment of debt            --        --       (52)      (38)
      Total special items                  56        43        26        21
        Adjusted earnings                $108       $62      $171       $97


    EARNINGS BY BUSINESS SEGMENT
    EXCLUDING  SPECIAL ADJUSTMENTS
    (Unaudited)
                                    2nd Quarter of 1998  2nd Quarter of 1997
    Millions of dollars except
      share amounts                 Before-tax After-tax Before-tax After-tax

    Exploration and Production
      United States
       Spirit Energy 76                 $24       $15         $52       $33
       Alaska                             2         1          17        11
      International                      79        43         103        52

    Global Trade                          7         4           8         5

    Geothermal and Power Operations      22        14          11         6

    Diversified Business Group
      Agricultural Products              18        12          40        26
      Carbon and Minerals                12        10          18        15
      Pipelines                          19        15          18        16
      Other                              --        --          (4)       (3)

    Corporate and Unallocated
      Administrative and general expense(16)      (12)        (22)      (14)
      Net interest expense              (33)      (24)        (29)      (23)
      Environmental and litigation expense(5)      (3)         (7)       (5)
      New Ventures (non E&P)             (8)       (5)        (20)      (15)
      Other                             (13)       (8)        (14)       (7)
    Earnings from continuing operations$108       $62        $171       $97

    Basic earnings from continuing operations
      per share of common stock                 $0.26                 $0.39
    Diluted earnings from continuing operations
      per share of common stock (a)             $0.26                 $0.39

    Distributions on preferred securities
      (net of tax) excluded in numerator for
      diluted earnings per share (a)              $--                    $6
    Basic weighted average shares                 241                   250
    Diluted weighted average shares               243                   264

    (a) In 1998, the effect of assumed conversion of preferred securities on
    earnings per share is antidilutive.


    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)
                                     Six Months Ended      Six Months Ended
                                       June 30, 1998         June 30, 1997
    Millions of dollars             Before-tax After-tax Before-tax After-tax

    Exploration and Production
      United States
       Spirit Energy 76                 $40       $25        $204      $128
       Alaska                            21        13          51        32
      International                     258       116         266       130

    Global Trade                         16        10          19        11

    Geothermal and Power Operations      44        28          21        19

    Diversified Business Group
      Agricultural Products              31        21          70        46
      Carbon and Minerals                27        24          97        66
      Pipelines                          37        30          35        30
      Other                              --        --          44        37

    Corporate and Unallocated
      Administrative and general expense(32)      (23)        (42)      (27)
      Net interest expense              (66)      (50)        (83)      (65)
      Environmental and litigation
       expense                         (100)      (63)        (34)      (21)
      New Ventures (non E&P)            (19)      (12)        (31)      (22)
      Other                               4         4         (31)      (20)
    Earnings from continuing operations
     before discontinued operations
     and extraordinary item             261       123         586       344
    Loss from discontinued operations    --        --         (71)      (44)
    Extraordinary item                   --        --         (52)      (38)
        Total                          $261      $123        $463      $262


    SPECIAL ADJUSTMENTS
    (Unaudited)

                                      Six Months Ended     Six Months Ended
                                       June 30, 1998        June 30, 1997
    Millions of dollars             Before-tax After-tax Before-tax After-tax

    Reported earnings                  $261      $123        $463      $262
    Less: Special items
      Exploration and Production
       United States
         Spirit Energy
          Asset sales                    --        --           3         2
       International
          Asset sales                    85        53         (16)      (16)
          Bangladesh well blowout        --        --         (10)       (7)
          Deferred tax adjustment        --       (14)         --        --
      Geothermal and Power Operations
          Deferred tax adjustment
          - Sarulla                      --        --          --         7
      Diversified Business Group
       Carbon and Minerals
          Asset sales                    --        --          67        41
          Environmental and litigation   (4)       (2)         --        --
       Other
          UNO-VEN restructuring          --        --          46        39
      Corporate and Unallocated
          Asset sales                    --        --           7         5
          Environmental and litigation  (94)      (59)        (23)      (14)
          Insurance settlement           17        11          --        --
      Discontinued Operations
          Net loss on disposal           --        --         (71)      (44)
      Extraordinary item
          Extinguishment of debt         --        --         (52)      (38)
      Total special items                 4       (11)        (49)      (25)
        Adjusted earnings              $257      $134        $512      $287

    EARNINGS BY BUSINESS SEGMENT
    EXCLUDING SPECIAL ADJUSTMENTS
    (Unaudited)

                                     Six Months Ended      Six Months Ended
                                       June 30, 1998        June 30, 1997
    Millions of dollars except
      share amounts                 Before-tax After-tax Before-tax After-tax

    Exploration and Production
      United States
       Spirit Energy 76                 $40       $25        $201      $126
       Alaska                            21        13          51        32
      International                     173        77         292       153

    Global Trade                         16        10          19        11

    Geothermal and Power Operations      44        28          21        12

    Diversified Business Group
      Agricultural Products              31        21          70        46
      Carbon and Minerals                31        26          30        25
      Pipelines                          37        30          35        30
      Other                              --        --          (2)       (2)

    Corporate and Unallocated
      Administrative and
       general expense                  (32)      (23)        (42)      (27)
      Net interest expense              (66)      (50)        (83)      (65)
      Environmental and
       litigation expense                (6)       (4)        (11)       (7)
      New Ventures (non E&P)            (19)      (12)        (31)      (22)
      Other                             (13)       (7)        (38)      (25)
    Earnings from continuing
     operations                        $257      $134        $512      $287

    Basic earnings from continuing operations
      per share of common stock                 $0.56                 $1.15
    Diluted earnings from continuing operations
      per share of common stock (a)             $0.55                 $1.13

    Distributions on preferred securities
      (net of tax) excluded in numerator for
      diluted earnings per share (a)              $--                   $12
    Basic weighted average shares                 241                   250
    Diluted weighted average shares               243                   264

    (a) In 1998, the effect of assumed conversion of preferred securities on
        earnings per share is antidilutive.

Updated: July 1998