press release

Unocal reports third quarter earnings

Download the quarterly financial tables (MS Excel 5.0 workbook - 133KB)

El Segundo, Calif., Oct. 27, 1998 - Unocal Corporation today said that lower worldwide oil and gas prices, coupled with increased costs for the company's expanded exploration program, led to lower third quarter earnings of $36 million, or 15 cents per share (basic and diluted). This compares with net earnings of $177 million, or 70 cents per share (diluted) in the third quarter of 1997.

Earnings from continuing operations, excluding special items (detailed in attached tables), were $4 million, or 2 cents per share (basic and diluted), compared with $94 million, or 38 cents per share (basic and diluted) in the third quarter 1997.

In late October, three Spirit Energy 76 exploration wells were determined to be dry holes. These included the Calypso deepwater well. Accounting rules require that $18 million in costs associated with these wells accrued through Sept. 30, 1998, be recorded in the third quarter. These October dry holes lowered Unocal's earnings by 5 cents per share.

"Despite continued low worldwide prices for oil and gas, we are generating sufficient discretionary cash flow to fund most of our expanded exploration programs in the Gulf of Mexico and overseas," said Roger C. Beach, Unocal chairman and chief executive officer.

For the third quarter, Unocal's discretionary cash flow (see attached table) was $445 million, or $1.85 per basic share. This included $198 million in aftertax proceeds from the sale of shares and debentures of Tarragon Oil and Gas Limited. Discretionary cash flow for the first nine months of the year was $1.1 billion, or $4.58 per basic share.

Unocal's total oil and gas exploration expenses in the third quarter, including dry hole costs, were $118 million, more than double the level for the comparable period in 1997. This reflects the company's increased focus on growth through the drill bit.

So far this year, Unocal's oil and gas exploration success rate has been 52 percent as the company recorded 49 commercial successes in the U.S. and overseas. Dry hole costs were $156 million, which is 42 percent of the $375 million spent on exploration drilling so far this year.

The company continues to record significant successes in the deepwater Kutei Basin area offshore Indonesia. To date, Unocal has discovered two important deepwater fields and has a number of additional promising prospects on its 2.1-million acre deepwater holdings there. In the Gulf of Mexico, Spirit Energy 76 has established itself as a major player in the deepwater with interests in 196 blocks, including 62 apparent high bids from the August lease sale.

"Low commodity prices continued to exert significant downward pressure on our earnings," Beach said. He noted that in the third quarter, lower prices for oil and gas reduced aftertax operating earnings by about $70 million, or nearly 29 cents per share, compared with the same period a year ago.

"Our strong balance sheet and low-cost structure allow us to maintain our capital and exploration program and move ahead with our long-term growth projects in the face of these lower commodity prices," Beach said.

Unocal's third quarter 1998 net worldwide oil and gas production was off 3 percent from last year's third quarter. The production reflected the effect of storms in the Gulf of Mexico that reduced Spirit Energy 76's average daily production by 2,000 barrels of oil and 25 million cubic feet of gas. Despite these storm curtailments, Spirit Energy's third quarter production was still higher than the second quarter. Spirit's production continues to grow, and the unit's exploration program is on track to replace production with new reserves in 1998.

The lower third quarter 1998 production also reflected the sale of Canadian producing properties earlier this year, and lower oil production from Indonesia.

Total revenues for the third quarter were $1.4 billion, about the same as a year ago. Capital expenditures were $482 million, up from $308 million in the same period of 1997, including almost $100 million for the August 1998 Gulf of Mexico lease sale.

Nine-months results

For the first nine months of 1998, Unocal recorded net earnings of $159 million, or 66 cents per common share (basic and diluted).

Year-to-date earnings from continuing operations, excluding special items (detailed in attached tables) were $138 million, or 57 cents per share.

Total revenues for the first nine months were $4 billion.

Capital expenditures for the year-to-date total $1.25 billion, up from $953 million for the first nine months 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, 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.

NOTE: The statements for consolidated cash flows, capital expenditures and operating highlights have been revised slightly to reflect updated information that was received subsequent to the issuance of this news release.

                               UNOCAL CORPORATION

    CONDENSED CONSOLIDATED EARNINGS STATEMENT
    (UNAUDITED)

                             For the Three Months        For the Nine Months
                              Ended September 30         Ended September 30
    Millions of dollars
     except per share amounts1998          1997         1998           1997

    Total revenues          $1,394        $1,397       $3,998        $4,507
    Costs and other
     deductions              1,319         1,394        3,662         3,918
    Earnings from
     continuing operations
     before income taxes        75             3          336           589
    Income taxes / (benefit)    39          (174)         177            68
    Earnings from continuing
     operations                 36           177          159           521
    Loss from discontinued
     operations (net of tax)    --            --           --           (44)
    Extraordinary charge
     - extinguishment of debt
     (net of tax)               --            --           --           (38)
    Net earnings              $ 36          $177         $159          $439

    Basic earnings/(loss)
     per common share (a)
      Continuing operations  $0.15         $0.71        $0.66         $2.09
      Discontinued operations   --            --           --         (0.18)
      Extraordinary item -
       extinguishment of
       debt (net of tax)        --            --           --         (0.15)
    Basic net earnings per
     share                   $0.15         $0.71        $0.66         $1.76

    Diluted earnings/(loss)
     per common share (b)(c)
      Continuing operations  $0.15         $0.70        $0.66         $2.04
      Discontinued operations   --            --           --         (0.17)
      Extraordinary item
       - extinguishment
       of debt (net of tax)     --            --           --         (0.14)
    Diluted net earnings
     per share               $0.15         $0.70        $0.66         $1.73

    (a) Weighted average
      shares - basic
      (millions).              241           247          242           249
    (b) Weighted average
      shares - diluted
      (millions).              243           261          243           263
    (c) Distributions on
      preferred securities
      (net of taxes) excluded
      in numerator.            $--            $6          $--           $18
      In 1998, the effect of
       assumed conversion of
       preferred securities on
       earnings per share is
       antidilutive.


    CONDENSED CONSOLIDATED BALANCE SHEET
    (UNAUDITED)
                                         Sep. 30       Dec. 31
    Millions of dollars                     1998         1997

    Assets
    Cash and cash equivalents               $183         $338
    Other current assets                   1,029        1,163
    Investments and long-term receivables  1,171        1,113
    Properties - net                       5,190        4,816
    Other assets                             214          100
      Total assets                        $7,787       $7,530

    Liabilities and Equity
    Current liabilities                   $1,212       $1,160
    Long-term debt                         2,423        2,169
    Deferred income taxes                    154          137
    Other deferred credits and
     liabilities                           1,189        1,228

    Convertible preferred securities         522          522

    Stockholders' equity                   2,287        2,314
      Total liabilities and equity        $7,787       $7,530


    CONDENSED CONSOLIDATED CASH FLOWS
    (UNAUDITED)

                             For the Three Months        For the Nine Months
                              Ended September 30         Ended September 30
    Millions of dollars       1998        1997(a)        1998        1997(a)
    Cash flows from
     operating activities
      Net earnings             $36          $177         $159          $439
      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      186           300          566           755
        Dry hole costs          58             8          150            51
        Deferred income taxes  (64)         (255)         (34)         (226)
       (Gain) loss on sales
        of assets (before-tax) (74)            2         (166)          (59)
        Other                   (9)           75           18           (83)
     Working capital and other
      changes related to
      operations               181            (8)          18          (212)
        Net cash provided by
         operating activities  314           299          711           736

    Cash flows from investing
     activities
       Capital expenditures
       (includes dry hole
       costs)                 (482)         (308)      (1,248)         (953)
       Proceeds from sale
        of discontinued
        operations              --             3           --         1,789
       Proceeds from
        asset sales            265             7          299            55
         Net cash (used in)/
          provided by
          investing
          activities          (217)         (298)        (949)          891

    Cash flows from financing
     activities
       Net increase/(decrease)
        in long-term debt      (56)         (241)         285          (959)
       Dividends paid          (48)          (50)        (145)         (150)
       Repurchase of
        common stock            --           (81)         (48)         (173)
       Other                    (3)            3           (9)         (46)
         Net cash (used in)/
          provided by financing
          activities          (107)         (369)          83        (1,328)

    Increase/(decrease)
     in cash and cash
     equivalents               (10)         (368)        (155)          299
    Cash and cash
     equivalents at beginning
     of period                 193           884          338           217
    Cash and cash
     equivalents at end
     of period                $183          $516         $183          $516

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


    CONDENSED CAPITAL EXPENDITURES
    (UNAUDITED)

    Millions of dollars

    United States Exploration
     & Production             $237           $88         $589          $200
    International Exploration
     & Production              212           171          576           574
    Geothermal and
     Power Operations           12            29           22            76
    Diversified Business Group  18            18           46            40
    New Ventures (Non-E & P)    --             2            1             5
    Corporate & Unallocated      3            --           14             9
    Discontinued Operations     --            --           --            49
      Total (b)               $482          $308       $1,248          $953

    (b) Includes capitalized
     interest of:               $6           $10          $22           $26


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

    Net earnings               $36          $177         $159          $439
    Adjustments to net earnings
     Depletion,
      depreciation &
      amortization             186           300          566           755
     Dry hole costs             58             8          150            51
     Deferred income taxes     (64)         (255)         (34)         (226)
     (Gain) loss on sales of
      assets                   (74)            2         (166)          (59)
     Exploration expenses       53            50          139           114
     Proceeds from asset sales 265            10          299         1,844
     Capitalized interest       (6)          (10)         (22)          (26)
     Environmental and
      litigation provision      15            97          113           125
     Environmental and
      litigation payments      (82)          (21)        (128)         (133)
     Loss on disposal of
      discontinued operations   --            --           --            71
     Other                      58            (1)          33           (75)
        Total discretionary
         cash flow            $445          $357       $1,109        $2,880

    (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 September 30, 1998

    Millions of               Spirit                         Other
     dollars                 Energy 76  Alaska   Far EastInternational  Total

    Sales (includes intercompany
     sales)
      Crude oil and condensate   $45       $25       $86        $26     $182
      Natural gas                140        13       156          3      312
      Natural gas liquids          8         1         3         --       12
      Other                        1        --        --         --        1
        Total                    194        39       245         29      507
    Other revenue/(loss)           2         2        (5)         6        5
    Gain on asset sales            1        --        --         73       74
        Total revenues           197        41       240        108      586

    Production costs              48        18        32         19      117
    Exploration expenses          21         1        11         18       51
    Dry hole costs                34        --        20         13       67
    Depreciation, depletion &
     amortization                 91        15        54          8      168
    Other operating expenses      17         4        15         12       48
     Results of operations
      before income tax         $(14)       $3      $108        $38     $135

                                      For the Three Months
                                    Ended September 30, 1997

                              Spirit                         Other
                             Energy 76  Alaska   Far EastInternational  Total

    Sales (includes intercompany
     sales)
      Crude oil and condensate  $ 67      $ 40      $112        $34     $253
      Natural gas                171        15       168         11      365
      Natural gas liquids         12        --         4          1       17
      Other                        1        --        --         --        1
        Total                    251        55       284         46      636
    Other revenue                  1         3        (4)         3        3
    Gain/(loss) on asset sales    (2)       --        --         --       (2)
        Total revenues           250        58       280         49      637

    Production costs              41        27        30         17      115
    Exploration expenses          13        --        22         13       48
    Dry hole costs                 3        --         4         --        7
    Depreciation, depletion &
     amortization                169        13        81         17      280
    Other operating expenses      18         2        12         21       53
     Results of operations
      before income tax           $6      $ 16      $131       $(19)    $134


    RESULTS OF OPERATIONS FOR
    EXPLORATION AND PRODUCTION ACTIVITIES
    (UNAUDITED)

                                       For the Nine Months
                                    Ended September 30, 1998

    Millions of               Spirit                         Other
     dollars                 Energy 76  Alaska   Far EastInternational  Total

    Sales (includes intercompany
     sales)
      Crude oil and condensate  $151      $ 77      $262        $79     $569
      Natural gas                431        47       446         19      943
      Natural gas liquids         33         2         9          1       45
      Other                        3        --        --         --        3
        Total                    618       126       717         99    1,560
    Other revenue/(loss)           6         6       (17)        14        9
    Gain on asset sales            1        --         3        160      164
        Total revenues           625       132       703        273    1,733

    Production costs             131        60        88         55      334
    Exploration expenses          47         2        45         38      132
    Dry hole costs               100        --        35         21      156
    Depreciation, depletion
     & amortization              267        36       167         43      513
    Other operating expenses      54        10        42         38      144
      Results of operations
       before income tax        $ 26      $ 24      $326        $78     $454

                                       For the Nine Months
                                    Ended September 30, 1997

                              Spirit                         Other
                             Energy 76  Alaska   Far EastInternational  Total
    Sales (includes intercompany
     sales)
      Crude oil and condensate  $233      $136      $342       $119     $830
      Natural gas                541        47       485         35    1,108
      Natural gas liquids         41         3        18          3       65
      Other                        2        --        --         --        2
        Total                    817       186       845        157    2,005
    Other revenue                  7         4        --         16       27
    Gain/(loss) on asset sales     2        --        --        (16)     (14)
        Total revenues           826       190       845        157    2,018

    Production costs             139        73        93         53      358
    Exploration expenses          37        --        40         31      108
    Dry hole costs                10        --        39          1       50
    Depreciation, depletion
     & amortization              374        42       235         53      704
    Other operating expenses      56         8        34         45      143
      Results of operations
    before income tax           $210       $67      $404       $(26)    $655


    OPERATING HIGHLIGHTS
    (UNAUDITED)
                            For the Three Months        For the Nine Months
                             Ended September 30          Ended September 30
                              1998          1997         1998          1997

    Net daily production
     Crude oil and condensate
      (thousand barrels daily):
       United States
       Spirit Energy 76         44            41           44            45
       Alaska                   27            30           29            32
         Total United States    71            71           73            77
      International
       Far East(a)              81            96           83            95
       Other                    31            25           31            26
         Total International   112           121          114           121

         Total Worldwide       183           192          187           197

    Natural gas (million cubic
     feet daily):
      United States
        Spirit Energy 76       808           845          795           876
        Alaska                 118           110          126           131
         Total United States   926           954          921         1,007
      International
        Far East(a)            794           790          816           790
        Other                   37            55           53            62
         Total International   831           845          869           851

         Total Worldwide     1,757         1,799        1,790         1,858

    Natural gas liquids
     (thousand barrels daily)   19            18           19            19

    Geothermal (million
     kilowatt-hours daily)      22            19           21            17

    Average sales prices (b)
    Crude oil and condensate
     (per barrel):
      United States
       Spirit Energy 76     $12.20        $17.13       $12.80        $18.61
       Alaska                 9.35         13.37         9.69         15.39
        Total United States $11.11        $15.50       $11.56        $17.28
      International
       Far East             $12.28        $17.45       $13.02        $18.72
       Other                 10.58         16.58        11.07         17.58
        Total International $11.82        $17.23       $12.48        $18.41

        Total Worldwide     $11.54        $16.44       $12.09        $17.89

    Natural gas (per mcf):
     United States
      Spirit Energy 76       $1.97         $2.38        $2.08         $2.39
      Alaska                  1.20          1.47         1.38          1.39
        Total United States  $1.87         $2.28        $1.98         $2.26
     International
      Far East               $2.23         $2.39        $2.10         $2.35
      Other                   2.38          2.40         2.26          2.23
        Total International  $2.23         $2.39        $2.10         $2.34

        Total Worldwide      $2.04         $2.33        $2.04         $2.29
    (a) Includes host country
     share of:
      Crude oil and condensate   6            28           11            29
      Natural gas               27            22           27            27

    (b) Excludes Global Trade margins and Canada equity affiliate sales


    Agricultural products
     production volumes
     (thousand tons)
      Ammonia                  365           314        1,129         1,072
      Urea                     234           188          739           696

    Agricultural products
     sales volumes (thousand tons)
      Ammonia                  186           187          649           590
      Urea                     259           191          854           690


    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)

    Millions of dollars      3rd Quarter of 1998          3rd Quarter of 1997
                           Before-tax    After-tax    Before-tax     After-tax

    Exploration and Production
     United States
      Spirit Energy 76        $(14)          $(8)          $6            $4
      Alaska                     3             2           16            10
    International
      Far East                 108            44          131           147
      Other                     38            23          (19)          (19)

    Global Trade                 5             3            3             2

    Geothermal and Power
     Operations                 22            16            7             6

    Diversified Business Group
     Agricultural Products       9            12            5             4
     Carbon and Minerals        (1)           --           13            10
     Pipelines                  16            14           19            16
     Other                      --            --           (1)           --

    Corporate and Unallocated
     Administrative and
      general expense          (30)          (20)         (20)          (13)
     Net interest expense      (40)          (33)         (26)          (19)
     Environmental and
      litigation expense       (19)          (12)        (104)          (65)
     New Ventures (non E&P)     (7)           (4)          (3)           (1)
     Other                     (15)           (1)         (24)           95
      Total                    $75           $36           $3          $177

    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)

    Millions of dollars      3rd Quarter of 1998          3rd Quarter of 1997
                           Before-tax    After-tax    Before-tax     After-tax

    Reported earnings          $75           $36           $3          $177
    Less: Special items
     Exploration and Production
      United States
       Spirit Energy
         Asset sales            --            --           (1)           --
         Impairment             --            --          (62)          (39)
      International
         Asset sales - Other    73            49           (1)           (1)
         Deferred tax adjustment
          - Far East            --            (7)          --            68
     Geothermal and Power
      Operations
         Deferred tax
          adjustment - Sarulla  --            --           --             3
     Diversified Business Group
      Carbon and Minerals
         Environmental          (2)           (2)          --            --
     Corporate and Unallocated
         Asset sales - Other    --            --           --            (1)
         Environmental and
          litigation           (12)           (8)         (97)          (61)
         Deferred tax
          adjustment - Other    --            --           --           114
     Total special items        59            32         (161)           83
       Adjusted earnings       $16            $4         $164           $94


    EARNINGS BY BUSINESS SEGMENT
    EXCLUDING SPECIAL ADJUSTMENTS
    (Unaudited)

    Millions of dollars      3rd Quarter of 1998          3rd Quarter of 1997
                           Before-tax    After-tax    Before-tax     After-tax

    Exploration and Production
     United States
      Spirit Energy 76        $(14)          $(8)         $69           $43
      Alaska                     3             2           16            10
     International
      Far East                 108            51          131            79
      Other                    (35)          (26)         (18)          (18)

    Global Trade                 5             3            3             2

    Geothermal and Power
     Operations                 22            16            7             3

    Diversified Business Group
      Agricultural Products      9            12            5             4
      Carbon and Minerals        1             2           13            10
      Pipelines                 16            14           19            16
      Other                     --            --           (1)           --

    Corporate and Unallocated
      Administrative and
       general expense         (30)          (20)         (20)          (13)
      Net interest expense     (40)          (33)         (26)          (19)
      Environmental and
       litigation expense       (7)           (4)          (7)           (4)
      New Ventures (non E&P)    (7)           (4)          (3)           (1)
      Other                    (15)           (1)         (24)          (18)
    Earnings from continuing
     operations                $16            $4         $164           $94

    Basic earnings from
     continuing operations
     per share of common stock            $ 0.02                      $0.38
    Diluted earnings from
     continuing operations
     per share of common stock(a)         $ 0.02                      $0.38

    Distributions on preferred
     securities (net of tax) excluded
     in numerator for diluted earnings
     per share(a)                            $--                         $6
    Basic weighted average shares            241                        247
    Diluted weighted average shares          243                        261

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


    EARNINGS BY BUSINESS SEGMENT
    (Unaudited)

                              Nine Months Ended          Nine Months Ended
                             September 30, 1998         September 30, 1997
    Millions of dollars     Before-tax   After-tax    Before-tax   After-tax

    Exploration and Production
     United States
      Spirit Energy 76        $ 26           $17         $210          $132
      Alaska                    24            15           67            42
     International
      Far East                 326           130          404           290
      Other                     78            53          (26)          (32)

    Global Trade                21            13           22            13

    Geothermal and Power
     Operations                 66            44           28            25

    Diversified Business Group
     Agricultural Products      40            33           75            50
     Carbon and Minerals        26            24          110            76
     Pipelines                  53            44           54            46
     Other                      --            --           43            37

    Corporate and Unallocated
     Administrative and
      general expense          (62)          (43)         (62)          (40)
     Net interest expense     (106)          (83)        (109)          (84)
     Environmental and
      litigation expense      (119)          (75)        (138)          (86)
     New Ventures (non E&P)    (26)          (16)         (34)          (23)
     Other                     (11)            3          (55)           75
    Earnings from continuing
     operations before
     discontinued operations
     and extraordinary item    336           159          589           521
    Loss from discontinued
     operations                 --            --          (71)          (44)
    Extraordinary item          --            --          (52)          (38)
        Total                 $336          $159         $466          $439


    SPECIAL ADJUSTMENTS
    (Unaudited)

                              Nine Months Ended          Nine Months Ended
                             September 30, 1998         September 30, 1997
    Millions of dollars     Before-tax   After-tax    Before-tax   After-tax

    Reported earnings         $336          $159         $466          $439
    Less: Special items
     Exploration and Production
      United States
       Spirit Energy
        Asset sales             --            --            2             2
        Impairment              --            --          (62)          (39)
      International
        Asset sales - Other    158           102          (17)          (17)
        Bangladesh well blowout
         - Other                --            --          (10)           (7)
        Deferred tax adjustment
         - Far East             --           (21)          --            68
     Geothermal and Power
      Operations
        Deferred tax adjustment
         - Sarulla              --            --           --            10
    Diversified Business Group
     Carbon and Minerals
       Asset sales              --            --           67            41
       Environmental and
        litigation              (6)           (4)          --            --
     Other
       UNO-VEN restructuring    --            --           46            39
    Corporate and Unallocated
      Asset sales - Other       --            --            7             4
      Environmental and
       litigation             (106)          (67)        (120)          (75)
      Insurance settlement
       - Other                  17            11           --            --
      Deferred tax adjustment
       - Other                  --            --           --           114
    Discontinued Operations
      Net loss on disposal      --            --          (71)          (44)
    Extraordinary item
      Extinguishment of debt    --            --          (52)          (38)
    Total special items         63            21         (210)           58
      Adjusted earnings       $273          $138         $676          $381


    EARNINGS BY BUSINESS SEGMENT
    EXCLUDING SPECIAL ADJUSTMENTS
    (Unaudited)
                              Nine Months Ended          Nine Months Ended
                             September 30, 1998         September 30, 1997
    Millions of dollars     Before-tax   After-tax    Before-tax   After-tax

    Exploration and Production
     United States
      Spirit Energy 76        $ 26           $17         $270          $169
      Alaska                    24            15           67            42
     International
      Far East                 326           151          404           222
      Other                    (80)          (49)           1            (8)

    Global Trade                21            13           22            13

    Geothermal and Power
     Operations                 66            44           28            15

    Diversified Business Group
     Agricultural Products      40            33           75            50
     Carbon and Minerals        32            28           43            35
     Pipelines                  53            44           54            46
     Other                      --            --           (3)           (2)
    Corporate and Unallocated
     Administrative and
      general expense          (62)          (43)         (62)          (40)
     Net interest expense     (106)          (83)        (109)          (84)
     Environmental and
      litigation expense       (13)           (8)         (18)          (11)
     New Ventures (non E&P)    (26)          (16)         (34)          (23)
     Other                     (28)           (8)         (62)          (43)
    Earnings from continuing
     operations               $273          $138         $676          $381

    Basic earnings from
     continuing operations per
     share of common stock                 $0.57                      $1.53
    Diluted earnings from
     continuing operations
     per share of common stock(a)          $0.57                      $1.52
    Distributions on preferred
     securities (net of tax) excluded
     in numerator for diluted earnings
     per share(a)                            $--                        $18
    Basic weighted average shares            242                        249
    Diluted weighted average shares          243                        263

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


Updated: October 1998