Unocal sets new course as world's largest independent exploration and production company
El Segundo, Calif., April 1, 1997 -- Unocal Corporation today is now the world's largest publicly traded independent exploration and production company, first in production and reserves, with a strong focus on integrated energy project development, said Roger C. Beach, Unocal chairman and chief executive officer.
With the completion of the sale of its West Coast downstream refining, marketing and transportation assets, the new Unocal will concentrate on aggressive expansion into international energy project development in Asia and launch an intensive U.S. Gulf Coast exploration program.
"Unocal has completed a major transformation that positions the company to compete successfully in today's global energy environment," Beach said. "We intend to play a key role in the entire value chain' -- from resource development and transportation to end-user applications like power production and fertilizer plants."
Beach noted that future energy demand in the fastest-growing nations of Asia far exceeds existing energy supplies. Unocal has the experience and expertise to link Asia's growing markets with known but undeveloped energy resources -- oil, natural gas and geothermal -- that will meet those demands.
"We're moving ahead with a variety of new projects throughout Asia, where we're building on our long experience and strong reputation" said Beach. He cited significant expansion of the company's exploraton and production operations in Thailand and Indonesia, the Yadana natural gas project in Myanmar, oil development in the Caspian Sea, proposed pipelines to transport crude oil and natural gas from Central Asia to markets in Pakistan, a new liquefied petroleum gas terminal in China, exploration and development opportunities in Bangladesh and Vietnam, and an independent power project in Thailand.
"The sale of our downstream assets give Unocal a much stronger balance sheet, "Beach said. "The sale proceeds will be used for new projects that add value and grow the company, as well as for debt reduction and stock repurchases." He noted that Unocal is no longer capital-constrained, but the company will maintain strict discipline on capital spending and invest only in high-return projects that have solid economic fundamentals.
"We have organized the company into focused, fast-acting business units with greater autonomy," Beach said. "This improves accountability, sharpens the competitive focus of management, helps to speed decision making, and allows for a variety of organizational and capital structures."
Unocal's new domestic exploration and production unit, Spirit Energy 76, is ready to compete with the best performing, though smaller, U.S. independents. "We have successfully narrowed our portfolio of exploration and production assets to those with the best returns," Beach said. The organization has succeeded in exploiting our large inventory of undeveloped reserves to increase production and cash flow.
"Spirit Energy now has an aggressive new management team in place whose goals are to increase production while expanding the reserve base through acquisitions, joint ventures and exploration in the Lower 48 states," Beach said. Spirit primarily focuses on the Gulf of Mexico region, where the company has a long history as a high-performing oil and gas operator. Beach said that Unocal will maintain a strong, stable Diversified Business Group (DBG) that includes agricultural products, carbon and minerals, and pipelines. He noted that DBG generates significant cash flow to help fund the company's growth investments.
"Unocal's improved earnings performance has been helped by strong commodity prices, but our efforts to improve efficiency, control costs and apply new technology have been the drivers of our success this past year," Beach said. "We will continue to focus on these key areas, but our main goal is to dramatically grow the company through new ventures."
PROFILE The New Unocal Corporation
Crude oil and condensate reserves
United States: 236 million barrels
Foreign: 277 million barrels
Natural gas reserves
United States: 2,575 billion cubic feet
Foreign: 4,220 billion cubic feet
Geothermal energy: 232 million equivalent oil barrels
Crude oil and condensate
United States: 96,000 barrels/day
Foreign: 111,000 barrels/day
United States: 1,075 million cubic feet/day
Foreign: 737 million cubic feet/day
Geothermal energy: 26,000 equivalent oil barrels/day
Oil and/or natural gas production in the United States (primarily Alaska, Texas and Louisiana), Thailand, Indonesia, Canada, The Netherlands, United Kingdom, Yemen and Zaire.
Geothermal production in the Philippines, Indonesia and the United States.
Diversified Business Group
Agricultural Products, Molycorp (lanthanides and molybdenum), equity pipelines, The UNO-VEN Company partnership (to be restructured in 1997).
The company is pursuing major new market-to-resource projects that offer significant growth opportunities for the company.
- Azerbaijan (AIOC): Part of a consortium developing three huge oil fields in the Caspian Sea; initial production of 115,000 b/d (Unocal, 10% working interest) in late 1997.
- Myanmar (Yadana project): Offshore natural gas project to supply a new electric generating plant in Thailand; production to begin 1998, rising to 525 mmcf/day (Unocal, 28.26% working interest).
- Bangladesh (Jalalabad): Joint venture to develop Jalalabad gas field; initial delivery of 100 mmcf/day (Unocal, 50% working interest) in mid-1998.
- China (LPG terminal): Joint venture to construct and operate a liquefied petroleum gas (LPG) terminal near Shanghai; operations to begin in early 1998 (Unocal, 30% working interest).
- Thailand (IPP): Part of a consortium that will build-own-operate a 700-megawatt, gas-fired electric generating plant (Unocal, 24% working interest); operations to begin in 1999.
- Central Asia Pipeline Projects: Company has proposed new pipelines to transport oil and gas from Turkmenistan through Afghanistan to ready markets in Pakistan and beyond; joined by companies from Saudi Arabia, Turkmenistan and Russia; expect project to move forward once political situation in Afghanistan improves.
- Exploration prospects: Have production sharing agreements for the Apsheron oil prospect in the Caspian Sea; prospects in northern Pakistan; Block B offshore Vietnam; Blocks W8/W9 in the Andaman Sea offshore Thailand; and Block M-8 in the Andaman Sea, offshore Myanmar near the Yadana field.
Updated: April 1997