-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JRxXxi3n13ZJWiFnmiTAH6+n+wkxZO3Hqyz5Kh38o91PI3FKQ9H0iw2zY8r5b1L3 On/XEBDMKr4ynDoOasuWTw== 0000716039-03-000002.txt : 20030205 0000716039-03-000002.hdr.sgml : 20030205 20030205171630 ACCESSION NUMBER: 0000716039-03-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030128 ITEM INFORMATION: Other events FILED AS OF DATE: 20030205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNOCAL CORP CENTRAL INDEX KEY: 0000716039 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 953825062 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08483 FILM NUMBER: 03541238 BUSINESS ADDRESS: STREET 1: 2141 ROSECRANS AVE STREET 2: STE 4000 CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3107267600 MAIL ADDRESS: STREET 1: 2141 ROSECRANS AVE STREET 2: STE 4000 CITY: EL SEGUNDO STATE: CA ZIP: 90245 8-K 1 u8k012802.txt 4TH QUARTER 2002 RESULTS SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) January 28, 2003 ------------------------ UNOCAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-8483 95-3825062 - -------------------------------------------------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (310) 726-7600 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Item 5. Other Events. Fourth Quarter 2002 and Year-To-Date Results - -------------------------------------------- Unocal Corporation's preliminary net earnings were $96 million, or 38 cents per share (diluted), in the fourth quarter of 2002 compared with a loss of $29 million, or 12 cents per share (diluted), in the fourth quarter of 2001. For the full year of 2002, preliminary unaudited net earnings were $331 million, or $1.34 per share (diluted), compared with $615 million, or $2.50 per share (diluted) in 2001.
For the Three Months For the Twelve Months Ended December 31, Ended December 31, ------------------------------------------- Millions of dollars 2002 2001 2002 2001 - -------------------------------------------------------------------------------------- Earnings(loss) from continuing operations $ 96 $ (30) $ 330 $ 599 Earnings from discontinued operations - 1 1 17 Cumulative effect of accounting change - - - (1) - -------------------------------------------------------------------------------------- Net earnings (loss) $ 96 $ (29) $ 331 $ 615 ======================================================================================
Continuing Operations - ---------------------- Fourth Quarter Results: Earnings from continuing operations were $126 million higher in 2002 compared to the fourth quarter of 2001, primarily reflecting improved results from the Company's exploration and production operations, due to higher worldwide commodity prices, lower exploration expenses and higher International gas production. In the fourth quarter of 2002, the Company's worldwide average liquids price was $25.28 per barrel, which was an increase of $6.51 per barrel, or 35 percent, from the same period a year ago. The Company's hedging program lowered the average realized liquids price by one cent in the fourth quarter of 2002 while the corresponding period in 2001 included a gain of 15 cents per barrel from hedging activities. The Company's worldwide average realized natural gas price, including a loss of 2 cents per Mcf from hedging activities, was $3.02 per Mcf for the fourth quarter of 2002. This was an increase of 60 cents per Mcf, or 25 percent, from the $2.42 per Mcf, including a benefit of 10 cents per Mcf from hedging activities, realized during the fourth quarter of 2001. Higher worldwide commodity prices increased net earnings by approximately $100 million. Lower worldwide exploration expenses, including dry hole costs, positively impacted net earnings by approximately $10 million in 2002. International gas production was 919 MMcf/d in the fourth quarter of 2002 compared to 851 MMcf/d in the fourth quarter of 2001, which added approximately $7 million to net earnings. The fourth quarter of 2001 was negatively impacted by an $86 million non-cash after-tax charge for impairment of certain Gulf of Mexico shelf properties due to depressed commodity prices. Net earnings were also impacted by improved margins from oil and gas marketing activities in 2002, which increased net earnings by $7 million from the fourth quarter of 2001. These positive factors were partially offset by lower North America production volumes, which decreased net earnings by approximately $30 million. North America production averaged 223,000 barrels-of-oil equivalent ("BOE") per day in the fourth quarter, down from 279,000 BOE per day a year ago. Approximately 60 percent of the production decline reflected lower production from the Muni field in the Gulf of Mexico, which had reached peak production rates in the third quarter of 2001, and hurricane-related production curtailments in the Gulf of Mexico. Natural declines in older existing fields were responsible for the remaining portion of the production decline. The fourth quarter of 2002 also included $9 million after-tax for uninsured losses due to hurricane damage in the Gulf of Mexico and $8 million after-tax in costs related to the acquisition of the outstanding minority interest in Pure Resources, Inc., common stock. In addition, the fourth quarter of 2002 included an after-tax loss of $1 million in mark-to-market accruals and realized gains/losses for non-hedge commodity derivatives recorded by the Company's Northrock Resources Ltd. ("Northrock") subsidiary, compared with an after-tax gain of $5 million in the same period a year ago. Pension-related costs were $7 million after-tax higher in the fourth quarter of 2002 compared to the same period a year ago. The fourth quarter of 2001 benefited from $18 million in after-tax earnings related to participation agreements covering the Company's former agricultural products business and the Company's former oil and gas operations in California while the after-tax earnings impact in the current period was $10 million. -1- Impairments of certain Alaska properties and a restructuring charge reduced the Company's Alaska exploration and production after-tax earnings by about $7 million in the current quarter. Higher cash expenses and lower sales revenues reduced after-tax earnings from the Company's real estate operations by $5 million during the current quarter, compared to the same period a year ago. After-tax environmental and litigation expenses were $30 million in the fourth quarter of 2002, compared with $28 million in the same period a year ago. The fourth quarter of 2002 results included $25 million in net after-tax gains from asset sales while the fourth quarter of 2001 included $15 million in after-tax gains from asset sales. Full-Year Results: Earnings from continuing operations were $330 million, or $1.34 per share (diluted), in 2002, compared with $599 million, or $2.43 per share (diluted), a year ago. The decrease was primarily due to lower North America production and natural gas prices. Lower production in North America reduced net earnings by approximately $175 million from 2001. Natural gas production averaged 886 MMcf/d in 2002, compared with 1,109 MMcf/d in 2001. The lower production was principally in the Lower 48 operations, which reflected lower Gulf of Mexico natural gas production stemming from the decline in Muni field production (10 MMcf/d, net of royalty, in 2002 versus 105 MMcf/d, net of royalty, in 2001), the natural declines in existing fields and hurricane-related production curtailments in the Gulf of Mexico. The lower production in North America was partially offset by higher production from International operations, which contributed approximately $25 million in higher 2002 after-tax earnings. Lower North America natural gas prices reduced net earnings by approximately $160 million in 2002. The Company's North America average natural gas price, including a benefit of 5 cents per Mcf from hedging activities, was $2.88 per Mcf for 2002, which was a decrease of 97 cents per Mcf, or 25 percent, from the $3.85 per Mcf, including a loss of 4 cents per Mcf from hedging activities in 2001. The full-year results in 2002 included $25 million after-tax in higher pension related costs, a $15 million after-tax charge for impairments in Alaska, a $12 million after-tax restructuring provision for the Gulf Region business unit, the $9 million for uninsured losses due to hurricane damage in the Gulf of Mexico and the $8 million in costs related to the acquisition of the outstanding minority interest in Pure Resources, Inc., common stock. The full-year of 2002 included an after-tax loss of $6 million in mark-to-market accruals and realized gains/losses for non-hedge commodity derivatives by the Company's Northrock subsidiary, compared with an after-tax gain of $10 million in 2001. In 2001, net earnings benefited from the $18 million related to participation agreements covering the Company's former agricultural products business and former oil and gas operations in California while the earnings impact in 2002 was $10 million. These negative factors in 2002 were partially offset by lower dry hole costs compared with the same period a year ago, which increased net earnings by approximately $40 million. The 2001 results also included an $86 million non-cash after-tax charge for impairment of certain Gulf of Mexico shelf properties. In addition, after-tax environmental and litigation expenses were $92 million in 2002, compared with $108 million in 2001. The 2002 results also included a $2 million after-tax gain from an insurance settlement reached with insurers for the recovery of amounts previously paid out for environmental pollution claims. The 2002 results included $26 million in net after-tax gains from asset sales while 2001 included $13 million in after-tax gains from asset sales. Discontinued Operations - ----------------------- In 2002, preliminary unaudited net earnings included a $1 million after-tax gain from discontinued operations, related to a participation payment received from the purchaser of the Company's former West Coast refining, marketing and transportation assets covering price differences between California Air Resources Board Phase 2 gasoline and conventional gasoline. The equivalent after-tax gain in 2001 was $17 million. Cumulative Effect of Accounting Change - -------------------------------------- In the first quarter of 2001, the Company recorded a one-time non-cash $1 million after-tax charge consisting of the cumulative effect of a change in accounting principle related to the initial adoption of Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". -2- Revenues - -------- Revenues from continuing operations for the fourth quarter of 2002 were $1.57 billion compared with $1.26 billion for the same period a year ago. The increase primarily reflected higher commodity prices, partially offset by lower domestic natural gas production. For the full-year of 2002, total revenues from continuing operations were $5.25 billion, compared with $6.75 billion for the full-year of 2001. The decrease primarily reflected lower average hydrocarbon commodity prices, lower domestic natural gas production and reduced marketing activity related to the Company's domestic equity crude production. Financial Condition - ------------------- Cash flows from operating activities, including discontinued operations and working capital and other changes, were $1.57 billion in 2002 compared to $2.13 billion in 2001. This decrease principally reflected the effects of lower North America natural gas production volumes and lower worldwide commodity prices. Capital expenditures were $1.67 billion for 2002 compared with $1.73 billion a year ago. In addition, the Company also spent $646 million for major acquisitions in 2001. The Company's total consolidated debt, including current maturities, at the end of December 2002, was $3.0 billion, compared with $2.91 billion at the end of 2001. Stockholders' equity was $3.3 billion at year-end 2002, compared with $3.12 billion at December 31, 2001. The net increase of $174 million includes a $391 million increase that reflected the value of the 13.2 million shares of Unocal common stock issued to acquire the outstanding common stock of Pure Resources, Inc. that the company did not already own. This increase was offset largely by an after-tax charge of $334 million to the other comprehensive income component of equity to recognize the minimum pension liability for the company's qualified retirement plan. This reflected the excess of the accumulated benefit obligation for vested current and former employees over the fair value of plan assets at December 31, 2002. The company was not required to make any cash contribution to the plan in 2002. First Quarter 2003 and Full-Year 2003 Outlook - --------------------------------------------- The Company's current net worldwide daily production estimate for the first quarter of 2003 is between 455,000 and 465,000 BOE. For the first quarter of 2003, the Company assumes average NYMEX benchmark prices of $33.00 per barrel of crude oil and $5.25 per MMBtu for North America natural gas. The Company's net earnings for the first quarter are expected to change 4 cents per share for every $1 change in the Company's average worldwide realized price for crude oil and 2 cents per share for every 10-cent change in its average realized North America natural gas price, excluding the effect of hedging activities. For the first quarter 2003, the Company has hedged 32 billion Btu of Lower 48 natural gas production with pricing collars between $4.06 and $4.99 per MMBtu, and 1.9 million barrels of Lower 48 crude oil with collars between $28.61 and $31.85 per barrel. First quarter hedged volumes represent approximately 57 percent and 42 percent of expected Lower 48 natural gas and crude oil production volumes, respectively. The Company also forecasts first quarter pre-tax dry hole costs of $50 to $60 million. For the full-year 2003, the Company assumes average NYMEX benchmark prices of $30.00 per barrel of crude oil and $5.00 per MMBtu for North America natural gas production. For the full-year 2003, the Company has hedged 70.6 billion Btus of Lower 48 natural gas production with collars of $3.92 to $4.81 per MMBtu. This volume represents approximately 27 percent of expected Lower 48 natural gas production. Hedged crude oil production volumes beyond the first quarter are immaterial. The Company's net earnings for the full-year are expected to change 14 cents per share for each $1 change in the Company's average worldwide realized price for crude oil and 7 cents per share for every 10-cent change in its average realized North America natural gas price, excluding the effect of hedging activities. The Company forecasts pretax dry hole costs of $115 to $145 million and that pretax pension-related expenses will increase over 2002 by approximately $50 million. The Company currently estimates its full-year 2003 production to be at the lower end of the previously disclosed range of 480,000 to 495,000 BOE per day. The expected production increase from the 2002 levels primarily reflects the anticipated start of new oil production from the West Seno field in Indonesia in the second quarter of 2003. -3- The Company's total actual production for the year could be impacted by cost recovery volume reductions under the Company's various foreign Production Sharing Contracts ("PSCs") due to higher oil prices, demand for gas in Thailand, production and exploration performance in the Gulf of Mexico, and possible asset sales of marginal producing properties from North America operations. Depletion and depreciation expense for the full-year 2003 is expected to increase by $35-$45 million pre-tax, primarily due to the production mix effect of new fields and higher expected future abandonment costs. The Company currently forecasts that after-tax interest expense for the full-year 2003 will be between $140 and $150 million. Capital expenditures for 2003 are currently forecast at approximately $1.7 billion, essentially unchanged from 2002. Capital spending on major developments will continue to account for an increasing larger percentage of the Company's overall capital spending program in 2003 with expenditures focused at West Seno (Deepwater Offshore East Kalimantan in Indonesia), Phase I AIOC (Caspian Sea Offshore Azerbaijan) and the Mad Dog (Deepwater Gulf of Mexico) development projects. Exploration capital expenditures in 2003 are currently expected to approach 2002 levels with exploratory drilling programs targeting deepwater prospects in Indonesia and the Gulf of Mexico and Deep Shelf prospects offshore Louisiana and Texas. Common share equivalents for purposes of computing fully diluted earnings are forecasted to average 260 million shares for both the first quarter and full-year. 2002 Reserve Replacement and FD&A Results - ----------------------------------------- The Company estimates its preliminary year-end 2002 proved oil and gas reserves to be 1.77 billion BOE, compared with 1.82 billion BOE at the end of 2001. The year-end estimates reflect additions of 140 million BOE from discoveries and extensions and a net 88 million BOE from performance-related revisions and improved recovery. These were offset partially by a net reduction of 84 million BOE in price-related revisions. The price-related revisions included 28 million BOE in upward revisions, primarily in onshore U.S. fields, which were offset by 112 million BOE of negative revisions in fields covered by the Company's various International PSCs. Including the net effect of price revisions, preliminary reserve replacement was 75 percent of 2002 production, with a finding and development ("F&D") cost of $11.63 per BOE and a finding, development and acquisition ("FD&A") cost of $12.43 per BOE. Excluding the impact of all price-related revisions, reserve replacement would have been 123 percent, with an F&D cost of $7.34 per BOE and an FD&A cost of $7.99 per BOE. Excluding the effect of PSC price-related revisions alone, the Company's reserve replacement would have been 139 percent, with an F&D cost of $6.54 per BOE and an FD&A cost of $7.14 per BOE. Under foreign PSC arrangements in Indonesia, Myanmar, Azerbaijan ("AIOC"), Bangladesh, and the Democratic Republic of the Congo, net entitlement reserves to the Company increase as oil and/or gas prices decline and decrease when they rise. Benchmark crude oil prices rose from $19.71 per barrel at year-end 2001 to $31.23 per barrel at the end of 2002. Comparable price increases in International operations resulted in the 112 million BOE negative revisions in the Company's reserves under its PSCs because fewer equivalent barrels were required at the year-end price levels to reimburse the company for its costs. -4- Additional Interests in Indonesia Production Sharing Contracts - -------------------------------------------------------------- The Company's Unocal Donggala Limited ("Unocal Donggala") subsidiary reached agreement to farm in to the deepwater Donggala PSC area offshore East Kalimantan, Indonesia. Unocal Donggala will acquire a 19.55 percent non-operating working interest in the PSC. The Donggala PSC area lies outboard of the Rapak PSC area, where Unocal is operator and holds an 80-percent working interest. Unocal has made several discoveries in the Rapak PSC area, including the deepwater Ranggas and Bangka fields. Water depth at Donggala ranges from 6,000 to 8,000 feet. The farm-in is subject to final approval by the Indonesian government. The Company and a partner also announced the award of the Muara Bakau PSC area, located offshore East Kalimantan and inboard of the Company's Gula and Gendalo discoveries. The Company's Muara Bakau Limited subsidiary will have a 50 percent non-operating working interest in the PSC. Water depth in the Muara Bakau PSC area ranges from 250 to 4,500 feet. The Muara Bakau PSC has a two-well commitment in the first year. China - East China Sea - ---------------------- The Company has reached verbal agreement with China National Offshore Oil Corporation, Sinopec Shanghai Offshore Oil and Gas Corporation and Royal Dutch Shell in principle on the terms for a PSC covering the exploration and development of natural gas resources on five offshore blocks in the Xihu Trough area of the East China Sea, east of Shanghai. The parties have indicated a desire to complete negotiations and sign a PSC by the end of March 2003. The Company expects to hold a 20 percent working interest in the project. Cautionary Statement - -------------------- This filing contains certain forward-looking statements about Unocal's future production rates, commodity prices, dry hole costs, estimates of proved reserves, future operations, capital expenditures, possible development activities, drilling plans, expectations for government approvals and business transactions. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Actual results could differ materially as a result of changes in commodity prices, development and exploratory drilling results, the amounts of the Company's operating cash flow and other capital resources available to fund its capital expenditures, government approvals, regulatory, geological, operating and economic considerations, and other factors discussed on pages 59 to 61 of Unocal's amended 2001 Annual Report on Form 10-K/A (copies of which pages are attached as Exhibit 99 to this report and incorporated herein by reference) and in subsequent reports. -5-
CONSOLIDATED EARNINGS (UNAUDITED) UNOCAL CORPORATION For the Three Months For the Twelve Months Ended December 31, Ended December 31, ----------------------------------------------- Millions of dollars except per share amounts 2002 2001 2002 2001 - ------------------------------------------------------------------------------------------------------------------- Revenues Sales and operating revenues $ 1,519 $ 1,201 $ 5,179 $ 6,664 Interest, dividends and miscellaneous income 13 37 30 64 Gain on sales of assets 40 25 42 24 - ------------------------------------------------------------------------------------------------------------------- Total revenues 1,572 1,263 5,251 6,752 Costs and other deductions Crude oil, natural gas and product purchases 577 351 1,701 2,492 Operating expense 378 365 1,292 1,376 Administrative and general expense 37 26 151 122 Depreciation, depletion and amortization 249 253 973 967 Impairments 20 118 47 118 Dry hole costs 26 35 107 175 Exploration expense 66 80 246 252 Interest expense 45 47 179 192 Property and other operating taxes 19 17 60 77 Distributions on convertible preferred securities of subsidiary trust 9 9 33 33 - ------------------------------------------------------------------------------------------------------------------- Total costs and other deductions 1,426 1,301 4,789 5,804 Earnings from equity investments 31 16 154 144 - ------------------------------------------------------------------------------------------------------------------- Earnings (loss) from continuing operations before income taxes and minority interests 177 (22) 616 1,092 - ------------------------------------------------------------------------------------------------------------------- Income taxes 77 5 280 452 Minority interests 4 3 6 41 - ------------------------------------------------------------------------------------------------------------------- Earnings (loss) from continuing operations 96 (30) 330 599 Discontinued operations Refining, marketing and transportation Gain on disposal (net of tax) - 1 1 17 - ------------------------------------------------------------------------------------------------------------------- Earnings from discontinued operations - 1 1 17 Cumulative effect of accounting change - - - (1) - ------------------------------------------------------------------------------------------------------------------- Net earnings (loss) $ 96 $ (29) $ 331 $ 615 =================================================================================================================== Basic earnings (loss) per share of common stock (a) Continuing operations $ 0.38 $ (0.13) $ 1.34 $ 2.45 Net earnings $ 0.38 $ (0.12) $ 1.34 $ 2.52 Diluted earnings (loss) per share of common stock (b) Continuing operations $ 0.38 $ (0.13) $ 1.34 $ 2.43 Net earnings $ 0.38 $ (0.12) $ 1.34 $ 2.50 Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.80 $ 0.80 - ------------------------------------------------------------------------------------------------------------------- (a) Basic weighted average shares outstanding (in thousands) 253,526 243,994 246,759 243,568 (b) Diluted weighted average shares outstanding (in thousands) 254,775 244,771 247,679 256,774
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) UNOCAL CORPORATION At December 31, ------------------------------- Millions of dollars 2002 2001 - --------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 168 $ 190 Other current assets - net 1,217 1,105 Investments and long-term receivables - net 1,044 1,405 Properties - net 7,879 7,484 Goodwill 112 30 Other assets 360 211 - --------------------------------------------------------------------------------------------------- Total assets $ 10,780 $ 10,425 =================================================================================================== Liabilities and Stockholders' Equity Current liabilities (a) $ 1,661 $ 1,422 Long-term debt and capital leases 2,992 2,897 Deferred income taxes 593 627 Other deferred credits and liabilities 1,439 1,314 Subsidiary stock subject to repurchase - 70 Minority interests 275 449 Convertible preferred securities of a subsidiary trust 522 522 Stockholders' equity 3,298 3,124 - --------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 10,780 $ 10,425 =================================================================================================== (a) Includes current portion of long-term debt of: 5 9
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CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED) UNOCAL CORPORATION Years Ended December 31, ------------------------------- Millions of dollars 2002 2001 - ---------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities Net earnings $ 331 $ 615 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 973 967 Impairments 47 118 Dry hole costs 107 175 Amortization of exploratory leasehold costs 98 95 Deferred income taxes 22 81 Gain on sales of assets (pre-tax) (42) (24) Gain on disposal of discontinued operations (pre-tax) (2) (27) Earnings applicable to minority interests 6 41 Other (74) 31 Working capital and other changes related to operations 106 53 - ---------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,572 2,125 - ---------------------------------------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (includes dry hole costs) (1,670) (1,727) Major acquisitions - (646) Proceeds from sales of assets 162 81 Proceeds from sale of discontinued operations 3 25 - ---------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,505) (2,267) - ---------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities Long-term borrowings 585 519 Reduction of long-term debt and capital lease obligations (495) (225) Minority interests (8) (17) Repurchases of common stock - - Proceeds from issuance of common stock 20 15 Dividends paid on common stock (196) (195) Other 5 - - ---------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (89) 97 - ---------------------------------------------------------------------------------------------------- Decrease in cash and cash equivalents (22) (45) - ---------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 190 235 - ---------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 168 $ 190 ====================================================================================================
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OPERATING HIGHLIGHTS UNOCAL CORPORATION For the Three Months For the Twelve Months Ended December 31, Ended December 31, ------------------------------------------ 2002 2001 2002 2001 - ------------------------------------------------------------------------------------ North America Net Daily Production Liquids (thousand barrels) Lower 48 (a) (b) 46 59 52 59 Alaska 23 26 24 25 Canada 18 19 18 16 - ------------------------------------------------------------------------------------ Total liquids 87 104 94 100 Natural gas - dry basis (million cubic feet) Lower 48 (a) (b) 659 860 719 905 Alaska 68 101 76 103 Canada 91 89 91 101 - ------------------------------------------------------------------------------------ Total natural gas 818 1,050 886 1,109 North America Average Prices (excluding hedging activities) (c) (d) Liquids (per barrel) Lower 48 $ 25.20 $ 18.27 $ 22.85 $ 23.35 Alaska $ 26.96 $ 22.36 $ 24.21 $ 24.69 Canada $ 19.58 $ 13.49 $ 20.10 $ 18.53 Average $ 24.46 $ 18.48 $ 22.68 $ 22.90 Natural gas (per mcf) Lower 48 $ 3.77 $ 2.28 $ 3.01 $ 4.14 Alaska $ 1.20 $ 1.57 $ 1.42 $ 1.37 Canada $ 3.50 $ 2.37 $ 2.67 $ 4.34 Average $ 3.51 $ 2.22 $ 2.83 $ 3.89 - ------------------------------------------------------------------------------------ North America Average Prices (including hedging activities) (c) (d) Liquids (per barrel) Lower 48 $ 25.19 $ 18.75 $ 22.87 $ 23.41 Alaska $ 26.96 $ 22.36 $ 24.21 $ 24.69 Canada $ 19.58 $ 13.49 $ 20.10 $ 18.53 Average $ 24.45 $ 18.74 $ 22.69 $ 22.93 Natural gas (per mcf) Lower 48 $ 3.75 $ 2.50 $ 3.07 $ 4.23 Alaska $ 1.20 $ 1.57 $ 1.42 $ 1.37 Canada $ 3.31 $ 2.37 $ 2.66 $ 3.17 Average $ 3.47 $ 2.40 $ 2.88 $ 3.85 - ------------------------------------------------------------------------------------ (a)Includes proportional shares of production of equity investees. (b)Includes minority interest shares of : Liquids 3 9 7 9 Natural gas 41 104 82 102 Barrels oil equivalent 10 26 21 26 (c)Excludes Trade segment margins. (d)Excludes gains/losses on derivative positions not accounted for as hedges and ineffective portions of hedges.
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OPERATING HIGHLIGHTS (CONTINUED) UNOCAL CORPORATION For the Three Months For the Twelve Months Ended December 31, Ended December 31, ------------------------------------------ 2002 2001 2002 2001 - ------------------------------------------------------------------------------------ International Net Daily Production (e) Liquids (thousand barrels) Far East 53 57 53 51 Other (a) 21 19 20 19 - ------------------------------------------------------------------------------------ Total liquids 74 76 73 70 Natural gas - dry basis (million cubic feet) Far East 823 782 847 829 Other (a) 96 69 93 65 - ------------------------------------------------------------------------------------ Total natural gas 919 851 940 894 International Average Prices (f) Liquids (per barrel) Far East $ 25.68 $ 18.68 $ 22.88 $ 22.50 Other $ 27.55 $ 19.11 $ 25.47 $ 24.15 Average $ 26.23 $ 18.80 $ 23.57 $ 22.97 Natural gas (per mcf) Far East $ 2.62 $ 2.45 $ 2.60 $ 2.52 Other $ 2.83 $ 2.43 $ 2.72 $ 2.75 Average $ 2.64 $ 2.45 $ 2.61 $ 2.54 - ------------------------------------------------------------------------------------ Worldwide Net Daily Production (a) (b) (e) Liquids (thousand barrels) 161 180 167 170 Natural gas - dry basis (million cubic feet) 1,737 1,901 1,826 2,003 Barrels oil equivalent (thousands) 451 497 471 504 Worldwide Average Prices (excluding hedging activities) (c) (d) Liquids (per barrel) $ 25.29 $ 18.62 $ 23.07 $ 22.93 Natural gas (per mcf) $ 3.04 $ 2.32 $ 2.72 $ 3.27 Worldwide Average Prices (including hedging activities) (c) (d) Liquids (per barrel) $ 25.28 $ 18.77 $ 23.07 $ 22.95 Natural gas (per mcf) $ 3.02 $ 2.42 $ 2.74 $ 3.25 - ------------------------------------------------------------------------------------ (a) Includes proportional shares of production of equity investees. (b) Includes minority interest shares of : Liquids 3 9 7 9 Natural gas 41 104 82 102 Barrels oil equivalent 10 26 21 26 (c)Excludes Trade segment margins. (d)Excludes gains/losses on derivative positions not accounted for as hedges and ineffective portions of hedges. (e)International production is presented utilizing the economic interest method. (f)International did not have any hedging activities.
-10- Item 7. Financial Statements and Exhibits. (c) Exhibits 99. Pages 59-61 of Unocal's Amended 2001 Annual Report on Form 10-K/A - Cautionary Statement for Purposes of the "Safe-Harbor" Provisions of the Private Securities Litigation Reform Act of 1995. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNOCAL CORPORATION (Registrant) Date: February 5, 2003 By: /s/ JOE D. CECIL ------------------ ------------------------------- Joe D. Cecil Vice President and Comptroller -11- EX-99 3 exh99.txt SAFE HARBOR Exhibit 99 CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Unocal desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as embodied in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and is including this statement in this report in order to do so. This report contains forward-looking statements and from time to time in the future the Company's management or other persons acting on the Company's behalf may make, in both written publications and oral presentations, additional forward-looking statements to inform investors and other interested persons of the Company's estimates and projections of, or increases or decreases in, amounts of future revenues, prices, costs, earnings, cash flows, capital expenditures, assets, liabilities and other financial items. Certain statements may also contain estimates and projections of future levels of, or increases or decreases in, crude oil and natural gas reserves and related finding and development costs, potential resources, production and related lifting costs, sales volumes and related prices, and other statistical items; plans and objectives of management regarding the Company's future operations, projects, products and services; and certain assumptions underlying such estimates, projections, plans and objectives. Such forward-looking statements are generally accompanied by words such as "estimate", "projection", "plan", "target", "goal", "forecast", "believes", "expects", "anticipates" or other words that convey the uncertainty of future events or outcomes. While such forward-looking statements are made in good faith, forward-looking statements and their underlying assumptions are by their nature subject to certain risks and uncertainties and their outcomes will be influenced by various operating, market, economic, competitive, credit, environmental, legal and political factors. Certain of such factors, set forth elsewhere in this report, are important factors that could cause actual results to differ materially from those expressed in the forward-looking statements. See the discussions of the decline in production from the Company's Muni field in the Gulf of Mexico under "Exploration and Production--North America--U.S. Lower 48--Gulf of Mexico Shelf and Onshore (Excluding Pure Resources, Inc.)" in combined Item 1 and 2 - "Business and Properties" of this report; the discussions of the negotiations with respect to the levels of natural gas and crude oil production from the Gulf of Thailand and natural gas contract prices under "Exploration and Production--International--Thailand" in Items 1 and 2 and under Outlook--Thailand" above in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"); the discussion of the effort by the Company's Philippine Geothermal, Inc., subsidiary to settle a contract dispute under "Geothermal and Power Operations" in Items 1 and 2; the discussion of negotiations, legal issues and related uncertainties involving the Company's patents for formulations of cleaner-burning gasolines under "Patents" in Items 1 and 2 and under "Outlook--Other Matters" above in MD&A; the discussions under "Government Regulations" and "Environmental Regulations" in Items 1 and 2; the discussions of certain lawsuits and claims, including tax matters, in "Item 3--Legal Proceedings" and in note 22 to the consolidated financial statements in Item 8 of this report, which note also contains a discussion of certain other contingent liabilities and commitments; the presentation and discussion of the Company's estimated 2002 capital expenditures under "Financial Condition--Capital Expenditures" above in MD&A; the discussion of the Company's need to borrow to meet a portion of its projected 2002 cash requirements, together with the available sources of borrowings and the related importance of maintaining the Company's investment-grade credit ratings, under "Long-term Debt and Other Financial Commitments" above in MD&A; the discussion of various of the Company's financial and other obligations and commitments under "Long-term Debt and Other Financial Commitments" above in MD&A; the discussion of the Company's critical accounting policies and practices under "Critical Accounting and Other Policies" above in MD&A; the discussions of the Company's reserves for and possible additional costs of remediation and other environment-related expenditures and expenses under "Environmental Matters" above in MD&A and in notes 18 and 22 to the consolidated financial statements; the discussion of the anticipated continued volatility of energy prices in 2002 under "Outlook" above in MD&A; the assumptions underlying the Company's forecasts of its 2002 aggregate oil and gas production levels and after-tax earnings per share under "Outlook" above in MD&A; the Company's sublease of its Discoverer Spirit drillship to a third party and the party's responsibility for the lease payments during the sublease period under "Outlook--U.S. Lower 48" above in MD&A, in note 5 to the consolidated financial statements and under "Other Matters" in note 22 to the consolidated financial statements; the discussion of the outstanding receivables balance due for sales of -59- natural gas and condensate to Petrobangla under "Outlook--Bangladesh" above in MD&A; the discussions of the outstanding receivables balance due related to the Company's Indonesian geothermal and power operations under "Outlook--Geothermal and Power Operations" above in MD&A and under "Concentrations of Credit Risk" in note 27 to the consolidated financial statements; the discussion of the negotiations with the purchaser of the Company's agricultural products business involving various aspects of the transaction and the obligations of the parties under the purchase and sale agreement for the business under "Outlook--Other Matters" above in MD&A; the discussion under "Future Accounting Changes" above in MD&A; and the discussions of the risks associated with the Company's use of derivative financial instruments in its hedging and trading activities under Item 7A "Quantitative and Qualitative Disclosures about Market Risk" of this report and in note 27 to the consolidated financial statements. Set forth below are additional important factors (but not necessarily all of such factors) that could cause actual results to differ materially from those expressed in the forward-looking statements. Commodity Prices A decline in the prices for crude oil, natural gas or other hydrocarbon commodities sold by the Company could have a material adverse effect on the Company's results of operations, on the quantities of crude oil and natural gas that could be economically produced from its fields, and on the quantities and economic values of its proved reserves and potential resources. Such adverse pricing scenarios could result in write-downs of the carrying values of the Company's properties, which could materially adversely affect the Company's financial condition, as well as its results of operations. Exploration and Production Risks The amounts of the Company's future crude oil and natural gas reserves and production will also be affected by its ability to replace declining reservoirs in existing fields with new reserves through its exploration and development programs and through acquisitions. The ability of the Company to replace reserves will depend not only on its ability to obtain acreage and contracts in the countries in which it currently operates, as well as in new countries, and to delineate prospects which prove to be successful geologically, but also to drill, find, develop and produce recoverable quantities of oil and gas economically in the price environment prevailing at the time. The exploration for oil and gas is a high-risk business in which significant numbers of dry holes and high associated costs can be incurred in the processes of seeking commercial discoveries. The Company's exploration and production activities also are subject to all of the physical risks and uncertainties normally associated with such activities, including, but not limited to, such hazards as explosions, fires, blowouts, leaks and spills, some of which may be very difficult and expensive to control and/or remediate, and damages from hurricanes, typhoons, monsoons and other severe weather conditions. The process of estimating quantities of oil and natural gas reserves and potential resources is inherently uncertain and involves subjective geological, engineering and economic judgments. Changes in operating conditions, such as unforeseen geological complexities and drilling and production difficulties, and changes in economic conditions, such as finding and development and production costs and sales prices, could cause material downward revisions in the Company's estimated proved reserves and potential resources. Projections of future amounts of crude oil and natural gas production are also imprecise because they rely on assumptions about the future levels of prices and costs, field decline rates, market demand and supply, the political, economic and regulatory climates and, in the case of the Company's foreign production, the terms of the contracts under which the Company operates, which could result in mandated production cutbacks from existing or projected levels. A significant portion of the Company's expectation for future oil and gas development involves large projects, primarily offshore in increasingly deeper waters. The timing and amounts of production from such projects will be dependent upon, among other things, the formulation of development plans and their approval by foreign governmental authorities and other working interest partners, the receipt of necessary permits and other approvals from governmental agencies, the obtaining of adequate financing, either internally or -60- externally, the availability, costs and performance of drilling rigs and other equipment, and the timely construction of platforms, pipelines and other necessary infrastructure by specialized contractors. Certain Political and Economic Risks The Company's operations outside of the U.S. are subject to risks inherent in foreign operations, including, without limitation, the loss of revenues, property and equipment from hazards such as expropriation, nationalization, war, insurrection and other political risks, increases in taxes and governmental royalties or other takes, abrogation or renegotiation of contracts by governmental entities, changes in laws and policies governing operations of foreign-based companies, currency conversion and repatriation restrictions and exchange rate fluctuations, and other uncertainties arising out of foreign government sovereignty over the Company's international operations. Laws and policies of the U.S. government affecting foreign trade and taxation may also adversely affect the Company's international operations. The Company's ability to market crude oil, natural gas and other commodities produced in foreign countries, and the prices the Company will be able to obtain for such production, will depend on many factors which are often beyond the Company's control, such as the existence or development of markets for its discoveries, the proximity and capacity of pipelines and other transportation facilities or the timely construction thereof, fluctuating demand for oil and natural gas, the availability and costs of competing fuels, and the effects of foreign governmental regulation of production and sales. The Company's operations in the U.S. are also subject to political, regulatory and economic conditions. In light of the foregoing, investors should not place undue reliance on forward-looking statements, which reflect management's views only as of the date they are published or presented. Although the Company from time to time may voluntarily revise its forward-looking statements to reflect subsequent events or circumstances, it undertakes no obligation to do so. -61- -----END PRIVACY-ENHANCED MESSAGE-----