-----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, A9w/vGYj0JmmS9UFmy38Z9jpQht+oIQs8TzY4jfUqJTUf/Vm1IsfyogzKEBf70iF jX/8DtLcn3hIrBZtHAUX3w== 0000716039-03-000084.txt : 20030729 0000716039-03-000084.hdr.sgml : 20030729 20030729164232 ACCESSION NUMBER: 0000716039-03-000084 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030729 ITEM INFORMATION: FILED AS OF DATE: 20030729 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: 03809074 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 u8k072903.txt ITEM 12 EARNINGS RELEASE 2Q03 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) July 29, 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 12. Disclosure of Results of Operations and Financial Condition. On July 29, 2003, Unocal Corporation issued a news release announcing the Company's earnings for the second quarter and six months ended June 30, 2003. A copy of the news release is furnished with this report as Exhibit 99.1. The information in Exhibit 99.1 and Exhibit 99.2 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933. The news release includes information regarding adjusted after-tax earnings, which is defined as net earnings excluding special items, earnings from discontinued operations and cumulative effects of accounting changes. Special items represent certain significant matters which positively or negatively impact net earnings that management determines to be not representative of the Company's ongoing operations. Examples of such events which have generally been excluded in determining adjusted after-tax earnings include: gain/loss from major asset sales; environmental remediation costs primarily related to inactive, closed or previously owned company facilities and third party sites; costs or settlements associated with major restructuring plans; litigation settlement costs primarily associated with former company operations or closed/inactive facilities; significant asset impairments due to changes in commodity prices; material damage to company facilities or operations due to fire, explosion, earthquakes, storms or other `acts of god' not covered by insurance; certain costs associated with major acquisitions including litigation and significant trading derivatives; insurance recoveries associated with former company operations or for costs incurred in prior years. Adjusted after-tax earnings is a non-GAAP measure and is used because the Company's management believes it to be useful to investors and analysts as it facilitates a focus on the Company's ongoing operations. The measure also allows for convenient comparisons to the Company's prior reporting periods, as well as the results of ongoing operations of other companies in the exploration and production industry that utilize the successful efforts method of accounting. Adjusted after-tax earnings is not a substitute for net income determined in accordance with GAAP as a measure of profitability, because the special items excluded from adjusted after-tax earnings do in fact positively or negatively impact net earnings. Other companies may define special items differently; hence, we cannot assure that adjusted after-tax earnings are comparable with similarly titled amounts reported by other companies. The news release also includes information regarding EBITDAX, which is a measure defined as net earnings before interest, taxes, depreciation, depletion and amortization, asset impairments, exploration expenses, dry hole costs, special items, earnings from discontinued operations and cumulative effects of accounting changes. The Company's management believes this measure is helpful to investors and analysts because it facilitates a comparison with companies in the exploration and production industry that utilize the full cost method of accounting. Exhibit 99.2 is provided to analysts that cover the Company's stock, as additional information, for reference during the Company's earnings conference call. The exhibit summarizes the significant variances in adjusted after-tax earnings by business segment between the second and first quarters of 2003. 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: July 29, 2003 By: /s/ JOE D. CECIL ------------------ ------------------------------- Joe D. Cecil Vice President and Comptroller EX-99 3 exh99-1.txt 2ND Q EARNINGS NEWS RELEASE Exhibit 99.1 Unocal Corporation 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 UNOCAL 76 LOGO NEWS RELEASE Contact: Barry Lane (Media) 310-726-7731 Robert Wright (Investors) 310-726-7665 Unocal 2Q 2003 net earnings up 55% from year earlier on higher prices --------------------------------------------------------------------- El Segundo, Calif. July 29, 2003 - Unocal Corporation (NYSE: UCL) today reported net earnings in the second quarter of $177 million, or 68 cents per share (diluted). This compares with net earnings of $114 million, or 46 cents per share (diluted), in the same period a year ago and $134 million, or 52 cents per share (diluted), in the first quarter 2003. Unocal's adjusted after-tax earnings for the second quarter 2003 were $191 million, or 73 cents per share (diluted). This compares with the Thomson/First Call consensus (published July 28, 2003) of 69 cents per share. Unocal's adjusted after-tax earnings were $134 million, or 55 cents per share (diluted), in the second quarter 2002 and $229 million, or 87 cents per share, in the first quarter 2003. Adjusted after-tax earnings are net earnings excluding special items, earnings from discontinued operations and cumulative effects of accounting changes. All of the special items are detailed in the Adjusted After-tax Earnings table.
CONSOLIDATED RESULTS (UNAUDITED) 2Q 1Q 2Q ------------------------------ Millions of dollars except per share amounts 2003 2003 2002 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 169 $ 217 $ 113 Earnings from discontinued operations 8 - 1 Cumulative effects of accounting changes - (83) - - -------------------------------------------------------------------------------- Net earnings 177 134 114 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 8 - 1 Less: Cumulative effects of accounting changes - (83) - Less: Special items (22) (12) (21) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 191 $ 229 $ 134 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $0.65 $0.82 $0.46 Discontinued operations 0.03 - - Cumulative effects of accounting changes - (0.30) - - -------------------------------------------------------------------------------- Total net earnings per share $0.68 $0.52 $0.46 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $0.73 $0.87 $0.55 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $1,620 $1,789 $1,368 ================================================================================
-2- Second quarter earnings factors - ------------------------------- Unocal's second quarter 2003 adjusted after-tax earnings (compared with 2Q 2002) reflected higher natural gas prices, increased liquids prices and higher international liquids and natural gas production. The largest contributor to the higher international production was Thailand, where oil-equivalent production was up 10 percent from last year's second quarter. Crude oil and condensate production increased 29 percent, primarily because of de-bottlenecking production from the Yala-Plamuk oil project and higher condensate production from the Pailin Phase 2 project. Quarterly natural gas production increased 5 percent from last year due to increased demand tied to higher electric power needs and reduced volumes from other suppliers. Unocal functions as the "swing producer" in Thailand, providing above-contract minimum volumes when required to meet Thailand's needs. Unocal has routinely produced more than its contract minimums. In early July, Unocal set a new one-day gross production record of 1.36 billion cubic feet, compared with the contract minimum of 1.07 billion. Higher production from Azerbaijan and Bangladesh also contributed to increased international production. These positive factors were offset partially by lower North America liquids and natural gas production and higher exploratory land provisions. The primary reasons for lower North American production in the second quarter were natural declines and decreased drilling activity. The lower North American production also reflected asset dispositions in the first six months of the year, which accounted for decreases of more than 5,000 barrels of oil-equivalent (BOE) per day. Higher exploratory land provisions of $26 million pretax resulted from Unocal's relinquishment of about 45 deepwater Gulf of Mexico blocks before their expiration dates. This reflected the decision to focus its deepwater Gulf of Mexico land position on those OCS blocks that have the best potential. Second-quarter total revenues were $1.62 billion, up from $1.37 billion in the second quarter 2002, primarily due to higher commodity prices for natural gas and liquids. Administrative and general expense in the second quarter included a $27 million pretax charge as a result of the restructuring program announced in June that is aimed at strengthening Unocal's Lower 48 businesses, realigning its corporate staff and shared resource groups, and improving its balance sheet (see special items detailed in the Adjusted After-tax Earnings table). The higher A&G expense also reflected increased pension-related expenses. Unocal's EBITDAX for the second quarter 2003 was $720 million, or $2.65 per share (diluted). This compares with $634 million, or $2.58 per share (diluted), for the same period in 2002. EBITDAX is net earnings before interest, taxes, depreciation, depletion and amortization, asset impairments, exploration expenses, dry hole costs, special items, earnings from -3- discontinued operations and cumulative effects of accounting changes. EBITDAX is commonly used by investors and analysts to facilitate comparison of companies like Unocal that use the "successful efforts" accounting method with other exploration and production companies that use the "full-cost" method. Worldwide, Unocal's consolidated net daily production in the second quarter 2003 averaged 463,000 BOE per day, compared with 486,000 BOE per day a year ago. Unocal's worldwide average liquids price, including hedging, was $25.36 per barrel, up from $23.25 in the second quarter 2002. The company's average worldwide realized price for natural gas, including hedging, was $3.53 per thousand cubic feet (mcf), compared with $2.87 per mcf a year ago. Hedging activities in the second quarter lowered worldwide liquids realizations by 4 cents per barrel and natural gas realizations by 7 cents per thousand cubic feet. Six-months results - ------------------ Net earnings for the first six months of 2003 were $311 million, or $1.20 per share (diluted). This compares with $136 million, or 55 cents per share (diluted) for the same period a year ago. Unocal's adjusted after-tax earnings for the first six months were $420 million, or $1.60 per share (diluted). This compares with $177 million, or 72 cents per share, for the first six months of 2002. The special items are detailed in the Adjusted After-tax Earnings table included with this news release. Total revenues for the year-to-date were $3.41 billion, up from $2.42 billion last year.
For the Six Months CONSOLIDATED RESULTS (UNAUDITED) Ended June 30, -------------------- Millions of dollars except per share amounts 2003 2002 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 386 $ 135 Earnings from discontinued operations 8 1 Cumulative effects of accounting changes (83) - - -------------------------------------------------------------------------------- Net earnings 311 136 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 8 1 Less: Cumulative effects of accounting changes (83) - Less: Special items (34) (42) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 420 $ 177 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $1.47 $0.55 Discontinued operations 0.03 - Cumulative effects of accounting changes (0.30) - - -------------------------------------------------------------------------------- Total net earnings per share $1.20 $0.55 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $1.60 $0.72 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $3,409 $2,417 ================================================================================
Unocal's EBITDAX for the six months of 2003 was $1.55 billion, or $5.69 per share (diluted), compared with $1.09 billion, or $4.44 per share (diluted), in 2002. -4- Financial condition - ------------------- Cash flow from operating activities for the six months ended June 30, 2003, was $1.09 billion, compared with $626 million for the comparable period of 2002. Capital spending was $917 million for the six months 2003, versus $830 Million in the same period a year ago. Pretax proceeds from asset sales were $125 million in the second quarter, bringing the total for the year to $191 million. Second quarter dispositions included various oil and gas properties, as well as the sale of Unocal's interest in Matador Petroleum (proceeds $80 million). The company's total consolidated long-term debt (including current maturities) was $3.0 billion at June 30, 2003, unchanged from year-end 2002. Cash and cash-equivalents were $363 million at June 30, 2003, up from $168 million at December 31, 2002. Proceeds from the sale of assets in 2003 will be used mainly to reduce debt and other financings. As part of this program, Unocal paid off the $252 million limited partner interest in Spirit Energy Partners in July. This financing would have been reclassified from minority interest to debt in the third quarter due to a change in accounting rules. Third quarter 2003 outlook - -------------------------- For the third quarter 2003, Unocal is forecasting adjusted after-tax earnings of 65 to 75 cents per share (diluted). This forecast compares with the Thomson/First Call consensus (published July 28, 2003) of 64 cents per share for the quarter. The third quarter forecast assumes average NYMEX benchmark prices of $30.00 per barrel of crude oil and $4.95 per million British thermal units (mmBtu) for North America natural gas for the period. Unocal's third quarter adjusted after-tax earnings are expected to change 4 cents per share for every $1 change in its 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. The forecast also assumes pretax dry hole costs in the third quarter of $40 to $50 million. The company's current estimate for third quarter 2003 production is between 460,000 and 470,000 BOE per day. Full-year 2003 outlook - ---------------------- For the full-year 2003, Unocal is forecasting adjusted after-tax earnings of $2.90 to $3.20 per share (diluted). This forecast compares with the Thomson/First Call consensus (published July 28, 2003) of $2.74 per share for the year. The full-year 2003 forecast assumes average NYMEX benchmark prices of $30.40 per barrel of crude oil and $5.45 per mmBtu for North America natural gas. Unocal's full-year adjusted after-tax earnings are expected to change 14 cents per share for every $1 change in its average worldwide realized price for crude oil and 7 cents per share -5- for every 10-cent change in its average realized North America natural gas price, excluding the effect of hedging activities. Unocal has hedges that result in fixed future prices for natural gas as follows: o Third quarter 2003: 109 million MMBTU per day at $5.87 o Fourth quarter 2003: 172 million MMBTU per day at $5.99 o First quarter 2004: 264 million MMBTU per day at $6.07 The forecast also assumes pretax dry hole costs of $155 to $185 million and that pretax pension-related expenses will increase over 2002 by approximately $65 to $70 million. The company's current estimate for full-year 2003 production is between 470,000 and 480,000 BOE per day. This estimate reflects the sale of Unocal's interest in Matador Petroleum and a one-month delay in the start-up of the West Seno field. In June 2003, Unocal announced plans to sell certain E&P assets in the Gulf of Mexico region that would reduce the size of the company's GOM shelf business to approximately 30 fields. This program is designed to create a more profitable and sustainable North American business that would complement Unocal's high-growth international operations. The company believes that the retained U.S. properties could yield additional production at lower finding and development costs. The sales could occur later this year and impact Unocal's net production for 2003. The fields currently identified to be sold represent net daily production of about 25,000 to 30,000 BOE. Unocal's total actual production for the year could also be impacted by cost recovery volume fluctuations under its various foreign production-sharing contracts due to changes in commodity prices, changes in demand for gas in Thailand and production and exploration performance in the Gulf of Mexico. In addition to the anticipated sale of Gulf of Mexico properties, other investments and non-E&P assets are expected to be sold, including rights to the proposed Sarulla geothermal project in Indonesia, for which Unocal expects to receive $60 million in September. The third-quarter and full-year adjusted after-tax earnings forecasts exclude special items. Because of the inherent uncertainty related to special items, determining whether or when they will occur and quantifying their dollar impact, Unocal does not forecast net earnings. About Unocal Corporation - ------------------------ Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal oil and gas activities are in North America and Asia. Conference call/financial database - ---------------------------------- Unocal will webcast its quarterly earnings conference call Wednesday, July 30, at 9 a.m. -6- PDT (12 noon. EDT) over the Internet. To listen to the live webcast, go to the Investor Information section of the Unocal web site, www.unocal.com. Replays of the conference call, including questions and answers, will be available. Complete detailed financial tables for the second quarter 2003 and the comparable prior periods are available in the "Quarterly Fact Book," which is posted in the Data Warehouse in the Investor Information section of the company's web site. The Quarterly Fact Book is also available upon request from Unocal Investor Relations. * * * * * This news release contains certain forward-looking statements about expected adjusted after-tax earnings, production rates, commodity prices, dry hole costs, divestitures and pension costs. 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; the levels of the company's oil and gas production; the extent of the company's operating cash flow and other capital resources available to fund its capital expenditures; regulatory, geological, operating and economic considerations; and other factors discussed in Unocal's 2002 Annual Report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission. Unocal undertakes no obligation to update the information in this news release. Investors are urged to consider closely the disclosure in Unocal's 2002 Annual Report on Form 10-K and other reports filed with the SEC (SEC File No. 1-8483). Copies of the company's SEC filings are available from the company by calling 800-252-2233 or from the SEC by calling 800-SEC-0330. The reports are also available on the Unocal web site, www.unocal.com. * * * * * -7-
CONSOLIDATED EARNINGS (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------------------------ Millions of dollars except per share amounts 2003 2002 2003 2002 - -------------------------------------------------------------------------------- Revenues Sales and operating revenues $ 1,564 $ 1,361 $ 3,339 $ 2,396 Interest, dividends and miscellaneous income (loss) 9 8 20 20 Gain (loss) on sales of assets 47 (1) 50 1 - -------------------------------------------------------------------------------- Total revenues 1,620 1,368 3,409 2,417 Costs and other deductions Crude oil, natural gas and product purchases 536 428 1,182 723 Operating expense 325 324 619 623 Administrative and general expense 87 37 138 80 Depreciation, depletion and amortization 255 255 515 479 Asset impairments 3 21 3 21 Dry hole costs 10 13 81 41 Exploration expense 88 61 143 120 Interest expense 36 43 74 94 Property and other operating taxes 21 18 43 34 Distributions on convertible preferred securities of subsidiary trust 8 8 16 16 - -------------------------------------------------------------------------------- Total costs and other deductions 1,369 1,208 2,814 2,231 Earnings from equity investments 53 51 96 88 - -------------------------------------------------------------------------------- Earnings from continuing operations before income taxes and minority interests 304 211 691 274 - -------------------------------------------------------------------------------- Income taxes 133 95 301 135 Minority interests 2 3 4 4 - -------------------------------------------------------------------------------- Earnings from continuing operations 169 113 386 135 - -------------------------------------------------------------------------------- Earnings from discontinued operations 8 1 8 1 Cumulative effects of accounting changes (a) - - (83) - - -------------------------------------------------------------------------------- Net earnings $ 177 $ 114 $ 311 $ 136 ================================================================================ Basic earnings per share of common stock (b) Continuing operations $ 0.66 $ 0.46 $ 1.50 $ 0.55 Net earnings $ 0.69 $ 0.46 $ 1.21 $ 0.55 Diluted earnings per share of common stock (c) Continuing operations $ 0.65 $ 0.46 $ 1.47 $ 0.55 Net earnings $ 0.68 $ 0.46 $ 1.20 $ 0.55 Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.40 $ 0.40 - -------------------------------------------------------------------------------- (a) Net of tax (benefit) $ - $ - $ (48) $ - (b) Basic weighted average shares outstanding (in thousands) 258,202 244,639 258,103 244,423 (c) Diluted weighted average shares outstanding (in thousands) 272,108 245,865 271,907 245,531
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) At June 30, At December 31, Millions of dollars 2003 2002 - -------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 363 $ 168 Other current assets - net 1,253 1,207 Investments and long-term receivables - net 1,074 1,044 Properties - net 8,327 7,879 Goodwill 129 122 Other assets 390 340 - -------------------------------------------------------------------------------- Total assets $ 11,536 $ 10,760 ================================================================================ Liabilities and Stockholders' Equity Current liabilities (a) $ 1,895 $ 1,632 Long-term debt and capital leases 2,744 3,002 Deferred income taxes 677 593 Accrued abandonment, restoration and environmental liabilities 917 622 Other deferred credits and liabilities 860 816 Minority interests 276 275 Convertible preferred securities of a subsidiary trust 522 522 Stockholders' equity 3,645 3,298 - -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 11,536 $ 10,760 ================================================================================ (a) Includes current portion of LTD of: 232 6
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CONSOLIDATED CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, --------------------------- Millions of dollars 2003 2002 - -------------------------------------------------------------------------------- Cash Flows from Operating Activities Net earnings $ 311 $ 136 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 515 479 Asset impairments 3 21 Dry hole costs 81 41 Amortization of exploratory leasehold costs 71 45 Deferred income taxes 41 (17) Gain on sales of assets (pre-tax) (50) (1) Gain on disposal of discontinued operations (pre-tax) (13) (2) Cumulative effects of accounting changes 83 - Other 110 (40) Working capital and other changes related to operations (67) (36) - -------------------------------------------------------------------------------- Net cash provided by operating activities 1,085 626 - -------------------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (includes dry hole costs) (917) (830) Proceeds from sales of assets 191 45 Proceeds from sale of discontinued operations - 2 - -------------------------------------------------------------------------------- Net cash used in investing activities (726) (783) - -------------------------------------------------------------------------------- Cash Flows from Financing Activities Long-term borrowings 79 440 Reduction of long-term debt and capital lease obligations (143) (229) Minority interests (3) (4) Proceeds from issuance of common stock 10 19 Dividends paid on common stock (103) (98) Other (4) - - -------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (164) 128 - -------------------------------------------------------------------------------- Net increase in cash and cash equivalents 195 (29) - -------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 168 190 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 363 $ 161 ================================================================================
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 2nd Q 2003 1st Q 2003 ------------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - -------------------------------------------------------------------------------- Exploration & Production North America U.S. Lower 48 (b) $ 89 $ 70 $ 111 $ 111 Alaska 14 14 15 15 Canada 8 6 24 22 International Far East 116 116 121 121 Other 29 29 21 21 Trade 4 4 (9) (9) Midstream 18 18 18 18 Geothermal and Power Operations 7 7 12 12 Corporate and Other Administrative and General (22) (22) (23) (23) Interest Expense - Net (28) (28) (31) (31) Environmental and Litigation (28) (2) (17) (3) Other (a) (38) (21) (25) (25) - -------------------------------------------------------------------------------- After-tax earnings (loss) from continuing operations 169 191 217 229 After-tax earnings from discontinued operations 8 - - - Cumulative effects of accounting changes - - (83) - - -------------------------------------------------------------------------------- After-tax earnings (loss) $ 177 $ 191 $ 134 $ 229 ================================================================================ (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 118 99 142 142 Deep water (29) (29) (31) (31)
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 2nd Q 2003 2nd Q 2002 ------------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - -------------------------------------------------------------------------------- Exploration & Production North America U.S. Lower 48 (b) $ 89 $ 70 $ 20 $ 32 Alaska 14 14 (5) (5) Canada 8 6 6 2 International Far East 116 116 113 113 Other 29 29 12 12 Trade 4 4 1 1 Midstream 18 18 23 23 Geothermal and Power Operations 7 7 14 14 Corporate and Other Administrative and General (22) (22) (19) (19) Interest Expense - Net (28) (28) (28) (28) Environmental and Litigation (28) (2) (13) (2) Other (a) (38) (21) (11) (9) - -------------------------------------------------------------------------------- After-tax earnings (loss) from continuing operations 169 191 113 134 After-tax earnings from discontinued operations 8 - 1 - - -------------------------------------------------------------------------------- After-tax earnings (loss) $ 177 $ 191 $ 114 $ 134 ================================================================================ (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 118 99 29 41 Deep water (29) (29) (9) (9)
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) For the Six Months Ended June 30, -------------------------------------------------- 2003 2003 2002 2002 -------------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - -------------------------------------------------------------------------------- Exploration & Production North America U.S. Lower 48 (b) $ 200 $ 181 $ 24 $ 33 Alaska 29 29 (11) (11) Canada 32 28 (3) (3) International Far East 237 237 203 203 Other 50 50 24 24 Trade (5) (5) 2 2 Midstream 36 36 42 42 Geothermal and Power Operations 19 19 20 20 Corporate and Other Administrative and General (45) (45) (43) (43) Interest Expense - Net (59) (59) (65) (65) Environmental and Litigation (45) (5) (36) (3) Other (a) (63) (46) (22) (22) - -------------------------------------------------------------------------------- After-tax earnings (loss) from continuing operations 386 420 135 177 After-tax earnings from discontinued operations 8 - 1 - Cumulative effects of accounting changes (83) - - - - -------------------------------------------------------------------------------- After-tax earnings (loss) $ 311 $ 420 $ 136 $ 177 ================================================================================ (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 260 241 42 51 Deep water (60) (60) (18) (18)
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OPERATING HIGHLIGHTS For the Three Months For the Six Months Ended June 30, Ended June 30, ----------------------------------------- 2003 2002 2003 2002 - -------------------------------------------------------------------------------- North America Net Daily Production Liquids (thousand barrels) U.S. Lower 48 (a) (b) 44 54 46 55 Alaska 23 25 22 25 Canada 17 17 17 18 - -------------------------------------------------------------------------------- Total liquids 84 96 85 98 Natural gas - dry basis (million cubic feet) U.S. Lower 48 (a) (b) 652 766 678 754 Alaska 67 77 64 89 Canada 86 92 91 91 - -------------------------------------------------------------------------------- Total natural gas 805 935 833 934 North America Average Prices (excluding hedging activities) (c) Liquids (per barrel) U. S. Lower 48 $ 26.02 $ 23.49 $ 28.11 $ 20.95 Alaska $ 27.46 $ 24.74 $ 31.34 $ 21.99 Canada $ 23.52 $ 21.92 $ 26.05 $ 19.15 Average $ 25.93 $ 23.56 $ 28.48 $ 20.89 Natural gas (per mcf) U. S. Lower 48 $ 5.01 $ 3.12 $ 5.66 $ 2.68 Alaska $ 1.20 $ 1.57 $ 1.20 $ 1.57 Canada $ 5.13 $ 3.03 $ 5.40 $ 2.54 Average $ 4.69 $ 2.98 $ 5.27 $ 2.55 - -------------------------------------------------------------------------------- North America Average Prices (including hedging activities) (c) Liquids (per barrel) U. S. Lower 48 $ 25.84 $ 23.48 $ 27.22 $ 21.01 Alaska $ 27.46 $ 24.74 $ 31.34 $ 21.99 Canada $ 23.52 $ 21.92 $ 26.05 $ 19.15 Average $ 25.84 $ 23.56 $ 27.99 $ 20.92 Natural gas (per mcf) U. S. Lower 48 $ 4.86 $ 3.12 $ 5.23 $ 2.80 Alaska $ 1.20 $ 1.57 $ 1.20 $ 1.57 Canada $ 4.79 $ 2.97 $ 5.07 $ 2.62 Average $ 4.53 $ 2.97 $ 4.89 $ 2.66 - -------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) Includes minority interests of : Liquids 1 9 1 9 Natural gas 11 98 10 98 Barrels oil equivalent 3 25 2 25 (c) Excludes gains/losses on derivative positions not accounted for as hedges and ineffective portions of hedges.
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OPERATING HIGHLIGHTS (CONTINUED) For the Three Months For the Six Months Ended June 30, Ended June 30, ----------------------------------------- 2003 2002 2003 2002 - -------------------------------------------------------------------------------- International Net Daily Production (d) Liquids (thousand barrels) Far East 59 54 57 53 Other (a) 20 20 21 20 - -------------------------------------------------------------------------------- Total liquids 79 74 78 73 Natural gas - dry basis (million cubic feet) Far East 911 883 890 852 Other (a) 89 79 100 78 - -------------------------------------------------------------------------------- Total natural gas 1,000 962 990 930 International Average Prices (e) Liquids (per barrel) Far East $ 24.78 $ 22.50 $ 27.06 $ 20.95 Other $ 25.16 $ 23.91 $ 27.11 $ 23.03 Average $ 24.90 $ 22.84 $ 27.07 $ 21.43 Natural gas (per mcf) Far East $ 2.74 $ 2.78 $ 2.75 $ 2.70 Other $ 2.89 $ 2.79 $ 2.86 $ 2.64 Average $ 2.76 $ 2.78 $ 2.76 $ 2.69 - -------------------------------------------------------------------------------- Worldwide Net Daily Production (a) (b) (d) Liquids (thousand barrels) 163 170 163 171 Natural gas-dry basis (million cubic feet) 1,805 1,897 1,823 1,864 Barrels oil equivalent (thousands) 463 486 467 482 Worldwide Average Prices (excluding hedging activities) (c) Liquids (per barrel) $ 25.40 $ 23.26 $ 27.80 $ 21.11 Natural gas (per mcf) $ 3.60 $ 2.87 $ 3.88 $ 2.62 Worldwide Average Prices (including hedging activities) (c) (e) Liquids (per barrel) $ 25.36 $ 23.25 $ 27.54 $ 21.13 Natural gas (per mcf) $ 3.53 $ 2.87 $ 3.71 $ 2.68 - -------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) Includes minority interests of : Liquids 1 9 1 9 Natural gas 11 98 10 98 Barrels oil equivalent 3 25 2 25 (c) Excludes gains/losses on derivative positions not accounted for as hedges and ineffective portions of hedges. (d) International production is presented utilizing the economic interest method. (e) International did not have any hedging activities.
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ADJUSTED AFTER-TAX EARNINGS(UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, ----------------------------------------- Millions of dollars except per share amounts 2003 2002 2003 2002 - -------------------------------------------------------------------------------- Net earnings $177 $ 114 $ 311 $ 136 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 8 1 8 1 Cumulative effects of accounting changes - - (83) - - -------------------------------------------------------------------------------- Earnings from continuing operations 169 113 386 135 - -------------------------------------------------------------------------------- Less: Special items E&P - North America - U.S. Lower 48 Asset sales 20 - 20 2 Environmental and litigation provisions (1) - (1) 1 Restructuring - (12) - (12) E&P - North America - Canada Trading derivatives -- non-hedging 2 4 4 - Corporate & Other Environmental and litigation provisions (26) (13) (40) (35) Insurance settlements - - - 2 Restructuring (17) - (17) - - -------------------------------------------------------------------------------- Total special items (22) (21) (34) (42) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 191 $ 134 $ 420 $ 177 ================================================================================ Adjusted after-tax diluted earnings per share $ 0.73 $ 0.55 $ 1.60 $ 0.72 ================================================================================
The preceding table reconciles adjusted after-tax earnings to net earnings. Special items represent certain significant matters which positively or negatively impact net earnings that management determines to be not representative of the company's ongoing operations. Examples of such items which have generally been excluded in determining adjusted after-tax earnings include: gain/loss from major asset sales; environmental remediation costs primarily related to inactive, closed or previously owned company facilities and third party sites; costs or settlements associated with major restructuring plans; litigation settlement costs primarily associated with former company operations or closed/inactive facilities; significant asset impairments due to changes in commodity prices; material damage to company facilities or operations due to fire, explosion, earthquakes, storms or other 'acts of god' not covered by insurance; certain costs associated with major acquisitions including litigation and significant trading derivatives; insurance recoveries associated with former company operations or for costs incurred in prior years. Other companies may define special items differently; hence, we cannot assure that adjusted after-tax earnings are comparable with similarly titled amounts reported by other companies.
EBITDAX (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------------------------ Millions of dollars except per share amounts 2003 2002 2003 2002 - -------------------------------------------------------------------------------- Net Earnings $ 177 $ 114 $ 311 $ 136 Less: Earnings from discontinued operations 8 1 8 1 Cumulative effects of accounting changes - - (83) - Special items (22) (21) (34) (42) - -------------------------------------------------------------------------------- Adjusted after-tax earnings 191 134 420 177 Add-backs to adjusted after-tax earnings: Depreciation, depletion and amortization 255 255 515 479 Asset impairments 3 21 3 21 Dry hole costs 10 13 81 41 Exploration expenses (including amortization of undeveloped leasehold costs) 88 61 143 120 Current income taxes 100 90 238 152 Deferred income taxes 37 17 74 7 Interest expense (a) 36 43 74 94 - -------------------------------------------------------------------------------- EBITDAX $ 720 $ 634 $1,548 $1,091 ================================================================================ EBITDAX per share (diluted) $ 2.65 $ 2.58 $ 5.69 $ 4.44 (a) Net of capitalized interest of: 19 10 35 19
##### EX-99 4 exh99-2.txt IR COVER PAGE Exhibit 99.2 UNOCAL SECOND QUARTER 2003 SUMMARY For reconciliation refer to the Earnings Release and Table titled "Net Earnings and Adjusted After-Tax Earnings by Business Segment" Total Reported Second Quarter 2003 Net Earnings $177 $.68/ Share - -------------------------------------------------------------------------------- Special Items & Discontinued Operations Gain on Sale of Matador Stock (20) Discontinued Operations - R&M Participation Payment (8) Environmental & Litigation Provisions 27 Non Hedge Derivatives - Mark to Market (2) Restructuring Charge 17 Second Quarter 2003 Adjusted Earnings $191 $.73/ Share - -------------------------------------------------------------------------------- First Call Consensus dated July 28, 2003 Per Share $.69/ Share - -------------------------------------------------------------------------------- $Million --------- First Quarter 2003 Adjusted Earnings 229 $.87/ Share Variances Lower 48 United States (41) Lower Prices: Natural Gas (26), Liquids (9) Higher Land Provision (15), Lower Volumes (12) Non Recurring Litigation Costs (4), Other (2) Lower Dry Hole Expense +31, Higher Cash Expenses (4) Alaska - (1) Lower Liquids Prices (8), Timing of Liftings +5 Lower Dry Holes +1, All Other +1 Canada - Lower Prices - Liquids (5), Gas (2) (16) Income Tax (4), Higher DD&A (2), Lower Vols (3) International E&P 3 Lower Liquids Prices (25), Higher Production +8 Timing of Crude liftings +14, Lower Dry Holes +4 All Other +2 Oil & Gas Marketing (Trade) 13 2Q Trading Gains vs Losses in 1Q Geothermal - Salak Landslide Impact (5) Corporate & Other - 9 Lower Net Interest +3, Carbon & Minerals Results +2 Real Estate Operating Results +2, All Other +2 Second Quarter 2003 Adjusted Earnings $191 $.73/ Share ----------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----