-----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, TDt5+6FPvo1rV5tc3FA2XWCA6bWRwHkYlwTrhKB5pd+PrIbeQ40JokKbeW9/6LIM h4cXRTx+nfQhdP1enGrOuQ== 0000716039-04-000028.txt : 20040203 0000716039-04-000028.hdr.sgml : 20040203 20040203093055 ACCESSION NUMBER: 0000716039-04-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040203 ITEM INFORMATION: FILED AS OF DATE: 20040203 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: 04560996 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 u8k020304.txt FURNISHED 4TH Q EARNINGS 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) February 3, 2004 ------------------------ 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 February 3, 2004, Unocal Corporation issued a news release announcing the Company's earnings for the fourth quarter and the year ended December 31, 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 fourth and third 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: February 3, 2004 By: /s/ JOE D. CECIL ------------------ ------------------------------- Joe D. Cecil Vice President and Comptroller EX-99 3 exh99-1.txt 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 4Q earnings up 79%; full-year 2003 results nearly double previous year ----------------------------------------------------------------------------- El Segundo, Calif., Feb. 3, 2004 - Unocal Corporation (NYSE: UCL) today reported preliminary net earnings for the fourth quarter of $180 million, or 68 cents per share (diluted), 79 percent above the $96 million, or 38 cents per share (diluted) reported in the same period a year ago. Unocal's preliminary adjusted after-tax earnings for the fourth quarter 2003 were $167 million, or 63 cents per share (diluted). This compares with the Thomson/First Call median of analyst estimates (published Feb. 2, 2004) of 62 cents per share. Unocal's adjusted after-tax earnings were $123 million, or 48 cents per share (diluted), in the fourth quarter 2002, and $190 million, or 72 cents per share (diluted), in the third quarter 2003. Adjusted after-tax earnings are net earnings excluding special items, earnings from discontinued operations and cumulative effects of accounting changes.
4th 3rd 4th CONSOLIDATED RESULTS (UNAUDITED) Quarter Quarter Quarter ------------------------------------- Millions of dollars except per share amounts 2003 2003 2002 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 172 $ 152 $ 96 Earnings from discontinued operations 8 - - - -------------------------------------------------------------------------------- Net earnings 180 152 96 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 8 - - Less: Special items 5 (38) (27) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 167 $ 190 $ 123 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 0.65 $ 0.58 $ 0.38 Discontinued operations 0.03 - - - -------------------------------------------------------------------------------- Total net earnings per share $ 0.68 $ 0.58 $ 0.38 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $ 0.63 $ 0.72 $ 0.48 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $1,589 $1,541 $1,583 ================================================================================
In the fourth quarter 2003, after-tax special items included a $29 million earnings benefit as the result of lower Canadian statutory tax rates and $17 million from insurance settlements. The positive special items were offset by a $28 million (after-tax) debt repurchase premium and an after-tax provision of $15 million for environmental and litigation matters related primarily to 2 formerly operated sites or sites previously sold with retained liabilities. All of the special items are detailed in the Adjusted After-tax Earnings table. Unocal's fourth quarter 2003 adjusted after-tax earnings (compared with 4Q 2002) reflected higher natural gas and liquids prices. These positive factors were partially offset by lower North America natural gas and liquids production and increased administrative and general expense due principally to higher pension-related costs. Worldwide hydrocarbon liquids and natural gas production for the fourth quarter 2003 averaged 420,000 barrels of oil equivalent (BOE) per day, compared with 451,000 BOE per day in the same period a year ago. The production decline reflected lower North America results primarily because of asset sales in the Lower 48 operations. The lower North America production was partially offset by increases in international liquids and natural gas production. Fourth-quarter 2003 worldwide price realizations (including hedging activities) for natural gas averaged $3.65 per thousand cubic feet (mcf), up from $3.10 during the prior year's fourth quarter. The company's worldwide liquids price realizations (including hedging activities) were $28.33 per barrel, up from $25.44 in 2002. Hedging activities in the fourth quarter increased worldwide liquids realizations by 19 cents per barrel and worldwide natural gas realizations by 14 cents per mcf. Total revenues for the quarter were $1.59 billion, up from $1.58 billion recorded a year ago. Unocal's EBITDAX for the fourth quarter 2003 was $661 million, or $2.41 per share (diluted). This compares with $607 million, or $2.38 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 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. Full-year 2003 results - ---------------------- For the full-year 2003, Unocal reported preliminary unaudited net earnings of $643 million, or $2.46 per share (diluted). The results were nearly double the $331 million, or $1.34 per share (diluted) recorded for 2002. Unocal's preliminary adjusted after-tax earnings for the full-year 2003 were $777 million, or $2.95 per share (diluted). This compares with $426 million, or $1.72 per share (diluted), for the full-year 2002. The special items are detailed in the Adjusted After-tax Earnings table included with this news release. 3
For the Year CONSOLIDATED RESULTS (UNAUDITED) Ended December 31, ------------------------- Millions of dollars except per share amounts 2003 2002 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 710 $ 330 Earnings from discontinued operations 16 1 Cumulative effects of accounting changes (83) - - -------------------------------------------------------------------------------- Net earnings 643 331 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 16 1 Less: Cumulative effects of accounting changes (83) - Less: Special items (67) (96) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 777 $ 426 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 2.70 $ 1.34 Discontinued operations 0.06 - Cumulative effects of accounting changes (0.30) - - -------------------------------------------------------------------------------- Total net earnings per share $ 2.46 $ 1.34 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $ 2.95 $ 1.72 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $6,539 $5,297 ================================================================================
Net cash provided from operating activities increased to $1.95 billion in 2003, from $1.57 billion in 2002. Unocal's EBITDAX for the full-year 2003 was $2.92 billion, or $10.71 per share (diluted), compared with $2.30 billion, or $9.29 per share (diluted), for 2002. The company's total consolidated long-term debt (including current maturities) was $2.88 billion at Dec. 31, 2003. Cash and cash-equivalents were $404 million at Dec. 31, 2003. "We had an outstanding year from a financial and operating standpoint," said Charles R. Williamson, Unocal chairman and chief executive officer. "We continued to reap the benefits of strong commodity prices and increased our overseas liquids and gas production levels. We expect further growth in international production under new or amended sales contracts that were negotiated during the year." Unocal's operations highlights for 2003 - --------------------------------------- - - Significant deepwater discoveries in the Gulf of Mexico (St. Malo, Puma) and Indonesia (Gehem). - - Initiated production on the deepwater West Seno project in Indonesia. - - Signed preliminary agreements in Thailand to extend the gas sales contracts and increase contract volumes; steps taken to double oil production by 2005. - - Restructured Unocal's North America business; sold properties to reduce unit operating costs and improve overall margins. - - Signed production-sharing contracts for exploration and production in the Xihu Trough in the East China Sea. - - Signed a gas sales agreement and approved a development plan for the Moulavi Bazar field in Bangladesh. 4 - - Major progress on construction of the Azerbaijan International Operating Company (AIOC) Phase 1 project in the Caspian Sea and related export pipeline. - - Successfully replaced all of our 2003 production and most of the reserves sold in the North America restructuring program. Finding, development and acquisition cost was among the lowest that Unocal has achieved in the last five years. - - Reduced debt and other financings by about $500 million; achieved 39% debt-to-total capitalization ratio. What to watch for from Unocal in 2004 - ------------------------------------- - - Major new developments near completion, contributing to significant international growth by 2005 (AIOC, Bangladesh, Thailand oil). - - Continued deepwater exploration success and appraisal of 2003 deepwater discoveries (St. Malo, Puma, Gehem); progress on commercialization of Perdido resources (Trident). - - Launching Indonesia deepwater gas developments for the Bontang Liquefied Natural Gas (LNG) plant. - - Meet $8.00 per BOE finding and development cost target for all of North America, including the reduced Gulf of Mexico shelf program. First quarter 2004 outlook - -------------------------- For the first quarter 2004, Unocal is forecasting adjusted after-tax earnings of 70 to 80 cents per share (diluted). This forecast compares with the Thomson/First Call median of analyst estimates (published Feb. 2, 2004) of 73 cents per share for the quarter. The first quarter forecast assumes average NYMEX benchmark prices of $34.25 per barrel of crude oil and $6.00 per million British thermal units (mmBtu) for North America natural gas for the period. Unocal's first quarter adjusted after-tax earnings are expected to change $8 million for every $1 change in its average worldwide realized price for crude oil and $3 million 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 first quarter of $40 to $50 million. The company's current estimate for first quarter 2004 production is between 410,000 and 420,000 BOE per day. Unocal's current estimate for the full-year 2004 production is about 450,000 BOE per day. The first-quarter adjusted after-tax earnings forecast excludes 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. 5 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 today at 1 p.m. PST (4 p.m. EST) over the Internet. To listen to the live webcast, go to the Investor Presentations 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 fourth 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 project developments, exploratory drilling activity and dry hole costs, production rates, commodity prices, expected adjusted after-tax earnings and future finding and development 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. * * * * * 6
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 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------- Revenues Sales and operating revenues $ 1,578 $ 1,529 $ 6,395 $ 5,224 Interest, dividends and miscellaneous income 7 14 25 31 Gain on sales of assets 4 40 119 42 - ------------------------------------------------------------------------------------------------------------------- Total revenues 1,589 1,583 6,539 5,297 Costs and other deductions Crude oil, natural gas and product purchases 497 577 2,126 1,701 Operating expense 375 389 1,340 1,338 Administrative and general expense 61 37 260 151 Depreciation, depletion and amortization 242 249 988 973 Asset impairments 7 20 93 47 Dry hole costs 33 26 128 107 Exploration expense 69 66 251 246 Interest expense 71 45 190 179 Property and other operating taxes 20 19 81 60 Distributions on convertible preferred securities of subsidiary trust 9 9 33 33 - ------------------------------------------------------------------------------------------------------------------- Total costs and other deductions 1,384 1,437 5,490 4,835 Earnings from equity investments 42 31 192 154 - ------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations before income taxes and minority interests 247 177 1,241 616 - ------------------------------------------------------------------------------------------------------------------- Income taxes 74 77 522 280 Minority interests 1 4 9 6 - ------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations 172 96 710 330 - ------------------------------------------------------------------------------------------------------------------- Earnings from discontinued operations 8 - 16 1 Cumulative effects of accounting changes (a) - - (83) - - ------------------------------------------------------------------------------------------------------------------- Net earnings $ 180 $ 96 $ 643 $ 331 =================================================================================================================== Basic earnings per share of common stock (b) Continuing operations $ 0.66 $ 0.38 $ 2.75 $ 1.34 Net earnings $ 0.69 $ 0.38 $ 2.49 $ 1.34 Diluted earnings per share of common stock (c) Continuing operations $ 0.65 $ 0.38 $ 2.70 $ 1.34 Net earnings $ 0.68 $ 0.38 $ 2.46 $ 1.34 Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.80 $ 0.80 - ------------------------------------------------------------------------------------------------------------------- (a) Net of tax (benefit) $ - $ - $ (48) $ - (b) Basic weighted average shares outstanding (in thousands) 259,521 253,526 258,563 246,759 (c) Diluted weighted average shares outstanding (in thousands) 274,025 254,775 272,722 247,679
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) UNOCAL CORPORATION At December 31, ----------------------------- Millions of dollars 2003 2002 - --------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 404 $ 168 Other current assets - net 1,587 1,207 Investments and long-term receivables - net 893 1,044 Properties - net 8,324 7,879 Goodwill 131 122 Other assets 459 426 - --------------------------------------------------------------------------------------------------- Total assets $11,798 $10,846 =================================================================================================== Liabilities and Stockholders' Equity Current liabilities (a) $ 2,085 $ 1,632 Long-term debt and capital leases 2,635 3,002 Deferred income taxes 704 593 Accrued abandonment, restoration and environmental liabilities 844 622 Other deferred credits and liabilities 960 902 Minority interests 39 275 Convertible preferred securities of a subsidiary trust 522 522 Stockholders' equity 4,009 3,298 - --------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $11,798 $10,846 =================================================================================================== (a) Includes current portion of LTD of: 248 6
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CONSOLIDATED CASH FLOWS (UNAUDITED) UNOCAL CORPORATION For the Twelve Months Ended December 31, -------------------------------- Millions of dollars 2003 2002 - ------------------------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities Net earnings $ 643 $ 331 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 988 973 Asset impairments 93 47 Dry hole costs 128 107 Amortization of exploratory leasehold costs 108 98 Deferred income taxes 56 22 Gain on sales of assets (119) (42) Gain on disposal of discontinued operations (25) (2) Pension expense net of contributions 58 22 Restructuring provisions net of payments 18 2 Cumulative effect of accounting changes 83 - Other 17 (73) Working capital and other changes related to operations (99) 86 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,949 1,571 - ------------------------------------------------------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (includes dry hole costs) (1,718) (1,670) Proceeds from sales of assets 642 163 Proceeds from sale of discontinued operations 11 3 - ------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (1,065) (1,504) - ------------------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities Long-term borrowings 205 585 Reduction of long-term debt and capital lease obligations (452) (495) Minority interests (257) (8) Proceeds from issuance of common stock 58 21 Dividends paid on common stock (207) (196) Loans to key employees 11 6 Other (6) (2) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (648) (89) - ------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 236 (22) - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 168 190 - ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 404 $ 168 ===================================================================================================================
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 4th Q 2003 3rd 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) $ 61 $ 58 $ 77 $ 85 Alaska 16 16 12 12 Canada 32 7 15 15 ------------------------------------------------- Total North America 109 81 104 112 International Far East 114 114 115 115 Other 24 24 21 21 ------------------------------------------------- Total International 138 138 136 136 ------------------------------------------------- Total Exploration & Production 247 219 240 248 ------------------------------------------------- Trade - - 3 3 Midstream 21 17 16 17 Geothermal and Power Operations 12 12 19 19 Corporate and Other Administrative and General (26) (26) (21) (21) Interest Expense - Net (54) (26) (32) (32) Environmental and Litigation (24) (8) (33) (15) Other (a) (4) (21) (40) (29) - ------------------------------------------------------------------------------------------- After-tax earnings from continuing operations 172 167 152 190 After-tax earnings from discontinued operations 8 - - - - ------------------------------------------------------------------------------------------- After-tax earnings $ 180 $ 167 $ 152 $ 190 =========================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 74 71 85 93 Deep water (13) (13) (8) (8)
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 4th Q 2003 4th 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) $ 61 $ 58 $ (4) $ 41 Alaska 16 16 1 1 Canada 32 7 5 6 -------------------------------------------------- Total North America 109 81 2 48 International Far East 114 114 111 111 Other 24 24 29 29 -------------------------------------------------- Total International 138 138 140 140 -------------------------------------------------- Total Exploration & Production 247 219 142 188 -------------------------------------------------- Trade - - 3 3 Midstream 21 17 45 15 Geothermal and Power Operations 12 12 5 5 Corporate and Other Administrative and General (26) (26) (18) (18) Interest Expense - Net (54) (26) (35) (35) Environmental and Litigation (24) (8) (26) (5) Other (a) (4) (21) (20) (30) - ------------------------------------------------------------------------------------------- After-tax earnings from continuing operations 172 167 96 123 After-tax earnings from discontinued operations 8 - - - - ------------------------------------------------------------------------------------------- After-tax earnings $ 180 $ 167 $ 96 $ 123 =========================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 74 71 12 57 Deep water (13) (13) (16) (16)
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) For the Years Ended Decembe 31, ------------------------------------------------- 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) $ 338 $ 324 $ 33 $ 87 Alaska 57 57 - - Canada 79 50 - 6 ------------------------------------------------- Total North America 474 431 33 93 International Far East 466 466 434 434 Other 95 95 69 69 ------------------------------------------------- Total International 561 561 503 503 ------------------------------------------------- Total Exploration & Production 1,035 992 536 596 ------------------------------------------------- Trade (2) (2) 4 4 Midstream 73 70 104 74 Geothermal and Power Operations 50 50 30 30 Corporate and Other Administrative and General (92) (92) (82) (82) Interest Expense - Net (145) (117) (128) (128) Environmental and Litigation (102) (28) (76) (11) Other (a) (107) (96) (58) (57) - ------------------------------------------------------------------------------------------- After-tax earnings from continuing operations 710 777 330 426 After-tax earnings from discontinued operations 16 - 1 - Cumulative effects of accounting changes (83) - - - - ------------------------------------------------------------------------------------------- After-tax earnings $ 643 $ 777 $ 331 $ 426 =========================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings table. (b) Includes earnings (loss) from: Onshore / Shelf 419 405 77 131 Deep water (81) (81) (44) (44)
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OPERATING HIGHLIGHTS UNOCAL CORPORATION Three Months Twelve Months Ended December 31, ---------------------------------- 2003 2002 2003 2002 - -------------------------------------------------------------------------------- North America Net Daily Production Liquids (thousand barrels) U.S. Lower 48 (a) (b) 37 46 43 52 Alaska 21 23 21 24 Canada 17 18 17 18 - -------------------------------------------------------------------------------- Total liquids 75 87 81 94 Natural gas - dry basis (million cubic feet) U.S. Lower 48 (a) (b) 516 659 616 719 Alaska 50 68 57 76 Canada 89 91 90 91 - -------------------------------------------------------------------------------- Total natural gas 655 818 763 886 North America Average Prices (excluding hedging activities) (c) Liquids (per barrel) U. S. Lower 48 $27.73 $25.20 $28.07 $22.85 Alaska $30.73 $26.96 $29.85 $24.21 Canada $22.94 $21.84 $24.76 $20.70 Average $27.52 $24.94 $27.84 $22.79 Natural gas (per mcf) U. S. Lower 48 $ 4.47 $ 3.77 $ 5.18 $ 3.01 Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42 Canada $ 4.56 $ 3.50 $ 5.07 $ 2.67 Average $ 4.30 $ 3.51 $ 4.88 $ 2.83 - -------------------------------------------------------------------------------- North America Average Prices (including hedging activities) (c) Liquids (per barrel) U. S. Lower 48 $28.50 $25.19 $27.72 $22.87 Alaska $30.73 $26.96 $29.85 $24.21 Canada $22.94 $21.84 $24.76 $20.70 Average $27.90 $24.94 $27.66 $22.81 Natural gas (per mcf) U. S. Lower 48 $ 4.91 $ 3.75 $ 5.07 $ 3.07 Alaska $ 1.46 $ 1.20 $ 1.31 $ 1.42 Canada $ 4.34 $ 3.31 $ 4.78 $ 2.66 Average $ 4.61 $ 3.47 $ 4.76 $ 2.88 - -------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) Includes minority interests of : Liquids - 3 - 7 Natural gas - 41 5 82 Barrels oil equivalent - 10 1 21 (c) 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 Three Months Twelve Months Ended December 31, ---------------------------------- 2003 2002 2003 2002 - -------------------------------------------------------------------------------- International Net Daily Production (d) Liquids (thousand barrels) Far East 63 53 59 53 Other (a) 19 21 20 20 - -------------------------------------------------------------------------------- Total liquids 82 74 79 73 Natural gas - dry basis (million cubic feet) Far East 844 823 877 847 Other (a) 78 96 88 93 - -------------------------------------------------------------------------------- Total natural gas 922 919 965 940 International Average Prices (e) Liquids (per barrel) Far East $28.40 $25.36 $27.30 $22.88 Other $29.68 $27.55 $28.29 $25.47 Average $28.73 $26.01 $27.54 $23.57 Natural gas (per mcf) Far East $ 2.96 $ 2.77 $ 2.83 $ 2.75 Other $ 3.00 $ 2.83 $ 2.90 $ 2.72 Average $ 2.96 $ 2.78 $ 2.84 $ 2.75 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Worldwide Net Daily Production (a) (b) (d) Liquids (thousand barrels) 157 161 160 167 Natural gas - dry basis (million cubic feet) 1,577 1,737 1,728 1,826 Barrels oil equivalent (thousands) 420 451 448 471 Worldwide Average Prices (excluding hedging activities) (c) Liquids (per barrel) $28.14 $25.44 $27.70 $23.13 Natural gas (per mcf) $3.51 $3.12 $3.73 $2.79 Worldwide Average Prices (including hedging activities) (c) (e) Liquids (per barrel) $28.33 $25.44 $27.60 $23.14 Natural gas (per mcf) $3.65 $3.10 $3.66 $2.81 - -------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) Includes minority interests of : Liquids - 3 - 7 Natural gas - 41 5 82 Barrels oil equivalent - 10 1 21 (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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Three Months Twelve Months ADJUSTED AFTER-TAX EARNINGS (UNAUDITED) Ended December 31, --------------------------------- Millions of dollars except per share amounts 2003 2002 2003 2002 - -------------------------------------------------------------------------------- Net earnings $ 180 $ 96 $643 $331 - -------------------------------------------------------------------------------- Less: Earnings from discontinued operations 8 - 16 1 Cumulative effects of accounting changes - - (83) - - -------------------------------------------------------------------------------- Earnings from continuing operations 172 96 710 330 - -------------------------------------------------------------------------------- Less: Special items E&P - North America - U.S. Lower 48 Asset sales 3 (20) 46 (18) Held for sale impairments - (8) (31) (8) Environmental and litigation provisions - - (1) 1 Minority interests acquisition - (8) - (8) Restructuring - - - (12) Uninsured losses - (9) - (9) E&P - North America - Canada Statutory tax rate change 25 - 25 - Trading derivatives -- non-hedging - (1) 4 (6) Midstream Asset sales - 30 - 30 Canadian statutory tax rate change 4 - 4 - Held for sale impairments - - (1) - Corporate & Other Asset sales - 14 - 14 Environmental and litigation provisions (15) (25) (78) (82) Debt repurchase premium (28) - (28) - Insurance settlements 17 - 17 2 Restructuring (1) - (24) - Total special items 5 (27) (67) (96) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 167 $ 123 $ 777 $ 426 ================================================================================ Adjusted after-tax diluted earnings per share $0.63 $0.48 $2.95 $1.72 ================================================================================
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.
Three Months Twelve Months EBITDAX (UNAUDITED) Ended December 31, - -------------------------------------------------------------------------------- Millions of dollars 2003 2002 2003 2002 - -------------------------------------------------------------------------------- Net Earnings $ 180 $ 96 $ 643 $ 331 Less: Earnings from discontinued operations 8 - 16 1 Cumulative effects of accounting changes - - (83) - Special items 5 (27) (67) (96) - -------------------------------------------------------------------------------- Adjusted after-tax earnings 167 123 777 426 Add-backs to adjusted after-tax earnings: Depreciation, depletion and amortization 242 249 988 973 Asset impairments 7 7 41 34 Dry hole costs 33 26 128 107 Exploration expenses (including amortization of undeveloped leasehold costs) 69 66 251 246 Current income taxes 113 81 415 260 Deferred income taxes (8) 10 163 75 Interest expense (a) 38 45 157 179 - -------------------------------------------------------------------------------- EBITDAX $ 661 $607 $2,920 $2,300 ================================================================================ EBITDAX per share (diluted) $2.41 $2.38 $10.71 $ 9.29 (a) Net of capitalized interest of: 14 13 60 46
EX-99 4 exh99-2.txt ANALYST COVER PAGE Exhibit 99.2 UNOCAL FOURTH 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 Fourth Quarter 2003 Net Earnings $ 180 $.68/ Share - -------------------------------------------------------------------------------- Special Items Gain on Sale of Lower 48 Assets (3) Canadian Statutory Income Tax Change (29) Insurance Recoveries (17) Premium on Debt Buy Back 28 Environmental & Litigation 15 Restructuring Charge 1 Discontinued Operations - R&M asset Sale. (8) Fourth Quarter 2003 Adjusted Earnings $ 167 $.63/Share Median Analyst estimate dated Feb. 2, 2004 Per Share $.62/Share - -------------------------------------------------------------------------------- $ Million Third Quarter 2003 Adjusted Earnings 190 $.72/Share Variances North America Lower 48 United States (27) Lower Volumes (15), Higher Dry Holes (9) Higher Expenses Cash (10), Higher Prices +7 Alaska - Timing of Liftings +3, Higher Prices +1 4 Canada - Timing on 3Q Asset Sale (7) (8) Lower Price (3), Tax Rate & Other +2 International E&P 2 Higher Prices; Liquids +5, Gas +7,Lower Production (3) Timing of Crude lifting +7,Timing of Cash Expense (17) Lower Tax Rate and Other +3 Oil & Gas Marketing (Trade) (3) Geothermal - Timing of Power Results (6) (7) All Other (1) Corporate & Other - 16 Lower Net Interest +6, Improved Minerals Results +2, Timing of Litigation +7, All Other +1 Fourth Quarter 2003 Adjusted Earnings $ 167 $.63/Share - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----