-----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, MGCRV2O7ggvcbOceeE3YQxRvodmVELSRCH/h8wyBvqxKHCylXEiRgv8bm0pjoXlg 35u9BEU1jxMOkatL7a2f8A== 0000716039-04-000150.txt : 20040802 0000716039-04-000150.hdr.sgml : 20040802 20040802090826 ACCESSION NUMBER: 0000716039-04-000150 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040802 ITEM INFORMATION: ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040802 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: 04943735 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 u8k080204.txt FURNISHED 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) August 2, 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 9. Regulation FD Disclosure; Item 12. Results of Operations and Financial Condition. In accordance with General Instructions B.2 and B.6 of Form 8-K, the information in this Form 8-K, including in Exhibits 99.1 and 99.2 hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such a filing. On August 2, 2004, Unocal Corporation issued a news release announcing the Company's preliminary earnings for the second quarter and six months ended June 30, 2004 and containing other information set forth therein. A copy of the news release is furnished with this report as Exhibit 99.1 and shall be deemed a part of and incorporated by reference into this Item 9 and Item 12 for all purposes. On August 2, 2004, Unocal Corporation distributed for reference during its quarterly earnings call held on August 2, 2004 a summary of the significant variances in adjusted after-tax earnings by business segment between the second quarter of 2004 and first quarter of 2004. A copy of this summary is furnished with this report as Exhibit 99.2 and shall be deemed a part of and incorporated by reference into this Item 9 and Item 12 for all purposes. Signature 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: August 2, 2004 By: /s/ JOE D. CECIL ------------------ ------------------------------- Joe D. Cecil Vice President and Comptroller EX-99 2 exh99-1.txt EXHIBIT 99.1 EARNINGS 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 posts record net earnings in second quarter -------------------------------------------------- El Segundo, Calif., Aug. 2, 2004 - Unocal Corporation (NYSE: UCL) today reported record preliminary net earnings for the second quarter 2004 of $341 million, or $1.25 per share (diluted), 93 percent above the $177 million, or 68 cents per share (diluted), reported in the same period a year ago. The record earnings included a number of special items discussed below in connection with Unocal's adjusted after-tax earnings. Unocal's preliminary adjusted after-tax earnings for the second quarter 2004 were $231 million, or 86 cents per share (diluted). This compares with the Thomson/First Call mean of analyst estimates (published July 26, 2004) of 83 cents per share. Unocal's adjusted after-tax earnings were $191 million, or 73 cents per share (diluted), in the second quarter 2003, and $239 million, or 89 cents per share (diluted), in the first quarter 2004. Adjusted after-tax earnings are net earnings excluding special items (discussed below) and cumulative effects of accounting changes.
CONSOLIDATED RESULTS (UNAUDITED) 2nd Q 1st Q 2nd Q ------------------------------------- Millions of dollars except per share amounts 2004 2004 2003 - ------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations $ 282 $ 266 $ 165 Earnings from discontinued operations 59 3 12 - ------------------------------------------------------------------------------------------------------------------ Net earnings 341 269 177 - ------------------------------------------------------------------------------------------------------------------ Less: Special items in continuing operations 54 30 (22) Less: Special items in discontinued operations 56 - 8 - ------------------------------------------------------------------------------------------------------------------ Adjusted after-tax earnings $ 231 $ 239 $ 191 ================================================================================================================== DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 1.04 $ 0.99 $ 0.64 Discontinued operations 0.21 0.01 0.04 - ------------------------------------------------------------------------------------------------------------------ Total net earnings per share $ 1.25 $ 1.00 $ 0.68 - ------------------------------------------------------------------------------------------------------------------ Adjusted after-tax earnings per share $ 0.86 $ 0.89 $ 0.73 - ------------------------------------------------------------------------------------------------------------------ REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $ 1,980 $ 1,885 $ 1,613 ==================================================================================================================
"We had an outstanding second quarter, recording the highest quarterly profit in the company's history," said Charles R. Williamson, Unocal chairman, chief executive officer and president. "In the second quarter, we benefited from higher commodity prices and lower 2 exploration expense." Williamson went on to say, "We continued to execute on our major development programs in the Caspian Sea, Thailand, Bangladesh and deepwater Gulf of Mexico - programs that we believe will contribute to production growth in 2005 and 2006." Recent operations highlights - ---------------------------- Unocal's operational highlights and other developments during the second quarter and through the date of this news release include: - - Deepwater oil discovery drilled on the Tobago prospect in the Gulf of Mexico (Unocal operator, 40.01% working interest) - - Deepwater appraisal wells encountered hydrocarbons on the St. Malo prospect in the Gulf of Mexico (Unocal operator, 28.75% working interest) and on the deepwater Ranggas, Gehem and Gula prospects in Indonesia (Unocal operator of production-sharing contracts (PSCs), 80% working interest) - - Ramp-up of production continued on the deepwater West Seno project in Indonesia (Unocal operator of PSC, 90% working interest), although slower than initially forecast - - Construction progressed on the Phase 1 and 2 developments of the Azerbaijan International Operating Company (AIOC) project in the Caspian Sea (Unocal, 10.28% working interest); first oil at the wellhead expected in early 2005 for Phase 1 - - AIOC participant companies are reviewing the Phase 3 development project for approval; official sanction expected by year-end 2004 - - Approximately 70 percent of construction completed on the Baku-Tbilisi-Ceyhan export pipeline from the Caspian Sea (Unocal, 8.9% equity interest) - - Sold certain fee mineral interests in the U.S. for approximately $190 million - - Settlement of an eight-year dispute over operation of the Tiwi and Mak-Ban geothermal steam fields in the Philippines - - Arbitration panel decision received in dispute over gas deliveries to Agrium's Kenai, Alaska, fertilizer plant; Unocal is required to pay $36 million for past underdeliveries through April 2004 plus $2 million in interest - - Approximately $67 million cash received from the sale of Unocal's indirect interest in its last remaining oil and natural gas assets in Brazil; possible future payments contingent on achieving certain natural gas prices and/or volume thresholds - - Installed a floating storage unit for oil production from fields in the Gulf of Thailand that resulted in decreased production during the installation process 2Q 2004 financial and operating details - --------------------------------------- In the second quarter 2004, after-tax special items included a $78 million gain from the sale of North American assets, a $46 million gain from the settlement of litigation related to 3 Unocal's Philippine geothermal business, and $27 million for net settlements and adjustments relating to tax matters. Partially offsetting these gains were environmental and litigation provisions of $13 million and a provision related to the arbitration settlement on Alaska gas deliveries of $29 million. All of the special items are detailed in the Adjusted After-tax Earnings Reconciliation table included at the end of this news release. Unocal's second quarter 2004 adjusted after-tax earnings (compared with 2Q 2003) reflected higher worldwide crude oil and natural gas prices and lower exploration expense. These positive factors were partially offset by lower worldwide natural gas and liquids production and higher dry hole costs. Worldwide hydrocarbon liquids and natural gas production for the second quarter 2004 averaged 404,000 barrels of oil equivalent (BOE) per day, compared with 463,000 BOE per day in the same period a year ago. The production decline was due primarily to the sale of oil and gas producing assets in North America, which accounted for nearly 34,000 BOE per day during 2003, natural production declines in North America, and lower contractor's cost recovery barrels from certain PSCs in Asia, as a result of higher commodity prices and recovery of sunk costs, which reduced production by about 7,000 BOE per day. Second-quarter 2004 worldwide price realizations (including hedging activities) for natural gas averaged $3.65 per thousand cubic feet (mcf), up from $3.53 during the prior year's second quarter. The company's second quarter 2004 worldwide liquids price realizations (including hedging activities) were $32.61 per barrel, up from $25.36 in the second quarter 2003. Hedging activities in the 2004 second quarter decreased worldwide liquids realizations by $1.94 per barrel and decreased worldwide natural gas realizations by 11 cents per mcf. Unocal's preliminary EBITDAX for the second quarter 2004 was $762 million, or $2.74 per share (diluted). This compares with $720 million, or $2.65 per share (diluted), for the same period in 2003. EBITDAX is net earnings before interest, taxes, depreciation, depletion and amortization, impairments, exploration expenses, dry hole costs, special items, and cumulative effects of accounting changes. The company's total consolidated long-term debt (including current maturities) was $3.34 billion at June 30, 2004. Because of an accounting rule change, in the first quarter 2004 the $522 million obligation for the Unocal Capital Trust convertible preferred securities was removed from the balance sheet and replaced by a debt liability of $538 million in 6-1/4-percent junior subordinated debentures of Unocal payable to Unocal Capital Trust. Cash and cash-equivalents were $939 million at June 30, 2004. Six-months results - ------------------ Preliminary net earnings for the first six months of 2004 were $610 million, or $2.25 per share (diluted), compared with $311 million, or $1.20 per share (diluted), reported for the same 4 period a year ago. Unocal's preliminary adjusted after-tax earnings for the six months 2004 were $470 million, or $1.75 per share (diluted). Unocal's adjusted after-tax earnings were $420 million, or $1.60 per share (diluted), for the six months 2003.
For the Six Months CONSOLIDATED RESULTS (UNAUDITED) Ended June 30, --------------------------- Millions of dollars except per share amounts 2004 2003 - -------------------------------------------------------------------------------------------------------- Earnings from continuing operations $ 548 $ 379 Earnings from discontinued operations 62 15 Cumulative effect of accounting changes - (83) - -------------------------------------------------------------------------------------------------------- Net earnings 610 311 - -------------------------------------------------------------------------------------------------------- Less: Special items in continuing operations 84 (34) Less: Special items in discontinued operations 56 8 Less: Cumulative effects of accounting changes - (83) - -------------------------------------------------------------------------------------------------------- Adjusted after-tax earnings $ 470 $ 420 ======================================================================================================== DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 2.03 $ 1.45 Discontinued operations 0.22 0.05 Cumulative effect of accounting changes - (0.30) - -------------------------------------------------------------------------------------------------------- Total net earnings per share $ 2.25 $ 1.20 - -------------------------------------------------------------------------------------------------------- Adjusted after-tax earnings per share $ 1.75 $ 1.60 - -------------------------------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $ 3,865 $ 3,395 ========================================================================================================
3Q 2004 earnings outlook - ------------------------ For the third quarter 2004, Unocal is forecasting adjusted after-tax earnings of 90 cents to $1.00 per share (diluted). This forecast compares with the Thomson/First Call mean of analyst estimates (published July 26, 2004) of 75 cents per share for the third quarter 2004. Unocal's third quarter forecast assumes average NYMEX benchmark prices of $39.90 per barrel of crude oil and $6.15 per million British thermal units (mmBtu) for North America natural gas for the period. Unocal's third quarter 2004 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 third quarter of $15 to $25 million. The third-quarter adjusted after-tax earnings forecast excludes special items and accounting changes. Because of the inherent uncertainty related to these items, determining whether or when they will occur and quantifying their dollar impact, Unocal does not believe it is able to provide a meaningful forecast of third-quarter net earnings. 2004 production outlook - ----------------------- In the past, Unocal has had a goal to provide investors with a forecast amount for future production volumes that had an equal likelihood of being below or above the actual amounts. 5 Because recent actual production levels have often fallen below Unocal's estimates, the company has decided to adopt a new approach for its production forecasts. Previous production estimates have been affected by factors such as different than anticipated declines, project start-up timing, and performance of new projects. In addition, the company's production is sensitive to constrained markets and/or pipeline capacity, and by the volatility associated with oil price changes in Unocal's PSCs. Beginning with today's outlook, Unocal will now offer production forecasts that the company expects will be exceeded by actual production. Accordingly, the production outlook based on the prior methodology is being revised from approximately 425,000 BOE per day to approximately 400,000 BOE per day for the full-year 2004. This reduced forecast reflects lower volumes in the second half of the year (annualized basis) due to dispositions of producing assets in the U.S. onshore and in Brazil (4,000 BOE per day), as well as the impact of higher prices on PSCs (3,000 BOE per day), infrastructure turnarounds, reduced West Seno performance (8,000 BOE per day), and other various factors (10,000 BOE per day). As a part of this new approach, Unocal will also disclose on its website additional detailed ranges of the numerous areas of production, which describe the company's lowest and highest production estimates in those areas. In locations where Unocal is limited by market demand or pipeline capacity, the range will be between the contract minimum and the highest past production or the estimated capacity limits of the producing assets. A sensitivity factor will also be provided to adjust future production for the impacts of PSC adjustments due to changes in oil prices. The details for 2004 and new projects for 2005 are posted in the Data Warehouse section of Unocal's Investor Relations web site, www.unocal.com. 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. PDT (4 p.m. EDT) over the Internet. To listen to the live webcast, go to the Investor Relations section of the Unocal web site, www.unocal.com. Replays of the conference call, including questions and answers, will be available. Additional financial tables for the second quarter 2004 and the comparable prior periods are available in the company's "Quarterly Fact Book," which is posted in the Data Warehouse in the Investor Relations section of the company's web site. The Quarterly Fact Book is also available upon request from Unocal Investor Relations. 6 Forward-Looking Statements; Preliminary 2004 Second Quarter Results - ------------------------------------------------------------------- This news release contains forward-looking statements about matters such as plans for drilling and development operations; dry hole costs; production rates, timing and growth; commodity prices; contingent payments pursuant to completed transactions; and adjusted after-tax earnings. Although these statements are based upon Unocal's current expectations and beliefs, they are subject to known and unknown risks and uncertainties that could cause actual results and outcomes to differ materially from those described in, or implied by, the forward-looking statements, including changes in commodity prices and the effectiveness of the company's hedging activities to manage that volatility; the company's ability to find or acquire additional oil and gas reserves and to develop deepwater fields and other large projects in a timely and cost-effective manner; the accuracy of the company's estimates and judgments regarding hydrocarbon resources and formations; decline rates of producing properties in which the company has an interest; adverse geological and other operational factors; the extent of the company's operating cash flow and other capital resources available to fund its capital expenditures; international and domestic regulatory, political, and economic considerations; performance by third parties, including foreign government entities, joint venture partners, independent contractors and operators of properties in which the company has an interest, and other factors discussed in Unocal's 2003 Annual Report on Form 10-K, as amended, and subsequent reports filed by Unocal with the U.S. Securities and Exchange Commission (SEC). 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. Unocal undertakes no obligation to update the forward-looking statements in this news release to reflect future events or circumstances. All such statements are expressly qualified in their entirety by this cautionary statement. In addition, disclosures in this news release, including in the attached tables, regarding Unocal's second quarter 2004 financial results are preliminary. These disclosures are subject to change in connection with Unocal's preparation and filing of its Form 10-Q for the second quarter 2004. Supplemental Non-GAAP Financial Measures - ---------------------------------------- The news release includes certain "non-GAAP financial measures" as defined under SEC regulations. Specifically, Unocal has referred to (1) adjusted after-tax earnings and (2) EBITDAX. Adjusted after-tax earnings are defined as net earnings excluding special items, and cumulative effects of accounting changes. EBITDAX is defined as net earnings before interest, taxes, depreciation, depletion and amortization, asset impairments, exploration expenses, dry hole costs, special items, 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 include: gain/loss from major asset sales; environmental remediation costs related primarily 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 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; and insurance recoveries associated with former company operations or for costs incurred in prior years. Unocal's management believes that adjusted after-tax earnings is a useful supplemental financial measure to investors and analysts because it facilitates a focus on the company's ongoing operations and allows for convenient comparisons to the company's prior reporting periods. Adjusted after-tax earnings is also used as a factor in calculating various performance measures in connection with payments under the company's annual bonus plan, and it is used by management as a factor in reviewing business unit performance. Unocal's management believes that EBITDAX is helpful to investors and analysts because it facilitates a comparison of companies like Unocal that use the "successful efforts" accounting method with other companies in the exploration and production industry that utilize the "full-cost" method of accounting. 7 Adjusted after-tax earnings and EBITDAX are not substitutes for net earnings determined in accordance with GAAP as a measure of profitability or other GAAP financial measures. Special items excluded from these non-GAAP measures do in fact positively or negatively impact net earnings. Other companies may define special items differently, and the Thomson/First Call mean of analyst estimates may not use a similar definition. Hence, these measures may not be comparable with similarly titled amounts reported by other companies or analyst estimates reported by Thomson/First Call. A quantitative reconciliation of adjusted after-tax earnings and EBITDAX to GAAP net earnings is found in this news release, including certain of the tables accompanying the text. * * * * *
CONSOLIDATED EARNINGS (UNAUDITED) For the Three Months For the Six Months Ended June 30, Ended June 30, ------------------------------------------------ Millions of dollars except per share amounts 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------ Revenues Sales and operating revenues $ 1,921 $ 1,557 $ 3,751 $ 3,325 Interest, dividends and miscellaneous income 19 9 30 20 Gain on sales of assets 40 47 84 50 - ------------------------------------------------------------------------------------------------------------------ Total revenues 1,980 1,613 3,865 3,395 Costs and other deductions Crude oil, natural gas and product purchases 766 536 1,516 1,182 Operating expense 376 325 662 618 Administrative and general expense 46 87 109 138 Depreciation, depletion and amortization 240 254 472 513 Impairments 9 3 14 3 Dry hole costs 40 10 65 81 Exploration expense 48 88 98 143 Interest expense 46 36 87 74 Property and other operating taxes 22 21 42 43 Distributions on convertible preferred securities of subsidiary trust - 8 - 16 - ------------------------------------------------------------------------------------------------------------------ Total costs and other deductions 1,593 1,368 3,065 2,811 Earnings from equity investments 38 53 75 96 - ------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations before income taxes and minority interests 425 298 875 680 - ------------------------------------------------------------------------------------------------------------------ Income taxes 144 131 323 297 Minority interests (1) 2 4 4 - ------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations 282 165 548 379 Earnings from discontinued operations (a) 59 12 62 15 Cumulative effect of accounting changes (b) - - - (83) - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 341 $ 177 $ 610 $ 311 ================================================================================================================== Basic earnings per share of common stock (c) Continuing operations $ 1.07 $ 0.65 $ 2.08 $ 1.47 Discontinued operations 0.22 0.04 0.24 0.06 Cumulative effect of accounting changes - - - (0.32) - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 1.29 $ 0.69 $ 2.32 $ 1.21 ================================================================================================================== Diluted earnings per share of common stock (d) Continuing operations $ 1.04 $ 0.64 $ 2.03 $ 1.45 Discontinued operations 0.21 0.04 0.22 0.05 Cumulative effect of accounting changes - - - (0.30) - ------------------------------------------------------------------------------------------------------------------ Net earnings $ 1.25 $ 0.68 $ 2.25 $ 1.20 ================================================================================================================== Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.40 $ 0.40 - ------------------------------------------------------------------------------------------------------------------ (a) Net of tax (benefit) $ 30 $ 7 $ 32 $ 9 (b) Net of tax (benefit) $ - $ - $ - $ (48) (c) Basic weighted average shares outstanding (in thousands) 263,916 258,202 262,945 258,103 (d) Diluted weighted average shares outstanding (in thousands) 277,754 272,108 277,232 271,907
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) At June 30, At December 31, Millions of dollars 2004 2003 - ------------------------------------------------------------------------------------------------------------ Assets Cash and cash equivalents $ 939 $ 404 Other current assets - net 1,603 1,587 Investments and long-term receivables - net 886 892 Properties - net 8,440 8,324 Goodwill 130 131 Other assets 479 460 - ------------------------------------------------------------------------------------------------------------ Total assets $ 12,477 $ 11,798 ============================================================================================================ Liabilities and Stockholders' Equity Current liabilities (a) $ 2,102 $ 2,085 Long-term debt and capital leases 3,104 2,635 Deferred income taxes 724 704 Accrued abandonment, restoration and environmental liabilities 871 844 Other deferred credits and liabilities 1,042 960 Minority interests 46 39 Convertible preferred securities of a subsidiary trust - 522 Stockholders' equity 4,588 4,009 - ------------------------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $ 12,477 $ 11,798 ============================================================================================================ (a) Includes current portion of Long-term debt and capital leases of: 236 248
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CONSOLIDATED CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, ------------------------------ Millions of dollars 2004 2003 - --------------------------------------------------------------------------------------------------------------- Cash Flows from Operating Activities Net earnings $ 610 $ 311 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 472 515 Impairments 14 3 Dry hole costs 65 81 Amortization of exploratory leasehold costs 32 71 Deferred income taxes 11 40 Gain on sales of assets (84) (50) Gain on disposal of discontinued operations (84) (13) Pension expense net of contributions 44 42 Restructuring provisions net of payments (14) 27 Cumulative effect of accounting changes - 83 Other (37) 4 Working capital and other changes related to operations Accounts and notes receivable 45 6 Inventories (1) (4) Accounts payable 76 26 Taxes payable (26) (3) Other 3 (54) - --------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 1,126 1,085 - --------------------------------------------------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (includes dry hole costs) (801) (917) Proceeds from sales of assets 158 191 Proceeds from sales of discontinued operations 120 - Return of capital from affiliate company 48 - - --------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (475) (726) - --------------------------------------------------------------------------------------------------------------- Cash Flows from Financing Activities Long-term borrowings 135 79 Reduction of long-term debt and capital lease obligations (241) (143) Minority interests (1) (3) Repurchases of common stock (20) - Proceeds from issuance of common stock 94 10 Dividends paid on common stock (105) (103) Loans to key employees 24 3 Other (2) (7) - --------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (116) (164) - --------------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 535 195 - --------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 404 168 - --------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 939 $ 363 ===============================================================================================================
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS 2nd Q 2004 1st Q 2004 BY BUSINESS SEGMENT (UNAUDITED) --------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - ------------------------------------------------------------------------------------------------------------------ Exploration and Production North America U.S. $ 108 $ 86 $ 113 $ 92 Canada 16 16 12 12 --------------------------------------------- Total North America 124 102 125 104 International Asia 137 137 158 158 Other 29 29 17 17 --------------------------------------------- Total International 166 166 175 175 --------------------------------------------- Total Exploration and Production 290 268 300 279 --------------------------------------------- Midstream and Marketing 18 18 23 23 Geothermal 57 11 37 16 Corporate and Other Administrative and General (21) (21) (27) (27) Interest Expense - Net (33) (33) (32) (32) Environmental and Litigation (11) (3) (16) (5) Other (18) (12) (19) (18) - ------------------------------------------------------------------------------------------------------------------ After-tax earnings from continuing operations 282 228 266 236 After-tax earnings from discontinued operations 59 3 3 3 - ------------------------------------------------------------------------------------------------------------------ After-tax earnings $ 341 $ 231 $ 269 $ 239 ================================================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings Reconciliation table.
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS 2nd Q 2004 2nd Q 2003 BY BUSINESS SEGMENT (UNAUDITED) --------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - ------------------------------------------------------------------------------------------------------------------ Exploration and Production North America U.S. $ 108 $ 86 $ 100 $ 81 Canada 16 16 8 6 --------------------------------------------- Total North America 124 102 108 87 International Asia 137 137 126 126 Other 29 29 19 19 --------------------------------------------- Total International 166 166 145 145 --------------------------------------------- Total Exploration and Production 290 268 253 232 --------------------------------------------- Midstream and Marketing 18 18 21 21 Geothermal 57 11 7 7 Corporate and Other Administrative and General (21) (21) (22) (22) Interest Expense - Net (33) (33) (28) (28) Environmental and Litigation (11) (3) (28) (2) Other (18) (12) (38) (21) - ------------------------------------------------------------------------------------------------------------------ After-tax earnings from continuing operations 282 228 165 187 After-tax earnings from discontinued operations 59 3 12 4 - ------------------------------------------------------------------------------------------------------------------ After-tax earnings $ 341 $ 231 $ 177 $ 191 ================================================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings Reconciliation table.
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS For the Six Months Ended June 30, BY BUSINESS SEGMENT (UNAUDITED) --------------------------------------------- 2004 2004 2003 2003 --------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - ------------------------------------------------------------------------------------------------------------------ Exploration and Production North America U.S. $ 221 $ 178 $ 223 $ 204 Canada 28 28 32 28 --------------------------------------------- Total North America 249 206 255 232 International Asia 295 295 258 258 Other 46 46 29 29 --------------------------------------------- Total International 341 341 287 287 --------------------------------------------- Total Exploration and Production 590 547 542 519 --------------------------------------------- Midstream and Marketing 41 41 30 30 Geothermal 94 27 19 19 Corporate and Other Administrative and General (48) (48) (45) (45) Interest Expense - Net (65) (65) (59) (59) Environmental and Litigation (27) (8) (45) (5) Other (37) (30) (63) (46) - ------------------------------------------------------------------------------------------------------------------ After-tax earnings from continuing operations 548 464 379 413 After-tax earnings from discontinued operations 62 6 15 7 Cumulative effect of accounting changes - - (83) - - ------------------------------------------------------------------------------------------------------------------ After-tax earnings $ 610 $ 470 $ 311 $ 420 ================================================================================================================== (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings Reconciliation table.
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OPERATING HIGHLIGHTS UNOCAL CORPORATION For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------------------------- 2004 2003 2004 2003 - --------------------------------------------------------------------------------------------------------- North America Net Daily Production Liquids (thousand barrels) U.S. (a) 55 67 55 68 Canada 15 17 16 17 - --------------------------------------------------------------------------------------------------------- Total liquids 70 84 71 85 Natural gas - dry basis (million cubic feet) U.S. (a) 511 719 512 742 Canada 83 86 83 91 - --------------------------------------------------------------------------------------------------------- Total natural gas 594 805 595 833 North America Average Prices (excluding hedging activities) (b) Liquids (per barrel) U. S. $ 35.91 $ 26.53 $ 33.66 $ 29.11 Canada $ 29.89 $ 23.52 $ 29.17 $ 26.05 Average $ 34.58 $ 25.93 $ 32.66 $ 28.48 Natural gas (per mcf) U. S. $ 4.80 $ 4.64 $ 5.20 $ 5.25 Canada $ 5.40 $ 5.13 $ 5.37 $ 5.40 Average $ 4.88 $ 4.69 $ 5.23 $ 5.27 - --------------------------------------------------------------------------------------------------------- North America Average Prices (including hedging activities) (b) Liquids (per barrel) U. S. $ 30.52 $ 26.41 $ 29.64 $ 28.49 Canada $ 29.89 $ 23.52 $ 29.17 $ 26.05 Average $ 30.38 $ 25.84 $ 29.54 $ 27.99 Natural gas (per mcf) U. S. $ 4.53 $ 4.50 $ 5.34 $ 4.86 Canada $ 5.08 $ 4.79 $ 5.06 $ 5.07 Average $ 4.61 $ 4.53 $ 5.30 $ 4.89 - --------------------------------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) 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, -------------------------------------- 2004 2003 2004 2003 - --------------------------------------------------------------------------------------------------------- International Net Daily Production (c) Liquids (thousand barrels) Asia 61 59 64 58 Other (a) 20 20 20 20 - --------------------------------------------------------------------------------------------------------- Total liquids 81 79 84 78 Natural gas - dry basis (million cubic feet) Asia 891 977 885 968 Other (a) 31 23 28 22 - --------------------------------------------------------------------------------------------------------- Total natural gas 922 1,000 913 990 International Average Prices (d) Liquids (per barrel) Asia $ 34.02 $ 24.77 $ 32.66 $ 27.06 Other $ 36.01 $ 25.19 $ 34.30 $ 27.10 Average $ 34.52 $ 24.90 $ 33.02 $ 27.07 Natural gas (per mcf) Asia $ 3.02 $ 2.74 $ 2.99 $ 2.75 Other $ 4.01 $ 4.60 $ 4.17 $ 4.38 Average $ 3.03 $ 2.76 $ 3.01 $ 2.76 - --------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------- Worldwide Net Daily Production (a) (c) Liquids (thousand barrels) 151 163 155 163 Natural gas - dry basis (million cubic feet) 1,516 1,805 1,508 1,823 Barrels oil equivalent (thousands) 404 463 406 467 Worldwide Average Prices (excluding hedging activities) (b) Liquids (per barrel) $ 34.55 $ 25.40 $ 32.86 $ 27.80 Natural gas (per mcf) $ 3.76 $ 3.60 $ 3.89 $ 3.88 Worldwide Average Prices (including hedging activities) (b) Liquids (per barrel) $ 32.61 $ 25.36 $ 31.41 $ 27.54 Natural gas (per mcf) $ 3.65 $ 3.53 $ 3.92 $ 3.71 - --------------------------------------------------------------------------------------------------------- (a) Includes proportional interests in production of equity investees. (b) Excludes gains/losses on derivative positions not accounted for as hedges and ineffective portions of hedges. (c) International production is presented utilizing the economic interest method. (d) International did not have any hedging activities.
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ADJUSTED AFTER-TAX EARNINGS RECONCILIATION (UNAUDITED) 2nd Q 1st Q 2nd Q Millions of dollars except per share amounts -------------------------------- 2004 2004 2003 - ------------------------------------------------------------------------------------------------------------------- Net earnings $ 341 $ 269 $ 177 - ------------------------------------------------------------------------------------------------------------------- Less: Special items from continuing operations E&P - North America - U.S. Asset sales 22 6 20 Litigation provisions / settlements - 15 (1) E&P - North America - Canada Derivatives -- non-hedging - - 2 Geothermal Asset sales - 21 - PGI settlement 46 - - Corporate and Other Environmental and litigation provisions (13) (12) (26) Net tax adjustments for settlements / assessments 27 - - Restructuring provisions 1 - (17) Provision related to Agrium arbitration settlement (29) - - Less: Special items from discontinued operations Gain on asset disposals 56 - 8 - ------------------------------------------------------------------------------------------------------------------- Adjusted after-tax earnings $ 231 $ 239 $ 191 =================================================================================================================== Adjusted after-tax earnings per share (diluted) $ 0.86 $ 0.89 $ 0.73 ===================================================================================================================
ADJUSTED AFTER-TAX EARNINGS (UNAUDITED) Six Months Six Months Millions of dollars except per share amounts ---------------------------- 2004 2003 - ----------------------------------------------------------------------------------------------------------------- Net earnings $ 610 $ 311 - ----------------------------------------------------------------------------------------------------------------- Less: Special items from continuing operations E&P - North America - U.S. Asset sales 28 20 Litigation provisions / settlements 15 (1) E&P - North America - Canada Derivatives -- non-hedging - 4 Geothermal Asset sales 21 - PGI settlement 46 - Corporate and Other Environmental and litigation provisions (25) (40) Net tax adjustments for settlements / assessments 27 - Restructuring provisions 1 (17) Provision related to Agrium arbitration settlement (29) - Less: Special items from discontinued operations Gain on asset disposals 56 8 Less: Cumulative effect of accounting changes - (83) - ----------------------------------------------------------------------------------------------------------------- Adjusted after-tax earnings $ 470 $ 420 ================================================================================================================= Adjusted after-tax earnings per share (diluted) $ 1.75 $ 1.60 =================================================================================================================
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EBITDAX RECONCILIATION (UNAUDITED) 2nd Q 2nd Q Six Months Six Months Millions of dollars except per share amounts --------------------------------------------------------- 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------- Net Earnings $ 341 $ 177 $ 610 $ 311 Less: Special items from continuing operations 54 (22) 84 (34) Special items from discontinued operations 56 8 56 8 Cumulative effect of accounting changes - - - (83) - ------------------------------------------------------------------------------------------------------------------- Adjusted after-tax earnings 231 191 470 420 Add-backs to adjusted after-tax earnings: Depreciation, depletion and amortization (a) 240 255 472 515 Impairments 9 3 14 3 Dry hole costs 40 10 65 81 Exploration expenses (including amortization of undeveloped leasehold costs) 48 88 98 143 Current income taxes 126 100 267 238 Deferred income taxes 22 37 45 74 Interest expense (b) 46 36 87 74 - ------------------------------------------------------------------------------------------------------------------- EBITDAX $ 762 $ 720 $1,518 $ 1,548 =================================================================================================================== EBITDAX per share (diluted) $ 2.74 $ 2.65 $ 5.48 $ 5.69 (a) Includes DD&A from discontinued operations of: - 1 - 2 (b) Net of capitalized interest of: 10 19 26 35
##### EX-99 3 exh99-2.txt EXHIBIT 99.2 ANALYST COVER PAGE Exhibit 99.2 UNOCAL SECOND QUARTER 2004 SUMMARY For a reconciliation of adjusted after-tax earnings refer to the Earnings Release and Tables titled "Net Earnings and Adjusted After - Tax Earnings by Business Segment" and "Adjusted after-tax Earnings Reconciliation" Million --------- Total Reported Second Quarter 2004 Net Earnings $ 341 $1.25/ Share - ----------------------------------------------------------------------------- Special Items Gain on Sale of Assets - North America (78) Philippine Geothermal Settlement (46) Income Tax Settlement (27) Agrium Arbitration 29 Environmental Litigation & Other 12 Second Quarter 2004 Adjusted Earnings $ 231 $.86/ Share - ---------------------------------------------------------------------------- Mean Analyst estimate dated July 26, 2004 $.83/ Share - ---------------------------------------------------------------------------- Variance Explanations to; $ Million First Quarter 2004 Adjusted Earnings 239 $.89/Share North America United States (6) Lower Prices - Gas (18), Lower Expl. Exp. +4, Lower Dry Holes + 7 All Other +1 Canada - Lower Effective Tax Rate +4 International E&P (9) Higher Prices; Liquids +11, Gas +6 Lower Production Vol.(12) Timing of AIOC Lifting +9 Higher Dry Holes (14), Higher D&D (4) Tax Rate & For. Exchange (3), All Other (2) Midstream & Marketing (5) Lower Storage & Pipeline Results Geothermal - Lower Power Results (5) Corporate & Other +13 Lower Admin & Gen. +6, Lower Env. & Lit. +2 Improved Molybdenum Results +6, All Other (1) Second Quarter 2004 Adjusted Earnings $ 231 $.86/ Share - ---------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----