-----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, NlmtdjtHj36dnmJT/nwKbRId+X/GkiTDe/4k7N1XsQ3jrnQvEVEn6FYDic5ziRBm HvlzuSkjwzBZGzjN3esD3g== 0000716039-05-000022.txt : 20050201 0000716039-05-000022.hdr.sgml : 20050201 20050201091810 ACCESSION NUMBER: 0000716039-05-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050131 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050201 DATE AS OF CHANGE: 20050201 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: 0901 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08483 FILM NUMBER: 05563951 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 u8k020105.txt 4TH Q / YE RESERVES UNITED STATES 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 1, 2005 ------------------------ 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act In accordance with General Instruction B.2 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. Item 2.02. Results of Operations and Financial Condition. On February 1, 2005, we issued a news release announcing our preliminary earnings for the fourth quarter and the year ended December 31, 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 2.02 for all purposes. On February 1, 2005, we distributed for reference during our quarterly earnings call held on February 1, 2005 a summary of the significant variances in adjusted after-tax earnings by business segment between the fourth quarter of 2004 and the third 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 2.02 for all purposes. Item 7.01. Regulation FD Disclosure. On February 1, 2005, we issued a news release announcing our preliminary proved natural gas and crude oil reserves estimate of 1.754 billion barrels-of-oil equivalent ("BOE") at year-end 2004, which compares with 1.759 billion BOE a year earlier. For the year 2004, we added 150 million BOE to our proved reserves through discoveries and extensions, net purchases and sales, and performance, price and other revisions. We produced 155 million BOE in 2004. We added 199 million BOE from discoveries and extensions. We also made 39 million BOE in negative price revisions attributable to changes in crude oil prices for proved reserves held under production-sharing contracts ("PSCs"). Other price revisions accounted for a 14 million BOE increase in our North American proved reserves. Purchases and sales amounted to a net reduction of 12 million BOE. All other revisions totaled a negative 12 million BOE. The discoveries and extensions were primarily from the sanctioning of the Bibiyana development in Bangladesh and the Phase III development by the Azerbaijan International Operating Company ("AIOC") in the Caspian Sea and additional proved reserves of our Unocal Thailand, Pure Resources and Northrock operations. In 2004, approximately 135 million BOE were promoted from proved undeveloped to the proved developed category. Under foreign PSC arrangements in Indonesia, Myanmar, AIOC, Bangladesh, and the Democratic Republic of the Congo, net entitlement reserves to us, as contractor, increase as oil and/or gas prices decline and decrease when they rise. Benchmark crude oil prices rose from $32.55 per barrel at year-end 2003 to $43.46 per barrel at the end of 2004. The price increase resulted in approximately 39 million BOE negative revisions in our proved reserves under PSCs because fewer equivalent barrels are required to be reimbursed for our costs. The higher prices resulted in 14 million BOE of positive revisions in non-PSC countries because our estimates of commercially recoverable resources increased under those economic conditions. -1- Unocal preliminary estimated proved reserves of crude oil and natural gas (MMBOE) -------------------------------------------- As of December 31, 2003(a) 1,759 Discoveries and extensions 199 Revisions -- PSC price-related (39) -- Other price-related 14 -- All other revisions (12) Purchases & sales (net) (12) Total 2004 changes 150 Production (155) As of December 31, 2004(a) 1,754 (a) Includes proportional shares of reserves of investees accounted for by the equity method of 9 MMBOE and zero at December 31, 2003 and 2004, respectively. Forward-Looking Statements This filing contains forward-looking statements about matters such as estimates of proved oil and gas reserves recoverable in future years. 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 to differ materially from those described in, or implied by, the forward-looking statements, including volatility in commodity prices; Unocal's ability to develop and produce deepwater and other projects in a timely and cost-effective manner; the accuracy of Unocal's estimates and judgments regarding hydrocarbon resources and formations and reservoir performance; operational risks inherent in the exploration, development and production of oil and gas; the impact of environmental laws, permitting and licensing requirements and other regulations; international and domestic political and economic factors; 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 Unocal's SEC filings are available from Unocal 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 by this cautionary statement, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Item 9.01. Financial Statements and Exhibits. (c) Exhibits. 99.1 Press Release dated February 1, 2005 entitled, "Unocal reports 4Q 2004 net earnings up 49%". 99.2 Summary of Significant Variances dated February 1, 2005. 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: February 1, 2005 By: /s/Joe D. Cecil - ------------------------ ------------------------------- Joe D. Cecil Vice President and Comptroller -2- EX-99 2 exh99-1.txt EXHIBIT 99.1 EARNINGS PR Exhibit 99.1 Unocal 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 reports 4Q 2004 net earnings up 49% ------------------------------------------ El Segundo, Calif., Feb. 1, 2005 - Unocal Corporation (NYSE: UCL) today reported preliminary net earnings for the fourth quarter 2004 of $268 million, or $1.00 per share (diluted), 49 percent above the $180 million, or 68 cents per share (diluted), reported in the same period a year ago. The 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 fourth quarter 2004 were $313 million, or $1.17 per share (diluted). This compares with the Thomson/First Call mean of analyst estimates (published Jan. 31, 2005) of $1.17 per share. Unocal's adjusted after-tax earnings were $167 million, or 63 cents per share (diluted), in the fourth quarter 2003, and $294 million, or $1.09 per share (diluted), in the third quarter 2004. Adjusted after-tax earnings are net earnings excluding special items (discussed below) and the cumulative effect of accounting changes.
CONSOLIDATED RESULTS (UNAUDITED) 4th Q 3rd Q 4th Q ------------------------------------ Millions of dollars except per share amounts 2004 2004 2003 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 268 $ 329 $ 169 Earnings from discontinued operations - 1 11 - -------------------------------------------------------------------------------- Net earnings 268 330 180 - -------------------------------------------------------------------------------- Less: Special items in continuing operations (45) 35 5 Less: Special items in discontinued operations - 1 8 - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 313 $ 294 $ 167 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 1.00 $ 1.22 $ 0.64 Discontinued operations - 0.01 0.04 - -------------------------------------------------------------------------------- Total net earnings per share $ 1.00 $ 1.23 $ 0.68 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $ 1.17 $ 1.09 $ 0.63 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $ 2,346 $ 1,993 $ 1,582 ================================================================================
"Our earnings continue to be driven by strong crude oil and natural gas prices," said Charles R. Williamson, Unocal chairman and chief executive officer. "On top of that factor, we also saw an upturn in our international liquids and natural gas production that more than offset 2 our North America declines on an oil-equivalent basis." Recent operational and financial highlights - ------------------------------------------- Some of Unocal's operational highlights and other developments during the fourth quarter include: - - Signed a natural gas sales and purchase agreement to develop and produce gas from the Bibiyana field in Bangladesh - - Ramped-up gross production at the deepwater West Seno project in Indonesia to 40,000 barrel-of-oil equivalent (BOE) per day at the end of the quarter; Unocal is operator of the production-sharing contract (PSC) with a 90% working interest - - Progressed with construction 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 - - More than 93 percent of construction completed on the Baku-Tbilisi-Ceyhan export pipeline from the Caspian Sea (Unocal, 8.9% equity interest) - - Geared up for first production from the deepwater Mad Dog project in the Gulf of Mexico; production started Jan. 13, 2005 - - Non-cash dry hole and impairment expenses were significantly higher than in each of the first three quarters of 2004 - - Year-end long-term debt was reduced to $3.06 billion, down from $3.42 billion at the beginning of 2004 (which included $538 million in convertible junior subordinated debentures of Unocal payable to Unocal Capital Trust) - - Announced a $465 million cash expenditure program to redeem the remaining outstanding convertible preferred securities and repurchase Unocal common stock 4Q 2004 financial and operating details - --------------------------------------- In the fourth quarter 2004, after-tax special items included charges of $43 million in environmental and litigation provisions, a $21 million Oil Insurance Limited retrospective liability increase, and a $14 million charge related to a contract settlement with Agrium Inc. These negative factors were offset partially by a $17 million gain from asset sales and a positive $15 million tax adjustment. 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 fourth quarter 2004 adjusted after-tax earnings (compared with 4Q 2003) reflected higher worldwide crude oil and natural gas prices and higher international production. These positive factors were offset partially by lower North America natural gas and liquids production and higher dry hole costs. Worldwide hydrocarbon liquids and natural gas production for the fourth quarter 2004 averaged 428,000 BOE per day, up from 420,000 BOE per day in the same period a year ago. 3 The production increase was due primarily to higher liquids and natural gas production in Asia. Fourth-quarter 2004 worldwide price realizations (including hedging activities) for natural gas averaged $4.15 per thousand cubic feet (mcf), up from $3.65 during the prior year's fourth quarter. The company's fourth quarter 2004 worldwide liquids price realizations (including hedging activities) were $41.27 per barrel, up from $28.33 in the fourth quarter 2003. Hedging activities in the 2004 fourth quarter decreased worldwide liquids realizations by $1.56 per barrel and decreased worldwide natural gas realizations by 20 cents per mcf. Unocal's preliminary EBITDAX for the fourth quarter 2004 was $1.02 billion, or $3.74 per share (diluted). This compares with $660 million, or $2.41 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 the cumulative effect of accounting changes. Full-year 2004 results - ---------------------- Preliminary net earnings for the full-year 2004 were a record $1.21 billion, or $4.48 per share (diluted), compared with $643 million, or $2.46 per share (diluted), reported for the same period a year ago. For the Year Ended CONSOLIDATED RESULTS (UNAUDITED) December 31, --------------------------- Millions of dollars except per share amounts 2004 2003 - -------------------------------------------------------------------------------- Earnings from continuing operations $ 1,145 $ 698 Earnings from discontinued operations 63 28 Cumulative effect of accounting changes - (83) - -------------------------------------------------------------------------------- Net earnings 1,208 643 - -------------------------------------------------------------------------------- Less: Special items in continuing operations 74 (67) Less: Special items in discontinued operations 57 16 Less: Cumulative effect of accounting changes - (83) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 1,077 $ 777 ================================================================================ DILUTED EARNINGS PER SHARE DATA (UNAUDITED) Net earnings per share: Continuing operations $ 4.25 $ 2.66 Discontinued operations 0.23 0.10 Cumulative effect of accounting changes - (0.30) - -------------------------------------------------------------------------------- Total net earnings per share $ 4.48 $ 2.46 - -------------------------------------------------------------------------------- Adjusted after-tax earnings per share $ 4.00 $ 2.95 - -------------------------------------------------------------------------------- REVENUES FROM CONTINUING OPERATIONS (UNAUDITED) $ 8,204 $ 6,512 ================================================================================ Unocal's preliminary adjusted after-tax earnings for the full-year 2004 were $1.08 billion, or $4.00 per share (diluted). Unocal's adjusted after-tax earnings were $777 million, or $2.95 per share (diluted), for the full-year 2003. The company's full-year 2004 adjusted after-tax earnings (compared with the full-year 2003) benefited from higher worldwide crude oil and natural gas prices, lower exploration expense and lower interest expense. These positive factors were partially offset by lower North America natural gas and liquids production and higher dry hole costs. 4 Net cash provided from operating activities increased to $2.56 billion in 2004, from $1.95 billion in 2003. Unocal's EBITDAX for the full-year 2004 was $3.42 billion, or $12.42 per share (diluted), compared with $2.92 billion, or $10.70 per share (diluted), for 2003. Cash and cash equivalents were $1.16 billion at Dec. 31, 2004, up from $404 million at Dec. 31, 2003. The increase was achieved despite paying down debt by $384 million and contributing $100 million to the company's U.S. qualified pension plan during 2004. 1Q 2005 earnings outlook - ------------------------ For the first quarter 2005, Unocal is forecasting adjusted after-tax earnings of $1.20 to $1.35 per share (diluted). This forecast compares with the Thomson/First Call mean of analyst estimates (published Jan. 31, 2005) of $1.09 per share for the first quarter 2005. Unocal's first quarter forecast assumes average NYMEX benchmark prices of $46.70 per barrel of crude oil and $6.25 per million British thermal units (mmBtu) for North America natural gas for the period. Unocal's first quarter 2005 adjusted after-tax earnings are expected to change $9 million for every $1 change in its average worldwide realized price for crude oil and $2 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 $30 to $40 million. The first-quarter adjusted after-tax earnings forecast excludes special items and accounting changes. Because of the inherent uncertainty related to determining whether or when these items will occur and quantifying their dollar impact, Unocal does not believe it is able to provide a meaningful forecast of first-quarter net earnings. 2005 production outlook - ----------------------- Unocal currently expects worldwide production for the full-year 2005 to exceed 425,000 BOE per day. The company's updated 2005 net production outlook can be found in the Data Warehouse section of Unocal's Investor Relations web site, www.unocal.com. This document provides 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 is between the contract minimum and the highest past production or the estimated capacity limits of the producing assets. A sensitivity factor is provided to adjust future production for the impacts of PSC adjustments due to changes in oil prices. 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 Asia and North America. 5 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 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 fourth 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. * * * * * Forward-Looking Statements;Preliminary 2004 Fourth Quarter and Full Year Results - -------------------------------------------------------------------------------- This news release contains forward-looking statements about matters such as adjusted after-tax earnings, dry hole costs, and production rates and timing. 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 volatility in commodity prices; Unocal's ability to find or acquire commercially productive reservoirs and to develop and produce deepwater and other projects in a timely and cost-effective manner; the accuracy of Unocal's estimates and judgments regarding hydrocarbon resources and formations and reservoir performance; operational risks inherent in the exploration, development and production of oil and gas; the impact of environmental laws, permitting and licensing requirements and other regulations; international and domestic political and economic factors; 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 Unocal's SEC filings are available from Unocal 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 by this cautionary statement, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In addition, disclosures in this news release, including in the attached tables, regarding Unocal's fourth quarter and full year 2004 financial results are preliminary and are subject to change in connection with Unocal's preparation and filing of its Form 10-K for the year ended December 31, 2004. Supplemental Non-GAAP Financial Measures - ---------------------------------------- The news release includes certain "non-GAAP financial measures" as defined under SEC regulations: (1) adjusted after-tax earnings (net earnings excluding special items and cumulative effects of accounting changes) and (2) EBITDAX (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 and 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. 6 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. 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 historical 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. * * * * * 7
CONSOLIDATED EARNINGS (UNAUDITED) For the Three Months For the Year Ended December 31, Ended December 31, --------------------------------------------- Millions of dollars except per share amounts 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Revenues Sales and operating revenues $ 2,291 $ 1,571 $ 8,003 $ 6,368 Interest, dividends and miscellaneous income 11 7 47 25 Gain on sales of assets 44 4 154 119 - -------------------------------------------------------------------------------- Total revenues 2,346 1,582 8,204 6,512 Costs and other deductions Crude oil, natural gas and product purchases 914 497 3,202 2,126 Operating expense 457 374 1,435 1,336 Administrative and general expense 58 61 202 260 Depreciation, depletion and amortization 277 241 997 985 Impairments 32 7 74 93 Dry hole costs 83 33 160 128 Exploration expense 52 69 201 251 Interest expense 33 71 160 190 Property and other operating taxes 23 20 84 81 Distributions on convertible preferred securities of subsidiary trust - 9 - 33 - -------------------------------------------------------------------------------- Total costs and other deductions 1,929 1,382 6,515 5,483 Earnings from equity investments 34 42 140 192 - -------------------------------------------------------------------------------- Earnings from continuing operations before income taxes and minority interests 451 242 1,829 1,221 - -------------------------------------------------------------------------------- Income taxes 178 72 673 514 Minority interests 5 1 11 9 - -------------------------------------------------------------------------------- Earnings from continuing operations 268 169 1,145 698 Earnings from discontinued operations (a) - 11 63 28 Cumulative effect of accounting changes (b) - - - (83) - -------------------------------------------------------------------------------- Net earnings $ 268 $ 180 $ 1,208 $ 643 ================================================================================ Basic earnings per share of common stock (c) Continuing operations $ 1.02 $ 0.65 $ 4.35 $ 2.70 Discontinued operations - 0.04 0.24 0.11 Cumulative effect of accounting changes - - - (0.32) - -------------------------------------------------------------------------------- Net earnings $ 1.02 $ 0.69 $ 4.59 $ 2.49 ================================================================================ Diluted earnings per share of common stock (d) Continuing operations $ 1.00 $ 0.64 $ 4.25 $ 2.66 Discontinued operations - 0.04 0.23 0.10 Cumulative effect of accounting changes - - - (0.30) - -------------------------------------------------------------------------------- Net earnings $ 1.00 $ 0.68 $ 4.48 $ 2.46 ================================================================================ Cash dividends declared per share of common stock $ 0.20 $ 0.20 $ 0.80 $ 0.80 - -------------------------------------------------------------------------------- (a) Net of tax (benefit) $ - $ 2 $ 33 $ 13 (b) Net of tax (benefit) $ - $ - $ - $ (48) (c) Basic weighted average shares outstanding (in thousands) 263,374 259,521 262,973 258,563 (d) Diluted weighted average shares outstanding (in thousands) 271,280 274,025 275,115 272,722
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CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) At December 31, Millions of dollars 2004 2003 - -------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 1,160 $ 404 Other current assets - net 1,770 1,587 Investments and long-term receivables - net 777 892 Properties - net 8,819 8,324 Goodwill 136 131 Other assets 439 460 - -------------------------------------------------------------------------------- Total assets $ 13,101 $11,798 ================================================================================ Liabilities and Stockholders' Equity Current liabilities (a) $ 2,581 $ 2,085 Long-term debt and capital leases 2,571 2,635 Deferred income taxes 839 704 Accrued abandonment, restoration and environmental liabilities 917 844 Other deferred credits and liabilities 949 960 Minority interests 27 39 Convertible preferred securities of a subsidiary trust - 522 Stockholders' equity 5,217 4,009 - -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $ 13,101 $11,798 ================================================================================ (a) Includes current portion of Long-term debt and capital leases of: 491 248
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CONSOLIDATED CASH FLOWS (UNAUDITED) For the Year Ended December 31, ----------------------------- Millions of dollars 2004 2003 - -------------------------------------------------------------------------------- Cash Flows from Operating Activities Net earnings $ 1,208 $ 643 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation, depletion and amortization 997 988 Impairments 74 93 Dry hole costs 160 128 Amortization of exploratory leasehold costs 61 108 Deferred income taxes 134 56 Gain on sales of assets (154) (119) Gain on disposal of discontinued operations (86) (25) Pension expense net of contributions (14) 58 Restructuring provisions net of payments (24) 27 Cumulative effect of accounting changes - 83 Other 107 (3) Working capital and other changes related to operations 93 (88) - -------------------------------------------------------------------------------- Net cash provided by operating activities 2,556 1,949 - -------------------------------------------------------------------------------- Cash Flows from Investing Activities Capital expenditures (includes dry hole costs) (1,744) (1,718) Proceeds from sales of assets 377 642 Proceeds from sales of discontinued operations 123 11 Return of capital from affiliate company 48 - - -------------------------------------------------------------------------------- Net cash used in investing activities (1,196) (1,065) - -------------------------------------------------------------------------------- Cash Flows from Financing Activities Long-term borrowings 138 205 Reduction of long-term debt and capital lease obligations (522) (452) Minority interests (3) (257) Repurchases of common stock (223) - Proceeds from issuance of common stock 195 58 Dividends paid on common stock (210) (207) Loans to key employees 25 11 Other (4) (6) - -------------------------------------------------------------------------------- Net cash used in financing activities (604) (648) - -------------------------------------------------------------------------------- Net increase in cash and cash equivalents 756 236 - -------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 404 168 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 1,160 $ 404 ================================================================================
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NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 4th Q 2004 3rd Q 2004 --------------------------------------------- Adjusted Adjusted Net After-Tax Net After-Tax Millions of dollars Earnings Earnings (a) Earnings Earnings (a) - -------------------------------------------------------------------------------- Exploration and Production North America U.S. $ 77 $ 77 $ 97 $ 99 Canada 14 14 15 15 --------------------------------------------- Total North America 91 91 112 114 International Asia 187 187 189 189 Other 31 31 31 31 --------------------------------------------- Total International 218 218 220 220 --------------------------------------------- Total Exploration and Production 309 309 332 334 --------------------------------------------- Midstream and Marketing 26 26 12 12 Geothermal 22 22 3 3 Corporate and Other Administrative and General (28) (28) (19) (19) Interest Expense - Net (20) (20) (26) (26) Environmental and Litigation (47) (5) (20) (3) Other 6 9 47 (7) - -------------------------------------------------------------------------------- After-tax earnings from continuing operations 268 313 329 294 After-tax earnings from discontinued operations - - 1 - - -------------------------------------------------------------------------------- After-tax earnings $ 268 $ 313 $ 330 $ 294 ================================================================================ (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings Reconciliation table.
NET EARNINGS AND ADJUSTED AFTER-TAX EARNINGS BY BUSINESS SEGMENT (UNAUDITED) 4th Q 2004 4th Q 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. $ 77 $ 77 $ 74 $ 71 Canada 14 14 32 7 --------------------------------------------- Total North America 91 91 106 78 International Asia 187 187 126 126 Other 31 31 12 12 --------------------------------------------- Total International 218 218 138 138 --------------------------------------------- Total Exploration and Production 309 309 244 216 --------------------------------------------- Midstream and Marketing 26 26 21 17 Geothermal 22 22 12 12 Corporate and Other Administrative and General (28) (28) (26) (26) Interest Expense - Net (20) (20) (54) (26) Environmental and Litigation (47) (5) (24) (8) Other 6 9 (4) (21) - -------------------------------------------------------------------------------- After-tax earnings from continuing operations 268 313 169 164 After-tax earnings from discontinued operations - - 11 3 - -------------------------------------------------------------------------------- After-tax earnings $ 268 $ 313 $ 180 $ 167 ================================================================================ (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 BY BUSINESS SEGMENT (UNAUDITED) For the Year Ended December 31, --------------------------------------------- 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. $ 395 $ 354 $ 384 $ 370 Canada 57 57 79 50 --------------------------------------------- Total North America 452 411 463 420 International Asia 671 671 497 497 Other 108 108 64 64 --------------------------------------------- Total International 779 779 561 561 --------------------------------------------- Total Exploration and Production 1,231 1,190 1,024 981 --------------------------------------------- Midstream and Marketing 79 79 70 67 Geothermal 119 52 50 50 Corporate and Other Administrative and General (95) (95) (92) (92) Interest Expense - Net (111) (111) (145) (117) Environmental and Litigation (94) (16) (102) (28) Other 16 (28) (107) (96) - -------------------------------------------------------------------------------- After-tax earnings from continuing operations 1,145 1,071 698 765 After-tax earnings from discontinued operations 63 6 28 12 Cumulative effect of accounting changes - - (83) - - -------------------------------------------------------------------------------- After-tax earnings $ 1,208 $ 1,077 $ 643 $ 777 ================================================================================ (a) For a reconciliation to net earnings, see the Adjusted After-Tax Earnings Reconciliation table.
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OPERATING HIGHLIGHTS For the Three Months For the Year Ended December 31, Ended December 31, -------------------------------------- 2004 2003 2004 2003 - -------------------------------------------------------------------------------- North America Net Daily Production Liquids (thousand barrels) U.S. (a) 53 58 54 64 Canada 16 17 16 17 - -------------------------------------------------------------------------------- Total liquids 69 75 70 81 Natural gas - dry basis (million cubic feet) U.S. (a) 470 566 495 673 Canada 81 89 83 90 - -------------------------------------------------------------------------------- Total natural gas 551 655 578 763 North America Average Prices (excluding hedging activities) (b) Liquids (per barrel) U. S. $ 44.53 $ 28.81 $ 37.82 $ 28.67 Canada $ 35.60 $ 22.94 $ 32.31 $ 24.76 Average $ 42.47 $ 27.52 $ 36.57 $ 27.84 Natural gas (per mcf) U. S. $ 6.03 $ 4.25 $ 5.33 $ 4.85 Canada $ 5.95 $ 4.56 $ 5.48 $ 5.07 Average $ 6.02 $ 4.30 $ 5.35 $ 4.88 - -------------------------------------------------------------------------------- North America Average Prices (including hedging activities) (b) Liquids (per barrel) U. S. $ 39.46 $ 29.30 $ 33.45 $ 28.43 Canada $ 35.60 $ 22.94 $ 32.31 $ 24.76 Average $ 38.57 $ 27.90 $ 33.19 $ 27.66 Natural gas (per mcf) U. S. $ 5.39 $ 4.66 $ 5.23 $ 4.75 Canada $ 5.85 $ 4.34 $ 5.24 $ 4.78 Average $ 5.45 $ 4.61 $ 5.23 $ 4.76 - -------------------------------------------------------------------------------- (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 Year Ended December 31, Ended December 31, -------------------------------------- 2004 2003 2004 2003 - -------------------------------------------------------------------------------- International Net Daily Production (c) Liquids (thousand barrels) Asia 83 63 70 59 Other (a) 19 19 19 20 - -------------------------------------------------------------------------------- Total liquids 102 82 89 79 Natural gas - dry basis (million cubic feet) Asia 982 896 912 941 Other (a) 11 26 20 24 - -------------------------------------------------------------------------------- Total natural gas 993 922 932 965 International Average Prices (d) Liquids (per barrel) Asia $ 42.87 $ 28.40 $ 37.76 $ 27.30 Other $ 43.89 $ 29.70 $ 38.64 $ 28.31 Average $ 43.06 $ 28.73 $ 37.94 $ 27.54 Natural gas (per mcf) Asia $ 3.41 $ 2.95 $ 3.17 $ 2.82 Other $ 4.71 $ 4.26 $ 4.32 $ 4.38 Average $ 3.43 $ 2.96 $ 3.19 $ 2.84 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Worldwide Net Daily Production (a) (c) Liquids (thousand barrels) 171 157 159 160 Natural gas - dry basis (million cubic feet) 1,544 1,577 1,510 1,728 Barrels oil equivalent (thousands) 428 420 411 448 Worldwide Average Prices (excluding hedging activities) (b) Liquids (per barrel) $ 42.83 $ 28.14 $ 37.33 $ 27.70 Natural gas (per mcf) $ 4.35 $ 3.51 $ 4.02 $ 3.73 Worldwide Average Prices (including hedging activities) (b) Liquids (per barrel) $ 41.27 $ 28.33 $ 35.84 $ 27.60 Natural gas (per mcf) $ 4.15 $ 3.65 $ 3.98 $ 3.66 - -------------------------------------------------------------------------------- (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) 4th Q 3rd Q 4th Q ------------------------------- Millions of dollars except per share amounts 2004 2004 2003 - -------------------------------------------------------------------------------- Net earnings $ 268 $ 330 $ 180 - -------------------------------------------------------------------------------- Less: Special items from continuing operations E&P - North America - U.S. Asset sales - (2) 3 E&P - North America - Canada Statutory tax rate change - - 25 Midstream & Marketing Canadian statutory tax rate change - - 4 Corporate and Other Asset sales 17 16 - Environmental and litigation provisions (43) (17) (15) Net tax adjustments for settlements / assessments 15 38 - Debt repurchase premium - - (28) Insurance settlements - - 17 Restructuring provisions 1 - (1) Oil Insurance Limited retrospective liability increase (21) - - Agrium settlement (14) - - Less: Special items from discontinued operations Gain on asset disposals - 1 8 - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 313 $ 294 $ 167 ================================================================================ Adjusted after-tax earnings per share (diluted) $1.17 $1.09 $0.63 ================================================================================
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ADJUSTED AFTER-TAX EARNINGS RECONCILIATION (UNAUDITED) For the Year Ended December 31, -------------------------- Millions of dollars except per share amounts 2004 2003 - -------------------------------------------------------------------------------- Net earnings $ 1,208 $ 643 - -------------------------------------------------------------------------------- Less: Special items from continuing operations E&P - North America - U.S. Asset sales 26 46 Impairment - (31) Litigation provisions / settlements 15 (1) E&P - North America - Canada Statutory tax rate change - 25 Derivatives -- non-hedging - 4 Midstream & Marketing Canadian statutory tax rate change - 4 Impairment - (1) Geothermal Asset sales 21 - UPI settlement 46 - Corporate and Other Asset sales 33 - Environmental and litigation provisions (85) (78) Net tax adjustments for settlements / assessments 80 - Debt repurchase premium - (28) Insurance settlements - 17 Restructuring provisions 2 (24) Oil Insurance Limited retrospective liability increase (21) - Agrium settlements (43) - Less: Special items from discontinued operations Gain on asset disposals 57 16 Less: Cumulative effect of accounting changes - (83) - -------------------------------------------------------------------------------- Adjusted after-tax earnings $ 1,077 $ 777 ================================================================================ Adjusted after-tax earnings per share (diluted) $ 4.00 $2.95 ================================================================================
EBITDAX RECONCILIATION (UNAUDITED) For the Three Months For the Year Ended December 31, Ended December 31, -------------------------------------- Millions of dollars except per share amounts 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Net Earnings $ 268 $ 180 $ 1,208 $ 643 Less: Special items from continuing operations (45) 5 74 (67) Special items from discontinued operations - 8 57 16 Cumulative effect of accounting changes - - - (83) - -------------------------------------------------------------------------------- Adjusted after-tax earnings 313 167 1,077 777 Add-backs to adjusted after-tax earnings: Depreciation, depletion and amortization (a) 277 242 997 988 Impairments 32 7 74 41 Dry hole costs 83 33 160 128 Exploration expenses (including amortization of undeveloped leasehold costs) 52 69 201 251 Current income taxes 153 112 565 412 Deferred income taxes 72 (8) 183 163 Interest expense (b) 33 38 160 157 - -------------------------------------------------------------------------------- EBITDAX $ 1,015 $ 660 $ 3,417 $ 2,917 ================================================================================ EBITDAX per share (diluted) $ 3.74 $ 2.41 $ 12.42 $ 10.70 (a) Includes DD&A from discontinued operations of: - 1 - 3 (b) Net of capitalized interest of: 21 14 65 60
EX-99 3 exh99-2.txt EXHIBIT 99.2 RESERVES PR Exhibit 99.2 UNOCAL FOURTH 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 Fourth Quarter 2004 Net Earnings $ 268 $1.00/ Share - -------------------------------------------------------------------------------- Special Items Gain on Sale of Assets (17) Income Tax Settlements (15) Environmental & Litigation & Other 56 O.I.L. Insurance Adjustment 21 Fourth Quarter 2004 Adjusted Earnings $ 313 $1.17/ Share - -------------------------------------------------------------------------------- Mean Analyst estimate dated January 24, 2005 $1.17/ Share - -------------------------------------------------------------------------------- Variance Explanations to; $ Million Third Quarter 2004 Adjusted Earnings 294 $1.09/Share North America United States (22) Higher: Dry Holes (34), Impairments (8) Lower Volumes (3), Higher Prices: Liq. +10, Gas +13 Canada (1) Higher Dry Holes (4), Higher Gas Price +3 International E&P (2) Higher OpEx (15) Income Tax (27), Higher Expl. (8) Higher Production Vol. +21, Timing of Crude Lifting +11 Higher Prices +17, Other (1) Midstream & Marketing 14 Higher Gas Storage & P/L Results +11 Higher Marketing Margins 3 Geothermal 19 Impairment in 3Q & Other +15, improved Results +4 Corporate & Other 11 Lower Net Interest +6, All Other +5 Fourth Quarter 2004 Adjusted Earnings $ 313 $1.17/ Share - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----